This time there really is a wolf at the door. A scary one.


This time there really is a wolf at the door. A scary one.

The ANC's moment of truth has arrived. The state's books don't balance and large parts of the country are falling apart. On the eve of the medium-term budget speech and with its toughest election looming, the party is confronted with the reality that it has mismanaged the country and the economy into the ground. MAX DU PREEZ wonders if it is capable of realising the seriousness of the crisis and making drastic changes.


IN recent years, there has been regular shouting of “Wolf!" but this time it is indeed crunch time for South Africa.

The cumulative effect of years of outdated ideologies, the deployment of incompetent political cadres, systemic corruption, state capture and a laissez-faire approach to governance are now boldly written on the wall.

In Helvetica Bold, with spotlights on it.

The ANC's much-vaunted “developmental state" has turned out to be anything but.

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There has been more NDR than NDP: the ANC is still guided by the socialist struggle-era dream, the national democratic revolution, rather than the development plan that was put on the table more than a decade ago, the national development plan.

We see the symptoms all around us every day: large parts of the heart of our economy, Johannesburg, are steadily becoming a dangerous slum; there are severe water crises in many parts of the country; stage 4-6 load-shedding; elderly and sick people waiting for their allowances for weeks; students going hungry because their National Student Financial Aid Scheme payments are delayed; 19 politicians murdered in the past six weeks in KwaZulu-Natal; the decay within state-owned enterprises such as Transnet deepening; doctors in rural areas reporting a shocking number of malnourished children, some dying of hunger.

Those who count the cents and rands at the National Treasury say the state's coffers are empty. The budget deficit is about R144-billion. Tax revenue for the first five months of the fiscal year is already R22-billion lower than budgeted, meaning a deficit of R53-billion by year-end. In the same period, overspending stands at R15.3-billion..

The Minister of Finance, Enoch Godongwana, says the only effective short-term solution is severe cuts in state spending. He must explain his plans to parliament on November 1 with his medium-term budget speech.

But the ANC fears any cutbacks or reduction in services will undermine its chances of achieving 50% in next year's general election.

Keeping the ANC in power in the short term is clearly a higher priority than saving the country from collapse.

On Monday, the ANC's top leaders, with those of Cosatu and the SA Communist Party, confronted Godongwana over his proposal to increase VAT by two percentage points and significantly cut the public service salary bill.

Godongwana has been threatened, especially by Cosatu and the SACP but also by certain cabinet ministers, that he should not touch the plans for a national health insurance (NHI) system; if implemented, it will cost the state about R500-billion a year. And this while most state hospitals are completely dysfunctional.

Demands are also being made to increase social grants for about 28-million people. Cosatu has even threatened a national strike if state spending is cut.

These populists believe the state should simply borrow more money to balance the budget. But as it stands, the state has to borrow an extra R2-billion every day just to pay its debt.

There is no proposal so far to cut the amount spent annually on the protection of politicians and senior officials, currently R3.4-billion. This is R1.2-billion more than the budget of the elite crime-fighting unit, the Hawks.

Godongwana's one proposal that may be supported by President Cyril Ramaphosa is that the cabinet should be downsized — after all, Ramaphosa has promised it for years. Smaller departments such as tourism, women and youth, communications, and sports, arts and culture are likely to be merged with other departments.

Effective governance and corruption are one leg of our crisis; the lack of economic growth is the other — and both legs belong to the same body.

The business conglomerate Remgro highlighted these problems this week and warned that they could lead to increasing instability. “All these features, compounded together, have created what is probably one of the most difficult business environments to operate in since Remgro’s inception."

Here's another flashing red light: the global banking giant HSBC believes the rand will weaken to R19.50 against the dollar by the end of the year and to R25.50 in 2024. This will particularly drive up the already high fuel prices.

Eskom's myriad problems are not the only hindrance to economic growth. Transnet's inability to manage freight transportation costs the mining industry billions of rand and hampers exports.

The DA's shadow minister of public enterprises, Ghaleb Cachalia, said this week that rail transport is the backbone of our logistics economy, and mismanagement is costing us a significant portion of our GDP and many job opportunities. Transnet's CEO, Portia Derby, is paid R8.5-million a year but she is a failure and should be replaced immediately, says Cachalia.

The Financial Mail asked a group of business leaders this week how South Africa can be put back on a path to success. Several of them called for more public-private collaboration and less bureaucracy. Read it here: SA’s top CEOs on how to fix SA now.

Standard Bank's CEO, Sim Tshabalala, says concessions to manage rail freight and ports should be given to the private sector immediately, and businesses should be allowed to employ any foreigner with a university degree. He argues that national health insurance  doesn't make sense with GDP growth between 3% and 5%.

“Joburg is in a shocking state, and no one has been fired," says the former head of Absa and former director-general of the treasury, Maria Ramos. She believes we need a radical new action plan and new senior leadership in the police to make citizens safer. She also suggests cutting consultants to government departments and ministers by half.

The chairman of Rain and former CEO of FirstRand, Paul Harris, suggests that the minimum wage should be scrapped for everyone under 25 because it leads to more unemployment.

The founder of Gift of the Givers, Imtiaz Sooliman, says retired doctors, nurses and teachers should be re-employed. More people should be assisted in generating their own energy without paying fees to municipalities.

The founder of Nando's, Robbie Brozin: “Focus on the symbolic heart and the engine room of the SA economy, the Joburg CBD, through the lens of our magnificent constitution. Let's resolve, reimagine and renovate this creative city from the inside."

The chairman of MTN and former deputy finance minister, Mcebisi Jonas: “Develop practical models for public-private partnerships, particularly for Eskom and Transnet. We need to move beyond backward ideological impediments and use state assets strategically to draw private investment."

♦ VWB ♦

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