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26/10/2015

Get the whole picture - and other photos from A.P.R.Mavangira

26/10/2015

Saudi Arabia’s cash reserves are in free-fall and the country could have only five years of financial assets remaining due in large part to the fall in oil prices, according to a report by the International Monetary Fund (IMF).

26/10/2015

Saudi Arabia may run out of financial assets needed to support spending within five years if the government maintains current policies, the International Monetary Fund said, underscoring the need of measures to shore up public finances amid the drop in oil prices.

26/10/2015

The Middle East’s biggest economy, Saudi Arabia may run out of financial assets within the next five years if the government maintains its current policies, warns the International Monetary Fund.

21/10/2015

Shared with permission from Sovereign Man and written by Simon Black... When I was a kid growing up in the early 80s, the…

16/10/2015

Huge sums are flowing out of Africa through illicit means, robbing the continent of capital sorely needed for development

12/09/2015

10/09/2015

Why Steve Biko's Black Consciousness is gaining ground in SA

Black youth seek an antidote to their reality wherein blackness continues to be mocked and marginalised.

Foundation essay: Our foundation essays are longer than usual and take a wider look at key issues affecting society.
Peter Gabriel’s song characterising the influence of Steve Biko is as apt today as it was in the 1980s:
You can blow out a candle but you can’t blow out a fire. Once the flames begin to catch the wind will blow it higher.
The 38th anniversary of Biko’s death this month comes in the wake of high-pitched invocation in South Africa of the Black Consciousness philosophy he espoused.
Interestingly, the philosophy appears to have gained traction largely among the country’s black youth born after the end of apartheid in 1994. The appeal of Black Consciousness among the so-called “born-frees” is reminiscent of the way it influenced the generation that took part in the liberation struggle.
Is this a coincidence of history or a confluence of historical verities? Black Consciousness is a transcendence that connects generations, which in Frantz Fanon’s watchwords in The Wretched of the Earth:
Each generation must, out of relative obscurity, discover its mission, fulfil it or betray it.
Born-frees and struggle generation
Political scientist Robert Mattes describes South Africa’s freedom struggle generation as that which, through the Soweto uprisings, brought to “an abrupt end in 1976, white confidence and African quiescence”. This is the generation of those who turned 16 between 1976 and 1996. It experienced the wrath of apartheid.
The first inclusive vote in 1994 marked the end of, according to Mattes, “a long trauma of protest, struggle and violence”.
As Mattes further explains, the born-frees refer to those who, starting in 1997:
… move through the ages of 16, 17 and 18 and enter the political arena with little if any first-hand experience of the trauma that came before.
Some characterise born-frees as who were born in 1994 and voted for the first time in the 2014 general elections. This discussion subscribes to the latter characterisation.
The born-frees are not a homogenous generation. There are who that are at the universities. Others, because of their socioeconomic circumstances, loiter in the streets.
The political generation’s theorists are unanimous in their assertions that the born-frees are different from the struggle generation in many ways. As Mattes explains, the born frees are “more modern, with higher levels of education”, urbanised and “cosmopolitan in their outlook” than the struggle generation.
A significant part of the struggle generation’s activism was inspired by Biko’s Black Consciousness philosophy from the late 1960s. The philosophy spawned radicalism characterised by confrontation with the apartheid machinery. The epochal June 16, 1976 students uprisings are a case in point. The students' revolt breathed new life into the moribund struggle for liberation.
But why are the born frees increasingly attracted to Biko’s Black Consciousness philosophy in post-apartheid South Africa? Why are they being radicalised when they should be enjoying the fruits of democracy brought by the struggles of the previous generations?
Long-lasting legacy of influence
To understand the reason for the growing attraction to Biko’s views and their continued relevance, we should ask: did black people attain, in Biko’s words, their “envisioned self which is a free self” in 1994 and “rid themselves of the shackles that bind them to perpetual servitude”?
The born frees increasingly think not — especially those in the lowest strata of society, unable to afford a tertiary education, facing a bleak future and feeling alienated.
