CHRISTMAS is coming and it would be nice to be cheerful. But even the most cursory glance at our economy is a bit like watching, in the phraseology of a former colleague, "the skies over the Union Buildings darkening with the wings of economic chickens coming home to roost".
Last week, one of the world’s best public economists — the lead economics writer on the Financial Times — Martin Wolf, was in SA. He returned to London to basically write us off unless we reverse economic policy.
The redistributive efforts of the African National Congress (ANC) were, he said (and we know it ourselves), a zero-sum game. We needed policies for faster job creation and economic growth. "If the country does not shift to a path of faster employment-generating growth (a) populist disaster seems increasingly inevitable," he wrote.
Wolf speaks for and to the international economic community and his article follows a Bloomberg report last week that the insurance being required to trade SA’s government-backed bonds was now so high they indicated the markets were already treating South African debt as if it were sub-investment standard or, in the parlance of the bond markets, junk.
And it is not only foreign voices speaking out. Read the edition of the Financial Mail published on Thursday. It reminds us that Reserve Bank governor Lesetja Kganyago was telling an audience in Cape Town last month that raising local interest rates was unavoidable.
That’s because the Bank had been too trusting that government growth and jobs policies would work. In keeping interest rates at historic lows, the Bank assumed SA’s potential growth rate was higher than it actually is.
Once that "potential" was thought to be 4%, but mismanagement of the economy by the administration of President Jacob Zuma made it impossible. The Bank has now lowered that "potential" to just 1.8%, and even that would be a substantial improvement on where the country is now, heading into Christmas.
Kganyago, in my humble opinion, is the best central bank governor this country has ever produced, but even he has now run out of room. He has to keep inflation in check. The left-wingers to whom Zuma has handed control of the economy will scream blue murder about chasing growth rather than inflation, but they’ve had six years to make something happen and their failure is now complete.
It is time the ANC stood up for the country first, even if Zuma won’t, or can’t.
He gave arguably his poorest speech to date (and there’s a lot of competition) to the conference of the Congress of South African Trade Unions (Cosatu) earlier this week, making it clearer than ever that he is simply not able to grasp what he is doing to the country.
He tried to explain why it was that the ANC-led alliance with Cosatu and the South African Communist Party (SACP) could only work if each knew its place. The ANC was leader of a "multi-class national liberation movement" dedicated to achieving a nonracial, nonsexist, democratic and prosperous country.
The SACP was the vanguard of a march towards a socialist revolution aimed at creating a dictatorship of the proletariat.
Cosatu "is not and never has been a political party", but a progressive trade union federation ... defending the rights of workers from superexploitation by the capitalist class.
Yep, Zuma said all that. Not an iota of analysis of the state we’re in. Just a description, plucked from Robben Island in another time, of how things should be (but aren’t).
But it got much worse when he began to drift off the speech in front of him.
"Now, how do you deal with dictatorship? Let me go to the other class I talked about, capitalist class. It dictates and at times you don’t feel it. It dictates everything every day. Dictatorship. Who decides the price of bread? Is there any meeting that sits down and says now it must cost so much? It is dictated by the capitalist class. They decide now bread must be 20c. One day they decide it must now be 25c. There is no meeting. If the price of oil goes up, they decide to raise the price of petrol. There is no meeting..."
Zuma, you have to presume, is probably not aware then that if bread producers did indeed have a meeting about the price of bread, they would be guilty of the criminal offence of collusion under laws frequently championed by his own ministers.
The scary thing about Zuma is that he cannot or does not care to judge the effects of what he says beyond the narrow and purely political confines of an alliance that many senior ANC leaders know in their hearts no longer exists in the form that it used to.
Out in the world where we ask people to invest their money with us, Zuma is a lost soul. That world will watch, for instance, very closely how Finance Minister Nhlanhla Nene deals with South African Airways (SAA) chairwoman (and Zuma crony) Dudu Myeni’s request for new funding.
Based on the contorted reason she wants the money (to buy a new fleet, not directly, but through an SAA-appointed local agent, who first denied he was dealing with her), Nene should flatly refuse her and, as the responsible minister, fire her from the board.
But if he did, would he survive politically? Zuma is already irritated that the Treasury is taking its time evaluating a response to pressure to fund a new nuclear build programme.
The mere fact that Nene has to look over his shoulder as he does his job, that he should have to weigh his integrity against his job, is a disgrace in a weak economy.
The president, though, shows little sign of relenting on all of the money he needs, be it university fees, nuclear power, a VIP flight or a new SAA fleet.
To get the money, he will have to break one of the three remaining institutions keeping our heads above water: the South African Revenue Service, where a new director, Tom Moyane, has set himself a collection target made almost impossible by the state of the economy; the Treasury; or the Reserve Bank. Kganyago will be impossible to move and Moyane can only collect what is on the table. Nene is the most vulnerable and there are knives out for the Treasury.
The ANC, in the face of very difficult local elections next year, will have to keep Zuma at bay. It is going to be a rough ride and not even investment bank Goldman Sachs’s promise of a recovery in emerging markets next year will help an economy that is way out of its depth.
President Jacob Zuma arrives at the Presidential Palace in Luanda, Angola, this week. He was accompanied by Minister of State Security David Mahlobo. Picture: GCIS
CHRISTMAS is coming and it would be nice to be cheerful. But even the most cursory glance at our economy is a bit like watching, in the phraseology of a former colleague, "the skies over the Union Buildings darkening with the wings of economic chickens coming home to roost".
