MMUSI MAIMANE: A disastrous quarter for SA Inc

In the corporate world executives are usually required to produce a quarterly report to shareholders summarising the preceding three months from a financial point of view, and providing an analysis of successes, milestones and opportunities that lie ahead in the next quarter.

Let’s for a second imagine national government had this responsibility to citizens — its variation of shareholders. Accounting for an annual budget of almost R1.5-trillion, what would such a report entail for the first quarter of 2023? And would the shareholders accept the report, or throw it out of the window and move to replace management to change the trajectory?

From a thematic point of view, the first 90 days of this year were marked by a national government that is managing decay. Events and developments during the period were a litany of red flags for the nation. The country is clearly heading in the wrong direction on multiple fronts, yet the disposition of the president and his ministers is one of nonchalance. That can only be out of resignation over the nations trajectory, combined with a selfish appetite for power and its trappings.

A significant moment in the first quarter was the decision by the Financial Action Task Force (FATF) to put SA on its greylist. The designation goes to the heart of a country’s commitment to combating money laundering and terrorism financing. Once a country is greylisted it takes a lot of work to have the designation lifted. I am doubtful there is the ability or the political will in SA at present to get this done.

On top of the greylisting, one of the big three global ratings agencies, S&P, downgraded its rating outlook for SA from positive to stable. That as economic indicators were flashing red: the unemployment rate for young people aged 15-24 was 70% and 50% for those aged 25-34. Long-term unemployment now accounts for 78% of all unemployment, up from 68% in 2012.

Inflation is quickening, with poor households hardest hit. The February inflation data from Stats SA indicates that ​​prices for food and nonalcoholic beverages increased 13.6% over the past 12 months, reaching the highest since April 2009. SA’s GDP contracted by 1.3% in the fourth quarter of 2022, taking it to pre-pandemic levels, and manufacturing production decreased by 3.7% in January from the same period a year earlier.

If we interrogate the data further we see where the fault-lines are: low levels of finished goods and original equipment manufacturing. Electrical machinery contributes only 2.21% to manufacturing, furniture 4.27% and textiles just 4.26%. In total, manufacturing contributed (a low) 13.7% to the SA GDP. High economic growth is not achieved with a low manufacturing base.

The Reserve Bank raised its main lending rate by 25 basis points to 7.25% in January, with a further rise likely on Wednesday. The repo rate is sitting at 7.5% and the prime lending rate at 10.75%. And while interest rates increase, 68% of middle-class families’ income is now used to service debt, making households highly vulnerable to further increases.

The economic data is underpinned by an education system that is exhibiting the same warning signs that Eskom did before it was too late. It is the root cause of our unemployment crisis and the source of our skills shortage. The dropout rate is 40%, which corresponds to the 3.5-million young people aged 15-24 who are not in employment, education or training.

The matric result diagnostic shows that of the 1.2-million students who started grade one in 2011 only 269,734 sat the final maths exam. Of that number just 23% (60,000) received a mark of 50% or more, and only 34,000 received a mark above 60% in grade 12.

Also in the first quarter, the electricity crisis came into the spotlight as former Eskom CEO André de Ruyter accused cabinet ministers of participating in cartel activity at the state-owned utility, and other ministers of being aware of the criminal activity and failing to act. This while the new electricity minister opined that the main problem at Eskom isn’t corruption but technical issues. That’s either a gross misunderstanding of the challenges facing the parastatal or a wilful attempt to misinform the public, in contradiction to what has been widely reported and corroborated by the state capture commission and De Ruyter.

After numerous delays and postponements SA was again disappointed by President Cyril Ramaphosa’s long awaited and keenly anticipated cabinet reshuffle. It was a monumental let-down as the already bloated cabinet was expanded and many of the worst-rated ministers kept their jobs. Pravin Gordhan, Bheki Cele, Angie Motshekga, Aaron Motsoaledi, Gwede Mantashe, Stella Ndabeni-Abrahams and others remain in their seats of power, reappointed by Ramaphosa.

Those events and indicators show that 2023 is going to be a turbulent year for SA, and that the pilots will merely attempt to smooth talk us through the turbulence as if the plane’s engines aren’t on fire. At Build One SA (Bosa) we are crafting 10 Big Ideas on policy, which we argue will radically change SA’s trajectory within a five-year term of office. They are:

1. The immediate creation of Township Special Economic Zones, funded from the sale of listed shares owned by the government’s Industrial Development Corporation (IDC), which are valued at about R200bn now. The government doesn’t need to own shares of big companies. Rather, township economies need to be stimulated and funded to uplift communities, and create new jobs and wealth for disadvantaged citizens.
2. Implementing a student performance grant for a C-grade or higher in the critical subject basket (so-called steam subjects — science, technology, economics, accounting & maths) to incentivise young people to obtain critical skills for success after school.
3. Introducing a school voucher programme that returns the power to parents to decide which school their children attend. This will be added to improved payment packages for excellent teachers, and curtailing over-powerful teacher unions.
4. A temporary tax holiday for first-time employees who are graduates from Technical & Vocational Education & Training institutions and universities.
5. A voluntary civilian national service, buttressed by an expanded public works programme.
6. The introduction of a basic income grant, with an unconditional cash grant paid to young South Africans via the ground-breaking MyShare programme.
7. Localising policing to communities through the formation of small regional and municipal police forces with a strong volunteer component and the additional authority to deputise private security providers with peace-officer status.
8. Amendments to the Electoral Act to enable citizens to directly elect their public representatives at local, provincial and national level and hold them accountable.
9. Universal access to broadband, Wi-Fi and telecommunication services in all townships, rural and peri-urban towns so that, for example, we can use telemedicine to put a doctor in every home.
10. Introducing a sustainable nuclear electricity generation via five 4,000MW-5,000MW plants built over the next 10-plus years, using the technology available from suppliers in the US, Europe, China and Russia.

The current state of SA is cause for great concern. However, with decisive action and a commitment to reform our nation can overcome these challenges and chart a course towards a brighter future. It is our collective responsibility as South Africans to demand better from our leaders and hold them accountable for their actions.

• Maimane is Bosa leader.