Thursday, December 14, 2017

South Africa's race relations laid bare in Steinhoff corporate scandal

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South Africans are fond of debating whether public or private sector failings are the bigger problem. It does not take too long to realise that they are really talking about race.

This is evident as the country faces an unusual scandal – one involving a private company called Steinhoff. The multinational furniture company is in trouble after German investigators began looking into it, for allegedly doctoring financial information to mislead the markets.

This was not the first time fingers were pointed at a private company. Auditors KPMG have been accused of unethical practice on behalf of the Gupta family who are linked to President Jacob Zuma and are accused of using money to influence government appointments and policies. Media conglomerate Naspers is also facing corruption accusations. Its subsidiary MultiChoice is accused of paying large sums to the formerly Gupta-owned television channel ANN7 in the hope of influencing government decisions.

But Steinhoff stands out because it does most to shake the confidence of one side of the argument and to get the other claiming it is vindicated.
For much of the past few years, corruption has been seen almost exclusively as a public sector problem. Attention has focused on Zuma and his relationship with the Guptas. The private sector (Gupta-owned firms excepted) has, by default, been painted as a corruption-free zone.

The KPMG and Naspers cases may involve prominent private firms, but are seen by the national debate as yet another sign of the Guptas’ baleful influence. The villains remain the same and so does the problem: public sector corruption.

Steinhoff is a different matter entirely. The state plays no role at all and the company is a pillar of the private economy. Its leadership is overwhelmingly white and its attitude to the post-apartheid government seems to range from indifference to scepticism.

No wonder that its failings have been gleefully seized upon by people who insist that private sector corruption is as big a problem as its public equivalent. Or that many of the people who usually insist that public corruption is the problem have reacted to Steinhoff with shock.

On the surface, this sounds like the standard debate in most democracies over the past few decades in which one side favours letting business do as it pleases and the other wants it to be reined in by the state. But, in a country in which whites remain dominant in private business while blacks largely control the government, it is really about the country’s racial divides.

Colour of merit

Apartheid was underpinned by strong beliefs in white superiority – these don’t simply melt away because political rules change. People are used to seeing one racial group in skilled jobs, giving orders to the other: inevitably, this becomes seen as natural and so being white is associated with merit, being black with lacking it.

Since 1994, when policies promoting black advancement in business and the professions were adopted, this is often expressed in the view that black people in senior positions are there because they were given a free pass by the system, not because they deserve it.

This way of thinking also shapes attitudes to government and business. For those used to the racial pecking order of the past, government is run by people who hold posts because they are black, not because they are competent. Business continues to be run mainly by people who were judged to be competent in the past and who are therefore assumed now to be honest and to know what they are doing. Calls to assign more government functions to businesses or business people are often a way of saying that white people or black people approved by them should be running the country.

This attitude is particularly evident in how people in the suburbs react to private monopolies or dominant corporations.

Government departments are almost always associated with waiting in long lines for surly officials who have no idea what they are doing. In most cases, this is a caricature; in some, the Department of Home Affairs passport office for example, it is flat wrong. But similar long waits, indifference to customers and incompetence at the dominant digital television corporation or one of the mobile phone companies is accepted cheerfully as normal business practice.

Delighted black voices

Black people are perfectly well aware of these attitudes. This is why those who insist that the private sector is as bad if not worse than its public equivalent are almost always black. And why many black voices are delighted at what has happened at Steinhoff because it shows that a pillar of white business can behave at least as badly as black government.

It also explains why many white people have reacted to Steinhoff with such shock – and why Steinhoff happened in the first place.

The editor of the country’s leading business daily, Tim Cohen, has pointed out that Steinhoff’s failings should not have been a surprise since several market analysts warned a while ago that something was amiss and were ignored. He offered some explanations but, given the realities described here, the most likely answer is that no-one believed the specialist nay-sayers because they assumed that a major white-owned company must know what it is doing and that the critics must have an axe to grind.

Cohen also ran into trouble on social media for suggesting that reduced capacity at state regulators allowed Steinhoff to happen. Predictably, black people felt (wrongly in his view) that they were being blamed for white business failings.

There is another explanation for the regulators’ inaction. It is that they were not eager to look into a large white-owned company because they feared that this would be seen as yet another case in which incompetent black people wanted to bully competent whites. It is standard in the South African debate that any attempt by government, however mild, to intervene in business is branded a threat to the market economy so it would hardly be surprising if regulators feared this.

Correcting wrong perceptions

The Steinhoff scandal would do South Africa a huge service if it made the point that corruption and mismanagement have nothing to do with race. It would also help if it alerted everyone in the marketplace to watch as carefully over private companies as they do over government departments.

