GDP figures: ANC looking at wrong signals and missing the point
- Stephen Grootes
- 08 Sep 2016 01:29 (South Africa)
It is sometimes forgotten in our cacophonic democracy that in the end, it’s the economy, stupid. Everything revolves around it. Money for university fees, money for social grants, the number of people working and paying tax, the general amount of happiness in a society, is all due to the economy. The ANC claims to know this. And yet its management of the economy is marked by a lack of interest. The party sometimes blames the private sector for not employing people, for not investing, for not creating jobs. At the moment, in the economic crisis that we are in, the ANC is cheering the wrong numbers, looking at the wrong signals, and generally missing the point. By STEPHEN GROOTES.
There can be no doubt of the trouble that we are in. We could throw around numbers, but the humans, the fellow South Africans you see every day on street corners, men looking for any kind of work at your local municipal rubbish dump, women with children knocking on your car window, tell the story more starkly. You know this. The ANC claims to know this. It claims to know how important it is to get the economy going. It claims, also, to understand this.
Why then a statement from the party on Wednesday from the ANC claiming that Tuesday’s GDP figures show that its policies are now successful? All the economy did was grow by slightly more than expected. The emphasis is on slightly. In reality, it grew by 0.6% year on year.
In other words, taking population growth into account, we’re standing still. Which means people are getting poorer, when you consider the rate of inflation, and in particular rising food prices. And yet the ANC claims that this figure “demonstrates that the ANC-led government’s collaborative approach, working together with organised labour, business and civil society is beginning to yield the desired results in our economy”. So, growth of just over half a percent is the result of their strategy. Time, perhaps, to change the strategy.
Unfortunately, the Presidency wasn’t much better. It said in its own statement (from China), that “the co-operation between government, business, labour and the community sector has yielded results”. Well, the only “result” was that the economy did not actually shrink, did not actually fall into a recession.
The figures from Statistics South Africa on our GDP are only the headlines. Beneath them, the figures that give an indication of the GDP numbers to come are still incredibly weak. Business confidence figures are weak, consumer confidence numbers are depressed, Purchasing Managers Index indices (which measure actual manufacturing output) are going the wrong way. These numbers can be complex. But reading them, and managing them, is important. It may be unfair given our history to ask this question, but it is becoming necessary: how many of our politicians actually understand what these numbers all mean, and the picture that they paint?
Time and time again, we have seen evidence that very few in fact do. President Jacob Zuma himself will only talk about the economy in the very broadest of terms. There will be no specifics, no mention of numbers, no actual plan to do anything. Just broad talk about a need to “join hands” or “work collaboratively” or of “moving the country forward”. Never will you hear our president talk about specific economic issues in a way that demonstrates he is actually seized with it.
Unfortunately, some in the ANC’s top leadership are even worse. Jessie Duarte, ANC Deputy Secretary-General, appeared economically illiterate during an interview with ANN7 10 days ago, when she claimed that the Reserve Bank had failed to protect the rand because it is privately owned. A comment that really should not be made by someone in her position, considering that the independence of the Reserve Bank is enshrined in the Constitution. And surely someone in her position, someone intimately involved in governance, should know this simplest of facts. It is impossible to imagine Gwede Mantashe or Zweli Mkhize making this mistake.
And Mantashe and Mkhize appear to do what they can to calm things down. Mkhize was happy to speak at a Sanlam event on Tuesday night. He said all the things business would want to hear. And business is happy with that. But they do not believe that he has the power to actually influence events. If you have to plot on a graph the moments at which the currency falls through the floor, the finger of blame will point to one person. Who is still in charge.
It is common for government and the ANC to refer to all sorts of plans – words on paper – that will literally change our economic world. Chief among these, of course, is the National Development Plan. A document agreed to by everyone in society except for Numsa and the Economic Freedom Fighters.
Instead it seems mired in the political muck, unable to see the light of day. What is important about this is that the NDP was agreed to at an ANC conference. It was adopted virtually by acclamation at the party’s Mangaung Conference in 2012 (along with a raft of resolutions promising to fight corruption). This means that there can be no political argument against it. And yet it still has not been implemented.
And time and time and time again, the ANC will discuss the economy at conferences, policy conferences and national general councils, and the same thing happens. The Commission on Economic Transformation will meet for the longest period, and then give the shortest press conference of the lot. In a way, it can’t be helped that some of us will wonder if this is deliberate, to ensure that there is no focus on the economy. And that if this is the case, is it to mask the fact the ANC can’t really agree on anything related to economic policy?
Many in the ANC like to blame the private sector. It is “white apartheid monopoly capital” that is responsible for not creating jobs, for going on an “investment strike”, for not trying to grow the economy.
But it is the ANC’s job, in government, to create an enabling environment. If you do this, business prospers, and everyone prospers. That’s not to deny some of the feelings of many around redistribution (although it seems impossible to imagine that a wealth tax could ever work in practice).
Another real problem is a near-complete lack of trust. It is often forgotten that the people making investment decisions are not playing with their money. They are playing with someone else’s money. The fund manager Futuregrowth Asset Managers wasn’t telling Eskom and the other state-owned entities last week that it will no longer lend it its money. It was saying that it will not lend them other people’s money. People who rely on that money. People who need that money to live on.
And look at how that money is treated. Just last month a German-owned company building solar panel equipment in Cape Town had to close its doors, losing a huge amount of money in the process. Why? Because Eskom decided, unilaterally and in defiance of the Energy Ministry, to stop engaging in more contracts with Independent Power Producers.
Have you seen Brian Molefe lose his job over this?
This is just one example. And it is an example of bad policy. Bad policy can sometimes be understood, almost condoned, if it appears that that policy will change, and the people making governance decisions have realised it was bad policy.
The lack of trust is more important, and cannot be fixed so easily. The situation where business, people managing money simply don’t trust the ANC, is the result of the actions of no one other than the ANC and Zuma himself.
You yourself would not be happy if someone invested your money with a person who lied and suffered no consequence for that lie. Would you lend money, your life savings, the money set aside for your children and your retirement, to Mosebenzi Zwane?
But Zwane, unfortunately, is a sideshow. The main event is Zuma himself. He took the decision to fire Nhlanhla Nene. He and he alone. His explanation for that decision, that Nene was going to the Brics Bank, was a lie. The ANC has seen it fit, as a result of its own political problems, not to let him suffer any consequence for that lie.
Would you lend your money to the ANC? Knowing that he is in charge of the party? Knowing that you will need it, that your children will need it in the future? And if you wouldn’t, can you really blame any private company for not investing in this country? DM
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