They question the very concept of freedom and being born free as an oxymoron. These concepts have failed to instil a sense of pride in their blackness. Officialdom’s response is to spew statistics that seemingly prove performance by the state, largely in dispensing the largesse.
In many ways this trivialises the complexity of the post-apartheid society, following many years of apartheid colonialism. Various instances of making blacks feel inferior challenge the state performance narrative as, in the words of critical theorist Donaldo Macedo, “the pedagogy of big lies”.
Theologian Ndikho Mtshiselwa argues that the fundamentals of the apartheid colonial social order are still in place, with the democratic regime unwittingly administering them, instead of changing or providing leadership in their destruction.
This is the irony of South Africa’s transition from apartheid colonialism, which gave the colonial matrices of power the space to, in decoloniality scholar Sabelo Ndlovu-Gatsheni’s words:
… continue to exist in the minds, lives, language, dreams, imaginations and epistemologies of modern subjects.
As long as this situation exists, Biko’s philosophy of black pride continues to be relevant. As Biko said:
It seeks to infuse the black community with a new-found pride in themselves, their efforts, their value systems, their culture, their religion and their outlook to life.
Two decades into South Africa’s democracy, the rise of largely born-free movements such as and Open Stellenbosch, which transcend party-political affiliations, expose the limitations of the transitional arrangements from which the post-apartheid state was constructed.
In ways reminiscent of Biko’s Black Consciousness movement, these challenge the colonial matrices of power which eluded the making of the post-apartheid state. The matrices foster institutional racism based on Hegelianism — a body of thought that characterises the cognitive faculty of Africans as, in Senegalese philosopher Souleymane Diagne’s words in The Meaning of Timbuktu, the “other reason and philosophical spirit” is bereft of the “capacity to think and live by a consistent system of sound principles”.
This is what students at the universities of Cape Town and Stellenbosch are fighting against. Their struggle seeks to restore and assert black pride — the essence of Biko’s philosophy of Black Consciousness.
The same spirit exists at the University of the Witwatersrand, where Western epistemology is increasingly being challenged in the debate on curricula transformation.
The born-frees are grappling with the question of the meaning of freedom in post-apartheid South Africa. They seek an antidote to their reality wherein blackness continues to be mocked and marginalised.
Their reality is one in which language policy is overtly used to limit the number of black students at historically white universities. They also have to contend with situations whereby white students enjoy privileged status under the guise of dual language instruction to perpetuate the falsehood of separate but equal.
This much is evident in the accounts of 32 students at the University of Stellenbosch in the online documentary .“Luister” is Afrikaans for listen.
The struggles of the born-frees beg the questions:
Hasn’t the struggle generation betrayed its children with the architecture of the post-apartheid state?
Did it err when it focused more on political transformation to the detriment of social and economic dimensions?
Hasn’t the “Rainbow Nation” invention unwittingly normalised coloniality?
The cries of black students expose a failure to adequately situate the theoretical and strategic policy orientations of the post-apartheid transformation agenda in Biko’s Black Consciousness philosophy. As long as black pride is not attained in post-apartheid South Africa, Biko’s philosophy remains relevant. Its transcendence continues to connect generations.
Maserumule is professor of Public Affairs at Tshwane University of Technology
This article first appeared on The Conversation.

08/09/2015

07/09/2015

Secrets and intrigues of Dangote's trip to Zimbabwe — worth more than its GDP, he came away with big deals

Africa's richest man is said to be looking beyond Robert Mugabe, whom a senior minister admitted could 'go soon one way or another'.

AFRICA’S richest man, Nigerian tycoon Aliko Dangote, whose net worth was US$17.5 billion as of yesterday, according to Forbes magazine, is looking well beyond President Robert Mugabe’s rule as he moves to invest billions in cement, power and coal projects at a time most investors are sitting on the fence jittery due to Zimbabwe’s hostile business environment.

This comes as it has also emerged Dangote — who is worth more than Zimbabwe’s annual Gross Domestic Product which stands at about US$13.66 billion and about five times its annual budget — has arm-twisted government for exemption from its controversial indigenisation laws spooking investors to secure full ownership of his investments.

