🔒 The Editor’s Desk: SA’s watershed election – will the ANC win it?

DUBLIN – South Africa is headed into election season and the stakes are high. After months of testimony at various commissions of inquiry, the full scope of Zuma’s maladministration has been laid bare. There can be no illusions that the ten years of Zumanomics were anything other than a disaster for the people of South Africa. But going into the election, the ANC under Cyril Ramaphosa is telling votes that, while the Zuma years were a disaster, the ANC is turning over a new leaf and committing to fixing what’s broken. The big question is – will voters believe this or not? And if they don’t, what will they do? Will they turn to one of the opposition parties (and if so, which one)? Or will they send the ultimate signal of weariness and disillusionment and just stay home on election day? In this episode, Alec Hogg and I unpack the upcoming elections and what the recent GDP numbers may mean for the country and the ANC. We also spend some time looking at the latest in the Elon Musk saga as the entrepreneur tangles once more with regulators and announces plans to take his company in a strange new direction. – Felicity Duncan

Hello, and welcome to this week’s episode of The Editor’s Desk here on BizNews Radio. I’m Felicity Duncan and with me is Alec Hogg.
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Alec, we are just about two months away from SA’s election. We’re getting into that time when electioneering kicks into high-gear and into that context comes SA’s GDP numbers for 2018, 0.8% growth. So, that’s a little higher than estimates. The estimates were about 0.6% to 0.7% so, in some sense that’s a bit of good news but 0.8% is hardly enough to fix the problems that SA is facing.

Yes, indeed and the projections from Treasury are that we’ll be at 1.5% this year. Now, in the context of all of this is population growth so, when one has a look at GDP it’s fine to look at the nominal number but you want to be sure that your  younger people are getting opportunities in the job market and that means that you’ve got to be growing your economy by at least the same level as you’re growing the population.

In the rich-north, of course, the population growth is negative so whatever growth is achieved in the rich-north means that people generally or on balance are getting richer. Whereas in developing countries this is always a challenge to grow faster than your population growth and in SA the population growth is 1.6% a year. So, that means that this year at best, half of the matriculants who came out of the system didn’t get jobs, just for the latest year. Next year, at best, they’re aren’t all going to get jobs.

Now, as a consequence of this, over the past five-years, SA has grown at sub-two percent. Now, you need to grow almost at 2%, just to keep the employment levels stable and when you grow slower it means that the people who don’t get the jobs are the youth and then the youths would stay at home, and they are the people who get irritated quickest, and they have no hope and then they do things like we saw in Coligny, where there was a difference of opinion on what happened to the tragic death of a young lad and people started trashing the place because they just felt… They believed anybody who would give them some kind of a story and this is something that the Electorate is now going to be making a decision on and really, it boils down to something pretty simple.

We all know what happened in the past.  We all know the Zuma-era was a blight on society, it was plundering, it was bad economic decisions – Zumanomics is a disaster of Venezuelan proportions and it has left the political party with a big issue. The new leader, Ramaphosa, is diametrically opposed to what Zuma was doing but is everybody in his party on the same page and will he be able to bring them to the party, if you like, in changing the way of approaching the economy? That’s the question that the people have got to vote for. I’m of the opinion that Ramaphosa is the best thing that could happen to SA. That he is a wonderful negotiator, and the way that he’s managed things so far, suggests that he will indeed be able to put the country back onto the path that it was on after the 94 election.

We forget so quickly, the country in 2006/7/8 had budget surpluses at a time when post of the world was running big deficits. In fact, they inherited a budget deficit of over 7% of GDP from the Nats so, it can be done and the ANC is capable of it. The problem is that the ANC has been led in a particular direction and you’ve now, as a voter, got to believe, are the ANC going to continue in that direction or is it going to go back to a period of sensible economic growth, where the economy grew as it did in the then ‘naughty’s’ and you start eating into unemployment? Those are the questions that voters have to make and outside of that you also have to have a look at whether the opposition party is. So, if you’re not going to give your vote to the political party that’s got you in the mess, are you going to give it to an opposition party that can do any better, and those are occupying SA’s minds, at the moment. Overlaying it all, as you have the scepticism and cynicism when you do hear any good news and we see that a lot amongst members of the BizNew’s community and society at large. On the other hand, you also have those trying to change things.