The ConversationBut, given how entrenched racial attitudes are, it is more likely that it will be dismissed as a once-off freak by those who assume that white led business is always competent and as further evidence of white prejudice by black people reacting to the label often stuck to them. If that happens, some private businesses will continue to get away with behaviour which would never be tolerated in government.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.

South Africa needs electoral reform, but president's powers need watching

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Jacob Zuma, president of South Africa. There are renewed calls for citizens to directly elect their president and other representatives.
Reuters/Sumaya Hisham

Within a short time, the 4000 odd delegates to South Africa’s governing African National Congress’s 54th National Conference will elect a new party leader. In turn – save death, disaster or unlikely electoral defeat – a parliament stuffed with an ANC majority will at some point elect that leader as the new President of South Africa. The expectation is that this will be Nkosazana Dlamini-Zuma or Cyril Ramaphosa. But, if the ANC elects a pig, the ANC parliamentary majority will vote for the pig.

Although it is by no means unusual for parliaments to elect countries’ political leaders, there is widespread complaint in South Africa that it is the small ANC elite which attends the conference that effectively selects the next president of the country. This, it is said by many, is undemocratic.

Two main reasons are cited. First, ANC electoral procedures are deeply corrupted by money changing hands, personal ambition and factionalism. Second, it should be the people, not the party, which should be charged with electing the country’s leader.

It is therefore of considerable interest that, rather than emanating from civil society or another political party, the proposal has been made by the ANC’s Gauteng provincial conference that consideration should be given to ordinary voters voting directly for presidents, premiers and mayors. This is of particular interest given that Gauteng is one of the ANC’s most powerful provinces, and at the same time, one which is often at odds with the party’s current leadership.

The proposal that the state president, provincial premiers and mayors be directly elected is a most welcome one, as there is much need to consider the quality of South Africa’s democracy, and to encourage public participation in decision-making. However, direct election of such offices simultaneously holds its risks.

The electoral reform debate

The debate about electoral reform in post-1994 South Africa has largely focused on the system used to elect MPs and their counterparts in the country’s nine provinces. The standard argument for a change was captured succinctly by ANC dissident and Umkhonto we Sizwe veteran Omry Makgoale:

When will we wake up and reform our crooked electoral system?

The argument is that the list proportional representation system results in the election of MPs who are accountable to party bosses rather than voters. Such an outcome is rendered more certain by the fact that South Africa’s constitution lays down that MPs or provincial legislature representatives who leave or are ejected from their parties lose their seat in the relevant legislature, plus the handy salary that goes with it. To continue with the animalistic referencing, parties’ elected representatives become sheep, devoid of any capacity for independence.

Presidential hopeful Nkosazana Dlamini-ZumaChairperson.
Reuters/Francois Lenoir

Such critiques often suggest (very sensibly) that the electoral system should become a mixed one which combines proportionality of outcomes with the direct election of representatives from constituencies. This was recommended in 2002 by the Van Zyl Slabbert Commission on electoral reform. But there has been relatively little debate about whether the President and premiers should be directly elected.

The survey conducted on behalf of the Van Zyl Slabbert Commission indicated that 63% of respondents would have liked to vote for the president directly. This level of preference was pretty much the same across all racial groups. Given the disastrous nature of the Zuma presidency, it is very possible that the preference for direct election would be considerably higher if the issue was put to survey respondents today.

Virtue of direction election

The virtue of the direct election of key political leaders is said to be that it renders them directly accountable to voters rather than to their political parties. On the face of it, it is an attractive argument, and it is one which could usefully introduce more diversity into the South African political system.

If they wanted to maximise their vote, parties would have to look at the qualities of their candidates, and ask themselves whether they would appeal to the electorate as a whole. (On this reckoning, it is a dead cert that Cyril Ramaphosa would streak home and dry, rather than, as under the ANC’s present system, running neck and neck with his chief rival, whose popular appeal is that of a wet fish). This would mean that candidates would end up openly campaigning for the leadership, dispensing with the ANC’s absurd pretence that individuals should not demonstrate political ambition.

There is also the possibility that voters would elect a president from a party other than the one which enjoys a majority in the National Assembly.

Would direct election of the president, premiers and mayors be a good idea? And, if so, what system should be adopted?

The second question is easily answered. To avoid the election of a president who gains less than 50% of a popular vote but more than any other candidate, provision would wisely be made for a second round of a presidential election in which the top two candidates engage in a run off.

A good idea?

So would direction elections be a good idea?

Parliamentary systems work well because they devolve the election of prime ministers to the legislature. On the continent, countries that inherited a parliamentary system from Britain subsequently opted for elective presidencies.

