Cyril’s liking for doubt and uncertainty makes him easy prey...


Cyril’s liking for doubt and uncertainty makes him easy prey for Deep Thought

International investors have given their verdict on South Africa by selling stocks and bonds worth R170bn. This is the consequence of Ramaphosa's clumsy dance with Vladimir Putin, writes PIET CROUCAMP.


IN The Hitchhiker's Guide to the Galaxy, Douglas Adams portrays life as a succession of difficult questions.

Millions of years ago, he explains, a race of hyper-intelligent, pan-dimensional beings grew tired of incessant arguments about the meaning of life. In an attempt to answer the complex questions of human existence, they decided to build a supercomputer the size of a small city.

The computer needed a name and the most elusive quality for a struggling philosopher provided it: Deep Thought.

When Deep Thought was activated, programmers Lunkwill and Fook, with wilful curiosity, inquired if it was indeed the most powerful computer ever created. Deep Thought replied: “No, but I am the second most powerful ever. The most powerful one has not been built yet."

With an embarrassed cough, the programmers asked if Deep Thought had the elusive answer to the vexing question about the meaning of life and the universe. Deep Thought unequivocally declared that there is indeed a simple answer, but it would require a bit of philosophical contemplation.

Two philosophers, Majikthise and Vroomfondel, lazily entered the room, somewhat uninvited. They represented the Amalgamated Union of Philosophers, Sages, Luminaries and Other Thinking Persons and insisted that Deep Thought be shut down immediately.

“Let the machines do the grunt work," said Majikthise, “we will deal with the eternal truths." They feared machines would leave philosophers without a livelihood.

The atmosphere was charged with cheap Marxist philosophy: the pursuit of ultimate truth is the inalienable privilege of working thinkers. “That's right," said Vroomfondel, “we demand strictly defined areas of doubt and uncertainty."

Writing’s on the wall

If there ever was a complete manifestation of Vroomfondel and Majikthise's insistence on doubt and uncertainty, it is Cyril Matamela Ramaphosa. The wise Herman Lategan's reference to Ramaphosa as a Trojan horse or John Steenhuisen's “confidence trickster" are not unwarranted or unjust descriptions.

The level of trust in the president to do the right thing at the right time is at an all-time low, and we have reached the stage where the expectation exists that he intentionally creates “strictly defined areas of doubt and uncertainty" with ideological and philosophical intentions.

When your integrity, or the trust that you will do the right thing at the right time, is called into question, the writing is usually on the wall for your status in the family or community you live in.

The same principle applies in the international political economy. International markets that function for the benefit of universal interests are usually a function of trust and predictability. Ramaphosa and the ANC may choose to overlook or ignore this reality, but the adverse effects of their indifference will be recorded in the history books.

There is already a compelling argument that investment capital, for the present, will venture into South Africa only if the high risks are rewarded with high returns, which is typically the scenario in deteriorating political economies. This probably explains the influx of investment capital into our equity markets over the past decade.

However, as several economists have pointed out in recent weeks, sufficient returns can now be generated in other markets with lower risks, raising the danger that South Africa will soon find itself on the periphery of capital markets.

The South African Reserve Bank attempted to bring this reality home at Luthuli House and the Union Buildings in this week's Financial Stability Review. It warned of perceptions in North America and Europe that South Africa's disengagement in the Russia-Ukraine war is a cover for an ideological affinity with Moscow and could lead to devastating secondary sanctions against organisations, institutions and/or individuals in our already struggling economy. Obviously, this would have morbid consequences for South Africa's financial stability.

Increasing doubt, measurable uncertainty

The economy is grappling with the aftermath of the ANC's misguided liberation philosophy.

Doubt and uncertainty provide oxygen for Ramaphosa, as they do for Majikthise and Vroomfondel, to engage in idle chatter, but the lingering effect of his spineless insistence on the pretence of disengagement has had the destructive impact of a laboratory-grown virus on South Africa's capital markets.

In the first four months of 2023, South African stocks and bonds worth more than R170-billion were sold by international investors. Relatively high interest rates in other markets certainly played a role, but the reality is that the South African policymakers are no longer trusted to do the right thing at the right time.

For international risk analysts, Ramaphosa and the ANC are now an additional indicator of increasing doubt and measurable uncertainty. Uncertainty and doubt raise the risk of doing business in and with South Africa, and as we all know, risk comes at a premium.

Magda Wierzycka, CEO of the financial services company Sygnia, claimed after talks with fund managers in London last week that there is a perception that South Africa has become irrelevant as an investment jurisdiction.

If Americans or the European Union reach a consensus that South Africa is irrelevant and a net exporter of investment capital — and will remain so — it becomes much easier to use the so-called secondary sanctions referred to in Reserve Bank report to send a strong message to other unsuspecting philosophers with unsavoury pretensions.

Political dance with Putin

The real damage of Ramaphosa's unconvincing, clumsy political dance with Vladimir Putin is the doubt and uncertainty it entails for South African financial institutions in international markets.

Ramaphosa claimed in a recent conversation that he is unaware of any plans to impose economic sanctions against South Africa. However, the president has been so frequently surprised, astonished and bewildered by South Africans' daily realities that his cognitive understanding of the reality for economic stakeholders also sprouts only in “doubt and uncertainty."

The parlous state of the rand doesn't seem to hold a clear message for the president. He even dismissed South Africa's appearance on the Financial Action Task Force (FATF) grey list of countries that need to be monitored specifically for corruption and funding of international terrorism. It was temporary and not truly influential on economic activities and local markets, he said.

More than half of the reported crimes in South Africa fall into categories that generate tax-related proceeds, but also include bribery, corruption, fraud and illicit drug trafficking — all crimes often associated with international value chains. The FATF claims that this reality creates “strictly defined areas of doubt and uncertainty."

Supercomputer fights back

There are still institutions in our state system that keep the bear away from the back door — for now. Lunkwill and Fook gradually came to realise that the philosophers' insistence on answering life's difficult questions was a facade and nothing more than a need to pamper “strictly defined areas of doubt and uncertainty".

The supercomputer fights back. The South African Revenue Service (Sars) under Edward Kieswetter is increasingly associated with the artificial intelligence (AI) of supercomputers. Using AI and machine learning systems, Sars has beaten its revenue budgets by more than R300-billion over the past three years. And the Reserve Bank also looks at economic factors through the prism of innovative technology.

Most of us think of the Reserve Bank only in terms of interest rate regulation as a means of inflation control. But under the expert management of governor Lesetja Kganyago, it is one of South Africa's last bastions of financial and political stability. And if it weren't for the Sars being such a personal nuisance for taxpayers, this well-managed institution would probably have evoked the same positive realisation among salary earners.

The Treasury doesn't exactly boast a clean audit annually, but finance minister Enoch Godongwana serves as a reality check on his colleagues in cabinet meetings, especially regarding their undefined political and bureaucratic claims on the fiscus.

The Treasury still has a long way to go but it is probably the next institution that will turn to artificial intelligence and machine learning technology for the purposes of effective budget management.

The purpose of technology, among other things, is to gain control over the variables that bring uncertainty. Uncertainty's roots are more often in ideological policy decisions, especially when the motivations for those decisions do not correspond to economic realities.

Japan's bombshell decision not to invite South Africa and Ramaphosa to the G7 summit in Hiroshima is clearly not just a symbolic reprimand.

It is also a finger-pointing by Deep Thought at our incredible philosophy of disconnection, and an indication that it is time for Majikthise, Vroomfondel and the Trojan horse to hit the road.


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