I loved the clip this week that Ramaphosa posted of his conversation with Trevor Noah, and saying to Trevor Noah, he caught Trevor Noah unable to say anything different. Where he said, ‘okay, Trevor,’ and the cameras were going, ‘we want you to come to the Investment Conference and its my dream to raise $100bn for SA over five-years. We got the first $20bn last year, we want more this year. Are you going to be there? We will arrange this big conference to suit your diary.’ What could Trevor Noah say? Interestingly enough, Ramaphosa also said to Trevor, ‘and I also want to get Elon Musk here because I want him to build a factory in SA.’ Now, we’re not so sure that that’s a good thing but it shows that, is this electioneering or is this somebody who is looking beyond the election and saying, ‘I have to build this country.’ I guess, where Ramaphosa is coming from is, he believes you have to give people hope and you have to be confident that you’re going to win the election with a good majority. If he gets both of those things right, it will be a different country in five-years’ time.

Absolutely, and I think what you say there about South Africans exploring their options is quite important because really, the two big opposition parties that stand to gain from a loss of ANC voters are the EFF and DA. Now, the DA obviously is consumed by some internal problems at the moment, and the EFF – their strategy really, has been to pick-off disgruntled ANC voters, people who feel very disenfranchised and so forth, they picked up a lot of those and that’s really formed the kernel or the core of the EFF.

As we go into this election, you are absolutely right to say, ‘people must look at the ANC and say has enough change happened that we can now believe in this party?’ But then if voters say ‘no’ they have three options. I’m going to give my vote to a big opposition party, I’m going to pick between the DA or the EFF. Or I’m going to give my vote to one of these marginal small parties just to make myself feel good there, and the other thing is, they can choose not to vote.

In many democracies around the world the decision to abstain from voting – the disenchanted voters, people who just don’t vote at all – that’s actually, in many places, has become the biggest majority – most people just don’t vote because they so disillusioned that they refuse to participate.

Now, SA, historically had a very good turnout and it would be very interesting going into this election to see what are people going to do? Are they go with the ANC…? They’re going to say, ‘yes, it’s true, this is a better party, they’re turning things around and we can look forward with hope.’ Or they’re going to go with one of the bigger opposition parties, they’re going to for the DA or the EFF? Or are they just going to stay home, which is, in a lot of ways, would be the saddest outcome?

Yes, it would be because you’d think that in SA most of the population were disenfranchised up until 1994. Women were disenfranchised until 1930. So, there were no women voters in SA until 1930, which is quite scary actually, when you think about it and there were lots of women, who worked very hard around the world to get the vote for themselves. Now, particularly if you female and a black female person – you’re the last person in the world who should not vote because so many people have really sacrificed a great deal to make sure that you have that right. If you’re a black person and you think about what went on before 1994, then you also have a huge obligation to vote as well. But just as an active citizen, and were it not for active citizenry there would not have been change in SA in the past couple of years, the dramatic change that we’ve seen.

There would have been no end to the Guptas plundering and who knows where we would have been. Well, probably at the door as RW Johnson said, be knocking on the door right now at the IMF, or if not knocking now, it would have happened last year. So, there are lots of reasons why one must vote and become more aware but I find South Africans are extremely politically interested but not always politically aware. So, it’s like everyone has got opinions but those opinions are not always based on fact and that is probably the biggest challenge that those of us in the media have is to try and just allow people to understand that sometimes the prejudices and misperceptions can take you along the wrong path so, you need to be a little distant from the noise and try and understand a little better what is happening on the ground.

It’s like the big story we had this week on BizNews where I expressed some optimism in the JSE, just on basic investment terms. It’s always right to be buying into stocks when there’re at there lowest, and relative to other emerging markets, SA shares are the cheapest they’ve ever been. It’s a very sensible, and logical, or rational conclusion to come to. Magnus Heystek, who’s a guy I’ve known for 30-years, who runs a very successful financial services business, where he advises what people should be doing with their money, has been beating a drum of taking your money offshore for a long time and he maintains, ‘you should continue to do that.’ I think where our difference of opinion is, is I’m of the opinion that, ‘hang-on, in the same way as things don’t keep going up forever, they don’t keep going down forever.’ As a consequence of that all the signals are telling me that SA 2020 is a very different country to SA 2017, and before then and as a consequence of that there are reasons why SA stocks will be doing better in the future. Magnus doesn’t buy that argument and lots of other people agree with him – I get it, that’s what makes a market.

