Living in Africa, for an Afro-optimist, offers endless opportunities to question one’s optimism.
For this reason, it is important to distance oneself from the political noise and identify what factors one should worry about, and which ones one shouldn’t, said Justice Malala, SA political commentator, newspaper columnist, author and presenter. He was addressing the FNB Franchise Leadership Summit 2016, held on September 1 in Fourways, themed ‘Disrupt – the future of franchising’.
Should owners of small businesses really be worrying about the Gupta’s, Nkandla’s #PayBacktheMoney, or even the performance of the DA and EFF in the local elections? – these are all red herrings to a businessman, said Malala.
“Take the elections – we have now had a series of elections in South Africa which have all been free and fair, and which resulted in a credible, unchallenged outcome. We are getting used to this now, and that represents a considerable maturing of our democracy and institutions. Even some developed countries cannot claim that. As a result of the successful election, I was expecting to address this conference in an entirely happy atmosphere to thunderous applause – instead, post-election it was ‘December’ all over again because a lot has happened since. However, that has all been political noise of no substance.
“If business listened to all the noise and consequently became obsessed with politics, no business would invest in South Africa – and the sharp fall in private sector investment suggests this is precisely what is happening. But these decisions are being taken on the wrong premise – South Africa remains a sound place to invest in as long as our institutions are strong. And with a few exceptions, they are strong,” said Malala.
He listed the election as an excellent example of institutions being strong, in this case the IEC. Another quite startling example was the decision by the Constitutional Court to compel President Jacob Zuma to repay R7.8 million. “If our institutions are strong, then that means you can safely invest in this economy in the knowledge your investment will be safe in five, ten or even 25 years’ time. When the rating agencies came to South Africa, they decided not to downgrade our sovereign rating purely on the strength and independence of our institutions, including our banking and judicial systems, the Reserve Bank and Treasury. These tell outsiders that we have rule of law and are not a banana republic,” he said.
“However, there are some institutions in South Africa which need to be interrogated very seriously, such as the Hawks. When such institutions are weak, or ‘captured’ in the current parlance, it means they are being used to pursue political vendettas, and this undermines the credibility of other institutions. This enables Julius Malema to claim, for instance, that SARS (SA Revenue Service) is after him for political reasons. If this were true, it would mean that anyone making a political statement could expect an audit by SARS, and if this in turn were the case you would certainly have to worry because running any business would be an uncertain activity.”
Nkandla is another interesting example of a political red herring. Malala explains that the issue of whether or not Zuma repays the money serves only to distract the country from the real issue. “At issue is that we have a Department of Public Works (DPW) – which is the engine room of the entire public sector – and which approved a R27.5 million budget for Nkandla. Yet nobody in the organisation said a word as the actual cost ballooned above R100 million, with the cost of items doubling and tripling with no accountability.
“DPW is the organisation which does most of the deals in this country. If a private organisation functioned like this on a single deal heads would roll. To date, not a single DPW employee has been fired over Nkandla. When Zuma repays the R7.5 million, will anything have changed? The DPW will continue to operate in the same fashion, and this is what businessmen need to be concerned about,” said Malala.
The success of the DA and EFF is another red herring, said Malala. This election was only ever about the performance of the ANC. The DA and EFF held their votes and increased them only slightly, while 3.3 million ANC voters decided to stay at home.
“They did not switch to the DA or EFF and are therefore available for the ANC to potentially win back in 2019. Furthermore, the EFF has signed no deals with other parties to create coalitions. This makes for a highly volatile situation and might make it difficult for minority governments to pass budgets and run metros properly. The EFF will only back those DA policies which it supports, and it has a radical agenda.”
The City of Oudtshoorn was run like this for eight months and consequently the city ground to a halt with suppliers not being paid.
“This situation makes for a lot of uncertainty. Businesses might find license applications being held up, and municipalities difficult to deal with, as well as central government having a more favourable stance on populist issues such as zero university fees.”
He anticipates that politics will remain turbulent for some time (though not forever) due to three reasons: the ANC is divided and at war with itself; the fraud and corruption charges laid against Zuma; and the unemployment rate, which sees 8.9 million people unemployed.
“Nonetheless, we are a changing society with the centre of power dispersing. We see the rise of the DA and EFF, but we also see businesses (the re-appointment of Pravin Gordhan as finance minister) and students (#FeesMustFall) asserting their own power. Ordinary people are no longer in awe or afraid of government’s authority. However, as the ANC sees power slipping, it will increase pressure on certain issues such as transformation and racism. Business can expect to see more pressure, not less, to transform.”
He believes the ANC will win the 2019 election and that legislation such as Broad-Based Black Economic Empowerment will therefore be around at least until 2024. The pressure of regulation on key sectors such as agriculture, through land restitution, and mining will not diminish, while government opposition to concepts such as ‘Once Empowered Always Empowered’ will spread from mining to every other sector, requiring continuous BEE deal-making.
“We will see calm in our politics only when there is a change in leadership, and as things stand Nkosazana Dlamini-Zuma is the clear favourite to succeed Zuma. She is actively campaigning and is visible everywhere, while deputy-president Cyril Ramaphosa is not active and has not even declared his candidacy.”
Despite the seeming unending rule of the ANC, Malala says there is much to be optimistic about: “In 2011, many people knew the Gupta’s yet nobody would speak out. Today, everybody speaks out. We also have a second centre of power in the DA.”
“South Africans tend to be a nation of extremes – but sometimes the truth is in the middle and not at the extremes,” said Malala.