The results are not unambiguously encouraging.

South African Deputy President Cyril Ramaphosa.

In Kenya and Zambia, for instance, the direct election of presidents may have weakened the link between legislatures and executives. This has allowed executives to trample over legislatures, and for leaders to claim a legitimacy separate from that of their party. Presidents from Daniel Arap Moi through to Uhuru Kenyatta in Kenya and from Frederick Chiluba through to Edgar Lungu in Zambia have all proved exceedingly authoritarian.

It follows that changing the South African system to allow for direct election would require the country to look carefully at how a directly elected president should be rendered accountable to parliament. Would the change enhance the accountability of the government by empowering MPs, or would it render them increasingly irrelevant?

Dangers of an all-powerful president

It is also worth recalling that there is now much greater awareness about how much power is concentrated in the Presidency, in a way, it would seem, that the makers of the country’s constitution did not intend. Under Zuma, the presidency has a direct say in far too much, such as the right to appoint the head of a National Prosecuting Authority which might have the responsibility of calling him to legal account.

South Africans need to be wary of any change in the system which ends up making the President less – rather than more – accountable.

In any case, while there can be very good reasons for reforming an electoral system, this will not automatically result in better governance. Form can rarely trump substance. Robert Mugabe only “won” the Zimbabwean presidency in 2008 through his army and police terrorising the opposition and effectively forcing his rival, Morgan Tsvangirai, to withdraw.

The ConversationIt will take more than a piecemeal change to South Africa’s constitution to improve it’s democracy. South Africans should be careful what they wish for, as they can never be quite sure what they will get.

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation.

Tuesday, December 12, 2017

Why changes to South Africa's labour laws are an assault on workers' rights

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South African public sector workers march for higher pay.
Reuters/Mike Hutchings

The biggest changes to South Africa’s labour laws since 1995, shortly after the country’s first democratic elections, are currently being considered by parliament. If passed into law, they will significantly limit the hard won rights of workers to strike. In addition, details about the country’s much-heralded national minimum wage set out in the enabling legislation show that, in practice, it may be unenforceable.

The three bills include amendments to the Labour Relations Act and the Basic Conditions of Employment Act, as well as the new National Minimum Wage Bill.

If these proposed amendments become law it will be a significant defeat for workers. Taken together the legislation would roll back the hard won gains of the labour movement in South Africa and curtail the most powerful tool available to workers to improve their earnings.

The end result is likely to deepen South Africa’s vast inequalities.

The right to strike

Two of the proposed changes will affect workers’ right to strike, which is protected under South Africa’s Constitution.

First, the proposed amendments to the Labour Relations Act would introduce measures which, although designed to minimise violent strikes, would, in fact, discourage strikes in general. For example, the amendments would require trade unions to hold secret ballots to decide on strikes. By individualising the decision to strike, the secret ballot fundamentally undermines the collective nature of a strike.

Second, the proposed Labour Relations Act amendments will introduce a mechanism where strikes could be resolved through an advisory arbitration panel, which would be led by a senior commissioner of the Commission for Conciliation, Mediation and Arbitration (CCMA).

The problems with this are that the circumstances under which an advisory arbitration panel can be convened are very broad and, crucially, employers will have the right to request it. Meaning employers will have an easy way to resolve strikes without necessarily having to engage their workers directly or agree to any of their demands. The decision of the advisory arbitration, unless appealed, will be binding on all parties.

On top of this, trade unions can be interdicted at any time during what would be a more onerous procedure.

If passed, the amendments would make protracted strikes, such as the 2014 platinum strike, highly unlikely.

Show us the money

Details of the bill reveal a different picture of the country’s much heralded national minimum wage of R3,500 (USD$256). There will be no monthly minimum wage, only an hourly minimum wage of R20 p/h. Those that work flexible hours or part time will be unlikely to earn the R3,500, if they work under 40 hours a week. For domestic and farm workers the news is worse: farm workers will earn R18 p/h, while domestic workers will receive only R15 p/h. Only in 2020 will these workers receive the full minimum wage.

Two problems loom large in the implementation of the national minimum wage. One is compliance, the other redress.

Some sectors, including domestic work and farm work, already have minimum wages prescribed in the sectoral determination. But, non-compliance can be as high as 50%, as is the case in the agricultural sector. Based on current experience, there is no reason to think that compliance with the national minimum wage will be any different.

But, the ability of workers to get justice will become significantly more difficult.

Under the proposed amendments, the enforcement of the national minimum wage will move from the Department of Labour to the CCMA. This will make the process of seeking redress more arduous.

