Guest Column

For the sake of the poor, just go

2017-04-09 06:13
Thousands of South Africans marched in Durban on Friday, in solidarity with demonstrators countrywide, calling for President Jacob Zuma to step down or be fired. Picture: Siyanda Mayeza

Thousands of South Africans marched in Durban on Friday, in solidarity with demonstrators countrywide, calling for President Jacob Zuma to step down or be fired. Picture: Siyanda Mayeza

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Mathews Phosa

On waking up last Friday morning, we learnt that our trusted finance minister, Pravin Gordhan, and his deputy, Mcebisi Jonas, had been removed under the cover of darkness at the stroke of midnight.

Following the disastrous appointment of Des van Rooyen on December 9 2015, Gordhan was handed a poisoned chalice and worked tirelessly to prevent our beloved South Africa from being downgraded to junk status.

Since 2000, South Africa had enjoyed the benefits of a good credit standing. It took hard work and dedication to gain an investment-grade rating following the ruinous legacy of apartheid.

The finance team which effected this result was initially led by Chris Liebenberg.

He was succeeded in 1996 by Trevor Manuel. During his 13-year term, Manuel was a household name here and became the flagbearer for our stable economy on the global stage.

When Gordhan took over from him, the protracted honeymoon that we had enjoyed since the dawn of our democracy, April 28 1994, was over.

The world economy was in trouble, but South Africa had dodged the proverbial bullet, thanks to the conservative policies implemented under Manuel and his team.

In keeping with his exemplary predecessors, Gordhan and his team worked tirelessly to ensure that our country maintained its place as the biggest economy on the African continent.

Under his leadership, our economy stabilised and showed positive signs, while the economy of world powers faltered or recovered slowly.

When Nhlanhla Nene took over from Gordhan in May 2014, our credit rating was intact, albeit under pressure.

Thanks to our hard-earned economic and political reputation, we were able to borrow successfully in the capital markets at rates which allowed our economic growth and low inflation to continue.

It all changed when Nene was unceremoniously removed on December 9 2015 and replaced by a captured minister who would have taken us to the depths of despair had the country, and certain brave leaders, not voiced their outrage.

Under pressure from all quarters, President Jacob Zuma was forced to reappoint Gordhan, who agreed to steady the ship. In doing so, Gordhan brought stability back to our beleaguered currency.

On Monday, South Africans received the shocking news that our credit rating had been lowered to subinvestment grade by S&P Global.

Although this was not unexpected, it came on the back of Zuma having scored yet another own goal with the previous week’s sacking of Gordhan and Jonas.

The latest political manoeuvres, coupled with the country’s protracted low growth and government’s manic looting of the public coffers, have plunged the country into a crisis.

Zuma’s changed constituency

The situation is dire.

The country is in revolt, and calls for Zuma to resign have crescendoed.

From ordinary citizens and opposition parties to civil groups such as Save SA and ANC veterans, countless South Africans have indicated they want change.

These groups believe Zuma is out to line his own pockets, as well as those of his sycophants, by bowing to external forces and selling South Africa to the highest bidder.

Crucially, he has lost the confidence of those who voted him into power.

And critically, he has turned his back on those from whom he should have sought a mandate for his decisions.

His constituency has changed from the electorate to other, sinister forces with no mandate nor any interest in a better life for all.

Our having “earned” a downgrade in our country’s credit rating is no different from someone who is struggling to obtain credit, since our personal credit histories are recorded by bureaus which inform potential lenders of our financial status.

If one is prudent with their finances, they can qualify for more debt – often at sympathetic interest rates and with decent repayment conditions.

On a national level, earning a sound credit rating is a great asset.

The banks, lenders, international funders and those with money to invest will regard us as a valued client and court us in a bid to have the chance to lend us money.

As a result of our good standing, interest rates will be low, the repayment terms negotiable and the interaction pleasant.

It is no different from the reception you will get from the banks if you are in good financial standing and want to borrow from them. It all contributes to our country’s prosperity.

However, the further South Africa slides down the rating scale to subinvestment grade, so reputable banks will close their doors on us, while creditors will knock at our door.

