RW Johnson: Why ANC-SACP persists with disastrous economic policy; Joburg’s unfixable water crisis
RW Johnson, the most popular columnist on BizNews Premium, exhibits his trademark 'take-no-prisoners' approach in this powerful interview where he explains the ANC-SACP's seemingly illogical pursuit of long discredited economic policies. He says the ruling party's policy blueprint, the National Democratic Revolution, has even been disavowed by the Soviet Union bureaucrats who created the destructive template in the 1950s. Persistence with this failed plan speaks of a political leadership bereft of ideas and out of touch with the destruction their decisions have wrought. Such an approach is sure to deliver the sticky end that always follows extended periods of low economic growth with continued accumulation of national debt. – Alec Hogg
Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.
Watch here
Relevant timestamps from the interview
- 00:00 – Introductions
- 01:21 – RW Johnson on the decline of Johannesburg
- 03:06 – Johnson on his conversation with a former student
- 06:02 – On whether a non-ANC govt. in Gauteng could turn around its decline
- 10:10 – On socialism in South Africa & the National Democratic Revolution
- 14:13 – On South Africa's economic struggles
- 15:36 – On the ANC and SACP's obsession with outdated policies
- 18:16 – On the future of South Africa
- 20:12 – Concludes
Listen here
Edited transcript of the interview
Alec Hogg: Morning, Mr. Johnson, let's pick up with your first column of the past week, which was to remind us that Johannesburg is one of the few major global cities not built near a source of plentiful fresh water. And now that the gold has gone it got me thinking maybe there are some parallels here. In the United States, in particular, there are many of ghost towns where there were gold rushes. Once the gold was mined out, the once thriving community dissipated. I guess, on a much broader scale, that might be something that could happen to Johannesburg.
RW Johnson: Well, it's an awesome thought because Johannesburg is South Africa's biggest city and it's not just what's inside Johannesburg, but all around it too. So that as a conurbation, it's very, very big and people are still going there in large numbers from outside SA's borders. If you look at the figures, it's actually been adding people in the recent period, even more than the Western Cape because of that historic migratory pattern, which is still there. There are still lots of people in Malawi, Zimbabwe and elsewhere whose idea is that you go to Joburg, you know? And so they're still piling in. But certainly there is a big migratory flow out now, and it's mainly semigrating to the Western Cape or emigrating away from SA.
Alec Hogg: On the story about not being on a plentiful source of water – are there other cities around the world that have managed to sustain themselves despite that problem?
RW Johnson: I don't know because I'm not well enough informed on that, I'm afraid. But I don't know of any. Every city that I know has got a large river running through it, whether it's the Thames or the Hudson – or you can go through even much smaller cities, they always have a river.
Alec Hogg: And you mentioned in this particular column, the conversation that you had with one of your former students who was working for the World Bank. It's worth elaborating on that.
RW Johnson: Well, he was a very bright man, and I was pleased to see him, but I was rather surprised that his take was that SA's cities are in the wrong place, and that really it ought to be more like Australia, where all the major towns are on the coast, and the interior is fairly empty because it's so dry and also too hot. And he said SA ought to be much more like that. And things that don't need to be in Joburg or Pretoria should relocate. And it just struck me that maybe some of that is now happening, you know, but for other reasons.
The truth is that when you get a large city, which has been there for quite a long time now, well over a century, that people feel very settled. They get to be very fond of their environment. And the idea of moving away is anathema to them in the first place. But nonetheless, it is happening now to a more pronounced degree. But, as I say, the reason they're moving is, well, I don't suppose it is water-related yet, although I think that could become a major source of migration because these water cutoffs are probably with us now for some time to come and are likely to be a recurring feature in Joburg, because the basic reasons for it are the power cuts and that's not going to stop. The Water Boards are not going to be better run than they were before. That's likely to be the case. But I do think that most of the migration now is a sort of getting away from the ANC and what that means in terms of municipal dislocation of all sorts, you know, all the things going wrong that we know about.
