Economic Watch

Dealing with just Zuma and Gordhan will not save South Africa

Gordnan two.jpg

Neither getting rid of President Jacob Zuma and his Gupta-dominated state-capture network, nor saving Finance Minister Pravin Gordhan from the onslaught on him will safeguard South Africa against the threatening economic headwinds.

These two eventualities on their own – important as they may be – will not turn the country around or fully address the political, economic and social decay the country has slipped into over the past decade or more.

The present public discourse in the country focuses mainly on these two gentlemen and seems to create the impression, or perception, that if the situation surrounding them can be handled successfully and expeditiously, all will be okay. The country’s problems, especially on the front of corruption and patronage, run much wider and deeper than the Zuma/Gordhan axle.

Shocking revelations

Revelations last week in two of the metropoles, where the African National Congress (ANC) lost control in the August municipal elections, uncovered the shocking truth of how wide and deep these ailments run.

In Tshwane, home of country’s administrative capital, it came to light that a patronage network of more than 40 000 suppliers, delivering even mundane stock like lightbulbs at a 400% mark-up, has developed.

The new Democratic Alliance mayor, Solly Msimanga, also announced that three formal charges are being laid against his predecessors for fraud and financial mismanagement relating to upgrades to the official mayoral residence and the city hall.

In the Nelson Mandela Bay metropole, the new DA mayor, Athol Trollip, froze a R21 million contract the municipality had with a Johannesburg-based media company. It was revealed that the original R10 million ‘cap’ on government spending was lifted for the company which had, halfway through its three-year contract, already spent R20,8 million.

In the relatively small Greater Tzaneen it also come to light that the new ANC mayor has just spent R1,2 million on a luxury vehicle, within days after being elected.

Besides revealing how widespread and entrenched corruption and the misuse of state resources has become, it also raises the question, where were the country’s much acclaimed network of watchdog and anti-corruption institutions while all of this was going on.

The official opposition, and now in some cases municipal governments, is making much of the latest revelations and will surely continue doing so in campaigning for the 2019 general elections. However, it also tells a story of how they failed as opposition when they were in those benches before the August municipal elections.

Challenging task ahead

Whoever takes over the leadership of the country from Mr Zuma, be it soon from within the ANC or after the 2019 election, will face a massive challenge to turn things around, however solid their intentions might be. And, the economic diffident will not come as readily as is generally expected.

In this regard Nigeria offers a sobering case history and important lessons, as I gather from a recent article on the Pambazuka News website by Moses E. Ochonu, professor of African History at Vanderbilt University.

He writes: “Nigeria is gripped by the familiar anxieties of an economy in distress. This escalating crisis has demystified a president once thought capable of astute, if not magical, economic management. In their desperation for respite, many Nigerians are now paradoxically yearning for the corruption that they and their leaders blame for their economic woes”; and (Our emphasis)

“’Bring back corruption’ mocks the logic of making the fight against corruption the sole preoccupation of government while unprecedented hardship stalks vulnerable Nigerians and expands to the ranks of citizens who previously occupied safe economic perches, and while the government fails to ease the economic strictures and contractions caused by the said fight against corruption.”

In another article in the same edition of Pambazuka News Nigerian journalist Godwin Onyeacholem writes: “Since assuming office on May 29, 2015, President Buhari has lived up to his campaign promise of tackling corruption headlong and providing a fresh template for instilling transparency and accountability. Nigeria could be a model for fighting this monster that gobbles up some $2.6 trillion annually from the global economy.” (Our emphasis.)

Reality more nuanced

It is clear from the Ochonu article, just coming to grips with the ‘monster’ of corruption is not enough. Unless the basics of the economy receive solid attention as well, the country will not prosper.

Ironically some of the answers to this challenge are to be found in another

African country, Rwanda, which was gripped by a horrible genocide when South Africa experienced its democratic ‘miracle’ in 1994.

Rwanda is one of ten countries, identified by the organisation International Strategic Analysis in its latest ISA News Update, which buck the global trend of growing fear “that the stagnation of global economic growth that has been in place in recent years could in fact be turning into a full-blown global slowdown”.

In its conclusion ISA writes: “Altogether, each of the ten economies highlighted here have succeeded due to their ability to improve their economic competitiveness, to attract investment, and to diversify their economies. 

“These are lessons that other economies would do well to learn as the global economic environment remains very difficult and shows no signs of improving over the near-term. 

“Those countries that fail to learn from their more successful peers are likely to find it difficult to generate significant growth in today's economic climate, while those that have success in emulating these ten often overlooked economies can hope for better days ahead.”

Our conclusion 

While South Africa has to deal with the corruption scourge which has beset it and deal expeditiously with the Gordhan issue to retain investment status and investor interest, that alone will not be enough.

It has to re-establish confidence in its watchdog institutions and guard jealously over the reputation of those that are still respected, like an independent judiciary and fearless Public Protector.

The country also has to breathe new life into its National Development Plan to ensure the country is globally competitive, diversified and attractive to investors.

by Piet Coetzer

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