By Alec Hogg
South Africa’s three day investment outreach was summed up in the clip of 50 seconds embedded below. It has been doing the rounds on social media, but in case you’ve missed it, have a watch. Because it reflects a watershed for the beleaguered South African economy. The sentiment expressed by SA president Cyril Ramaphosa reverses decades of dogma. And opens up a new road to prosperity for a country that has long been shackled by destructive dogma.
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The clip shows the crucial part of Ramaphosa’s response to the conference’s keynote address by Alibaba founder Jack Ma. The president instructs those assembled that entrepreneurs are not the enemy – as they have been portrayed in SA for decades – but are actually national heroes. So Bell Pottinger-inspired barbs like “white monopoly capital” must end. Now.
This reflects a massive jump to the right for the former trade unionist. It is a major shift in a worldview shaped by decades of active resistance to a regime supported by a largely complicit business sector.
The ideology of Ramaphosa and fellow cadres in “The Struggle” was based on the old chestnut that my enemy’s enemy is my friend. Hence it made sense for the ANC and organised labour to cosy up to the left side of the political spectrum. Specifically, economically-deranged Soviets and their Cuban vassals, who were the strongest critics and supportive opponents of Apartheid South Africa.
From a personal perspective, Ramaphosa also had many personal reasons to distrust SA’s business sector and the free enterprise approach it theoretically endorsed.
As Anthony Butler’s superb biography on the man documents, during the resistance period he spent months in solitary confinement, detained without trial on numerous occasions, and then released without reason to create suspicion among comrades that he had “grassed”.
Ramaphosa was also at the sharp end of 1988’s destruction of Khotso House where security policy explosives destroyed the infrastructure of the fledgling trade union movement he was leading – a callous act quietly applauded in many boardrooms.
Even during his exile from politics spent in the business sector, SA’s now-president kept his distance from most fellow executives. Although on nodding terms with virtually all SA’s commercial captains (and even indulging in rounds of golf at their River Club cathedral), he allowed very few to get close.
That’s because politics has always been front and centre for Ramaphosa. Those chairmanships and the BEE-deal aided expansion of his bank account was in truth simply an effective way to bide his time until the presidential opportunity arose.
Where does entrepreneur “hero” tag come from?
That said, where does this sudden entrepreneurial hero worship come from?
The superficial reasons are easy to understand.
SA’s jobless crisis is well documented. And an embarrassment for socialists driven home by the fact that job implosion has happened during an era where market-driven democracies globally are revelling in unemployment levels at 40 year lows.
The penny has also dropped that State-created jobs (a la Zumanomics) are no panacea, but are actually like adding more infection to a long-term malaise.
While those realities have likely played a role, there’s a much bigger one at play.
Ramaphosa is a politician. A very astute one. He has an election to win next year. And recognises that to do so he needs to take heed that a wave sweeping the world is directly opposite to the one his ANC has long championed.
Although dismissed by self-proclaimed pundits as aberrations, hindsight shows Brexit and Donald Trump’s election were actually the first concrete signs of a new wave that has been swelling for some time and is now approaching its zenith.
Citizens worldwide who are able to express their opinions via the ballot box keep telling us they have tired of decades of political correctness.
They desire a return to a simpler world where effort is recognised and want to stop subsidising those they regard as gaming an unworkable system created by idealistic politicians with a limited grasp of or connection to reality.
They want jobs, not handouts. And have tired of rhetoric that punishes those who create employment in the name of promising a fairer society, but actually delivers the opposite.
It’s as there has been a massive “Aha” moment has happened. Something akin to everyone on earth picking up a copy of Ayn Rand’s Atlas Shrugged, the groundbreaking novel where the free market prophetess plays out what happens to society when entrepreneurs go on strike.
South America leading the swing to the right
Nowhere is the swing to the right more pronounced than in the continent which produced economically destructive heroes like Chávez and Lula, Guevara and Castro.
South America’s 30-year rule by the left is being swept away. What began in Chile and then Argentina continues to spread. Latest domino to fall is the biggest yet, continental powerhouse Brazil.
Over the weekend, right winger Jair Messias Bolsonaro won a landslide victory over the candidate of Worker’s Party, which has ruled for three decades.
An admirer of Donald Trump, the man whose middle name translates to “the anointed one”, has attacked China’s unfair commercial and trade practices and blasted the leftist regime in neighbouring Venezuela, where the US has recently hinted at sending in troops to end what has become a politically-inspired human tragedy.
But most important in the context of Ramaphosa’s latest reflection, Bolsonaro has promised to redouble efforts to punish the corrupt (dozens of whom including former president Lula are in jail) and dramatically reform an economy hamstrung by an ever-expanding public sector.
Among his first moves was to appoint a “super minister” for his cabinet’s economics cluster in US-trained academic, liberal thinking economist Paulo Guedes. The 69 year old, who studied in Chicago under free market guru Milton Friedman and has campaigned for decades for free and efficient Latin American markets, has already floated a $200bn privatisation programme.
At the political level Brazil’s new president, a recently converted evangelical Christian, is aggressively courting Trump’s White House.
Like the US, Bolsonaro wants to move the country’s Israeli embassy to Jerusalem, telling supporters last year that “You can be sure Trump will have a great ally in the southern hemisphere. Trump is an example to me….and in many ways to Brazil.”
Pundits are still trying to absorb the global consequences of the seismic change in Brazilian politics.
One of the obvious results is how this is likely to disrupt a BRICs combine whose united front is already straining at deepening differences between US-tied India and Trump’s declared enemy China. Having such a strong Trump-ally injected into the heart of BRICs won’t please China’s president Xi, raising questions about the sustainability of a group created in a different era largely on political commonalities and a Goldman Sachs acronym (with SA a later appendage).
Another lesson to read from Bolsonaro’s election is that if a three decade rule in Brazil can end so abruptly, it could happen anywhere else where similar abuses have been perpetrated on long-suffering but enfranchised citizens. Including South Africa. A fact Ramaphosa is now telegraphing to his own party and the world at large.
Welcome, South Africa, to your new future.