Alec Hogg: An interesting thought that when we have the 2024 election, there will be, by all accounts, a different governing party in Gauteng, which would presume that there might be more support for the Johannesburg Metro. Let's just say it was a non-ANC council – would it be possible for them to turn things around , given the ANC's poor record on maintenance, etc.?
RW Johnson: Well, we've had that experience, haven't we, with the DA mayor and council for a while. And the poor mayor, she said Johannesburg is in ruins. That was the phrase she used repeatedly. She said it's terribly sad to say so, but that is the situation. And I think that is the situation which would face a DA or whatever opposition coalition might emerge.
The problem is twofold. One is that this has been going on for the best part of 30 years, this neglect and mismanagement. That means there's a huge accumulated backlog of things in all areas. And secondly, it means that the administration, the actual people who work for you in the city hall will pretty well all be ANC deployed cadres.
And so you've got a real problem there because this is something which the DA faced when it took over in Cape Town and has faced in other places as well. Getting that sorted out takes time. So, it's a very large job if you're going to try to turn things around because you've got to.
What they did in Cape Town and I think elsewhere, was to say to the existing staff, look everybody, we're perfectly happy for you to do your jobs. We realise that you've been working for an ANC administration. This is going to be different, but we are very happy to work with you. But if people don't do their jobs, then we will have to change things. And of course, they did find then that there were some people who continued carrying out ANC policies, which they had now reversed. And they would call them in and the usual things with a letter of warning and so forth. And finally, they would get rid of them and they would gradually, if necessary, replace them. But they didn't have to do it on a very large scale because most people were happy enough in Cape Town to say, okay, fine, we'll just do our jobs. We want to keep our jobs. And so they kept most of those people.
So, and it's worked in Cape Town. But the city manager in Cape Town was just an ANC cadre who carried on and said, that's what I do. You can't change that sort of thing. They had to get rid of him. I don't know the situation in Joburg, but I assume it's the same.
Alec Hogg: So you'd have at the top the cadres who probably would be replaced, but for the majority of staff there's a big job that awaits them. On top of that, you've got the water issue down the line.
The other column you wrote recently is an interesting one because we've had quite a lot on BizNews this past week about socialism. The interview that I had with Anthea Jeffery about her new book, Countdown to Socialism, where she references the National Democratic Revolution as something devised in Moscow in the 1950s. She explains the fixation the ANC-SACP has with this and how it is affecting the economy. Now, when you wrote your bestseller "How long will South Africa survive" a few years ago, it followed a similar theme where the parlous financial situation of the country was just not being properly understood. You revisited that in this most recent column, again to remind us we aren't making too much progress on that front.
RW Johnson: In fact, we are now again pushing up against the limits of how much we can borrow. This 'Primary Budget Surplus' idea is always wheeled out, but it's not the reality. It excludes interest on the debt, which is now a very large item in the National Budget. When it comes to actual having to borrow, one of the reasons why is that you've got to pay that interest. And it's going to be going up because of rising interest rates too. So it'll become a larger and larger item.
The implication is that, look, we could get out of this two ways. One is by absolute austerity, where you cut a lot of the social spending of one sort or another and it would be politically very difficult to do.
But the other way, of course, the much nicer way would be to have real economic growth. If we were growing even at 2.5% or 3%, that would be something. All these years we've had, nought point something growth or none at all, and we're still at that sort of level. That means it's not keeping up with population growth so per capita income is steadily falling. It's been falling for over a decade. To be quite frank, irrespective of what political system you have in any country in the world where per capita income steadily falls you're going to have trouble politically because at a certain point there will be a revolt against this situation. That's just a fact.
The ANC has just carried on with its policies and not taken those signals at all, which are that any government in this country ought to be absolutely flat out to create growth. I was noticing that Keir Starmer has now said the number one objective of the (UK) Labour Party is more economic growth: 'We want to be the fastest-growing member of the G7.' That would take a lot because Britain is not growing very well at all at the moment. It's very slow.
So they'll have to make a major changes to live up to that. That ought to be the objective here in SA. And of course, that would then gradually make the interest payments and if at the same time you did everything you could to hold down further debt, then you would gradually get to a situation where you could start repaying some of this debt and where it would shrink as an item in your budget, which is what we want to happen.
