1 December 2011

Zimbabwe: SA - A Matter of Time Before Bomb Explodes


I CAN predict when South Africa's "Tunisia Day" will arrive. Tunisia Day is when the masses rise against the powers that be, as happened recently in Tunisia. The year will be 2020, give or take a couple of years. The year 2020 is when China estimates that its current minerals-intensive industrialisation phase will be concluded.

For South Africa, this will mean the African National Congress (ANC) government will have to cut back on social grants, which it uses to placate the black poor and to get their votes. China's current industrialisation phase has forced up the prices of South Africa's minerals, which has enabled the government to finance social welfare programmes.

The ANC is currently making South Africa a welfare state and tends to "forget" that there is only a minority that pay all the taxes. They are often quick to say that if people (read whites) are not happy they should leave. The more people that leave, the more their tax base shrinks. Yes, they will fill the positions with BEE candidates (read blacks), but if they are not capable of doing the job then the company will eventually fold as well as their "new" tax base.

When there is no more money available for handouts they will then have a problem because they are breeding a culture of handouts instead of creating jobs so people can gain an idea of the value of money. If you keep getting things for free then you lose the sense of its value. The current trend of saying if the West won't help then China will is going to bite them. China will want payment such as land for their people. This will result in an influx of Chinese since there is no such thing as a free lunch!

The ANC inherited a flawed, complex society it barely understood. Its tinkering with it are turning it into an explosive cocktail. The ANC leaders are like a group of children playing with a hand grenade. One day one of them will figure out how to pull out the pin and everyone will be killed. ...and 20 years on they still blame apartheid but have not done much to rectify things. Changing names only costs money that could have been spent elsewhere.

A famous African liberation movement, the National Liberation Front of Algeria, after tinkering for 30 years, pulled the grenade pin by cancelling an election in 1991 that was won by the opposition Islamic Salvation Front. In the civil war that ensued, 200 000 people were killed. The "new" leaders are forgetting the struggle heroes and the reasons for it. Their agenda is now power and money and it suits them for the masses to be ignorant - same as Robert Mugabe did in Zimbabwe. If you do not agree with the leaders then the followers intimidate you.

The former British Prime Minister, Margaret Thatcher, once commented that whoever thought that the ANC could rule South Africa was living in Cloud Cuckoo Land. Why was Thatcher right? In the 16 years of ANC rule, all the symptoms of a government out of its depth have grown worse.

l Life expectancy has declined from 65 years to 53 years since the ANC came to power. A leader who did not believe that HIV causes Aids (Thabo Mbeki) and another who believes having a shower after unprotected sex is the answer and has five wives and recently a child out of wedlock (Jacob Zuma). Great leaders for the masses to emulate? Not!

lIn 2007, South Africa became a net food importer for the first time in its history. Yet they want to carry on with their struggle song "kill the boer (farmer)" and stopping farm killings does not seem to be a priority. They do not seem to realise where food actually comes from.

lThe elimination of agricultural subsidies by the government led to the loss of 600 000 farm workers' jobs and the eviction from the commercial farming sector of about 2,4 million people between 1997 and 2007. Yet they want to create jobs and cause even more job losses -- very short-sighted thinking.

lThe ANC stopped controlling the borders, leading to a flood of poor people into South Africa, which has led to conflicts between South Africa's poor and foreign African migrants. Not much thought was given to this -- their attitude was to help fellow Africans by allowing them "refuge" in South Africa. Not thinking that illegals cannot legally get jobs but they need to eat to live. I believe that most of our crime is by non-South Africans. They need to do something to survive. Remove the illegal problem and you solve most of the crime problem.

When they took control of the government in 1994, ANC leaders should have identified what South Africa's strengths were, identified what South Africa's weaknesses were, and decided how to use the strengths to minimise and/or rectify the weaknesses. They were too busy enriching themselves.

A wise government would have persuaded the skilled white and Indian population to devote some of their time -- even an hour a week -- to train the black and coloured population to raise their skill levels.

What the ANC did instead when it came to power was to identify what its leaders and supporters wanted. It then used South Africa's strengths to satisfy the short-term consumption demands of its supporters. In essence, this is what is called Black Economic Empowerment (BEE). It entails putting people in positions they can cope without making them look stupid. You cannot "create" a company CEO in a couple of years. It takes years of work, starting at the bottom of the ladder. Only some things can be learnt in books; experience is the most important factor and this is not found in text books or university corridors.

BEE promotes a number of extremely negative socio-economic trends. It promotes a class of politicians dependent on big business and therefore promotes big business's interests in the upper echelons of government. Second, BEE promotes an anti-entrepreneurial culture among the black middle class by legitimising an environment of entitlement. Third, affirmative action, a subset of BEE, promotes incompetence and corruption in the public sector by using ruling party allegiance and connections as the criteria for entry and promotion in the public service, instead of having tough public service entry examinations. Nepotism is rife -- jobs for friends and families who are nowhere near qualified and then hire consultants to actually get the work done -- at additional cost of course.

The first purpose of BEE was to create a buffer group among the black political class that would become an ally of big business in South Africa. This buffer group would use its newfound power as controllers of the government to protect the assets of big business.

The buffer group would also protect the modus operandi of big business thereby maintaining the status quo in which South African business operates. That was the design of the big conglomerates.

The problem with the formula of BEE is that it does not create entrepreneurs. People do not develop the necessary skills when being fast-tracked into a position and being given a free ride. You are taking political leaders and politically-connected people and giving them assets which, in the first instance, they don't know how to manage.

It does not add value. One is faced with the threat of undermining value by taking assets from people who were managing them and giving them to people who cannot manage them. BEE is thus creating a class of idle rich ANC politicos.

My quarrel with BEE is that what the conglomerates are doing is developing a new culture in South Africa -- not a culture of entrepreneurship, but an entitlement culture, whereby black people who want to go into business think that they should acquire assets free, and that somebody is there to make them rich, rather than that they should build enterprises from the ground.

But we cannot build black companies if what black entrepreneurs look forward to is the distribution of already existing assets from the conglomerates in return for becoming lobbyists for the conglomerates. All companies start from the bottom. When they are "given" these businesses they are usually run into the ground because of inexperience. And when they are given loans to buy business the loans invariably are not repaid and the businesses go bankrupt.

The third worrying trend is that the ANC-controlled state has now internalised the BEE model. We are now seeing the state trying to implement the same model that the conglomerates developed.

What is the state distributing? It is distributing jobs to party faithful and social welfare to the poor. This is a recipe for incompetence and corruption, both of which are endemic in South Africa. This is what explains the service delivery upheavals that are becoming a normal part of our environment.

A socialist model, along the lines of the Soviet Union, is not workable today. The creation of a state-owned economy is not a formula that is an option for South Africa or for many parts of the world. Instead of shuffling pre-existing wealth, we have to create new entrepreneurs, and we need to support existing entrepreneurs to diversify into new economic sectors.

Make people work for their "handouts" even if it means they must sweep the streets or clean a park. Just do something instead of getting all for nothing. Guaranteed there will then be less queuing for handouts because they would then be working and in most instances they do not want to work -- they want everything for nothing.

And in my opinion the ANC created this culture before the first election in 1994 when they promised the masses housing, electricity etc. They just neglected to tell them that they would have to pay for them. That is why the masses constantly do not want to pay for water, electricity, rates on their properties. They think the government must pay this -- after all they were told by the ANC that they will be given these things. They just do not want to understand that the money to pay for this comes from somewhere and if you don't pay you will eventually not have these services.

Mbeki is the author of Architects of Poverty: Why African Capitalism Needs Changing.

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