South Africa's red herring

It might be prudent, for the time-being, to relegate the public indiscretions and or financial inconsistencies of the EFF's Malema to the back-bench and focus instead on more pressing issues which will, in time, become defining.

Faced with a contradiction in terms and based on the premise that all South Africans are free, the idea that economic emancipation or economic freedom, if you like, should, by definition, follow is inherently flawed. In fact, perversely, history often confirms the opposite.

Has the African National Congress (ANC) - government failed its people? Yes, mostly but it's hardly surprising and that's not a reflection on the competencies within the ANC but rather on the system itself. Yes, some officials have been incompetent and yes some are corrupt. Even so, it would be ridiculous to suggest that South Africa's economic woes are commensurate with the ANC and by extrapolation any different from other developing countries.

Service-delivery promises, often the only tangible way for ordinary people to measure the success of their vote, have fallen short. Poverty is rife. 25% of the workforce remains unemployed. Schools, hospitals and other basic infrastructural necessities are either in a state of decay, disrepair or are inadequate. So where to from here?

Traditionally there are three basic economic strategies to uplift the poor. One - grants, subsidies, welfare & charity. Two - artificial wealth redistribution and Three - Education and access to funding. Most countries prefer a combination of the three with an emphasis on one or the other. The permutations are many... In South Africa we employ a combination of the three with an emphasis on welfare. Black Economic Empowerment (BEE) is our preferred version of artificial wealth redistribution and we have legislation compelling banks to lend money favourably to the poor. Now, if the EFF has its way it will nationalise the mines. That's tolerable if the mines are well-managed and draw on skills from within the private sector and the proceeds spent on higher education and infrastructure investment. If the emphasis is on education everything else takes care of itself. If however, as most suspect, the EFF plans to nationalise the mines to give the money to the poor, that would be finite, unsustainable and inefficient. Worst of all, if the EFF does, in fact, nationalise the mines, for the sake of taking from one ethnic group to give to another, then that would be counterproductive, demotivating and in short, nothing short of disastrous.

So, if we are serious about this country's future let's not begrudge a politician his time in the limelight for that's what he is, a politician. Notwithstanding, ignoring the plight of the poor and the associated socio-economic issues as the ignorant rantings of a fool is economic suicide.

Strikes - a living wage and Europe's glass house

Let's cut the bull for five minutes and call a South African spade a shovel.

1. The government has failed. Service delivery; job-creation and an improvement in living standards has fallen short of the political promissory note. Paradoxically, the ensuing leadership vacuum has given intellectually questionable and morally obtuse opportunists the platform to fuel discontent.
2. Government excess and nepotism is no different or more morally corrupt than the culturally entrenched nepotistic employment practices and excesses common in the private sector. 
3. The unions have lost relevance. NUM, in particular, has forfeited control; lacking the strategic vision, leadership qualities and structural continuity to motivate effective collective bargaining. When dialogue fails, militant violence must follow.  
4. The strikes in the mining and transport industry are tangible manifestations of the current misalignment between the expectations of the general population and the ability of the country to service those claims. The private sector, specifically those companies structurally confined within the geographic region, lacks the margin to pass on a higher wage bill to consumers. The cycle intensifies when consumers themselves face further cost-push realignment; usually a down-scaling.
5. Education is neither pragmatic nor sufficiently preparatory for effective participation in the global environment. The negative economic consequences of the largely defunct educational system will emerge in the next decade, effectively negating an entire generations' creative potential.
6. Structural inadequacies and largely porous borders strain the rule of law, promoting violence, ethnic mistrust and racial bias.
7. Publicly reported remuneration excesses in the formal private sector fuels the corporate culture of personal gain and systematic asset stripping at the expense of longevity and so on and so on...

Notwithstanding all of the above, the South African situation is not much different from the structural failures in both Europe and the US. European corruption, nepotism, ineffectual leadership and the emerging militancy of its populace is neither imagined nor surprising. Political ineptitude, tax evasion and corporate excess at the highest levels is systemic. 

Critically, although most condemn the associated violence, you could argue that the strikers demanding a living wage are correct in their claims that hitherto local and now internationally domiciled mines have been stripping this country's assets for far too long. Is there a case to pursue a national policy of resource-ownership? Why not rather pay contracted mines for their extraction skills, infrastructural spend and intellectual capital and pay them generously? Market the refined, rather than the raw product, through a state-owned central hub managed by the private sector, also contracted and paid generously. Strategically viable? Yes. Socially acceptable? Perhaps. Timeous and innovative? Definitely. 

At its core South Africa's mineral wealth, currently residing in the corporate / capital structures of Europe, has not made her people prosperous and you don't have to look too far to see why. 

Policy, civic pride & perception

Let's give Europe a breather and, for today at least, consider our financial exposure in the South African dynamic.That has me thinking about civic pride; the South African government, it's policies and investor perception as a whole.