Investment houses do not simply hold investment-grade government bonds and other credit instruments.

When a country slips out of the investment zone, these houses act fast to sell its junk-status documents to any takers.

Such takers are akin to loan sharks – the mashonisas – that will lend you money but get you to leave your precious assets with them; assets they can sell when you cannot repay your debt.

We have seen this happen to other countries, such as Brazil.

A subprime investment rating, AKA a junk rating, affects the consumer directly.

Those living on credit – be it in the form of a housing bond, a car loan or credit from a clothing store – can expect to pay more for their borrowings and find credit hard to come by.

Even for people living within their means, necessities such as food, as well as other services such as schooling and petrol, become more expensive.

We will all have less money to spend on necessities and luxuries.

In addition, our taxes will buy fewer services as the interest that our country will need to pay on our borrowings will increase.

Our well-laid plans for increased investment in infrastructure will not materialise, and our water supply, electricity and other services will come under pressure.

Expect service delivery – already problematic in many parts of the country – to deteriorate even further.

To counter the decline, government will have to raise taxes, risking economic growth and increasing the chances of a recession.

This, in turn, will affect us all as employment opportunities – already scarce – diminish further. In addition, imported goods become more expensive as the rand continues to lose value.

And who will suffer most? The poor, who will become poorer.

Because of our economic interdependence with African states, our neighbours, too, will suffer.

Looting, nepotism and tribalism

Our actions should be carefully considered. Decisions can never be taken to favour an individual, a population group or a foreign party.

We are all proud South Africans, but recent events have seen the state being eroded by nefarious characters, by nepotism being enacted at presidential level and by an influential, unelected family being given carte blanche to raid our institutions.

Now it seems as if Treasury is being targeted by these evil forces.

Following hot on the heels of Gordhan and Jonas’ exit, Treasury’s director-general, Lungisa Fuzile, resigned this week.

It is clear that the state has been captured. South Africans are in despair and parliamentarians are being held ransom by threats of ANC members losing their jobs should they defy Zuma.

We need to grow a collective backbone – fast – and fill the streets with our protesting voices until somebody listens to our outrage.

The National Prosecuting Authority, which was so forthright in bringing dubious charges against Gordhan, has been deafeningly silent about those who are raping our country and depriving our children of a decent future.

South Africa needs an educated middle class to drive growth.

Citizens need to feel safe on the streets and in their homes. The anxiety brought on by incompetent leadership, greed and self-interest at the top is destroying our nation.

Over the past eight years, we have seen our dreams crumble.

Our people must unite against a force bent on destroying our communities by paying lip service to “an inclusive economy” while practising exclusionary politics.

We cannot sit idly by, watching our economy, political system and livelihoods being destroyed.

We need to see action being taken against these forces of evil by uncompromising leadership.

We want a finance minister with integrity and foresight to grow our economy. By shrinking the economic pie and overtaxing individuals and corporations, we can never achieve an inclusive economy.

How will destroying our economy empower us?

The looting, nepotism and destructive tribalism dominating South Africa have placed us all in a political and economic quagmire.

SA must mobilise

Ordinary citizens always bear the brunt of politicians’ failings.

Servant leadership is sorely needed. It entails steering clear of nefarious external influences and doing what benefits the people.

South Africans are angry, scared and hungry.

Our democracy is under attack from those with an unquenchable thirst for corruption. Their tables are heavy with the food that belongs in the households of the poor.

If we do not remove Zuma and his sinister associates, the consequences will be dire.

The credit downgrade is just the beginning. If we continue in this vein, investment in new projects will cease and unemployment will skyrocket.

As a citizenry under siege, we demand a new president and new leadership. Our country is being managed like Zuma’s personal fiefdom.

It resembles a family business that extends favours to unscrupulous third parties and unconscionable bidders. We know what happens when companies are managed in this way – they fail.

I call on Zuma to show that he has respect for the poor and go. I call on all South Africans to mobilise tirelessly until that happens.

Phosa is the former treasurer-general of the ANC and premier of Mpumalanga


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Read more on:    anc  |  zuma  |  jacob  |  protests  |  cabinet reshuffle


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