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Scenario planner for the Gordon Institute of Business Science, Marius Oosthuizen, says that only when the black middle class loses patience with the ANC and loyalty to it, can we avoid a R21/USD scenario. They have the most to lose with the ANC having presided over a looting spree and now making a mess of the economy. If this dollar/rand exchange scenario emerges, pension funds will lose a quarter of their value, fuel, bread and milk will get drastically more expensive and affluent whites and skilled black professionals will emigrate faster as earnings dwindle. The rich will use inflows from abroad to settle local debts while the poor default. The Bosasa and other State Capture scandals led to a government by the rich, for the corrupt, at the direct expense of the poor and the working class, no matter what hypocritical populists claim. Most reasonable people are hoping the crop of leaders who surrounded Nelson Mandela will redeem themselves and act decisively to restore order – instead of acting compromised by the army of undead Zuptoids in their midst. The middle class needs to mobilise and crush the ANC’s dysfunction to enable any large-scale reform. – Chris Bateman
Can we avoid a R21/USD scenario?
By Marius Oosthuizen*
South Africa’s future is now in the hands of the black middle-class, which has the most to lose if we slide further into a budgetary crisis. All indications are that we are headed for a step-change, downwards, to R21 to the US dollar.
What that means is that imported goods will instantly become drastically more expensive, including our fuel, which will send inflation through the economy all the way to the shop-front where consumers buy bread and milk. It also means that pension funds and savings will lose around 25% of their value in real terms and that the rich will settle local debts cheaply using inflows from abroad, while the poor default on their debts.
In this scenario, affluent whites will emigrate at a faster rate, along with skilled black professionals who see their earnings dwindle due to no fault of their own.
We are in this position for one basic reason – the ANC has made a total mess of the economy and the fiscal position of the country.
The party will blame global markets, they will blame the private sector and will blame the legacies of apartheid. But the facts are clear – since the ousting of former president Thabo Mbeki the ANC has gone on a social spending spree while at the same time debating the fundamental policy framework in key sectors such as mining, and questioning basic principles such as property rights. They have done this while running our SOEs into the ground, into over-indebtedness and then bailing them out while increasing the administrative costs of the country, such as the cost of electricity.
It would have been tolerable, perhaps, to say the ANC has simply provided a social safety net while managing the polarities inherent in their constituency. But the fact is that ANC deployed cadres have siphoned billions out of state coffers in what might be the biggest criminal enterprise since Africa’s independence.
For all the talk about liberation and democratic revolution, the reality is the ANC has knowingly presided over a looting-spree, taking years to turn off the taps and close the loopholes created by their statist project. Civil society complained, but Luthuli House closed ranks and put the party before the country.
Populism and plutocracy
Economic mismanagement is one thing, but while the party was enjoying the extravagant largess of the worst of our citizens, they were numbing the masses with talk of expropriation without compensation. Basically, this was a two-pronged strategy: give the masses the opium of populist hope while doing deals with corrupt plutocrats such as Gavin Watson and his bedfellow, Angelo Agrizzi. This amounts to government by the rich, for the corrupt, at the direct expense of the poor and the working class.
In a real revolution these types of enemies of the state, real enemies of the working class and the poor, would be shot. In a democracy they must be hauled before the court, found guilty without reasonable doubt, and jailed. This is the basis for democratic order – the rule of law.
We are yet to see if the new look ANC under President Ramaphosa has the stomach to restore order, or if the small nyana skeletons, the enemies within the ANC, will be awaken from their tombs like an army of undead, to haunt the leadership into a compromised position.
Social contract breaking down
When we see long-haul trucks being looted across the country in a pattern reminiscent of nationwide xenophobic attacks, this should warn us that the social contract is breaking down. The poor cannot allow rich consumers to shop in peace in the glitzy malls that dot our metropolis, while they languish in despair.
The social contract required for a modern industrial economy to function, necessitates a basic foundation of fairness. While the legacies of apartheid have baked a lack of fairness into all aspects of our country, the recent misdeeds of the ruling elite have pushed the society into new modes of outrage, including a loss of faith in our institutions.
We see this demonstrated in the sporadic running battles between police and communities in stagnating towns across the country.
What the ANC must understand is that social insecurity and political ineptitude is poisonous to the conditions required for capital investment. You cannot grow an economy in a meaningful way if the political elite is entirely incompetent, or so corrupt that the competent among them are neutralised. Not even a socialist utopia, as some in the ANC pretend to dream of, can work if the social contract is broken. Those with capital and other means such as skills will eventually lose faith and leave with their resources.
In the end, basic governance and government, such as fixing potholes, maintaining water infrastructure and keeping the sidewalks clean, matter a great deal. Not least, because they are the basis for efficient economic activity, but also because they send a signal of intent, of order and a commitment to development. So far, but for a few lone voices, the ANC has shown an intent only to extend patronage and amass grotesque amounts of ill-gotten gains. We have little to show for their quarter century of rule. The good work done by the ANC in the provision of housing and community-based medical care has been overshadowed by the devastation of grand corruption.
What happens next is that the black middle class, who have gained the most in the last 25 years of democracy, lose patience and loyalty to the movement.
The more the state mismanages its affairs, the more people tend to act in their own interests. The middle class, dutifully paying the rates and the taxes and the levies that have financed the ANC’s fiscal fiasco, including the social grants, are going to demand more from their leaders.
As a futurist I understand that socio-political systems can move in unexpected ways, and expect that there will be an entire block of marginalised voters who are going to back the populist cronies in the ANC and the opportunists in the EFF. However, South Africans have shown that they understand what is required of their governing elites, and they have been very patient, hoping that the crop of leaders who surrounded Nelson Mandela in the early years will redeem themselves. They have not. Instead they are now playing political games, and the time to act decisively is running out.
We can avoid a R21/USD scenario later this year, but only if the middle class mobilises to crush the dysfunction in the ANC. In the short-term this can steady the ship. Long-term, the political landscape is ripe for large-scale reform.
- Marius Oosthuizen teaches scenario planning at GIBS. He writes in his own capacity.
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