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Open SA’s economy to all or kiss our democracy goodbye

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Colin Coleman is co-chair of the Youth Employment Service, member of boards, a former partner at Goldman Sachs and former senior fellow at Yale University’s Jackson Institute.

Powerful forces of extraction are threatening to completely overwhelm our society. This is not the domain of corrupt politicians alone, but bad actors outside government using any interface with economic resources to leverage personal benefit by means fair and foul. Their actions compound our descent into a lawless, corrupt society.

For those unable to compete in a modern economy, or structurally locked out by joblessness, gangsterism is now the primary transmission belt to access resources and extract income by quasi-legal, plainly illegal, or violent means. 

Think of the taxi wars, the construction mafia, corrupt Covid tenders, criminal politicians, the gold, coal and diesel syndicates, trucker wars, the copper mafia, cable theft, illegal mining, looting of SOEs, corrupt purchasing of unsuitable equipment, crooked cops, stripping of rail infrastructure, inflated government tenders, kickbacks, buying of votes in party contests, political killings, “empowerment” gorging, degrading infrastructure, rotting hospitals and failing municipalities. 

This gangsterism is the fundamental reckoning for — and central, very real, present threat to — our democracy. Our very own Arab Spring moment in slow motion. 

It has infused itself in our politics. Control of the political and state machinery is now a direct transmission belt to economic advantage. Last year’s July “insurrection” was also a powerful demonstration of this. 

Some ministers, instructed by the president to bring looting under control by mobilising an effective security operation, either looked the other way or arguably committed treason by delaying an effective response and so facilitated the ongoing gorging.

At the heart of the problem is a complete breakdown in the economy in terms of providing a reasonable share of income and opportunity across our population. 

Past the tipping point

With only 14.5 million South Africans employed — 11.7 million are unemployed or discouraged jobseekers, and another 13.6 million not economically active — we are arguably past the tipping point where the economy serves its people. 

This leaves more than half of the population living in poverty and hunger, shut out from economic opportunity. The education system fails to train people for work, and when it does, large numbers still cannot find work. 

Added to this disturbing reality is that not only are half our citizens living with poverty and hunger, but they must watch those with jobs and assets live large, in a parallel universe of comparative riches and opportunities. To those on the street, the racial profile of the impoverished is black, even if those with assets and income are both black and white.

The rise of opulence and a culture of aggressive materialistic displays are in sickening contrast to the poverty and struggles they fight daily. Those on the street want to know how they will put food in their stomachs and clothes on their backs. 

They want hope and solutions. Among the employed, inequities are stark too. Look no further than striking workers at Sibanye demanding to close the remaining R250 a month gap in wages — while their boss is given a R300-million pay package. 

No wonder South Africa is called the most unequal society on earth. 

Providing practical economic alternatives to those who otherwise resort to increasingly aggressive extractive methods to survive, while prosecuting and punishing those who do, is at the heart of our battle to save South Africa’s heroic and historic democratic project. 

In short, defeating extraction as the central organising model of current economic behaviour is central to our political and economic future, and our choices.

A rupture in our political and economic life has been under way since Polokwane, and many predict it will now likely only gain momentum. It will take different forms as our social and economic crisis deepens. 

Yes, this is partly about what happens in our governing party, the African National Congress, and the choices it makes, including at its elective conference this December. But it is also about what happens outside the ANC, once — but no longer for many — the leader of society, and what new political responses emerge.

Economic elites and power brokers

It is equally about what the economic elites and power brokers, black and white, do. Economic and political elites have over the past three decades by and large focused on their immediate vested interests and mostly ignored the growing threat posed by rising economic exclusion, joblessness, lawlessness and corruption. 

When business and union leaders have come out of their corners to raise their hands, the government has mostly ignored them or slapped them down. Now everyone is paying for it as the forces of extraction threaten to overwhelm the government, the ANC itself, the economy, business and society at large. 

So we must ask, what can democrats, business people, unionists, citizens who believe in the rule of law — who want a constitutional democracy and modern, inclusive economy — do to save our country, provide hope to citizens shut out of the economy and reverse our descent?

At the simplest level, millions of citizens are helping in their communities with humanitarian efforts such as feeding schemes. The Solidarity Fund is assisting with disaster relief and Covid response measures. The Youth Employment Service programme has mobilised 75,000 paid internships for youth with businesses. The SME Fund has mobilised billions from corporates to fund SMEs. The Presidency Employment Stimulus is on track to reach one million beneficiaries. 

But we must admit that fundamentally, as a society, we are failing to stem the tide. We must accelerate efforts to create real and credible pathways into the economy for half of society that is currently shut out. 

We all agree that, most importantly, we need to grow the economy. 

We need to create millions of work opportunities. That is a common departure point. But not enough is being done to achieve it. A consensus on a broad programme of economic reforms has largely been agreed. But, at each step, implementation is frustrated. 

Some think a political rupture to disrupt the vested political interests frustrating economic reform is needed, as a precondition for that reform. Why are we failing to get energy reform? Why are we failing to provide security to stop the stripping of our infrastructure before our very eyes? Because of intertwined economic and political interests in the corridors of power, some suggest. 