Dangote on Monday met Mugabe and his ministers to get the go-ahead and assurances of security of his investments in a country notorious for trampling on the rule of law and property rights.

While investors fear Zimbabwe’s political risk — rooted in the interface between politics and business — and toxic policies, ministers said in private briefings the Nigerian business magnate was coming to Zimbabwe as he was now looking far beyond Mugabe, 91, widely seen as on the sunset of his long political career as the country sits on the cusp of a new dispensation.

“Dangote is taking a long term view on Zimbabwe,” a senior government minister who met the Nigerian mogul told the Zimbabwe Independent this week.

“He knows the president (Mugabe), given the perception he is part of the problem, is going to go soon one way or another. He has informed advisors and uses risk assessment firms to analyse the environment and make decisions.”

“We’ve already decided to invest into Zimbabwe, that’s why we are here. Any country where you see us visiting it means, yes, we’ve decided to invest,” Dangote was reported as saying while in the country.

How he got a breakthrough
The Independent has been monitoring Dangote’s behind-the-scenes manoeuvres since July and has information showing how he managed to get a breakthrough.

Dangote’s trip was facilitated by a Nigeria-based Zimbabwean and television personality, Josey Mahachi and her husband Olusegun Babajide Agbeniyi (a television producer).

Mahachi and Agbeniyi — who wedded in 2013 in Harare — have been in the country since July and managed to convince Vice-President Emmerson Mnangagwa, who they engaged privately, to lobby Mugabe to allow Dangote to invest on his terms.

In an interview, Mahachi, who is the face of Dstv talkshow programme Click Africa, said she was facilitating the investment for the love of her country. “You meet people with the potential to invest and because of the love of one’s country one is pushed to sell the investment idea to them. We are happy because something concrete is coming out of our efforts to turn around our economy,” she said adding: “I will be relocating to Zimbabwe to make sure such an investment is protected and handled properly.”

When it comes to investors seeking to navigate turbulent emerging markets and unstable countries like Zimbabwe, their main fears resolve around unexpected and arbitrary changes in government policies detrimental to their investments.

Another minister said: “Investors like Dangote know how to deal with such unstable environments like ours. Even if we have problems, Nigeria is worse from a political risk perspective. I mean there is literally a civil war going on there, with Boko Haram wreaking havoc but then there is oil and investors still go there.

First mover advantage
“So Dangote knows there are resources in Zimbabwe and the president (Mugabe) will go, so he is positioning himself. He is an investor with foresight as he wants a head start. Mind you a lot of investors have been coming here to assess the situation; from the United States, Britain, France, Denmark, China, Russia and many other countries. Dangote came to invest here so that he has a first mover advantage. In business that’s very important, not always politics and these succession stories you hear all the time.”

A leading research institute, Oxford Economics risk assessment firm, NKC African Economic, recently added Zimbabwe to its potential conflict zones or flashpoints watch list as the country’s economic situation fast deteriorates, citing Mugabe’s raging succession power struggles as a destabilising factor.

Officials say Dangote had to meet Mugabe and his relevant ministers because most aspects of the government-related policy and procedures are risks beyond his control, for example, granting of mining concessions, licences and permits, taxation, and various contracts to be signed with the government.

“Dangote is mainly concerned with risks related to uncertainties in the government policy and regulation, hence he needed to meet the president, but he is looking beyond the current situation,” one official said.

Even though some senior ruling Zanu PF officials want Mugabe to run for re-election in 2018 until 2023, insiders say he might soon bow out due to health problems or political pressure associated with the current economic meltdown. Mugabe is however known for his stubborn resistance to pressure, although he cannot defy health complications, dotage and frailty.

Cannot tell exactly when
Government ministers this week said Dangote and his advisors believe this is the most opportune time to enter the Zimbabwe market because the country is moving towards the end of Mugabe’s rule even if they cannot say exactly when that will be.

This reality though is now openly acknowledged in government as Mnangagwa and First Lady Grace Mugabe recently spoke about the situation in Zimbabwe in future-sounding terms looking beyond Mugabe.

