MOELETSI MBEKI: Wealth creation
Only a matter of time before the hand grenade explodes
Published: 2011/02/10 07:01:41 AM
I can predict when South Africa’s “Tunisia Day” will arrive. Tunisia Day is when the masses rise against the powers that be, as happened recently in Tunisia. The year will be 2020, give or take a couple of years.
The year 2020 is when China estimates that its minerals-intensive industrialisation phase will be concluded.
For South Africa, this will mean the ANC government will have to cut back on social grants, which it uses to placate the black poor and to get their votes. China’s industrialisation phase has forced up the prices of South Africa’s minerals, which has enabled the government to finance social welfare programmes.
The ANC inherited a flawed, complex society it barely understood; its tinkerings with it are turning it into an explosive cocktail.
Former British prime minister Margaret Thatcher once commented that whoever thought that the ANC could rule South Africa was living in cloud-cuckoo-land.
Why was she right? In 16 years of ANC rule, all the symptoms of a government out of its depth have grown worse:
- Life expectancy has slid from 65 to 53 since the ANC came to power.
- In 2007, South Africa became a net food importer for the first time.
- The elimination of agricultural subsidies led to a loss of 600 000 farmworkers’ jobs and the eviction from commercial farming of 2.4 million people between 1997 and 2007.
- The ANC stopped controlling the borders, leading to a flood of poor people into South Africa.
What should the ANC have done? When they took control of the government in 1994, ANC leaders should have identified South Africa’s strengths and weaknesses and decided how to use the strengths to minimise or rectify the weaknesses.
A wise government would have persuaded the skilled white and Indian population to devote some time – even an hour a week – to train blacks and coloureds.
Instead, when the ANC came to power it identified what its leaders and supporters wanted. It then used South Africa’s strengths to satisfy the short-term consumption demands of its supporters – in essence, black economic empowerment.
BEE promotes extremely negative socio-economic trends. It promotes a class of politicians dependent on big business and therefore promotes big business’s interests in the upper echelons of government.
Second, BEE promotes an anti-entrepreneurial culture among the black middle class by legitimising an environment of entitlement.
Third, affirmative action, a subset of BEE, promotes incompetence and corruption in the public sector by using ruling party allegiance and connections as the criteria for entry and promotion in the public service.
I first came across the concept of BEE at a company, which no longer exists, called Sankor, the industrial division of Sanlam.
The first purpose of BEE was to create a buffer group among the black political class that would become an ally of big business. This group would use its new power as controllers of the government to protect the assets of big business. The buffer group would also protect the modus operandi of big business and thereby maintain the status quo.
Sanlam established BEE vehicle Nail; Anglo established Real Africa, Johnnic and so forth.
The conglomerates gave their marginal assets to politically influential black people, with the purpose, in my view, not of transforming the economy but of creating a black political class that is in alliance with the conglomerates and so wants to maintain the way our economy operates.
There are many things wrong with how conglomerates operate and how they have structured our economy:
- The economy has a built-in dependence on cheap labour.
- It has a built-in dependence on the exploitation of primary resources.
- It is unfavourable to the development of skills in our general population.
- It has a bias towards importing technology and economic solutions.
- It promotes inequality by creating a large, marginalised underclass.
- Conglomerates are a vehicle not for creating development here but for exploiting natural resources without creating in-depth, inclusive social and economic development, which is what the country needs.
The second problem with the formula of BEE is that it does not create entrepreneurs. You are taking political leaders and politically connected people and giving them assets which, in the first instance, they don’t know how to manage.
So you are not adding value. You face the threat of undermining value by taking assets from people who were managing them and giving them to people who cannot manage them. BEE thus creates a class of idle rich ANC politicos.
My quarrel with BEE is that what the conglomerates are doing is developing a new culture – not one of entrepreneurship, but one of entitlement, whereby black people who want to go into business think that they should acquire assets free, and that somebody is there to make them rich, rather than that they should build enterprises from the ground.
We cannot build black companies if what black entrepreneurs look forward to is the distribution of existing assets from conglomerates in return for becoming lobbyists for the conglomerates.
Architects of Poverty: Why African Capitalism Needs Changing, By Moeletsi Mbeki [*Amazon*]
The third worrying trend is that the ANC-controlled state has internalised the BEE model. We are seeing the state trying to implement the same model that the conglomerates developed.
What is the state distributing? It is distributing jobs to party faithful and social welfare to the poor. This is a recipe for incompetence and corruption.
