Let's Think

The big SA disconnect – government words and deeds

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There is a huge, and dangerous, disconnect between the words and deeds of the South African government, resulting in an economic recession and an explosive public mood depression.

On Thursday last week, after cancelling a much-anticipated media briefing on the economy after the country went into an official recession, to attend an “urgent cabinet discussion on the matter, Finance Minister Malusi Gigaba came back with a promise, amongst other, that: The cabinet economic cluster will in two weeks’ time come up with an "action plan that deals with boosting business and consumer confidence."

He also said government has heeded calls (by rating agencies) for greater policy certainty, sees faster and more inclusive growth as top priority, and it is “committed to restoring it (investment grade rating) to a favourable investment-grade rating with a positive outlook as quickly as possible.”

Gigaba, like president Jacob Zuma, called for unity of purpose from South Africans and governments ‘social partners’ to “reflect on our progress in bringing about inclusive growth and economic transformation, and to do all that we can, and more, from our respective positions.”

However, on the very same day his cabinet colleague, the Minister of Mineral Resources, Mosebenzi Zwane, unilaterally announced a radical new Mining Charter – a move which one commentator describe as “populism on steroids."

 It immediately saw South Africa’s resources stocks weaken, which is bad news for the country’s economic growth prospects as investor confidence plunge even further. At least one serious commentator posed the question: “Will they (radical transformation measures) kill the sector?”

And, instead of creating “unity of purpose,” the launch of this, the third, version of the Mining Charter, is likely to see the Minister and the Chamber of Mines tipped against one another in a protracted and acrimonious legal battle.

The Chamber reacted sharply, announcing they are going to court to ask for an interdict against the implementation of the charter and, to take it on review.

Their main issue upfront is consultation. Chamber of Mines president, Mxolisi Mgojo said that while included in drafting of previous charters, they hadn’t met the department of mineral resources for two months, and knew nothing about many of the provisions introduced in the latest version of the charter.

“This process that the department of mineral resources embarked on, is their own unilateral process,” he claimed.

Broader impact and public mood

A strong indication of the mood in other sectors in the economy also came on Thursday from a sector that intimately affect the majority of the population, when the minibus taxi industry brought traffic across Gauteng to a standstill.

The protest organised by the South African National Taxi Association (Santaco) came after the collapse of negotiations between the association and South African Taxi Finance Holdings over the cost of Toyota Quantum vehicles.

 It was a repeat performance of what happened two weeks ago in Durban over the plight of taxi owners, caused by underlying factors emanating from the general state of the economy – effects also experienced by the vast majority of the population in things like their general cost of living.

"Some members of the taxi industry have been hard hit by the high interest rate of 28.5% (on financing a taxi purchase) and the R15,000 per month payment. We can't take it anymore. There will be no taxis running and we advise commuters to seek alternative transport," said the spokesperson for Santaco Gauteng Ralph Jones.

A Quantum minibus, when launched in 2010, cost R220 000. It has since more than doubled to at least R450 000.

The parties is back at the negotiating table, and Santaco president Phillip Taaibosch and the association’s senior leadership said they would try to resolve the issue – failing which, they would embark on a national strike on July 12. If that happens it could bring the South African economy to a virtual standstill.

This week already thousands of commuters could not get to work. Not only did the Gauteng Department of Education also urged parents to keep their children home for their safety, but some students missed sitting for exams.

In their own way, millions of South Africans, from small scale traders to individual households, are feeling the effects of the downward spiral of the economy.

Besides the depressing effect of the recession on the purchasing power of especially the poor and lower middle class, of whatever income they do have, and by extension their quality of life, a growing economy is particularly important for South Africa.

As Prof Jannie Rossouw of Wits University in an article on The Conversation website points out, the economic decline is “in South Africa’s case …particularly serious because the country needs strong economic growth to make inroads into unemployment, which currently stands at more than 27%.”

Coming on top rampant corruption, revealed by thousands of leaked emails associated with ‘state capture,’ maladministration and looting at state enterprises and news that another 20% electricity tariff increase is probably in its way, it is small wonder that, while the economy is in recession, the public mood is in deep depression.

It is the stuff revolutions are made of and just more promises of jet another plan to get the economy off the ground, will not turn this dangerous mood around.

by Piet Coetzer

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