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Sudden death: A South African fiscal heart attack will end the game


Mfuneko Toyana is an associate editor at Business Maverick.

'Financial crises are like a heart attack,' says economics historian Adam Tooze. 'It is not the most profound sort of problem an economy can suffer, but it can cause sudden death. No amount of exercise, superfood, or mental training will help if your heart stops.'

First published in the Daily Maverick 168 weekly newspaper.

Before the Covid-19 pandemic struck, an epidemiological crisis with dire social consequences, SA was already in a financial crisis. The country was clutching at its shirt pockets, snatching at the chest pains, growing clammy and light-headed, the feeling of doom rising fast as blood flowing to the heart trickled.    

For close to a decade the economy had failed to grow and the government debt built up not only to plug the widening budget deficit but also to fund a political vision of industrialism and infrastructure build at any cost, a philosophy increasingly out of sync with a changing financial world order where soft skills and the services sector were the cardinal points of economic health.

That fiscal crisis itself had grown out of a succession of global financial tsunamis – the subprime crisis, before it the dotcom bubble, and before that the emerging markets crisis rooted in Asia. Locally: Polokwane, Marikana, and then Fees Must Fall rolled into a terrifying triptych of crises, of accumulation and credit, even if on the surface they looked like sociopolitical eruptions only tangentially linked to the changing financial weather.

But as South Africa’s financial heart conditions have worsened, there has been temptation to attend to the country’s other ailments, with increasing political capital and airtime spent diagnosing these and coming up with treatment plans and homeopathic remedies, the implicit hope being that they put off the coronary event or perhaps steel the patient enough to survive it. That seems to be the logic behind recent developments.   

That said, the reality behind the rhetoric of President Cyril Ramaphosa’s televised speech on 6 September summarising the deliberations of the ANC’s legothla over the weekend is difficult, if not impossible to decipher, sandwiched as it was in a soup-thick news cycle that included former president Jacob Zuma’s early release from prison on medical parole, and the Electoral Commission’s decision to reopen candidate registration for the on-again, off-again local government elections.

Ramaphosa spoke both bluntly and blithely about the drastic but not so drastic policy measures needed to defibrillate the economy, deploying the kind of double speak he has perfected three and a half years into a tenure underwritten by the Nasrec stalemate that has morphed into a five-way Mexican standoff between the factions in the ruling party, the electorate exhausted with decade-long economic spiral, and business and investors nervy about a swing to get-out-of-jail-free expansionary spending, that would likely smash the tenuous moral hazard that keeps the country tethered to the global financial structure.

Ramaphosa kicked off with the sure-fire crowd-pleaser, denouncing the neoliberal policy agenda – that’s the rhetoric part – and promising a complete rethink of our economic policy settings.

The reality is hinted at by the generous sprinkling of conjunctions and auxiliary verbs – “will”, “is going to” – vanquishing the present and instead throwing forward to a rose-lit, now-now future; the kind of temporal distortion feigning parity, prosperity and predictable policy that South Africans are used to but would rather do without.

There were no timelines attached to the prescriptions about a feasible fiscal structure needed to pursue a permanent expansion to the necessary and urgent cash support to the millions in the country without work. That matter was still to be studied, we were told, even though there are studies dating back to the early 2000s and the Taylor Commission, which laid out in detail what options were open to South Africa regarding a universal welfare system.

The decision that was deferred then and remains now is what trade-offs the government is willing to swallow. A heart attack now in an otherwise healthy body.

A permanent unemployment grant may lead to a market and investor backlash resulting in high bond yields and downgrades to the credit rating that will worsen the financial crisis.

It is the kind of fiscal knife-edge that requires certainty of executive tenure that is just out of Ramaphosa’s grasp. Had the speech been followed by a detail-heavy briefings by the finance, labour, social affairs and economic development ministers, it might have been believable. Perhaps that is too much to expect considering Ramaphosa was speaking as head of the ANC and not as president of the country, two supposedly unrelated positions operating in parallel timezones.

Remarkably, the president made similar, hedged noises about being open to considering an unemployment grant, yet almost no progress, none that has been shared with the public, has been made towards making that a reality. Instead, the green paper on social security got a quick bullet to the back of the head and the soon-to-be corpse thrown out with the bathwater.     

In the absence of details and hard-to-pierce prose about the remedy to South Africa’s many economic ailments, the issue of the fiscal heart attack feels like a point among many on a long to-do list.

All the problems are of course important, and there are risks that will have to be taken and tough trade-offs made if we truly want to transform our society, but social change is nearly impossible if the imminence of financial collapse occupies all the political space.

“The thing with a heart attack is that it is a deal breaker. It finishes the game if not immediately addressed,” says Tooze. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.


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  • Philip Mirkin says:

    Mfuneko, you are DMs new Richard Poplack. Cutting, insightful and bright in every way. It makes for a great challenge to get all your levels of meaning, that thrills when I see it. I love reading your work and this article clearly shows how deeply you have penetrated the issue.
    I think the imminent heart attack is due to no new flow of nutrients to the system. The legitimate economy withdrew some time back and the stakes are getting too high for the criminals… Cyril is stuck in the middle and seems to be increasingly isolated. I hope he can cleanse the system of toxins and disease soon. Otherwise he won’t be able to convince those with legitimate new nutrients that their help will not just continue to feed the rot.

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