As an executive at Goldman Sachs for 20 years, on my travels to Nigeria it became clear to me that powerful interests there had no interest in disrupting diesel supply as the main energy source, and so expensive, polluting diesel generators today remain the reality for Nigeria. 

Economic plan

Sound familiar? In July 2020, at my UCT lecture, “From a two-speed society to one that works for all”, I proposed a 10-point plan to grow an inclusive economy that included a fiscally neutral unemployment grant, measures to clamp down on the illegal economy, assisting SMEs and micro businesses, unlocking infrastructure investment, modernising the public service via an e-government platform, fixing Eskom operations and balance sheet, redesigning the industrialisation architecture and supporting manufacturing and mining, and ending spatial apartheid planning.

The plan targeted the creation of five million jobs in a decade and growth of 5% per annum. One can add to this mix other measures like zero-based budgeting to redirect expenditure and tax reforms to pay for it, employee benefit plans and worker representation on corporate boards to reset the contract between employees and employers, labour and other reforms to stimulate jobs, and public-private partnership concessions to build, maintain and operate infrastructure. 

You may or may not agree with this mix of measures, but if you don’t, we had better all come up with practical ones in which you do believe, work. What we can’t do is purely pay down debt, smooth the fiscal numbers and not stimulate economic growth. We cannot ignore the poor on the one hand and rising erosive forces of extraction on the other. 

That is a losing strategy — watching while the house burns down. 

We need to ask, what smart choices can we make to reshape the contract between those inside and outside our economy, by providing new economic pathways? And what sacrifices are we willing to make to save South Africa?

Commodity windfall

Since my UCT speech in 2020, our domestic backdrop has only worsened as the forces of extraction have risen in the dangerous vacuum created by a weak state. Actually, this domestic downward spiral is against the global backdrop of one of the biggest tailwinds South Africa has enjoyed, due to fiscal windfalls from elevated commodity export earnings.

This windfall is likely to continue as the world’s largest economies are refitted with commodity-rich infrastructure to meet climate change commitments. The good news is that this will provide us with fiscal space to make some hard choices for inclusive growth and stability. 

But let us be clear. A reckoning is under way in South Africa and evidence of its corrosive effects is mounting. 

We must act now to reverse the decline. We must provide practical avenues for economic participation to those on the streets, or not only will our infrastructure be stripped before our eyes, so will our democracy — extracted along with everything else, leaving an empty shell, an edifice with nothing supporting it. 

Gangsters dressed in Gucci will hold up our flag under the facade, pretending to be democrats while they eat our proud nation’s lunch and flesh. 

Instead, by providing practical economic pathways and closing off avenues for extraction, we must all fight for the prize of reclaiming and living Mandela’s dream of a non-racial, constitutional, democratic state with an inclusive, modern economy. BM/DM

 

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  • We have watched a country hell-bent on self destruction for 20 years. Warped ideology, active inertia, doomed political promises and sticking plaster to stem a growing flood of weak economic policies, desecration of infrastructure and boiling anger. This government has no plan, possibly intention, to fix the broken cycle of decline into mass unemployment and total social inequality. It will leave the inevitable result in the hands of others so that it can absolve the stain of failure.

    • South Africa is being destroyed to please the investors who root billions though tax evasion and frauds such as Medupi The same investors have manipulated the population and media to blame everyone except them from the EFF (The white man) ANC (Apartheid) DA (lazy workers and communism) Same in every other country !!

      An Economic Hit Man Confesses and Calls to Action

      John Perkins describes the methods he used to bribe and threaten the heads of state of countries on four continents in order to create a global empire and he reveals how the leaders who did not “play the game” were assassinated or overthrown. He brings us up to date about the way the economic hit man system has spread from developing countries to the US, Europe, and the rest of the world and offers a strategy for turning this around. “Each of us,” he says, “can participate in this exciting revolution. We can transform a system that is consuming itself into extinction into one that is sustainable and regenerative.”
      youtube.com/watch?v=btF6nKHo2i0

  • The question that Mr Coleman glosses over is exactly how, why and when it came to be that the “window of opportunity” for successful activity came to be solely focussed through the narrow prism of control and ideology of the ANC.

    This is the crux of the matter, and this is what needs to change. We need less Government/ANC involvement and interference because this results in the twin evils of favour to the narrowly politically connected few and deep corruption which is its inevitable bedfellow.

    Governments role is to facilitate the general economic and social conditions that can best enable, support and nurture economic activity – and for this to occur Government should concentrate on human and infrastructural capital development. Which means quality, appropriate education and skills growth, together with physical infrastructure, roads, railways, airports, ports and harbours fit for purpose in the 21st century.

    Less political waffle and social engineering – rather back to the building block basics.

  • I agree wholeheartedly, but you’re preaching to the choir. Try to get the ANC to listen? Good luck.

    We need to hold on until 2024, and then pray we can cobble together a coalition that either breaks the ANC’s existing criminal networks and partners with the reformers, or excludes the ANC entirely.

  • The only winners have been South Africa’s business oligarch’s who rapidly accumulated wealth with the fall of apartheid from the 1990’s with the introduction of BEE. These guys also had political influence. And then switch from business oligarch to political oligarch. Google the Russian oligarchs and the parallels to South Africa are quite disturbing and underline the support for Russia in the Ukraine situation.

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