Opinion

Imagine an IMF intervention in SA

IMF take-over.jpg

The past week – as I’ve been reading RW Johnson’s controversial How Long Will South Africa Survive? – has been pretty depressing.

It is another booming voice saying that South Africa is sliding towards financial disaster and that, for as long as Jacob Zuma holds the reins, the prospect of a much-needed about-turn is virtually zero.

As a proud South African it is not an easy read. Johnson is brutal in the way he hammers home the point that Zuma and his cronies are only interested in enriching themselves and that government is not capable of managing the imminent economic crisis. And, though Johnson fashions many liberal assumptions with a selective interpretation of facts, it is difficult to deny the broad narrative.

The core message of the book is that the South African economy is a runaway train on its way to a financial crisis. When this happens (in the not too distant future, Johnson believes) the ANC will be forced to approach the IMF with cap in hand to ask for a bailout. The IMF will then, as it does, demand significant structural reforms, which will cause significant dissent within the ranks of the ruling party. Johnson then analyses several scenarios flowing from this event, which all fail.

IMF                                                                                                                        

The IMF has over the past few decades demanded aggressive structural reforms in lieu of funding, which has not always been a roaring success. The most recent example is Greece where such reforms contributed greatly to the country’s 25% drop in GDP in the past five years.

I am consequently not the biggest fan of the IMF, but my immediate reaction was that it wouldn’t be such a bad thing if Zuma and Co were put in the firing line. Any altercation with the IMF would force the ANC to consider and accept that current socialist policies have failed and to consider other options.

It would not be too difficult to envisage some of the ‘proposed’ reforms the IMF would prescribe for South Africa. If Greece were South Africa it seems likely that the ANC would be forced to slash the civil service, cut the public wage bill and reduce social grants. The IMF would also demand aggressive reform of labour laws and reduce the influence of trade unions. The IMF may even suggest the partial privatisation of some of State-owned companies to increase efficiency levels, most notably Eskom and South African Airways.

An IMF intervention would also force Zuma to step up to the plate and take responsibility for what is happening in the country. It is no secret that Zuma is extremely embarrassed and defensive when anyone (especially potential foreign investors) ask him about the electricity supply problems in the country.

An IMF intervention may prove to be a lot more embarrassing.

Change

I agree with Johnson that Zuma and his government are not capable of managing an economic crisis. Apart from Finance Minister Nhlanhla Nene, not one of the ministers in the economic cluster realises what damage their policies and their departments’ inefficiency are doing to the economy. These leaders also lack the political will and gravitas to affect the desperately needed changes, as they will require unpopular decisions.

I do, however, not agree with Johnson that the end is near. South Africans have over the years proven to be resilient and almost always avert a crisis at the last minute.

There is a growing realisation (albeit slowly) among the electorate that the ANC is losing the plot, as is evident in the loss of support during the last two national elections. The loss of support in urban areas was also noticeable, although it was countered with an increase in votes in rural areas, especially in KwaZulu-Natal.

There is a growing belief that this loss of support will accelerate in the upcoming local government election. If the ANC loses control of the metros in Joburg, Port Elizabeth and possibly Tshwane, it will send a clear signal that it is not only the neoliberals in the country who are unhappy, but also the growing middle class.

Other recent positive developments include Chief Justice Mogoeng Mogoeng and ex-minister Trevor Manuel’s public criticism of the ANC, eloquently described by Max du Preez in a previous column. Such public criticism has been rare to date, but hopefully other leaders, who also disagree with the status quo but have remained silent, will follow suit.

The press also remains largely free, which is critical to the future of our democracy. The mere fact that Johnson’s book is freely available in South Africa is a clear case in point. Johnson makes numerous highly defamatory statements about Zuma and several other individuals and it will be interesting to see how they react.

Another book in 2055?

Almost ironically, Johnson penned a book by the same title in 1977, nearly 40 years ago. The book was also scathing of the then apartheid government, but for the most part his predictions did not materialise. I hope Johnson, if he is spared, writes another book with the same title in 2055.

Lastly, I read the book on a Kindle and found it very frustrating that the countless references to sources are not linked to actual websites. Johnson primarily used information from his previous books and information from the popular press (as well as a few less credible sources such as Sunette Bridges) to formulate his views. It would have been more powerful if there were active links to the sources to confirm his assumptions.

                                                                                                                                                          by Ryk van Niekerk

(This article was first published by Moneyweb Today.  Ryk van Niekerk is the editor of Moneyweb Today.)



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