ON WEDNESDAY the word "growth" is likely to get more than its fair share of mentions when Finance Minister Pravin Gordhan delivers his budget speech.
He has no choice because many of the factors that determine whether SA will be downgraded to junk status hinge on economic growth.
Sovereign debt is fine as long as it is low enough not to matter as a ratio to gross domestic product. The latter must grow larger for this formula to work, which means it must grow. In turn this has an influence on the split between imports and exports, the current account and therefore the exchange rate.
In a country that imports as much as we do the exchange rate matters a great deal because it can influence prices, the inflation rate and therefore interest rates. Whatever the Reserve Bank or the Treasury does at any given point is not as causal as the decisions and actions of politicians. In our case this extends to the whims of those who enjoy the patronage of politicians, or have captured them.
After several meetings between the government and business I’m certain there will be plenty more to come. Everyone will promise to do their best to both deliver a consistent (positive) narrative and to contribute towards growing the economy. It’s all good stuff except it misses a critical ingredient — unequivocal political commitment.
The commitment is not just to quickly follow through on those commitments already made, but also to deal with the elephant in the room that even supposedly powerful politicians have only begun to talk about. This is the reality of trying to grow an economy in what is effectively a gangster state. I call it such because it is captured by criminal elements who do not care for Gordhan’s growth narrative.
They just want to get rich.
Let me tell you two short stories. Last year a former CEO of a state-owned enterprise (SOE) told me he had quit after receiving death threats so serious that they were delivered to his office. These came after he had turned down the forceful advances of powerful business people who have been in the news lately.
They wanted him, among others, to award them contracts for raw material supplies worth billions. When he explained that he did not get involved with deciding contracts, they wouldn’t have it. They wanted him to break the rules. He still refused.
His account was confirmed to me late last year and early this year, independently. In one of these accounts a technocrat at the same SOE who used to work with contracts around the same time related a similar incident. Their boss, a former member of the executive committee, was being violently instructed to approve a proposal that did not meet all the key requirements.
When the document was sent back so that it could at least be reworked to meet requirements it came flying back with astounding ferocity. A senior manager, notably junior to the executive, waved the document in the technocrat’s face and said, "This time they must f***ing sign this, or else!" The document was sent back to the executive. Needless to say, she and the technocrat did not last either, same as the guy who had got the death threats.
This is the soft underbelly of the other narrative, how we have destroyed any prospect of sustainable economic growth by putting this responsibility in the hands of either gangsters or frightened officials who are bullied to prioritise the awarding of contracts to thugs.
This pattern is not limited to SOEs. About two years ago, people who had been promised patronage posts by a politician, but didn’t get them when she was appointed, brazenly confronted a highly regarded administrator at an Eastern Cape metro. A columnist in the Herald newspaper received telephonic threats when he wrote about the poisoned environment.
Needless to say, the official also didn’t last. She was paid to leave after her life was made very difficult.
These are issues that speak to the African National Congress’s (ANC’s) decay, and therefore its inability to act in concert with Gordhan’s pleadings in his budget speech.
ANC spin doctors may wish to say these are exaggerated cases, but they’re not. In December 2007 Kgalema Motlanthe, then the party’s secretary-general, said the following in his political report: "The possibility of division between elected structures of the movement on the one hand, and government appointees on the other, is very real. The movement is then utilised as a power base from which to undermine the effective functioning of government, in order to create conditions for access to resources for those who perceive themselves to have been excluded."
He went further: "The ANC at times becomes the battlefield in which ministerial silos seek to win arguments that they failed to secure consent on within government."
So this is part of our terrible economic growth story, a subculture in which ideological dogma, corruption and state capture take precedence over the ANC’s own conference resolutions and the country’s needs.
Until the party deals with its own inability to run itself effectively, elect leaders with depth and rid itself of the gangsters who make up a significant part of its body politic, there is little hope for growth. The state has been so captured that all we brag about these days is the judiciary.
Independent judges are good to have, but everything else needs to function too, and it hardly does. That’s beyond anything Gordhan can deliver in his speech. Our task as a nation is to ask why we are paralysed when the country has so much capacity to do so much more.