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WHY CONFIDENCE MATTERS AND YES THERE IS SOME…

by | Jun 1, 2021

Confidence helps us feel ready for life’s experiences. When we are confident, we are more likely to move forward with people and opportunities – not back away from them!

This applies not only to our personal lives but also to countries, and boy besides the vaccine jab South Africa desperately needs a shot of confidence in order to help our economy recover. As an investment destination investor confidence is critical in order to attract money to SA. Currently business confidence is at an all-time low, which is dissuading foreigners from investing in South Africa. As it stands our business confidence index is at its lowest point since when apartheid was in its final death throes with SA economically isolated, sanctioned to the hilt and facing civil war.

So why is confidence so low? There are many reasons right now, ie. Surging Expenditure, (debt, public sector wage bill, SOE bailouts, social grants) Declining Revenue, (corruption, crime, state capture, power outages, fading economic growth and shrinking tax revenue) and Government’s poor track record. Corruption and crime combined with these many other issues have led to instability in the rand, stalled economic growth and resulted in downward revisions in growth forecasts.

These problematic factors make it difficult for doing business in SA. With deeply entrenched corruption there are understandably trust issues, and on top of this crime acts as a disincentive for businesses to move their operations to our country. Although corruption is firmly in Cyril’s crosshairs, the lack of actual prosecutions and ongoing political infighting remain a major challenge to restoring confidence. The good news is that there seems to be action and very recently some senior ANC officials (e.g., ACE) are being dealt with.

South Africa has consistently underperformed our peer emerging market countries and now more than ever we need proper implementation in order to set us on an economic upward trajectory. Business needs to be encouraged and supported and through this job creation will help alleviate the frightening unemployment number and help to set us on a path of recovery. Right now, we need political stability and a rapid roll out of the Covid vaccine in order that we can get back to business of doing business. Government needs to stop wanting to do everything by itself and rather engage and partner with the private sector which typically has the skill set within its ranks, has money and has proven to be more successful at delivering results.

Putting SA on the path to an economic recovery is possible but this will take political will which to date has being lacking. The good news is that finally we are seeing some positives. Recently we put out an article “Structural Reform: Slow but Steady” which highlighted some progress we are making in energy, harbours and politically. The commitment of the Ramaphosa government to reignite growth through structural reform is coming into focus and the bounce back in economic growth will hopefully trump population growth, reversing the six year decline we had.

Ramaphosa finally has grip on ANC.

Given the recent political events and outcomes of the NEC (national executive committee) it seems as if the ANC party has reached a tipping point, and fortunately in a favourable direction. The secretary-general has been sent packing after failing to suspend the President and then refusing to apologize. ACE’s defiance has backfired spectacularly, and his support seems to be dwindling fast…Ramaphosa is a formidable adversary and based on FW de Klerk’s experience of the man through their encounters during the negotiations for a new SA warned that Ramaphosa’s relaxed manner and convivial expression were contradicted by cold calculating eyes which continually searched for the weak spots of his opponents. His silver tongue and honeyed phrases lulled potential victims while his arguments relentlessly tightened around them.

With the support of the NEC this is what he has done to Magashule and his allies. This bodes well for both the ANC’s renewal project (ridding the ANC of corruption, rebuilding public trust and ensuring it delivers on its obligations as a government) and the country at large.

Below find JP Landman’s latest article “First the State, Now the Party” which summarizes recent events and helps instill some much-needed CONFIDENCE!

JP Landman – political & trend analyst

First the State, Now the Party

10 May 2021

In the corruption update in August last year, I wrote: ‘One must distinguish between what the state is doing and what the ANC is doing or not doing. President Ramaphosa has clearly put the state on a new trajectory. It is important that the ANC now follows suit.’ Nine months later, in the past week, this is exactly what happened. 

Ace Magashule was suspended pending the outcome of his corruption court case in the Free State and removed from a National Executive Committee (NEC) meeting. Former minister Bongani Bongo was also expelled from the NEC due to his corruption charges. Magashule dominated the news. He may not have been the most corrupt person around, but he is the highest-ranking ANC official to be charged so far and, sadly for him, he has become the symbol of corruption in the ANC, together with Jacob Zuma.

Below the high-profile headlines, however, it is important to note that an additional 68 ANC members from eight provinces, who are being charged with a range of criminal offences, must all step aside.

The charges include fraud and corruption (by far the most), murder, theft, stock theft, avoiding VAT, paying a bribe, sexual assault and rape, two drunk-driving charges, and one person in possession of dagga (but also subverting justice – probably the more serious offence). Including Magashule and Bongo this makes it 70 ANC members who must step aside.

The Free State ANC has failed to compile and submit to Luthuli House a list of individuals being charged. This was because the provincial structure collapsed after an Appeal Court decision that the last internal ANC elections in the province were null and void. Given the asbestos and looming Estina dairy cases, the province will probably push the number to over 80.