If a worker is being underpaid, she will have to refer her case to the CCMA. The average time for a case to reach arbitration is 60 days, but in the experience of the Casual Workers Advice Office it can take many more months.

Even if a worker eventually receives an arbitration award, many employers can simply ignore it. The next step is for the worker to have the award certified by the CCMA. If the employer still refuses to abide by the award the worker has to get a writ of execution, which is then served by a sheriff but often only after the demand for a deposit has been met. In 2016/2017, the CCMA had to assist 4,000 low-paid workers in getting a writ of execution. Many more workers often give up hope and never see through the enforcement of their arbitration award. Many more are not even aware of the CCMA remedy.

By making the CCMA the primary enforcer of the national minimum wage, the process is likely to become fraught with legal and practical difficulties, making the whole process unworkable.

What’s worse is that, to accommodate the national minimum wage, the amended Basic Conditions of Employment Act will actually roll back important rights for some workers.

Sectoral determinations do not only prescribe minimum wages but provide important protections for workers, such as provident funds. Amendments to the act will mean that the sectoral determinations will be phased out and replaced with the national minimum wage law. This could mean that workers could lose out on both the wage front as well as some important rights. This is particularly the case for farm workers who stand to lose important rights to housing.

How did it come to this?

You would have expected trade unions to have objected loudly to these fundamental changes to worker rights. Not so. The country’s leading trade union federations, including Cosatu, Fedusa and Nactu have all been involved in negotiations on the changes.

What this reflects is the balance of class forces in South Africa today. Trade union membership has been declining and now only about a quarter of the workforce is unionised. Of those that are unionised, the overwhelming majority are likely to be in full time, permanent, professional or skilled employment.

The simple truth is that unions largely do not organise workers who will benefit from the national minimum wage and are therefore indifferent to its practicalities.

The ConversationWhat is less clear is why the major trade union federations have been involved in a process that has negotiated away important protections around the right to strike.

Carin Runciman, Senior Reseacher, Centre for Social Change, University of Johannesburg

This article was originally published on The Conversation.

Saturday, December 9, 2017

South Africa's communist party strips the ANC of its multi-class ruling party status

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There is a fallout between alliance partners the South African Communist Party and the governing ANC.
EPA/Kim Ludbrook

The South African Communist Party (SACP) has broken with history and challenged the governing African National Congress (ANC) in an election. The SACP’s decision to go it alone in the Metsimaholo municipality by-election marks a new low in relations within the tripartite alliance forged during the struggle against apartheid. The other alliance partner is the trade union federation Cosatu. The contest ended in a hung council, with the ANC taking 16 seats, the Democratic Alliance 11, the Economic Freedom Fighters eight and the SACP three. Politics and Society Editor Thabo Leshilo asked political scientist Professor Dirk Kotze about the development.

What is the significance of this development?

The decision to contest an election on its own clearly represents a watershed event for the SACP. It is the first tangible step towards implementation of a resolution taken by the SACP in 2007. Then, unhappy with the ANC’s policies in government, the communists raised the issue of contesting elections themselves. It proposed doing this either within a “reconfigured alliance” or having its own candidates contest elections, after which it would come to an agreement with the ANC on how to cooperate in government.

The SACP’s decision to go it alone is the culmination of a fallout dating back to 1996. Then, the ANC government under President Thabo Mbeki announced a macro economic framework, known as Growth, Employment and Redistribution (Gear), without substantial consultations with the SACP and Cosatu. Both slammed the policy as being anti-communist and serving the interests of business at the expense of the poor working class.

The SACP, and Cosatu, thought that their fortunes had turned when, with their support, Jacob Zuma was elected president of the ANC in Polokwane in 2007. But it wasn’t to be. Both groups have subsequently fallen out with Zuma. The relationship has deteriorated so badly that SACP members in KwaZulu-Natal are being assassinated over municipal council positions.

Why is this so unusual?

The Tripartite Alliance can be traced back to the late 1940s and the Communist Party’s subsequent underground involvement in the ANC-led Congress of the People in 1955. The Congress Alliance adopted the Freedom Charter as its blueprint for a democratic and prosperous South Africa.

In the 1960s the formation of Umkhonto we Sizwe, the armed wing formed by ANC and SACP members, was arguably the most concrete articulation of the ANC-SACP alliance.

In the decades that followed the SACP played a key role in facilitating the support of the Soviet Union and Eastern Bloc for the ANC and South African Congress of Trade Unions. The communists also shaped the ANC’s philosophy around national liberation as the “national democratic revolution” and view of apartheid as “colonialism of a special type”.