Although Zimbabwe has signed investment agreements with Russia and China in recent months after long negotiations, Dangote came to Harare and decided to invest.

Sources that were in the closed door meetings between Mugabe and Dangote said the Nigerian industrialist would be exempted from the controversial indigenisation policy which require foreign investors to surrender at least 51% to locals and remain with 49% or less.

“Mugabe told Dangote of the various investment opportunities in Zimbabwe, in agriculture and the mining sectors especially,” a source said. “He then assured him that his investments will be protected as the indigenisation policy will be waived for him.

Dangote assured the president that on Monday next week his team which comprises geologists, engineers, lawyers and the chief strategist will be in the country to do feasibility studies as well as paperwork.

“He also said one of his intentions is to construct a plant which will employ close to 1,000 people producing 1.5 million tonnes of cement per year.”

Although China and Russia have signed multi-billion dollar investment deals with Zimbabwe, they have been treading cautiously as they fear their investments could sink in this unstable environment.

Last year in August Chinese leaders told Mugabe in Beijing he needed to resolve his succession problems and ensure leadership renewal, as well as embrace serious reforms to get game-changing investment. The same message was communicated to Mnangagwa when he visited China in July.

—First published in The Zimbabwe Independent

26/08/2015

Embedded racism in financial services sector still an issue

The focus the Mbeki presidency brought to black empowerment has been lost. Business people no longer fear Thabo Mbeki's public rebukes.

Speaking at the Black Management Forum’s Gauteng annual conference on Friday, I was confronted by the anger of many black professionals at the lack of transformation in the financial services sector. Anger that their business proposals are routinely declined for bank funding while equivalent or worse proposals from white businesses succeed. Anger that only a tiny portion of the fund management industry’s assets are managed by black firms (4.4%, according to research by 27four Investment Managers). Anger that there is not a single black-owned bank in the country that could challenge the institutional racism that seems entrenched in the formal banking industry.
Transformation in the financial services industry is in a worse position than it was 10 years ago. When the financial services charter was signed in 2003, something of a Damascene conversion had occurred among the white leaders of banks, insurance companies and asset managers.
They had to face up to the racism embedded in the way banking and other financial services products were designed and sold. While there was much resistance to change, among the leadership there was a commitment that was tangible. It did have an effect — the banks and insurers did empowerment deals; they set up departments to specifically focus on targeted financing of black businesses; and they started training programmes to build black talent.
Fast forward 13 years and that momentum seems to have dissipated. There are many reasons. The focus the Mbeki presidency brought to black empowerment has been lost. Business people no longer fear Thabo Mbeki’s public rebukes.
In financial services, one of the most serious and disappointing reasons has been the dysfunction of the financial services charter. The charter effectively collapsed in 2009 after its council missed the end-2008 deadline to bring the charter in line with the broad-based black empowerment codes. The collapse happened because of a standoff in the charter council between the South African Communist Party and everyone else. A renewed charter was signed in 2013 and an annual report was produced for the first time that year since 2008. However, that charter has since been subject to further negotiation to bring it into line with new broad-based empowerment codes.
Apart from these factors, one also senses that the pressure on financial services companies from within has lessened as black empowerment deals have matured and the more activist lobbyists have become wealthy beneficiaries. All told, the commitment to transform that was in evidence in 2005 now seems sorely absent. Anger is the inevitable result.
Even under apartheid, there were black-owned banks, albeit restricted to the homelands. In late apartheid and the early days of democracy, a number of licences were issued to black-controlled entrants to the banking market, but these didn’t survive the post-1998 emerging market crisis. Black-controlled banks such as Real Africa Durolink, FBC Fidelity and African Merchant Bank came to an end in 2001.
That may change soon, though. I am aware of some attempts to bring black control back into the banking market via some of the smaller banks such as Teba-controlled Ubank.
The regulatory architecture isn’t helping. The Treasury’s move towards a twin peaks regulatory framework will see the Reserve Bank become a prudential authority and the Financial Services Board become a sector conduct authority. The prudential authority will worry about systemic stability; the conduct authority about the way banks treat their customers. Neither has a mandate to worry about transformation.
Part of the problem is that systemic stability has taken on renewed importance since the financial crisis. Large banks with substantial capital behind them are more competitive as they are better able to assuage nervous depositors and regulators.
Regulatory reform since the crisis has made it harder than ever for small local banks to enter the market; there is little substitute for large financially strong shareholders in banking. Ultimately, the leadership of our banks and other institutions need to face up to the moral imperative to drive change.
This article first appeared in Business Day

