On the Brink. Claire Bisseker
the national democratic revolution).
Such is the desire for renewal that there is every chance that on Zuma’s exit, whether before the 2019 election or after, South Africa will embark on another protracted detour in search of consensus solutions on how to run the economy regardless of who replaces him. But the solutions to South Africa’s economic decline are no mystery. They have been tried and tested in other countries. Many of them have appeared in various iterations of South Africa’s own economic policies over the years. What the country has not done is actually implement them.
To implement any development plan requires a capable, accountable state, unifying leadership and someone to champion reform at the highest level of government. South Africa has lacked all these ingredients. And though Gordhan championed the NDP and made every effort to partner with business to get growth going, he was thrown to the wolves. With him went the country’s credit ratings.
South Africa can devise a new plan if it must (it would be its fourth in a decade), but until the government can actually land it throughout society and use it to remove the key impediments to growth, the economy will remain trapped beneath a 2% ceiling. The longer South Africa debates the problem, the longer it will remain trapped, and the further it will be left behind.
Politically, South Africa’s future is impossible to call, since many plausible outcomes can be imagined. But for the economy, the future really is binary. Only two outcomes are really possible – a good one or a bad one – because if the economy is not moving forward convincingly, it is in decline. With the right leadership and economic policies, the country could take off. With the wrong ones, it will continue its descent. That descent could be rapid, if the ANC tacks left towards more populist policies, or gradual, if policy confusion and inertia continue to frustrate growth.
With the country living dangerously, South Africa needs more than ever for wise heads to prevail. Gigaba is unlikely to surprise everyone by rising to the challenge of his portfolio, though there remains an outside chance of this. Zuma is deeply entrenched but his corrupt faction may yet be swept out of power on the rising tide of South Africa’s anger. In every facet of public life, people are standing up to his gangster regime. The courts, especially, have inflicted heavy losses on Zuma’s push for untrammelled power.
Though Zuma would leave behind a ravaged state, better people would be attracted to the multi-year task of rebuilding the country’s institutions and they would build them stronger than before, knowing now the forces they might need to again withstand one day.
South Africa stands on the brink of a political and fiscal cliff. The period ahead is going to be nail-biting with the dial on the nation’s psyche likely to swing from despair to euphoria and back again several times before it is all over. Many of the ingredients for a catastrophic collapse are already present, but South Africa has pulled back from the brink before. There is every reason to believe it will find the national cohesion and resolve to do so again.
PART 1
A Political Overview
1 #ZumaMustFall
‘The National Treasury held the line on everything; we had to park some projects that couldn’t be executed. … those things might not have gone down well with all of my colleagues. No one was happy.’
– Nhlanhla Nene
South Africa’s jilted former finance ministers Nhlanhla Nene and Pravin Gordhan are sitting on a bench on a farmhouse veranda in the little village of Kranskop, which lies on the edge of the Tugela River Valley in the KwaZulu-Natal Midlands. They are watching Nene’s cattle wander up from the river to graze on leftover bean stalks below the house.
Gordhan turns to Nene and says, ‘Now I can see why you always come back to work so refreshed on a Monday morning.’
Back in that bucolic moment the colleagues could scarcely have imagined the assault on the National Treasury that lay ahead and how it would result in both of them being axed within months of each other, ultimately causing the economy to be junk-rated and growth to flat-line.
President Jacob Zuma’s act of summarily dismissing Nene, a highly competent finance minister, on 9 December 2015 without informing the rest of his cabinet or the top echelons of the ANC, but with the apparent knowledge of his friends, Atul and Ajay Gupta, has been dubbed ‘Nenegate’ or ‘9/12’.
The event shook South Africa to the rafters. Not only did it take government’s mismanagement of the economy to a whole new level, but it also set in motion a chain of events that cleaved the ANC into two opposing factions and blew the lid off the murky world of state capture by providing first-hand evidence of the extent of the Guptas’ influence.
The steep drop in the rand,1 a spike in bond yields and the sharp fall in the JSE All-Share Index in the days immediately after Nene’s axing revealed the investment community’s horror at his dismissal. The public was equally dismayed: #ZumaMustFall was the top-trending Twitter hashtag in South Africa; talk shows were flooded with calls for Zuma to resign.
The fact that the consumer-confidence index, released the same day, collapsed to –14 index points, approaching levels not seen since 1986, added to the sense that the economy had suffered one too many blows.
It had been evident to the media weeks before that the knives were out for the National Treasury, and Nene in particular. The story that he would be fired and offered a job at the new Brics Bank as political cover was leaked to the press at least three weeks before 9 December. Nene was aware of these reports but said he ‘didn’t take them seriously’.2
He initially laughed off the astounding revelation by his deputy, Mcebisi Jonas, that members of the Gupta family had offered Jonas the post of finance minister – dismissing the Guptas as ‘chancers trying their luck’.
The South African public were deeply shocked. For if it was true that the Guptas were peddling cabinet posts around town, it meant that Saxonwold, not Pretoria, was really running the government, and that South Africa had truly descended into a gangster state.
As Jonas noted in a subsequent press statement, asserting that he had rejected the Guptas out of hand, ‘The basis of my rejection of their offer is that it makes a mockery of our hard-earned democracy, the trust of our people and [the fact that] no one apart from the president of the republic appoints ministers.’3
Later Jonas told the Public Protector that he had been offered R600 000 in cash by the Guptas to be finance minister, together with the promise of a further R600 million over time.
After Jonas spoke out, other revelations began to snowball. Former ANC MP Vygie Mentor claimed that the Guptas had offered her the post of Minister of Public Service and Administration to replace Barbara Hogan – provided she awarded them the flight route between South Africa and India. Hogan later claimed that the Guptas had also attempted to influence her decision-making. Mentor subsequently laid formal charges of corruption against the government and the Gupta family with the police. This gave South Africa another scandal – ‘Guptagate’ or ‘Zuptagate’ – to add to its inglorious trophy cabinet.
The impression that Nene’s dismissal was part of an orchestrated plot to capture the National Treasury was corroborated by Zuma’s choice of ANC MP David Des van Rooyen as a replacement finance minister. This former small-town mayor, with no fiscal or national-government experience, arrived at the Treasury with two little-known advisors (Ian Whitley and Mohamed Bobat) in tow, promising to make the Treasury ‘more accessible’ once he was installed.
Lungisa Fuzile – who served as the director-general to four consecutive finance ministers, Trevor Manuel, Nene, Gordhan and, more recently, Malusi Gigaba before his resignation – recalls that December weekend with the new incumbents as the ‘lowest of low points’ in his 19 years at the Treasury.
Bobat displayed such ‘impoliteness’ and disdain for how the Treasury operated that Fuzile was enraged. ‘I suspect that had that weekend not turned out the way it did, we would’ve ended up coming to blows,’ he said.4
It