But it has been interesting that a lot of the comments that come out of that from people are based on even a misreading of that discussion, and it just is what it is that we have busy lives and  not everyone has the luxury as we, as journalists, do of being able to read, absorb and to be exposed to many different points of view and sometimes, very unfortunately, a lot of ‘off the record’ stuff that you cannot repeat but it does shape your opinion.

Absolutely, now you mentioned that Ramaphosa was interested in getting Elon Musk to build a Tesla factory in SA. Now, this doesn’t seem to be an opportune moment, perhaps, to be reaching out to Mr Musk, who is having plenty of troubles of his own.

Over the last couple of weeks, we’ve seen some very strange occurrences at Tesla and there’s two things that stand out. One is that he’s found himself, once again, on the wrong side of the SEC for tweeting inaccurate information or information that is in contravention or violation of the terms of his settlement with the SEC. The SEC has now asked that he be held in contempt, which essentially would have some serious and negative consequences. So, there’s a real possibility of a period of suspension for him, as CEO of Tesla. He’s really tweaking the nose of the SEC in a way that I think is a bit crazy.

The other interesting thing we saw recently is the announcement is that Tesla is going to close up all its brick-and-mortar dealerships and is going to focus selling its cars exclusively online. Now, both of these things seem to be the action of a man who perhaps is not taking a lot of external advice in.

Or internal advice. Felicity, we see it time and again. There was a really obnoxious man, and I don’t say that word often, who I me through Davis, is a chap called Martin Sorrell, who started an advertising agency called WPP 33-odd years he’d been running it. He finally was ousted last year but he was an appalling human being. You’d be in events or suppers and discussion and someone would be giving the presentation and Martin Sorrell would be having a loud conversation at his table with whoever would be prepared to listen, while the other person is trying to express themselves.

I was having a chat with somebody from The Financial Times one day – the two of us were in conversation. Martin Sorrell came along, ignored what was going on and just started butting in and talking to this other person that I was engaging with and it’s little things like that that one sees the reality of a human being, who has got too much power, and has got too full of their own hubris and as a consequence, they’re heading for a fall. I really hope this isn’t the case with Elon Musk but all the signs are pointing in that direction. That he isn’t taking advice from anyone. He isn’t getting good counsel. He’s seemingly unable to find someone who actually pulls him up and says, ‘Elon, this is not right. Don’t behave like this, behave differently because it will be in your best interest in the long term.

This decision that he made to suddenly stop selling motor vehicles through the dealer network and they’ve almost got 400 physical outlets around the world. Can you imagine the message that that sent to the Tesla staff who were sitting in Shanghai recently appointed? Or those in CT, who are working on various Tesla initiatives there. Suddenly, they’ve got to ask themselves, ‘well, if we’re going online 100% am, I going to have a job in two-months’ time?’ And indeed, the people in Honolulu and another place in the US, but within three-days, they closed those branches. Tesla branches don’t exist there anymore. So, it’s decisions that were made, which contradict what was written, for instance, in the annual report, which only came out 10-days previously, where they were committing themselves to more of a bricks and mortar kind of approach.

Elon wakes up one morning and says, ‘no, we’ve got to go online.’ Nobody stops him and the company goes through another jolt. Hopefully he does listen to Ramaphosa. Hopefully the fact that 57-million people love him because he has SA roots, will mean something and like we saw with Trevor Noah, with his engagement with Cyril. He was a little bit starstruck, to a degree, and maybe Elon Musk gets starstruck by the office, if not by the individual and starts listening and doing things differently. Who knows? When human beings get into a position of extreme power, we do know that it corrupts, and sometimes it corrupts absolutely. I’m really hoping that the brilliant mind that Elon Musk has and possesses doesn’t make him so brilliant that he thinks or he forgets that the Socrates said, “The beginning of wisdom is the understanding that we don’t know what we don’t know.” That there is much that actually know nothing he said, and there is much in the world that I will never know. If you can start from that basis that you need to keep listening, and exploring, and understanding that your current base of knowledge is only based on the limited experience that you’ve so far, and that there’s so much more experience to come – then you can start growing your knowledge. But when you believe you know it all as sometimes Elon seems to be sending that message out – then you are heading for a fall.

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