“I CAN predict when SA’s ‘Tunisia Day’ will arrive. Tunisia Day is when the masses rise against the powers that be, as happened recently in Tunisia. The year will be 2020, give or take a couple of years. The year 2020 is when China estimates that its current minerals-intensive industrialisation phase will be concluded”.
“The ANC inherited a flawed, complex society it barely understood; its tinkerings with it are turning it into an explosive cocktail. The ANC leaders are like a group of children playing with a hand grenade. One day one of them will figure out how to pull out the pin and everyone will be killed”.
These extracts and the ones that follow are taken from one of the most important articles I have read in many years. Today Business Day has published the article by Moeletsi Mbeki, author of “Architects of Poverty: Why African Capitalism Needs Changing” and the article forms part of a series on transformation supplied by the Centre for Development and Enterprise. It is entitled Wealth creation: Only a matter of time before the hand grenade explodes.
Cloud Cuckoo Land
“The former British prime minister, Margaret Thatcher, once commented that whoever thought that the ANC could rule SA was living in Cloud Cuckoo Land. Why was Thatcher right? In the 16 years of ANC rule, all the symptoms of a government out of its depth have grown worse.
- Life expectancy has declined from 65 years to 53 years since the ANC came to power;
- In 2007, SA became a net food importer for the first time in its history;
- The elimination of agricultural subsidies by the government led to the loss of 600000 farm workers’ jobs and the eviction from the commercial farming sector of about 2,4-million people between 1997 and 2007; and
- The ANC stopped controlling the borders, leading to a flood of poor people into SA, which has led to conflicts between SA’s poor and foreign African migrants.
Skills should have been retained
What should the ANC have done, or be doing? The answer is quite straightforward. When they took control of the government in 1994, ANC leaders should have:
- identified what SA’s strengths were;
- identified what SA’s weaknesses were; and
- decided how to use the strengths to minimise and/or rectify the weaknesses.
A wise government would have persuaded the skilled white and Indian population to devote some of their time — even an hour a week — to train the black and coloured population to raise their skill levels.
Black Economic Empowerment (BEE)
What the ANC did instead when it came to power was to identify what its leaders and supporters wanted. It then used SA’s strengths to satisfy the short-term consumption demands of its supporters. In essence, this is what is called black economic empowerment (BEE)”.
Conglomerates
“But what is wrong with protecting SA’s conglomerates? Well, there are many things wrong with how conglomerates operate and how they have structured our economy.
- The economy has a strong built- in dependence on cheap labour;
- It has a strong built-in dependence on the exploitation of primary resources;
- It is strongly unfavourable to the development of skills in our general population;
- It has a strong bias towards importing technology and economic solutions; and
- It promotes inequality between citizens by creating a large, marginalised underclass.
Conglomerates are a vehicle, not for creating development in SA but for exploiting natural resources without creating in-depth, inclusive social and economic development, which is what SA needs. That is what is wrong with protecting conglomerates”.
Create wealth through entrepreneurs
“The second problem with the formula of BEE is that it does not create entrepreneurs. You are taking political leaders and politically connected people and giving them assets which, in the first instance, they don’t know how to manage. So you are not adding value. You are faced with the threat of undermining value by taking assets from people who were managing them and giving them to people who cannot manage them. BEE thus creates a class of idle rich ANC politicos”.
“So what is the correct road SA should be travelling? We all accept that a socialist model, along the lines of the Soviet Union, is not workable for SA today. The creation of a state-owned economy is not a formula that is an option for SA or for many parts of the world. Therefore, if we want to develop SA instead of shuffling pre-existing wealth, we have to create new entrepreneurs, and we need to support existing entrepreneurs to diversify into new economic sectors”.