26/08/2015

Actually, President Zuma, SA's economy has hit the skids.

Less than three months ago, President Jacob Zuma insisted in parliament that SA was "doing very well". Last week, he came close to admitting SA was in a crisis. However, he insisted the country was not alone in experiencing low growth, nor was the problem one of SA’s own making.
The Financial Mail has long warned that the economy is in crisis. But it is as much a crisis of confidence caused by government’s mismanagement of the economy as it is due to global factors like China’s slowdown and the machinations of the US Federal Reserve.
The fact that there are both negative domestic and external forces bearing down on the economy makes its predicament that much worse.
With the mining sector edging closer to a strike, the rand testing new lows, fresh concerns over China’s growth, and the Fed on the cusp of raising rates, there is a real danger that SA’s economy could tip into an outright recession.
Over the past few months, many of SA’s key economic indicators have sunk to levels that suggest SA is headed for long-term economic stagnation, at the very least. Business and consumer confidence are at 15-year lows, worse even than at the start of the 2009 recession.
However, at a press conference on the state of the nation last week, Zuma assured SA that though it was caught up in a wider emerging-markets crisis, not everything was "doom and gloom".
Though conceding that the electricity constraint could shave as much as one percentage point off growth in 2015, he expressed confidence that the economy was still on track to grow by 2% this year and rebound to 3% by 2017.
But with the Reserve Bank having marked down SA’s growth potential to just above 2% from 3.5% a few years ago, and Eskom having just pushed out the deadlines for the completion of Medupi, Kusile and Ingula by two years, it is becoming increasingly unlikely that the automatic upswing built into SA’s official growth forecasts will materialise.
The more plausible view is that SA can expect to bump along the bottom for several more years, growing at 1%-2% a year. Two more years of this desultory performance and SA will have experienced five consecutive years of low growth — the most prolonged phase of weak growth since 1994.
In an update on the SA economy released this week, the World Bank revised down its real GDP growth forecast for SA to 2.0% in both 2015 and 2016 (a drop of 0.5 and 0.8 percentage points, respectively).
Most significantly, it forecasts the SA economy will recover to just 2.4% in 2017 as it expects the electricity situation to improve only towards the end of that year.
"Growth is stuck in low gear due to a combination of external headwinds arising from the fall in commodity prices and slowdown in the Chinese economy and important domestic constraints," the Bank says.
Proof of this lies in the fact that over the past five years, the BBB median country growth rate has averaged close to 4% against SA’s average of just 1.8%. This points to homegrown shortcomings that have been holding the country back, rather than just global constraints.
The president’s failure to recognise this (at a press conference called to show he is not out of touch with the state of the nation) can only dent confidence further.
"I wish he hadn’t continued to blame foreign forces and global issues and continued to say SA isn’t alone is having low growth," says Nomura strategist Peter Montalto. "[It] shows he fundamentally cannot admit to the problem. This is the first step investors want to see, that SA acknowledges that its problems are homegrown."
Pan-African Capital Holdings CE Iraj Abedian agrees. He argues that the economy’s suffering comes from a crisis of business and investor confidence, which primarily stems from government’s mismanagement of the economy.
For instance, he notes that the minister of home affairs has thrown SA’s tourism sector into disarray through the introduction of the new visa regime — at a time when, with the weak rand, it should be fairly humming. "This is a self-inflicted problem that has nothing to do with the global crisis," says Abedian. "Not owning up to the specific damage the cabinet has wrought on the economy was a missed opportunity."
He is unimpressed that Zuma announced that Deputy President Cyril Ramaphosa would head an interministerial task team to review the visa regulations since, like so much of the salvage work assigned to Ramaphosa, it comes after the horse has bolted.
Hopefully the tourism sector has not been irrevocably harmed and will bounce back once more practical travel rules are implemented.
The same cannot be said for SA’s faltering industrial complex.
Even as the president was insisting that manufacturing exports had turned around, Stats SA released data showing that SA’s manufacturing sector had experienced two consecutive quarters of decline, dropping by 1.2% q/q in the second quarter after a 0.5% q/q contraction in the first.
