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In danger of being a failed state?

23rd January 2013

By: Denis Worrall


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The last Insight which you received in early December was a lead-up to the ANC's important electoral and policy-making conference later in the month.  We focused in particular on the probable election of Cyril Ramaphosa to a top position in the ANC – something we predicted and which of course happened.  We also said – and this didn't take much intelligence – that President Zuma would be re-elected and receive the second term which he so much wanted.

As regards policy, the ANC conference took the issue of nationalisation of banks and mines, etc. off the table.  But how far from the table the issue of nationalisation of mines is, is anybody's guess – given the ANC's emotional and counter-productive reaction to Angloplat’s announcement that it intended temporarily closing certain of its mines.  Also important from a policy point of view, the conference adopted the National Development Plan which, as readers will know, we have promoted in this brief.


Expecting more from the conference than these positives would be asking too much. Because, quite frankly, South Africa's problems right now are enormous. Socially and economically, our society is divided and unequal, ill-disciplined, frustrated and angry, and too easily resorts to violence. Our institutions of representation, mediation and reconciliation – whether government, unions or private sector leadership – have at times malfunctioned or broken down.  Economically, the infrastructure spending which the government relied on eight months ago to generate jobs, and for which financial provision was made, hasn't been made available.  Certain sectors of the economy, notably mining and minerals with its huge job generation potential, is distinctly in decline with little prospect of either internal or external investment; and our fruit-exporting business, carefully built up over decades, has seriously been affected by widely publicised violent strikes.  All this following on the Marikana tragedy.

This unhappy state of affairs is reflected in rating agency evaluations of the country and media perceptions. Last Thursday, Finch downgraded South Africa’s banks and financial institutions, bringing them into line with the Moody's and S & P’s downgrading of the country’s sovereign risk five months ago.  The latest Financial Mail's cover story describes the country as "mired in crisis", and last week a Russian economist specialising on Africa said "South Africa is in danger of tipping over and becoming a failed state".


This is over the top and unreal, but it unfortunately is the basis on which foreign decisions on South Africa will be taken.  And no doubt commentary like this has a negative impact also on internal South African business decisions.  And therefore, as South Africans in all sectors of our society, there is a desperate need for us to respond.   The fact is – we are in trouble – and this is not the time for simple statements of intention.  It is a time for action.

Firstly, Cyril Ramaphosa must assume the position for which he was elected.  The only person in South African public life with some charisma (what Minister in the South African cabinet would attract an interview by Christiane Amanpour?).  The public reaction to his election was enthusiastic and even more so when ANC Secretary General Gwede Mantashe, speaking immediately after Ramaphosa’s election, said that he would be the de facto prime minister of the country – so raising enormous expectations among South Africans and interested people abroad.  But right now, we have a lame duck deputy president who has already been assigned to a new position, and we have Ramaphosa going around the country making apple pie and mother love speeches, while all the time losing the magic that got him elected by the largest number of votes cast at the conference.  It is a ridiculous situation given what this country needs.

Secondly, Trevor Manual as the responsible minister must come out from the shadows and start a visible process – it must be visible – of bringing government policy in all areas into line with the National Plan.

And finally, putting all our eggs in the Ramaphosa basket will not be enough.  One person can do a lot to turn situations around.  But much more is needed.  There has been a great deal of talk about an inclusive approach by business.  Inclusivity applies also to government.   We need to reinforce the government and the Cabinet by introducing excellence from the private sector.  President P.W. Botha did it as did F W De Klerk.  And there is therefore no reason why President Zuma shouldn’t do it.  There are some very extraordinary South Africans who could make an immense and unique contribution to in particular the execution of policy.  They are “non-politicals” with no particular political axe to grind.  I think of Phuthuma Nhleko, Bobby Godsell, Iraj Abedian, Wendy Lucas-Bull, Roger Jardine, Seapei Mafoyane, Jayandra Naidoo and Michael Spicer.  Somebody like Pravin Gordhan, who is an excellent minister of finance, needs help in persuading his Cabinet colleagues that money doesn't grow on trees.  These are some examples of people who can enormously enrich the governing of our country to everybody's advantage and generate confidence internationally.  There are so many more who would be willing to offer their services in the improvement of governance in our country.

Two important developments in the run-up to the ANC's conference have been largely overlooked in appraisals of that event.  The first is that a business lobby emerged – mainly made up of youngish business leaders – who were prepared to raise their heads above the parapets, and no doubt will do so again in the interests of accountability.  And secondly, and probably more importantly, has been the mobilisation of the faiths.  I say faiths because it involves Christians, Jews, Hindus and Moslems.  Under the leadership of the impressive, clearly fearless and youthful Archbishop Thabo Makgobo they warned President Zuma that if leaders did not act to stop the moral decay in the country, the churches would mobilise civil society "to bring about a more healthy democracy".  The involvement of the churches early last December is reminiscent of their crucial role against apartheid.  And it is a very welcome one because it seems that our leaders don't understand what morally accountable government is about. This is illustrated by President Zuma's statement last week at an ANC business bash that companies who supported the ANC could expect their fortunes to be multiplied.  The Sunday Times followed this at the weekend by carrying a front-page report that one of President Zuma's biggest donors had been awarded a R1.2 billion contract by the Gauteng government. One presumes this was just a coincidence.

Please note:

With thousands of other informed and "with it" people around the world, you received the Insight political risk service during 2012.  And we would like you to continue to receive it in 2013. Today, political risk is at the top of every investor - whether large or small - and business person’s agenda. This is so all over the world but particularly in Africa. We know because after the  Marikana mining disaster, Moody's and  S&P's downgrading of the country, and the violent fruit farm strikes  in the normally placid Western Cape and elsewhere, we've been hard pressed to keep up with international enquiries along the lines of "what's going on in that country?" And we know in our  guts that those questions are bound to increase. As a result we've expanded the Insight Africa service - and this is particularly important to you – we have adopted a more effective delivery system. And for you to be on it, whether you currently get Insight directly by e-mail or whether it was originally forwarded to you, you need to confirm your contact details. Otherwise you will not receive Insight!.

Please update your contact details by using the subscribe/update profile tabs below to assist me in reaching you in future, or unsubscribe if you no longer wish to receive Insight Africa.  Thank you

Stacey Farao -



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