By Alec Hogg
Current events in South Africa are a stark reminder of a warning delivered in 1974 by Brazilian economist Edmar Bacha, the first from that country to earn an economics doctorate from US ivy league Yale University.
Bacha described his country as “Belindia” – with a tiny island of prosperity like “Belgium” floating in a sea of poverty like “India”. He argued the nation would only flourish if it protected the Belgian part against destruction by Indian waves. To a large extent, Brazil managed to do so – its wealth has expanded to a point where the country housing 3% of the world’s population now generates an equal 3% of global GDP.
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The poorly educated Jacob Zuma, who together with his confidants hails from rural KZN, fits snugly into the “India” part of South Africa’s own Belindia. Ahead of 1994’s transition to majority rule, learning from the Brazilian example, checks were installed to protect the Belgian segment by having a modern Constitution as the ultimate authority. This aimed to prevent SA repeating the awful experience of other newly independent African countries.
Understandably, most “Indians” chafe against such constraints. When Zuma talks about “other leaders” he is referring to other African heads of state, the cadre with which he aligns himself. Hence his abhorrence of oversight by rules-based global organisations like, for instance, the International Criminal Court (ICC) or the big three credit ratings agencies.
Zuma’s unsuccessful attempt to extract his country from the ICC is partly self-preservation. It’s no coincidence that one of Zuma’s first State visits (accompanied by the Guptas) was to seek deals in oil rich, non-ICC member Equatorial Guinea where Teodoro Obiang has ruled since 1979. It is 74 year old Obiang who is now hosting Gambia’s former president Yahya Jammeh, who after 22 years of brutal rule was forced to vacate office on threat of invasion.
Zuma’s approach to ratings agencies is equally misguided. One of his prominent mouthpieces, the ANC Women’s League, was quick to condemn S&P’s downgrading of SA’s credit rating, calling it politically motivated. A statement issued yesterday described S&P as “corrupt”, saying SA should not be “held ransom” by it and urging the rating agency not be allowed into the country.
Such breathtaking ignorance of the ANCWL is further reflected in a call for the ANC Government persuades its partners to “speedily establish the BRICS ratings agency.” Its eagerness comes from an assumption that rubber stamps open funding floodgates. The ANCWL, like other Zuma acolytes, has zero appreciation of how capital allocation works.
In our highly competitive, networked world, those controlling capital afford premiums to countries which prioritise good governance and transparent processes. Nations run like feudalistic kingdoms are starved of development funding, condemning their citizens to continued serfdom. As long as SA has a president whose role models are Equatorial Guinea and Zimbabwe, its economy will follow their destructive paths.