This suggests that overall GDP growth remained below 2.0% q/q seasonally adjusted and annualised in the second quarter. The Reserve Bank has warned SA to expect another dismal outcome when the GDP figures are released next week, roughly equal to the 1.3% recorded in the first quarter.
This means that the economy will have to outperform in the second half of the year to grow by 2% for the year as a whole. This seems increasingly unlikely, given the plummeting rand, rising inflation, tighter monetary policy and impending job cuts in several sectors.
Economists agree that the weakness in SA’s industrial output reflects a number of factors, including low productivity, regular labour disruptions, rising import intensity, weak business confidence and infrastructure bottlenecks, especially in the provision of electricity.
But this handy economic shorthand tends to mask the true horror of the disaster unfolding in SA’s industrial sector.
Henk Langenhoven, the chief economist of the Steel & Engineering Industries Federation of Southern Africa, is surprised that few people have grasped the extent to which the economy is being eviscerated.
The first step to understanding what is happening, says Langenhoven, is to realise that the metals & engineering sector is intimately linked to the fortunes of the mining, construction and car-manufacturing sectors. Any disruptions in activity in any one of the sectors will hurt the others.
For instance, the travails in mining as a result of lower commodity prices, cost pressures and losses have had a very negative impact on demand in the metals & engineering sector.
The latter’s annualised production numbers turned negative in June 2014 and have been negative ever since. In fact, the downward trend is accelerating.
Whether this slide continues depends largely on whether mining is able to sustain production and exports. That’s a big "if" given that, at current prices, more than 40% of the country’s platinum and 31% of the gold mining industry is loss-making.
"Strikes now in the mining sector would be calamitous," says Langenhoven.
"All four sectors are suffering, all are highly energy-intensive and are the biggest employers and biggest export earners. That’s why it’s so serious," he adds. "It seems as if nobody has realised how interlinked these sectors are and how important they are to the economy."
Collectively the four sectors contributed 20.6% to GDP in 2000, but that had dropped to just under 17% by the first quarter of 2015.
At the end of 2014, they together directly employed about 1.45 million people. By the end of the second quarter of this year, Langenhoven expects 67 000 of these jobs to have been shed, based on the sectors’ recent data for production and value added.
He also estimates the contraction in these four sectors will collectively shave 0.7% off SA’s total GDP in the second quarter. But the most worrying factor, he feels, is that these four sectors’ combined trade balance had reversed from a R50-billion surplus in 2011 to an estimated deficit of R70-billion at the end of the second quarter of 2015.
"The metals & engineering sector exports half of its output," says Langenhoven. "If exports don’t recover, half our market doesn’t recover."
Manufacturing and mining have discovered that despite the very weak rand, exporting your way out of trouble is difficult when China’s slowdown has depressed the prices of, and demand for, your key exports, the EU is barely growing and load-shedding occurs frequently.
The motor industry is also in recession, with vehicle sales down 2% in the first half of the year compared to the first half of 2014. The passenger car market has been in decline since mid-2013, reflecting the growing pressure on the highly indebted SA consumer from rising living costs and weak jobs growth.
"If this is not counter-balanced by sustained or growing vehicle exports (so far they have been buoyed by America’s recovery), it could initiate another wave of lower demand for the metals & engineering sector and exacerbate the already bleak situation, with more retrenchments resulting," says Langenhoven.
One of the chief industrial policy goals of the department of trade & industry (DTI) has been to use the public procurement process to reindustrialise SA. But, says Langenhoven, it hasn’t stimulated the domestic economy by anything close to what was expected.
"Government wanted industry to ramp up from tiny volumes to making things like trains in huge volumes overnight. The capacity just wasn’t there." Instead, it has been met in many cases by cheaper Asian imports.
The combination of domestic challenges, coupled with a global steel glut and swelling of cheap Chinese imports, has proved too much for SA’s steel industry. Evraz Highveld Steel, SA’s second-largest steel producer, has been placed in business rescue and ArcelorMittal has put its Vereeniging long steel works into temporary emergency care.