This explains the service delivery upheavals that are becoming a normal part of our environment.
So what route should South Africa be on? Given the implosion of the former Soviet Union, the creation of a state-owned economy is not an option.
If we want to develop the country instead of merely shuffle existing wealth, we have to create new entrepreneurs, and we need to support entrepreneurs to diversify into new economic sectors.
Mbeki is the author of Architects of Poverty: Why African Capitalism Needs Changing. This article forms part of a series on transformation supplied by the Centre for Development and Enterprise and first appeared in Business Day.
» » » » [Business Day, via SA Failing]
'People Don't Eat Democracy' - Moeletsi Mbeki
ANC rejects Mbeki’s ‘Tunisia Day’ claim
ANC says SA’s fledgling constitutional democracy cannot be equated with tyranny or stagnation in the country’s growing economy
Sam Mkokeli, Business Day
Published: 2011/02/16 06:35:10 AM
THE African National Congress (ANC) yesterday disputed predictions by political analyst Moeletsi Mbeki that the South African government would face a Tunisia-style revolt, on the same day police fired live ammunition to disperse residents who took to the streets over poor service delivery in Mpumalanga.
The latest protest comes as President Jacob Zuma ’s government grapples with the country’s jobs crisis, and experts warn that public protests could become a regular feature of South African politics.
Municipal IQ, a Johannesburg- based company that researches local government trends, said public service protests were increasingly becoming a tool used by citizens disappointed with government performance. Last year saw a record number of marches as citizens sought a way of being heard.
The protests were growing into a "socio political phenomenon", with 111 recorded across municipalities last year, according to Municipal IQ. There were 105 recorded in 2009, while there were 10 in 2004 when monitoring of the protests began.
South African Local Government Association spokeswoman Milisa Kentane said yesterday that there may be more in the build-up to the local government elections later this year, but these were likely to be about councillor nominations rather than service delivery.
Mr Mbeki predicted in an opinion piece published in Business Day last week that SA would face a civil revolt around 2020, when the government would no longer be in a position to sustain the welfare programmes "it uses to placate the black poor and to get their votes".
He said the local economy depended on China’s minerals-intensive industrialisation, which would end around 2020.
ANC spokesman Brian Sokutu yesterday hit back at Mr Mbeki’s claims. "Our fledgling constitutional democracy , which continues to make inroads in redressing decades of apartheid , cannot be equated with tyranny or stagnation in our growing economy, as Moeletsi insinuates."
SA had a stable democracy, with a number of bodies that supported it, like the Office of the Public Protector and the Human Rights Commission, Mr Sokutu said.
Mr Mbeki retorted yesterday that "people don’t eat democracy".
Architects of Poverty: Why African Capitalism Needs Changing, By Moeletsi Mbeki [*Amazon*]
Steven Friedman, director of the Centre for the Study of Democracy, said a change of government was possible , but that would be done through the ballot. He said the ANC enjoyed a "great deal" of legitimacy despite the anger of those who demonstrated.
Udesh Pillay, executive director at the Human Sciences Research Council, said conventional ways of engaging the state were still working, but people could revolt should they feel they were not being heard.
In Mpumalanga yesterday, police used live ammunition in an attempt to quell protests at the Wesselton informal settlement, near Ermelo, where residents have been protesting since Monday over service delivery.
Dozens of protesters were taken into custody in Ermelo after they burned tyres and threw stones at vehicles.
» » » » [Business Day]
Moeletsi Mbeki dismisses taunt from Zuma
Feb 20, 2011 10:35 PM
Sapa / TimesLive
Economic analyst Moeletsi Mbeki has dismissed President Jacob Zuma's portrayal of him as an armchair critic, saying he presented the president with proposals on changing ANC policy to stimulate growth.
Mbeki said he presented Zuma in 2008 with a 10-point plan to boost commercial and agricultural output, bring the poor into the economy and create youth employment.
His document stated: "The economic policies that the ANC government has been pursuing during the 14 years, and especially since the adoption of Gear in 1996, have caused significant damage".
Mbeki said he was well received by Zuma, but there was no follow-up. He thought Zuma was not giving serious consideration to suggestions of intellectuals because the ANC's alliance with Cosatu and the SA Communist Party gave him little room to manoeuvre. "The nature of the alliance means that ideologically, the party is stuck."
Mbeki thought the slight was related to bad blood between Zuma and his predecessor, Thabo Mbeki.
"I think he's trying to fight his battle with my brother through me," he said.
» » » » [Times Live]