Some detail

The 70 individuals from the eight provinces include the secretary-general, a member of parliament, several members of provincial legislatures, three members of provincial executives (provincial ministers), around 40 councillors/mayors and some 15 ‘ordinary’ members of the ANC.

The highest number is in KwaZulu-Natal (24) and the lowest is in the Northern Cape (one). One wonders if the 15-year prison sentences that former Northern Cape ANC leader John Block and his private-sector counterparty are currently serving for corruption have anything to do with the low number in the province. But it is also a sparsely populated province; and the current premier is a formidable no-nonsense guy.

Proportional to ANC members in the province, the highest number is found in the Western Cape (11).

In Gauteng, four people have been suspended from the party – some for Covid-19 personal protective equipment shenanigans – although formal charges have not been laid against all of them. It appears Gauteng is more willing to bite the pre-emptive bullet.

Taking the party along

This is the culmination of a party process that started in August 2020 when President Ramaphosa wrote his famous open letter in which he said: ‘Today, the ANC and its leaders stand accused of corruption. The ANC may not stand alone in the dock, but it does stand as Accused no 1.’ It has taken nine months, but the ANC has shifted to where it is now.

There were very high expectations back in 2020 that Magashule’s suspension would happen ‘before Christmas’, or ‘before the 8 January statement’, etc. People were dismayed when their deadlines were not met. But slowly and systematically the process was managed to where it is now. Ramaphosa made sure that he took the party structures with him. The benefit of that deliberate process is that Magashule has not only been suspended but was now also told to apologise publicly. If he refuses, he will probably be expelled or at least suspended for a long period. It is really a spectacular fall.

The drive against corruption started in the state in 2018 when Ramaphosa became President; now three years later, the party has followed suit. The era of blatant impunity may not be over, but corrective action has certainly been taken and people are being held accountable. As Churchill said: ‘It is not the end, it is not even the beginning of the end, but it is maybe the end of the beginning.’

Political fallout

The Magashule/Radical Economic Transformation (RET) grouping in the ANC has no doubt taken a severe beating. Three years ago, in February 2018, Magashule said, ‘members must just be patient, in five years we will take the ANC back’. It is not looking like that now.

Those in wider society who proclaimed ‘Ramaphosa is a one-term President only’ have clearly been repudiated. (The media outlet that proclaimed the probability of ‘President Magashule’ and wrote arrogantly ‘In the real world, Ace is in the strongest position to wield the final, killing blow’ must surely qualify for some kind of first prize.)

What the RET grouping will now do, will become clearer over the next few weeks. Their first option is to stay in the party and try to mobilise branches with an eye on the upcoming National General Council of the ANC (a conference of some 5 000 branch delegates convening to evaluate the party’s performance in government). That is what Zuma did after he was fired by Thabo Mbeki in 2005 and the Magashule/Zuma faction may try that again. Ramaphosa, however, made sure that he took the party structures along with him. Also, the NEC decision that Magashule should apologise in public, will be decisive: if he does not apologise, he is out.

Then the option is for the RET faction is to leave the ANC and start a party of their own (or join other parties). This would be the cleanest and the easiest and could unlock a re-configuration of South African politics. But that may be a bridge too far, particularly regarding funding. We will see.

There are several branches in the ANC that are unhappy with the step-aside rulings and they will make a lot of noise in the coming weeks. However, the developments in the ANC Women’s League, where a proposal to suspend the step-aside rule was swept off the table due to members’ resistance, and the fact that not one provincial leader has expressed support for Magashule, indicate that the unhappiness can be contained. The decision that Magashule should apologise is tilting the balance of power further against him. I expect the centre to comfortably hold.

The decision on Jacob Zuma’s contempt of court charge will also be a factor in the political fallout. It may have some galvanising effect, but it isn’t likely to upset the apple cart.

The suspension of Magashule also frees the President’s hand to do a cabinet reshuffle. I may fit nicely into his ongoing plans to make government smaller, but he may not be ready to move on that yet. (He has already cut the cabinet from 34 to 28 members.)

So what?

  • On the key performance indicator of ‘fighting corruption and holding people accountable’, Ramaphosa has scored significantly with this last week’s developments.
  • Any doubts about Ramaphosa being in charge of the ANC can now safely be dismissed – he has emerged stronger than at any time since his appointment as President in 2018. He deserves plaudits for patience, discipline and staying calm while the chattering classes around him were losing their heads.
  • Supra Mahumapelo from North West has been suspended for five years; Ace is on ice; the Free State and North West ANC structures are in disarray … these are the erstwhile “premier provinces” supporting Zuma and Magashule. Looks more like a disintegrating base.
  • The organising principle of these ‘step-asides’ is that those who are charged must move aside. The National Prosecuting Authority said in Parliament last week that they are ready to move on several state capture cases. We should therefore see more people stepping aside.

Hopefully, we will also see court cases and step-asides in the private sector as well, which often constitute the other side of corrupt actions. To paraphrase Churchill, ‘this is the beginning not the end!”