"I think we’ve already lost in the short term and I expect things to get worse and job losses to accelerate," says Langenhoven. "We’re seeing a lot of losses and some of the guys in my sector tell me they can’t service their debts."
Stanlib chief economist Kevin Lings fears things could snowball. Substantial job losses in mining and manufacturing would depress consumption and so further weaken the broader business sector, he explains. The risk is that this causes a self-perpetuating cycle in which companies start to cut jobs more aggressively, forcing the economy ever closer to an outright recession.
Lings’ view is that a recession is not inevitable, but that SA is laying the groundwork for precisely such an outcome. Whether or not the economy actually tips into negative territory, what cannot be denied is that SA has become well and truly stuck in a low-growth environment without any immediate means of escape.
Exports are under pressure, the consumer is on the ropes, business is battening down the hatches, and both fiscal and monetary policy are in tightening mode as the authorities seek to lessen SA’s external vulnerability in the face of imminent Fed hikes.
The World Bank warns that there are downside risks even to its already weak SA economic forecast.
"On the domestic front, if labour relations do not improve or if power disruptions worsen, growth could well disappoint further," it notes in its report. "And if wage settlements continue to exceed inflation and productivity gains, competitiveness will erode, undermining the role of net exports in supporting the recovery."
Consulting economist Cees Bruggemans feels SA is "increasingly harvesting an approaching storm" as the result of years of penalising the economy through government’s single-minded and legalistic pursuit of redress and redistribution at the expense of economic efficiency.
This approach has led to layoffs, weakening the human capital base in the public sector, writes Bruggemans in a recent column. "The cumulative unintended consequences of this can be observed daily."
Only a change of heart can turn this around, he feels. "This does not necessarily mean a shift to unfettered economic logic. Restitution and compensation can remain a major feature of changing SA’s complexion ... but in a secondary, supporting role rather than the sole primary one, as has been the case for too many years now."
Given three wishes, Abedian would reshuffle the cabinet to include more competent people who understand modern economies; abandon government’s statist approach to running the economy (since it has neither the money nor the implementation capability to do so) and instead invite the private sector into a partnership to revive the economy; and have a credible, cost-effective and sustainable energy policy that ends Eskom’s monopoly and involves a greater private-sector contribution.
Old Mutual Investment Management chief economist Rian le Roux wishes Zuma had used his press conference to announce immediate action against underperforming municipalities and government departments. He also would like to see a far more aggressive approach to corruption and wastage and a plan to reduce regulatory burdens, speed up regulatory processes and sort out managerial problems at state-owned enterprises, including replacing dysfunctional managements and boards with qualified, competent people.
For the World Bank, "improved labour relations, matched by greater collaboration between the public and private sectors and policy certainty to improve the business environment, is fundamental to restoring confidence."
It also says SA must get basic education and post-school vocational training right in order to meet the jobs challenge, noting that this will also require more supportive small business policies, like ensuring greater regulatory flexibility.
Montalto counters that it is already too late to fix many things, like preventing the impending job cuts in mining. In any event, what needs to be done is politically impossible under SA’s current style of leadership, he says. "SA is stuck in this low-growth world within the confines of what is politically possible. The foundations are already laid. It’s all well and good bandying around need for labour law changes, improved education and skills and a change of mind-set at the DTI, but it isn’t going to happen."
The idea that SA has already lost the battle is not typically expressed in SA’s public discourse except in hushed asides.
Standard & Poor’s sub-Saharan African MD Konrad Reuss is one of the few to have given it voice. In an interview with the Financial Mail earlier this year he said: "While we believe that government will continue to adhere to controlled fiscal expenditure, we do not believe it will manage to undertake the major labour and other economic reforms that will significantly boost GDP growth."