At the macro level, civic pride plays a key role in predictable economic expansion. Short-sighted strategic planning with 'nation-building' as justification in preference to civic pride misinterprets the sustainability of the project. To clarify: - 'nation-building' as a concept, is a State imposition ie: big brother knows best whilst civic pride is more reliably 'we-the-people-get-what-we-need'. The push / pull forces are very different. Civic pride is commensurate with a mature society. Imposition at its core is not sustainable. Giving people what they need rather than what you think they need addresses civic pride and is, by definition, more sustainable. A nationally-recognised vested interest in an asset and or a project promotes longevity. It's arguable that South Africa's young democracy has not matured sufficiently to nurture civic pride and therein lies the problem. Assets in the hands of the private sector, particularly the mining sector, are perceived, generally, by many South Africans, to be an injustice. There is therefore very little civic pride in the current mining infrastructure. As a consequence this sector faces a possible / probable legislative, judicial and or administrative threat to its longevity, certainly in its current form. Political preservation disguised as policy discussion on nationalisation and or the recently proposed 2nd-transition is evidence enough of this phenomenon. 

What's worse for the mining sector as a whole, in the South African context, is the tangible dislike local communities display, often violently, against these mines. Employment, as opposed to inclusion, is not seen as justification for the nurturing of civic pride. Until that changes, mining productivity, asset security and staffing will remain an issue. It is, in fact, the key risk variable most analysts build into mining-sector risk-models. 

International investors, as a whole, either directly or indirectly, justify risk by examining longevity. In the South African context sustainability is perceived, by both foreign and local investors alike, to be questionable and it's for that reason only that companies, either locally domicile or wholly invested here, particularly in the mining sector, will continue to underperform their peers.

Deafening silence..

Protection of State Information Bill - in favour 229; 107 against... 

I suppose we all thought the government would do its duty. In these impure, politically-bereft and often emotionally draining times, nepotistic leaders (sic) callously impugn the dignity of the people. Described as a vote of tactical defiance or partisan politics for the sake of defiance, South Africa's government took its first steps down the constitutionally slippery slope reminiscent of the draconian heavy-handedness employed by the apartheid-masters against which, perversely, many of the aye-vote STRUGGLED against.

A shining African light for democracy no more.

Red-herrings & a hot potato

It might be prudent, for the time-being, to relegate the public indiscretions and or financial inconsistencies of the ANCYL's Malema and focus instead on more pressing issues which will, in time, become defining.

Faced with a contradiction in terms and based on the premise that all South Africans are free, the idea that economic emancipation or economic freedom, if you like, should, by definition, follow is inherently flawed. In fact, perversely, history often confirms the opposite.

Has the African National Congress (ANC)- government failed its people? Yes; mostly... but it's hardly surprising and that's not a reflection on the competencies within the ANC but rather on the system itself. Yes, some officials have been incompetent and yes some are corrupt. Even so, it would be ridiculous to suggest that South Africa's economic woes are commensurate with the ANC and by extrapolation any different from other developing countries.

Service-delivery promises, often the only tangible way for ordinary people to measure the success of their vote, have fallen short. Poverty is rife. 25% of the workforce remains unemployed. Schools, hospitals and other basic infrastructural necessities are either in a state of decay, disrepair or are inadequate. So where to from here?

Traditionally there are three basic economic strategies to uplift the poor. One - grants, subsidies, welfare & charity. Two - artificial wealth redistribution and Three - Education and access to funding. Most countries prefer a combination of the three with an emphasis on one or the other. The permutations are many... In South Africa we employ a combination of the three with an emphasis on welfare. Black Economic Empowerment (BEE) is our preferred version of artificial wealth redistribution and we have legislation compelling banks to lend money favourably to the poor. Now, if the ANCYL has its way it will nationalise the mines. That's tolerable if the mines are well-managed and draw on skills from within the private sector and the proceeds spent on higher education and infrastructure investment. If the emphasis is on education everything else takes care of itself. If however, as most suspect, the ANCYL plans to nationalise the mines to give the money to the poor, that would be finite, unsustainable and inefficient. Worst of all, if the ANCYL nationalises the mines for the sake of taking from one ethnic group to give to another then that would be counterproductive, demotivating and in short nothing short of disastrous.

So, if we are serious about this country's future let's not begrudge a politician his time in the limelight for that's what he is, a politician. Notwithstanding, ignoring the plight of the poor and the associated socio-economic issues as the ignorant rantings of a fool is economic suicide.

The ghost of Africa past..

The notion that Africa will position itself as an economic superpower somewhere in the not-too-distant-future falls a yard or two short of reality. Where violent tribal enmities are a common thread and with her demographically segmented peoples, flawed long-term economic strategies and burgeoning poverty it's not difficult to be dismissive of Africa's prospects.

In a new development, the European legacies of the past, largely exploitative and still entrenched in Africa's beggared psyche, have been rekindled, unnoticed it seems, in the boardrooms of China. China's resource ambitions are unfettered and often environmentally disastrous and yet African governments smarting from Western betrayal, perceived or otherwise, have little option but to look to the East. China's propensity to lull the uninitiated by conjuring up poorly constructed, inferior quality infrastructure in return for what can only be described as economic exploitation, imperils Africa. 

In countries where retained power is often pillared on ethnic subjugation and even genocidal sacrifice, the elected officials and or self-styled political leaders continuously flout the best interests of her peoples. Under this guise Africa's leaders, lulled into a Ray-Ban-tinted sense of self-worth and where the rule of law is an ephemeral notion at best, seemingly lack the experience or courage to resist this trickery, exchanging precious non-renewable resources for cheap trinkets. 

In a leadership vacuum African Ubuntu (pride) has a fragility reminiscent of the distant past. South Africa is no different.