Nothing makes you feel more miserable than feeling much poorer than you did a week ago. For South Africans, that feeling is growing intense. It is the hourly beating you get whenever you hear a radio news bulletin, and see how the rand has slipped some more. And while you may think it doesn’t really matter, so long as we have food and beer, actually, it does. The price of everything is going to go up. Inflation, for so long kept in check by the Reserve Bank’s policy of inflation targeting is going to go sharply up. So is the price of petrol, at some point. And there is nothing on the horizon that makes it look as if there are any signs of improvement.
It is amazing how much President Jacob Zuma’s sacking of Nhlanhla Nene has affected us all. It was a crossing of a Rubicon that simply cannot be un-crossed. And yet, he still just doesn’t seem to get it. Zuma has now told at least two broadcasters that the reaction to his decision to fire Nene, the rapid fall in the rand, the loss of R170bn in the two days after the announcement, the 19% decline in the JSE’s banking index, the loss of oxygen suffered by many middle-class South Africans, was all an “over-reaction”, an “exaggeration”. He goes on, suggesting that people just “didn’t understand” the decision, and that it was important for Nene to go to the BRICS Bank (incidentally, there has been no formal announcement yet of Nene’s appointment to that institution).
There is a logical problem that Zuma simply cannot get around here. When you reverse a decision you are in a trap. It cannot be that both your actions were correct. If your first action was right, then your decision to reverse it was wrong. If your decision to reverse it was correct, well, then your first decision was wrong. Zuma does not appear to appreciate this nuance. And he seems to be suggesting that his first decision, to fire Nene, was the correct one. (I gasped for air when I heard that, too.)
As for his complaint that people didn’t understand what he was doing, communication goes both ways, Mr President. It is about understanding what is happening, but it is also about communicating what is happening, so it can be understood. And at the risk of repeating myself, there is a way of communicating decisions about the Finance cluster which reduces the risk of misunderstandings. You leak suggestions about to key people, then you have a formal announcement, with both the appointee leaving and the new person in the room, and let them both speak. It wasn’t just the appointment itself that led to the huge market reaction, it was also the way the appointment was announced. Communication matters. In politics, and in financial markets. Like it or not, it’s just the way it is.
It is interesting that Zuma did not have a better answer prepared for this question. It was obviously going to be asked, the Nene story is one of the biggest political surprises, and debacles, to have hit for some time, and he was the single person who made the decision. Perhaps it shows the problem that he was in, that he had been reversed. In other words, there really was nothing else for him to say.
Which points to another interesting issue. There does not seem to be any mention of the ANC in his justification. He uses the word “we” when it comes to the decision to fire Nene, but it is unclear whether he means people in government, the party, or if it is just the royal “we”, so beloved of one of his predecessors.
Zuma’s comments were made just hours before that predecessor, one T Mbeki, posted on Facebook, that he was beginning a series of articles that would prove he was not paranoid while he was in office. There is, of course, a problem, when you start by saying you will prove that you were not paranoid. There is a sort of eerie resonance with Zuma’s behaviour now, and some of what Mbeki used to say, towards the end of his presidency. Comments to the effect that “you don’t understand” or “I’m so misunderstood”, or “I’ll be shown to be right in the end” could come from either of them.
And it’s interesting that Zuma is beginning to display some of this now, early in his second term. It could well be evidence that he is in fact beginning to lose touch with some people in his own party. Certainly, it seems that he has lost touch with the middle classes, the people who he claims didn’t understand his decision about Nene. And while there are many ways to win the votes of the middle-classes in politics, telling them they’re stupid isn’t usually recommended.
That doesn’t mean that people are going to move against him; no one seems to have an interest in upsetting the apple-cart just yet. But it could mean that he feels he is capable, and qualified, to make more big, risky decisions in the future, without consulting the rest of the ANC leadership, or his government. (Unless, of course, he has actually learnt a lesson from the Nene reaction, and which he is yet to verbalise.)
All the indications are that this feeling of being poorer than we were even recently is something we will probably have to get used to. While events in places like China and the US may change tack, and the commodity markets may improve, in the end the fact is our currency is low because people also don’t value us as a nation. Investors don’t appreciate the totality of South Africa and, of course, they use the tools they have at their disposal: money valuations.
One doesn’t need to be a prophet to predict that more strange events will happen. SAA may soon end up stranding a plane somewhere after finding that the world’s banks decided to cut the airline’s overdraft facilities. Food is going to cost more because of the drought and energy price jump. Imported goods will skyrocket because the rand has sunk so deeply. And someone may decide it would be a good time to hit the State Security Agency again. As a friend of mine has suggested, “We have now begun our descent”. DM