But otherwise, we are on course ultimately for an IMF bailout. And that's the moment of truth ahead if the ANC-SACP carry on like this.
Alec Hogg: Picking up on the 'Primary Budget Surplus.' It's way a little bit like when Eskom talks about load shedding. Lovely words, but completely irrational because 18% of South Africa's Budget costs are interest repayments. So if you are saying, excluding that 18% we aren't spending more than the taxes that we're getting in, you're really fooling yourself. Plus when you look at what's happened over the past few years with the support of a commodities boom that seems now to have petered out, does that not exaggerate the problems that might be faced?
RW Johnson: Indeed and the slow growth and the problems of transport increase it. Mining companies are cutting back on production simply because they can't ship the ore or the finished metal away from where they are because SA's railways are not working. When they are cutting production for whatever reasons it means taxes paid are going to be much less. So that's now beginning to hit the national fiscals quite seriously.
Alec Hogg: What is this fixation by the ANC on taking blueprints from outside the country? Perhaps you could apply your mind to the two of them. The National Democratic Revolution, as Anthea Jeffery articulates very well in her book, was created in the 1950s in the Soviet Union (which itself imploded) nearly 75 years ago. And then the second thing is the Labour Policies in South Africa introduced from West Germany, which is hardly a good model for a developing country like this one. And yet it's almost like the ANC-SACP takes these policies and drives them no matter what the evidence is showing. Where does this come from?
RW Johnson: It comes from historic commitments which they made. Basically, the SACP was pushing the National Democratic Revolution and they got the ANC to accept it because they didn't have a plan otherwise. That was what they'd accepted for some time to come.
The oddity is, of course, that the authors who actually wrote the NDR plan in the Soviet Union to put it forward as a model have now themselves said it's a lot of nonsense and it didn't work and completely distance themselves from it because it was just a load of fantasy.
-RW Johnson
So SA is following not only an outdated model but one which its authors have long since abandoned. It's a very strange thing to do. I have to say that I haven't read Anthea Jeffery's book yet. I look forward to doing so. But I suppose my own emphasis is different because if you look at the realities, it's difficult to say that we are either a socialist state fully or that things are moving in that direction because they're not. Obviously, the ANC-SACP is trying to do that, but it's not working. The result is they're having to bring in private people in Transnet and there's been this proliferation of other energy sources because of the failures of Eskom. A great deal – very large numbers of people and companies have invested in solar and other means of powering themselves, and that's clearly going to continue. So that's already a sort of semi-privatisation effect going on. And I think that's just going to happen.
Alec Hogg: I asked her Anthea that and her response was, well, with the National Democratic Revolution, its protagonists are prepared to take a step backwards sometimes to go two steps forward. She says watch out because when you the private sector rescues the situation, the ANC-SACP will do what they've always promised to do, which is to nationalise and turn the country into a socialist state. I guess that all lies in the future and we don't know how it will work out, but it is something to be concerned about no doubt.
RW Johnson: Oh, it is, except that things are breaking down at a much higher rate than they are progressing towards that sort of future. Already, as you know, in Johannesburg, quite a lot of municipal services, like filling post holes and things, are being done by the private sector. They're just doing it as a matter of goodwill. I think that is already the situation elsewhere too, certainly wherever there's a large mine, they are running the whole municipal area. We're moving away from the NDR on the ground, but she's right that of course, that remains the ANC-SACP model and what they would like to do. But I don't think they're ever going to get to the point where it's possible. Of course, the problem about it is that while that remains the model which the ruling party is moving towards, and you've got that in your head, that you're not going to start doing the things that you need to do to remove obstacles to economic growth.
It's quite clear and has been for some time that Eskom, Transnet in particular, but certainly other publicly owned things as well, really are holding the economy back. And if you could just privatise them or fix them completely, that you would release quite a lot of growth without a doubt. If Transnet was working properly, the ports and the railways were all working in the way they used to, then we would be exporting a lot more from the mines for a start. But probably more fruit and agricultural products as well, actually, so that alone would help things considerably.
Read also: