ROB ROSE: Like it or not, SA lurches towards IMF
The ANC’s left and its alliance partners fear that accepting another deal from the global organisation would mean that SA will be prevented from implementing policies the way they want; but many observers see no other option for the country but to approach the body unless the ruling party takes some urgent steps
Mteto Nyati, CEO of technology company Altron, has never shied away from speaking his mind.
Still, his declaration this weekend that “the ANC has gone past its sell-by date … it is time for change” was brave, given how vindictive the governing party tends to be towards business leaders who speak out.
Nyati’s point was that the party hasn’t been able to meet the challenges SA faces; instead, its leaders “have buried their heads in the sand,” he said on social media.
This is abundantly clear — not only in the ANC’s pusillanimous response to the swearing-in of corruption-accused Zandile Gumede in KwaZulu-Natal’s legislature last week, but in the fact that its leaders haven’t bothered to grapple with how broken the economy really is.
Speaking to the FM yesterday, Nyati said the country’s economic trajectory leads one way: to the door of the International Monetary Fund (IMF).
“We’re heading for a big problem. If you look at our tax collections, we’re spending way more than we’re collecting. So you have to find money somewhere, and that’s where the IMF will have to come in,” he says.
Last month SA was lent $4.3bn by the global body as part of its “rapid financing instrument,” which came with a low 1.1% interest rate and just a few conditions.
But that’s not the bogeyman those in the left of the ANC are worried about; rather, it’s the fully fledged “structural adjustment programme” of the IMF in which it lends a far larger sum of money to a country, provided the government agrees to specific austerity measures.
The ANC’s left and its alliance partners fear that accepting such a deal means SA would lose its “economic sovereignty” and be prevented from implementing policies in the way they wish, such as by expropriating land or nationalising the SA Reserve Bank. This is why, two weeks ago, SA Communist Party secretary-general Blade Nzimande described the IMF loan as a “grievous mistake” because, he said, it exposes the country to suffocation by imperialist interests.
Forget for a minute the emptiness of that phrase, or that Nzimande, as higher education minister, was part of the cabinet that agreed on the IMF loan; it illustrates starkly that Nzimande clearly doesn’t appreciate how SA was out of options to such a degree that it had little choice but to turn to the IMF.
By contrast, Nyati sees no problem in SA approaching the organisation, as long as those funds are actually used for the right things, “for example, unlocking infrastructure spending — and this includes for digital infrastructure, because we’ve seen how critical that has been to connect schools and hospitals during Covid-19,” he says.
His point was reiterated this weekend by Duncan Artus, the 44-year old who is taking over as chief investment officer of the highly rated investment firm Allan Gray.
In an interview with Business Times’ Chris Barron, Artus said a bailout appeal to the IMF is looking inevitable.
“The cost of our 10-year government debt is higher than [growth in] our economy. Just do the maths; it can’t carry on like that. Unless we make some brave economic decisions, it won’t be long,” he said.
In a rather terrifying diagnosis, Artus said that SA is “getting closer to that death spiral all the time,” as it fails to implement critical reforms.
Artus’s views underscore those of many others, including economist Thabi Leoka, who told the FM a few weeks ago that it is becoming “increasingly difficult to see how we can execute a U-turn”. Unless things change, she said, “we’ll be knocking on the doors of the IMF by October 2021”.
A lost cause?
In other words, the country has to do the right things economically if it wants to avoid landing up at the IMF. The trouble is, does the ANC even know what the right thing is any more?
Such knowledge wasn’t at all evident from the torturous debates within the party over what to do about the flagrant incidents of corrupt Covid-19 tenders.
Rather famously, the ANC’s own secretary-general, Ace Magashule, said a few weeks ago: “Tell me of one leader of the ANC who has not done business with the government”. This, after his sons were exposed by Daily Maverick’s Pieter-Louis Myburgh for scoring state contracts worth R2.7m to manage Covid-19.
Yet Magashule is the man who, as the City Press reported yesterday, has taken charge of “cleaning up” the organisation. A letter Magashule sent to ANC structures apparently said “a team of ANC cadres” would be picked to investigate claims of corruption.
Or put another way: the foxes will be drawing up a report probing instances where the henhouse’s integrity had been compromised.
In a well-argued essay in the Sunday Times, author and professor William Gumede said there’s no way to save the ANC as it is. The only solution is for the party to split in two: a Ramaphosa faction and a Magashule/Jacob Zuma faction.
“Unless Ramaphosa musters the courage to break the ANC to save SA, the country will plummet further down the path to a failed state, to Zimbabwe-like poverty levels, and we may experience Lebanon-like explosions in popular uprising,” wrote Gumede.
However, it seems that Ramaphosa doesn’t see a split as his only solution. Rather, it appears he believes the ANC can still be saved.
Creating the future you want
Yesterday, in an extraordinary letter sent to the ANC’s members, Ramaphosa wrote that in the public eye, the ANC stands as “accused number one” when it comes to complicity for corruption.
He outlined a series of steps that must be taken to deal with this. It includes the provision that anyone accused of corruption must step down while they’re being investigated. “Those who see the ANC as a path to wealth, to power, to influence or status must know that they do not belong in our movement. They must change their ways or they must leave,” he said.
But is that feasible? Or just wishful thinking?
As you can imagine, there is deep scepticism. The pledges and platitudes haven’t worked before, so why would this time be different?
Even the ANC diehards hardly raised a murmur against Nyati’s biting conclusion this weekend that the governing party ought to be retired.
“What was surprising to me,” Nyati told the FM, “is that almost 100% of people supported my view, irrespective of their colour, class or background”.
What those who engaged him did ask, however, was: what’s the alternative? If you’re unconvinced by the Democratic Alliance and find the Economic Freedom Fighter’s economic policy totally loony tunes, who do you vote for?
Nyati says this can never be an excuse. “This thing of feeling stuck and helpless, it’s just a failure of creativity. Go create the future you want. If there are no options, we must build them. We must create the kind of SA we want,” he says.
It’s a compelling thought. And perhaps explains why Altron’s share price has risen 61% over the past three years while the wider JSE all share index has fallen 1.25% in that time. But that sort of good fortune only happens when you’re willing to take the brave decisions.
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