Picture: REUTERS
Picture: REUTERS

The government’s backtracking on spending cuts, further bailouts for SAA, and the reluctance to confront unions, was predicted by the Institute of Race Relations (IRR). The government can do none of these things for a very practical reason; to do so would be to interrupt the cashflow to the cadre deployment networks on which the internal unity of the ANC now depends.

If that increasingly tenuous unity fragments suddenly, the political demise of the ANC as early as 2024 is virtually assured. Hence, expect that from budget to budget SA’s debt projections will be revised upwards.

An aversion to surrendering policy sovereignty to international financing institutions raises the further risk that the government will, sooner rather than later, make a firm move towards prescribed assets and thereafter to printing money to plug spending gaps.

Enabling the former we read as a key objective of expropriation legislation now in train — although this remains poorly understood in business, with those sectors most exposed to the risk going as far as loudly rejecting the possibility. Both moves would, however, be in keeping with the current intellectual and ideological balances of power in the cabinet and the executive committee of the ANC.

It strikes us as one of the greatest strategic risks to business in SA that few firms are willing to discuss openly in their boardrooms the ideological inflection of government thinking and its policy implications, for which their shareholders and clients end up paying a very heavy price.

Frans Cronje
Institute of Race Relations

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