RW Johnson: Destructive Patel may be gone but ANC economic policy still stuck in Wonderland

Last week, the World Bank criticised South Africa's trade policies, highlighting their detrimental impact on the economy. The policies, spearheaded by former Trade Minister Ebrahim Patel, have led to higher tariffs and domestic production costs, stifling economic growth and damaging regional trade. Despite Patel's departure, his problematic localisation strategy persists under new leadership. The ANC's inability to address corruption and economic mismanagement exacerbates the party's declining electoral fortunes, revealing a deeper systemic failure..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..Join us for BizNews' first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA's gas bounty from new and familiar faces. Register here..By R.W. Johnson.Last week the World Bank found a tactful way of telling South Africa that its trade policies were, frankly, mad. .___STEADY_PAYWALL___.Finally, however, Patel decided to retire and the Bank quickly took the opportunity to suggest that Patel's localisation policy is a huge blunder and should be completely scrapped. The Bank pointed out that localisation had the effect of making imported goods more expensive via tariffs and that this in turn makes domestic production more expensive. This ultimately results in falling production, lower exports and declining GDP. Thus the net result of these "development" policies is to make the country and its citizens poorer. In addition, such a policy inflicts large income losses on countries which have South Africa as a major trading partner. In particular, such policies are damaging to the poorer African countries surrounding South Africa. So localisation not only makes South Africa poorer but inflicts economic damage on the pan-African economy, which is quite the opposite of what South Africa wants to do. Instead South Africa should concentrate on export-led growth, seeking out market advantage wherever it can find it. .To be fair, Patel's predecessor, Rob Davies, was also bad news for economic development. But it doesn't stop there: Patel successfully won over the ANC at large to his disastrous localisation policies. These policies are the theme behind the Public Procurement Act just signed into law by Ramaphosa and they have also been adopted by Patel's successor, Parks Tau. How can the government be so stupid that, in the name of economic development, it adopts policies which have exactly the opposite effect ? Part of the answer is the ANC's almost complete lack of economic knowledge or understanding but there is something even more fundamental about the way the ANC thinks, something that defies ordinary logic or even common sense...Read more: Criminal attacks on SA rail system jeopardize World Bank-funded coal transport project.Take, for example, the recent ANC report on why the party fared so badly in the election. Before the report gets very far we are told that the real problem is that "the counter-revolution" has been at work within the ANC. This is a peculiar and vague form of paranoia. The notion is that shadowy forces connected to the old apartheid security police are quietly at work, subverting the ANC. No one asks why it is that in more than thirty years no one has found even a single such ex-police agent at work. Or even asks whether such ex-policemen haven't reached retirement age long ago. It is, to be frank, about as credible as deciding that Father Christmas is behind the ANC's election defeat..And, to support this argument, the report instances claims made by Mandela at the 1997 ANC conference. In fact, as we know, Mbeki wrote a wholly paranoid speech for Mandela and the poor old boy dutifully gave it. It was utter nonsense then and there. It was so over the top that Mbeki himself went about trying to tamp down all the talk among journalists about paranoia. How can anyone possibly believe that citing that speech 27 years later can help explain election losses in May 2024 ? The report also lays great blame on the harm done to the ANC by Jacob Zuma in his nine years as President. Quite clearly, the implication is that Jacob Zuma represented the counter-revolution and it is now revealed with horror that his side carried arms into the 2007 Polokwane conference in case things should not go their way there. That is very likely true, but what on earth has that got to do with the ANC's poor electoral performance seventeen years later ?.But, if one makes the not unreasonable assumption that Zuma was simply bent on enriching himself and his friends and that this meant abandoning many of the ANC's principles, several other questions arise. First, Zuma was simply behaving like any number of other African leaders have – like Mugabe, Obote, Kenyatta, Mobutu, Houphouet-Boigny and others. Does it follow that counter-revolution was just a normal part of African development ? Or again, many of the ministers and MPs who supported Zuma then are still in the ANC. Are they all still working for the counter-revolution ? Moreover, the DA repeatedly put down motions of no confidence in Zuma for debate in Parliament and the ANC invariably voted them down. So was the whole ANC on the side of the counter-revolution ?.Read more: World Bank funding may come back to haunt us.Yet the answer as to why the ANC did so badly in the election is really very simple. In any country in the world a government which presides over falling real per capita incomes for a decade or more must expect to lose votes and, indeed, to lose power. Quite obviously, the government has adopted perverse policies in order to produce