Opinionista Marius Oosthuizen 14 August 2020

What I wish SA’s middle class was talking about

The ANC’s approach to the economy was to try to transform the golden goose through BEE, while plucking it naked to feather their own nests. Some in business pretentiously went along with it, while knowing better.

When business media writes, “South Africa is in an economic crisis”, the people say, “we know”. When civil society cries, “South Africa is in a socio-economic crisis”, the people say, “we know”. When the government reports (in the NDP 20-year review), “South Africa is in a health, education and unemployment crisis”, the people say, “we know”.

We know, because we have been watching the crisis unfold in slow motion for a decade.

The problem is, making the diagnosis is easier than writing the prescription. More importantly, saying what must be done is easier than actually taking the medicine. Instead of responding to our crisis, our leaders are dithering, staring at their toes as they debate useless cigarette bans. They are in crisis mode without the capacity for crisis management. 

What we need now

What we need now is a clear plan, directive leadership and economic pragmatism by the bucket load, and we need to be very honest with ourselves about what has gone wrong.

Let me put it as plainly as I can:

Millions of South Africans pinned their hopes on the political promise of the African National Congress (ANC), and for a while, South Africa worked. Under president Thabo Mbeki the economy at one point grew at above 5%. Tragically, this period saw jobless growth. Why? Because an economy that is shifting away from labour-absorptive primary and secondary industries, over to the tertiary services economy, which is increasingly digital, does not create jobs for poorly skilled masses.

When it became clear that the ANC’s Mbeki-era growth was jobless, organised labour and the ANC youth league decapitated the movement and installed Jacob Zuma – the pretender president who turned out to be a plundering kraal-builder and not much more. The state-owned enterprises became a feeding trough and the rest is history.

But there was a deeper problem: The economic shift described above was a symptom, not the cause.

When you over-regulate the economy, and reracialise the policy environment and use these policies as a front for crony-capitalism and as party-sponsored window-dressing of the business sector, you kill the golden goose. All the Mandela-era goodwill for SA inside and from outside the country was flushed down the pit toilet that is the ANC’s governance record.

The ANC’s approach to the economy was to try to transform the golden goose through BEE, while plucking it naked to feather their own nests. Some in business pretentiously went along with it, while knowing better.

In addition, if you raise the costs of labour and of electricity and you mismanage water supply, and then corrupt the procurement processes of the state, you kill the incentives for honest businesspeople to commit their savings/investment to your country. This is true, even if it is their own country that they abandon. Business did not go on an investment strike, as the ANC would want us to believe, but tried to invest elsewhere and with mixed results.

So here we are today, in recession, with rising sovereign debt, falling ratings across the board, rising unemployment and frustration building beneath the surface. The public trust has been decimated and a tax strike will come next.

The ANC’s management of South Africa has been a disastrous spectacle of catastrophic proportions. Like a power-drunk bus driver on Van Reenen’s Pass, the ANC has made South Africa veer from one self-imposed cliff-hanger to another. Then came Covid-19.

What must we do?

South Africa’s challenges can be framed in many ways: as “legacies of apartheid”, “the precipitation of years of poor governance and a weak state”, or a “victim to an elitist economy that is extractive at its core”. Whatever the character of the problem, would we take the medicine if we knew what it was?

The middle class is my only hope for South Africa. Why? Because it is the only group with both the long-term interests and the means to effect change where it is needed. If you are reading this, you are a member of this class. You probably employ and work with middle-class South Africans shoulder to shoulder, who duly pay their taxes, pay off their debts and shoulder the growing burden of dependency of those who look to the state for grants. These South Africans are getting sick and tired of being taken advantage of and are beginning to murmur.

We will know when this class has woken up from its ANC induced sleep when the following happens:

When someone goes to prison for looting the coffers at Eskom – the people’s power utility – or for stealing the silver in the coffers at Prasa and Transnet – the people’s transport logistics companies – or for bankrupting most of our municipalities – the people’s first point of contact for public services.

I could go on.

We will know the middle class is awake to the problem, when we have CEOs of companies, with the backing of their employees, throw down the gauntlet to the politicians and say, “You will govern us no longer if you can’t even govern yourself.”

Imagine what would happen if the business leaders of every small and medium business and every large corporate sat down in a town hall with their employees and explained:

When electricity prices rise, while we are being “load shedded”, we are forced to retrench some of you to cut costs. When businesses, complicit with corrupt politicians, raise the cost of construction or services provided to the state in order to pay the middle-men and middle-woman who benefit but do nothing of value except to manipulate the procurement process, it raises your tax rates and reduces public goods. When we make investment decisions and calculate the risk of the political and policy uncertainty created by politicians who are caught up in infighting and in Mafia-networks of extraction, we opt for other markets at the expense of your future.

All of these have already happened, but business and the middle-class sits mostly silent. 

There is a tipping point or turning point ahead

There is a moment approaching when South Africa diverges either towards the high road or the low road scenario.

The low road is clear:

It begins with an IMF or Chinese funded structural adjustment programme in 2021/2022, on which we renege on our commitments for reform due to domestic political squabbles, leading to a bleak but honest picture of exactly how weak we have become in economic and democratic terms. This would be a national tragedy and would mean that poverty returns even as unemployment expands.

The high road will be treacherous and hard fought:

In this scenario, the middle class forces the hand of the president of the country and of the ANC in 2021 to find his voice and oust the criminals in his Cabinet, in the ANC NEC and in government. Remembering that these people are innocent until proven guilty but enjoying the gravy train with impunity in the meantime. When this fails, the middle class takes Gauteng (the unpolished jewel of the economic crown) away from the ANC in the elections and gives it to a dysfunctional adolescent opposition coalition.

This motley crowd of opposition leaders finds an inspirational narrative which draws a new coterie of elites into active politics and government. These new entrants to public life produce nodes of better governance, more efficient delivery and win back the confidence of their counterparts in business. Labour, wounded by their betrayal by the ANC, sides with business and the middle class in a new social compact for a social democratic growth path and discipline the populists in their own ranks. 

The ANC regroups around 2030 and this takes South Africa into an era of more mature multi-party democracy.

Is business up for this fight? That remains to be seen. Can we look past the Covid moment and take the tough decisions that the national situation requires? By all accounts, if the middle class fails to find its voice, we may find that the ANC presides not only over its own undoing, but that of South Africa as we know it. We cannot allow that to happen. DM

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