In trying to understand South Africa’s turbulence, yesterday I sought guidance from RW Johnson’s masterpiece. Because the predictions he made in How Long Will SA Survive have been incredibly accurate. For instance, in May 2015 Johnson suggested it would take two years for SA’s debt rating to drop to junk status. It has taken 23 months.
The next big fork in the road is when SA’s fiscal cliff is breached and the IMF becomes the lender of last resort – a point where commercial borrowers are no longer prepared to loan the money except at an unaffordable price. This reality started coming home on Tuesday when SA Revenue confirmed 2017 tax year collections down R30bn on what had been budgeted for in the national accounts, a massive hole for an economy of SA’s size.
Johnson predicted this slide. In the final chapter of his must-read book he writes: “The country is set up for a huge and obvious failure. This, sadly, has got to take place. Ever since 1994, SA has lived in a sort of dream world in which it was possible to believe six impossible things before breakfast. Everywhere there was a huge amount of pretending.”
___STEADY_PAYWALL___
Leading the self-delusion was a transformation-above-all-else agenda whose Koolaid is still being consumed in vast quantities. As Johnson puts it “One had to pretend that people who were hopeless at their jobs were good at them…that BEE was not just crony capitalism….that SA’s steady decline on every sort of index was due to the apartheid inheritance..” The list goes on and on.
So, after the trauma of the past week, is the country finally ready to sober up?
Back in 2015, Johnson drew hope from a belief that SA’s destructive “liberation era” was almost over. But he also warned that reaching rock bottom would be turbulent: “The ANC has become more chiefly, more tribal, a giant federation of political bosses held together by patronage, clientelism and concomitant looting and corruption…….exhibiting all the signs of rural backwardness. It may take great convulsions to change that as the groups in power will not easily let go of it.”
Johnson talked two years ago of “an imminent crisis on many fronts.” The sinister reasons behind Gordhan’s firing provided the spark that anti-Zuma forces needed to kickstart rolling mass action. Unless citizens stay away, Friday’s march to the Union Buildings is sure to be only the start. But even in a best-case scenario, SA is headed for the point where it needs a bailout from the International Monetary Fund. IMF loans come with strict conditions, most of which fly against the left-wing economics of those who dominate SA politics.
It is at this point that the die will be cast. In 1999, Robert Mugabe told the IMF to “shut its mouth” putting Zimbabwe onto a destructive cycle of economic interventions by the ignorant, including land grabs and “indigenisation” of companies. The consequence has been hyper-inflation and an explosion of poverty with GDP per capita far below where it was in 1965. SA’s leaders, one hopes, will be more sensible. But the risks of repeating the Zim disaster are growing.