such a result. There is no mystery about this. Surveys show that foreign investors mainly shy away from South Africa because of BEE. In effect BEE requires that such investors give away 20-30% of their capital and no one in their right mind wishes to do that. BEE is why no new mines have been dug for over a decade. BEE is why South Africa has just missed out on really huge investment in its oil and gas sector. So it's quite straightforward. If you want South Africa to grow then get rid of BEE. .Similarly, towns and cities under ANC rule are all in an advanced state of decay. Services are no longer delivered and there are major problems over water, electricity, potholes and infrastructural maintenance. The basic reason for this is that so many ANC councillors and officials are thieves. They appropriate the money paid through rates but they do not spend it on proper municipal purposes. The solution is simple: arrest all the wrong-doers and sling them in jail. If the ANC protests that the BEE profiteers are their comrades or that the crooks in local government are their signed- up members, fine. If they prefer to protect these crooks and profiteers, then lose elections they must. Can't they see that the DA only gains public trust and respect by being tough with any misdemeanours in its own ranks ? .Or again, the ANC says it is going to make a huge effort to improve local government outcomes in order to improve their showing in the 2026 local elections. Right now the municipal workers' union, SAMWU, is demanding an 8% increase, far beyond inflation and already its members are being paid up to three times as much as their equivalent workers in the private sector. And the Treasury says 86% of all municipalities are in financial distress, unable to afford such inflated wage bills. Quite clearly the ANC needs to tell SAMWU to accept a pay freeze for at least a few years. This would be an enormous assist to municipal delivery outcomes. .In other words, if the ANC wants to improve its electoral fortunes what it needs to do is to crack down on all the greedy people in its own ranks – BEE tenderpreneurs, crooked local ANC officials or trade unionists. If, as it claims, it is a disciplined movement, this should be well within its powers. But we all know that that's not going to happen, so what is really going on here ?.Read more: Keen interest in World Bank Rhino Bonds launched in SA.The first thing is that the ANC has never matured from being a struggle movement. It still picks people like Rob Davies and Ebrahim Patel to be economic ministers, even though it's obvious that there are many people in South Africa who are vastly better equipped to do that job. It is a classic case of choosing old struggle comrades rather than present competence. It makes no sense – the struggle has been over for more than thirty years and getting competent ministers into position is now a make-or-break matter for the movement – but the ANC simply can't grow up. Much the same applies to the BEE tenderpreneurs, corrupt local officials and greedy trade unions: they all count as comrades and therefore must be forgiven their pecadilloes, no matter how damaging that is to both the country and the ANC..But it is even more telling that when pressed to come up with reasons for the ANC's electoral collapse, the party comes up with "the counter-revolution", AKA the equally imaginary Third Force. The point is that during the exile years the ANC was in a constant state of paranoia about the penetration of the movement by the agents of the apartheid security establishment. When ANC militants were arrested they were horrified to discover how extremely well informed the apartheid police were and it was obvious that many highly-placed ANC figures must be leaking information not just to BOSS but to various other intelligence agencies. Joe Modise was a prime suspect. .The result was that the exiled ANC had a complete mania about "apartheid spies". Thabo Mbeki was perhaps the best exemplar of the resulting paranoia. And so when the ANC reaches back to find the villain of the party's decline, it goes back almost automatically to that familiar bogeyman, no matter how absurd that is in 2024. The fact that having announced this bogeyman the ANC makes no suggestion that he or it should be tracked down, is also revealing. At some level the ANC knows that such a pursuit would be fruitless. As the children's song goes:-."We keep the blankets pulled over our heads.To keep out the bogeyman"..What this reveals is that the ANC is locked inside its own little morality play. It is quite incapable of examining the reasons for its electoral woes in the way that any normal political party would. Worse, it still believes in all manner of fairy tales like "the national democratic revolution". The fact that the Soviet theorists who dreamt up the NDR have long since abandoned it as nonsense simply fails to register: the ANC is still under its enchantment, it's like a spell. .The pathos in the situation is that these barriers to the ANC either understanding its plight properly or taking the obvious remedial steps means that its collapse is likely to continue. Like Peter Pan, the party cannot grow up and the penalty for that is to die before you get old..Read also:.Deputy Trade Minister Andrew Whitfield: AGOA renewal, slashing red tape and SA's economic revival🔒 ANC's electoral setback sparks coalition speculation in SA🔒 Zuma's electoral victory: A threat to SA's reform efforts – Justice Malal

RW Johnson: Destructive Patel may be gone but ANC economic policy still stuck in Wonderland

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