Moody’s continues to give government the benefit of the doubt a full three years after the launch of the National Development Plan (NDP), despite all the evidence that government is incapable of implementing any of the tough economic or labour market reforms.
"The country is at a crossroads in that it’s stuck in this low-growth trajectory and there are policy choices to make," Moody’s lead SA analyst Kristin Lindow told the Financial Mail in May. "A lot of the growth constraints are domestic in origin. Acknowledging and dealing with it is going to be crucial if SA is to move beyond this period."
So far government’s response to the crisis has been to establish task teams and "war rooms", repackage old plans or promise to "fast-track" things it should have been doing urgently anyway, send contentious matters for further study, and continue to insist it is committed to implementing the business-friendly NDP even as new policies weaken property rights and investor protection.
To be fair, Zuma did announce one new, welcome initiative at the press conference: the establishment of a pilot investment facilitation centre, or One Stop Shop, at the DTI to reduce regulatory and bureaucratic hurdles and fast-track all investment inquiries.
But what government has not been able to do is face up to the root cause of the growth slowdown: that under Zuma’s presidency there has been a progressive erosion of the structural underpinnings of SA’s economic performance and productivity.
A recent BNP Paribas study confirms that large swathes of SA’s once-profitable firms and factories are experiencing faltering turnover, squeezed industry profitability, waning capital replacement ratios and poor returns on assets.
The main culprit, according to the report, is that real turnover growth has barely kept pace with soaring real wage growth and rapidly rising employment costs. The result is that the productivity of many SA firms is in steady decline at a time when global conditions have become increasingly tough.
But supportive micro-policies to raise industry’s competitiveness have been few and far between. Instead, Zuma’s administration has increased the complexity of industrial regulations and presided over a rapid rise in the cost of logistics.
Above all, its distrust of private capital has meant it has failed at the most basic level to make SA a welcoming place to do business.
To compound matters, Zuma’s hands-off leadership style and lack of crisis management have created the sense of an economy on auto pilot with no-one at the helm to arrest the steady slide in its growth potential and creditworthiness.
This was underscored in parliament recently when Zuma revealed that he had no knowledge of impending job losses in mining, or of attacks on the integrity of the judiciary by his police minister, or even of the knee-jerk suspension of Glencore’s Optimum Colliery’s mining licence by his mineral resources minister — an item of huge controversy which has caused confidence in the sector to plumb new depths.
It was ostensibly to repair the damage that Zuma called the press conference a few days later where he assured SA that not everything was "doom and gloom".
On the contrary, SA is busy making the noose for its own neck.
At most, SA has a two-year window to prevent further sovereign credit rating downgrades. The rating agencies have been clear that it will take more than treasury’s continued fiscal prudence for SA to hang on to its investment rating. The country must also prevent any further deterioration in its growth and investment climate, something it is manifestly failing to do.
The World Bank concludes that "structural impediments will continue to weigh heavily on SA’s growth over the next three years" and that "labour relations will remain difficult in an environment of weak growth".
Given this, the Bank expects unemployment to remain "sticky and high", and extreme poverty and inequality to remain broadly unchanged.
The consensus is that the only way to jolt SA out of this low-growth trap is for government to undertake structural economic and labour market reforms.
However, for that to happen will ostensibly require an overhaul of the political leadership. That is at least four years away. If the economy is in bad shape now, what will it look like after another four years of this?
On its current trajectory, SA can expect massive de-industrialisation, macroeconomic instability, and a sovereign rating downgrade to junk status, which could trigger a currency crisis.
A worsening of the growth and jobs situation could also lead to a crisis — either through escalating social unrest, a fiscal crisis or a jump to outright populist policies, says Le Roux.

That is not a happy ending. It is certainly a lot less than SA deserves. But if it materialises, SA will have only itself to blame.
This article first appeared in the Financial Mail