President Jacob Zuma’s pledge of $2-billion to the International Monetary Fund at the G20 summit in Los Cabos, Mexico, is a worrying move. It is indicative of a country swept by the powerful currents of the “sins of incumbency”, with no strategy for salvation. It is nothing more than a very expensive photo opportunity.
Having escaped the insults of the Youth League at the various youth day celebrations of the ANC in his own country, President Jacob Zuma needed to redeem what little dignity he had left when arriving at the G20 Summit in Los Cabos, Mexico. He had to do something dramatic to justify his presence at such an auspicious occasion, to both his G20 counterparts and to the noose around his neck, the BRICS gang. So he decided to pledge $2-billion (R16,5 billion) of our money – I know, as an interest-bearing loan – to an organisation with whom South Africa and indeed the rest of Africa, has, at best, a tenuous relationship.
There is no shortage of accounts of the IMF’s continuation of colonial style fiscal policies specifically against African states, policies which have perpetuated the continued poverty and looting of African resources, unreasonable loan structures and impossible repayment schemes.
Let us be fair, the reason South Africa is a member of BRICS, an amalgamation of emerging markets from some of the major continents of the globe – Brazil (for the Americas), Russia (Eastern Europe), India (the Middle East and the Subcontinent), China (The Far East) and South Africa (Africa) – is to be part of a strategic alliance of countries and markets with a powerful enough voice to influence global economic policies for those countries and regions represented in BRICS. These are countries that have, historically, been at the fringes of world power and influence.
Secondly, South Africa’s participation at the G20 summits is related. It is there to positively influence by its presence, albeit not as a permanent member, decisions by the most industrialised nations of the world often at the expense of developing countries, many of whom are in Africa, and to advance the African Agenda at these important gatherings.
In this regard South Africa certainly occupies an important and enviable position in global geo-politics. One could argue that the European debt crisis, faced particularly by Greece and soon Spain, Portugal and Italy, indeed presents an opportunity for South Africa to consolidate its position in these structures by playing a meaningful and powerfully symbolic financial role. Hence the pledge.
Indeed, strategically South Africa’s position promises a potentially beneficial outcome for both South Africa and Africa – theoretically speaking. Furthermore, we are told that this is a loan and not a gift and will continue to be part of South Africa’s foreign reserves and earn interest. This mitigates any risk, real or imagined, and we should therefore not be alarmed because this is a manifestation of South Africa’s visionary foreign policy. So why are South Africans unconvinced by these seemingly water-tight arguments? Why the scepticism?
Well, besides the fact that the arguments advanced for South Africa’s participation in formations such as the G20 and BRICS are all largely theoretical and have borne no practically perceivable benefits for South Africans on the material ground, given the pressing and painfully overdue delivery of basic services, education and employment. The ineptitude, graft and political factionalism cost the taxpayer more than R25-billion in the 2010/2011 financial year, according to the Special Investigation Unit and auditor-general Terence Nombembe.
It has been recently reported that the president and his deputy alone have spent more than R200-million in travelling costs in the last 12 months, attending all sorts of “important” meetings. Let us not forget the e-tolling debacle, which saw the improvement of the busiest and economically the most important highway in the country responsible for generating a significant portion of our GDP, cost R20-billion rand, just a few billion more than this loan pledge.
We are told today and every day of the huge debt we now have to service for this highway improvement. Why did we not pledge that money for this bird in hand than pledge it on a bird flying in the sky? These are just some of the peripheral reasons motivating a general scepticism about this decision
Oh yes, this is a loan, not a gift we’re told, but we are conveniently kept in the dark about the interest we are now liable for in rand terms for raising this R16.5-billion from the treasury, at South African interest rates, which are considerably higher than those we will earn from the IMF. In other words, it costs us more to lend the IMF this $2-billion than South Africa will derive from the IMF’s interest rate.
The business case for this decision is weak. Government’s consultation process for such a strategically important and relatively costly exercise – even with the ANC and its alliance partners – is suspect. There is no expressed plan of action detailing the operationalisation of the strategic allocation of these funds. It is purely at the discretion of the IMF for an indefinite period. There is no clearly defined return on investment. Rest assured, if the IMF were to be lending us that money, all of these conditions would have been unequivocally expressed, up front.
Why would Cosatu and the ANC Youth League be crying foul if this was a collective decision? After all, we are constantly told that the ANC, especially under Zuma, is a paragon of consultative decision-making and consensus. All of this raises the question: What is the real reason for this seemingly sudden, irregular and unaffordable decision?
In a brilliantly written article entitled “Why good people go bad” for a popular Sunday publication, Joel Netshitenzhe, member of the national executive committee of the ANC, postulates: “Of profound relevance to the ‘sins of incumbency’ is how the ANC transited into government. In the NEC Political Report to the 1994 conference, the president, Nelson Mandela made a pointed observation: ‘Ours was not a planned entry into government. Except for the highest echelons; we did not have a plan for the deployment of cadres. We were disorganised, and behaved in a manner that could have endangered the revolution.’ This concern was expressed by then deputy president Walter Sisulu, and he insisted that it should be included in the speech. Is history bearing him out?”
I suggest that history is bearing out these founding fathers of our democracy. They prophetically and intuitively sensed the danger of the seeds of ill-preparedness and elitist decision making at the infantile stages of the democratic order. They understood that theoretically sound ideas must be born on the sturdy shoulders of practicability. This is a lesson our current leadership seems not to have learned, particularly with this IMF pledge and many other decisions made in haste and the intoxicating lust for emulating more sophisticated countries. These are the sins of incumbency. I fear we will pay dearly for this type of pubescent impressionability. DM
Aubrey Masango was born in Mamelodi, east of Pretoria. Educated at St Johns College in Johannesburg and later went to the University of Pretoria to study to be a teacher. He was bored. He decided to get out of the corporate rat-race in 2009 because he did not like the person he was becoming in the BEE scene, seeing it as pretentious and unsustainable. These days, Aubrey is a talk show host on Talk Radio 702 and 567 Cape talk. His regular show “Talk with Aubrey” is on a Sunday evening at 23h00 to Monday morning at 01h00.
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