Last week, one of the world’s best public economists — the lead economics writer on the Financial Times — Martin Wolf, was in SA. He returned to London to basically write us off unless we reverse economic policy.
The redistributive efforts of the African National Congress (ANC) were, he said (and we know it ourselves), a zero-sum game. We needed policies for faster job creation and economic growth. "If the country does not shift to a path of faster employment-generating growth (a) populist disaster seems increasingly inevitable," he wrote.
Wolf speaks for and to the international economic community and his article follows a Bloomberg report last week that the insurance being required to trade SA’s government-backed bonds was now so high they indicated the markets were already treating South African debt as if it were sub-investment standard or, in the parlance of the bond markets, junk.
And it is not only foreign voices speaking out. Read the edition of the Financial Mail published on Thursday. It reminds us that Reserve Bank governor Lesetja Kganyago was telling an audience in Cape Town last month that raising local interest rates was unavoidable.
That’s because the Bank had been too trusting that government growth and jobs policies would work. In keeping interest rates at historic lows, the Bank assumed SA’s potential growth rate was higher than it actually is.
Once that "potential" was thought to be 4%, but mismanagement of the economy by the administration of President Jacob Zuma made it impossible. The Bank has now lowered that "potential" to just 1.8%, and even that would be a substantial improvement on where the country is now, heading into Christmas.
Kganyago, in my humble opinion, is the best central bank governor this country has ever produced, but even he has now run out of room. He has to keep inflation in check. The left-wingers to whom Zuma has handed control of the economy will scream blue murder about chasing growth rather than inflation, but they’ve had six years to make something happen and their failure is now complete.
It is time the ANC stood up for the country first, even if Zuma won’t, or can’t.
He gave arguably his poorest speech to date (and there’s a lot of competition) to the conference of the Congress of South African Trade Unions (Cosatu) earlier this week, making it clearer than ever that he is simply not able to grasp what he is doing to the country.
He tried to explain why it was that the ANC-led alliance with Cosatu and the South African Communist Party (SACP) could only work if each knew its place. The ANC was leader of a "multi-class national liberation movement" dedicated to achieving a nonracial, nonsexist, democratic and prosperous country.
The SACP was the vanguard of a march towards a socialist revolution aimed at creating a dictatorship of the proletariat.
Cosatu "is not and never has been a political party", but a progressive trade union federation ... defending the rights of workers from superexploitation by the capitalist class.
Yep, Zuma said all that. Not an iota of analysis of the state we’re in. Just a description, plucked from Robben Island in another time, of how things should be (but aren’t).
But it got much worse when he began to drift off the speech in front of him.
"Now, how do you deal with dictatorship? Let me go to the other class I talked about, capitalist class. It dictates and at times you don’t feel it. It dictates everything every day. Dictatorship. Who decides the price of bread? Is there any meeting that sits down and says now it must cost so much? It is dictated by the capitalist class. They decide now bread must be 20c. One day they decide it must now be 25c. There is no meeting. If the price of oil goes up, they decide to raise the price of petrol. There is no meeting..."
Zuma, you have to presume, is probably not aware then that if bread producers did indeed have a meeting about the price of bread, they would be guilty of the criminal offence of collusion under laws frequently championed by his own ministers.
The scary thing about Zuma is that he cannot or does not care to judge the effects of what he says beyond the narrow and purely political confines of an alliance that many senior ANC leaders know in their hearts no longer exists in the form that it used to.
Out in the world where we ask people to invest their money with us, Zuma is a lost soul. That world will watch, for instance, very closely how Finance Minister Nhlanhla Nene deals with South African Airways (SAA) chairwoman (and Zuma crony) Dudu Myeni’s request for new funding.
Based on the contorted reason she wants the money (to buy a new fleet, not directly, but through an SAA-appointed local agent, who first denied he was dealing with her), Nene should flatly refuse her and, as the responsible minister, fire her from the board.
But if he did, would he survive politically? Zuma is already irritated that the Treasury is taking its time evaluating a response to pressure to fund a new nuclear build programme.
The mere fact that Nene has to look over his shoulder as he does his job, that he should have to weigh his integrity against his job, is a disgrace in a weak economy.
The president, though, shows little sign of relenting on all of the money he needs, be it university fees, nuclear power, a VIP flight or a new SAA fleet.
To get the money, he will have to break one of the three remaining institutions keeping our heads above water: the South African Revenue Service, where a new director, Tom Moyane, has set himself a collection target made almost impossible by the state of the economy; the Treasury; or the Reserve Bank. Kganyago will be impossible to move and Moyane can only collect what is on the table. Nene is the most vulnerable and there are knives out for the Treasury.
The ANC, in the face of very difficult local elections next year, will have to keep Zuma at bay. It is going to be a rough ride and not even investment bank Goldman Sachs’s promise of a recovery in emerging markets next year will help an economy that is way out of its depth.
Data supplied by Profile Data
Change: 0.00%
Change: 0.00%
Change: -1.13%
Change: 0.00%
Change: 0.00%
Data supplied by Profile Data
Change: 0.01%
Change: 0.02%
Change: 0.03%
Change: 0.69%
Change: -0.10%
Data supplied by Profile Data
Change: 0.00%
Change: 0.00%
Change: 0.00%
Change: 0.00%
Change: 0.00%
Data supplied by Profile Data