This influence on the ANC was personified by the likes of leading communists Moses Kotane, Moses Mabhida and Dr Yusuf Dadoo. The SACP viewed the alliance as a popular front uniting the working class and progressive forces in the struggle for freedom.

The SACP is unique in Africa because very few communist parties survived after independence. Most of them were either banned or integrated into nationalist liberation movement governments.

The party’s independent participation in the Metsimaholo by-election takes it back to the period before 1950 when communists such as Brian Bunting and Sam Kahn represented the then Communist Party of South Africa in Parliament.

But after that, and after the party was banned, the SACP’s revolutionary theory of armed struggle and insurrection excluded an electoral approach.

Once the first inclusive elections were planned in South Africa, the SACP deferred to the ANC as the leader of the national democratic revolution to pursue an electoral approach.

What is the significance for South Africa?

Firstly, no one can continue to argue that the Tripartite Alliance is still a coherent political front bringing together a working class union movement (Cosatu), working class party (SACP) and a multi-class governing party (ANC).

What this means is that the ANC’s social democratic character in terms of a partnership with working class organisations has come to an end. The ANC will now have to reconfigure its own identity as a social democratic party, similar to former UK Prime Minister Tony Blair’s reconfiguration of “New Labour”.

Secondly, the SACP’s decision serves as an official recording of the radical changes the ANC’s identity has undergone in terms of how it defines its own interests or constituencies. It’s finally stating that its core interests and those of the ANC’s are in the process of parting ways. In socialist parlance, the ANC’s and SACP’s class interests have reached a crossroads.

This follows on the earlier decision by Cosatu’s largest affiliate the National Union of Metalworkers of South Africa to part ways with the federation and to establish the United Front as its own political vehicle. It’s still unclear whether this this will result in a new left political movement. But, all the socio-economic conditions - such as high inequality, unemployment, poverty and social discontent - provide fertile ground for just such a movement.

What are the electoral prospects of the SACP?

The SACP is not in a position to mobilise substantial support in the near future. The left is contested terrain and prone to fragmentation. This is partly the result of personality clashes and ideological hair-splitting.

The ConversationIt could possibly join forces with the National Union of Metalworkers of South Africa which, for the last 30 years, has debated the ideal of a workers’ party. This would only be viable if the SACP combined its party programme with the social democratic (social welfare) needs of a rural, non-socialist populace. This would imply making ideological compromises, which is not uncommon for the SACP. It would also require it to establish a real party political infrastructure.

Dirk Kotze, Professor in Political Science, University of South Africa

This article was originally published on The Conversation.

Tuesday, December 5, 2017

Snags that could cast doubt on ANC's choice of new leaders

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South Africa’s governing African National Congress has begun the process of choosing its leaders.
EPA-EFE/Kim Ludrick

South Africa’s governing African National Congress (ANC) holds its highly contested national elective conference for its top six leaders, between December 16 – 20. The conference will, among other things, mark the end of Jacob Zuma’s controversial decade-long tenure as party president. It will also bring to an end a bruising contest to replace him. The top two contenders are Cyril Ramaphosa and Nkosazana Dlamini-Zuma. The Conversation Africa’s Politics and Society Editor, Thabo Leshilo, asked Keith Gottschalk about the process.

Why does the conference matter?

The elective conference is important for the party as well as the country. This is because the person chosen to lead the party has, since 1994, gone on to become president of the country – an outcome dictated by the fact that the parliament elects the next president and the ANC has a large majority in parliament. The outcome is therefore watched very closely by both South Africans who support the ANC and those who don’t.

How does the ANC choose its top leaders?

The ANC’s election process is full of extraordinary contradictions. It has built into it some of the most stringent checks and balances of any party in the world. On paper, the process could not be more fair. In practice either incompetence or manipulation causes much anger.

The party holds an elective conference every five years. According to the ANC rules, 90% of the delegates to the conference must be from party branches. Each branch in good standing is entitled to send one delegate, and if a branch has more than 250 delegates it is allowed to send one extra delegate per 250 extra members.

The additional 10% of delegates is made up of representatives from each provincial executive, delegates representing the women, youth and veterans leagues as well as members of the party’s National Executive Committee who attend in an ex officio capacity.

Before the conference ANC members are required to take part in a specially convened annual general meeting of their branch. There are over 2 000 branches in good standing. To be able to vote at this special AGM members have to have their ANC membership card as well as their South African national identity document.

What checks and balances are in place to make sure the process is fair?

Voting at the branch AGMs is monitored by trusted veterans chosen by the Provincial Executive Committee who are deployed to monitor the process.

Voting usually takes place by show of hands, but may be done by secret ballot. The team monitoring the process must take a picture of results of voting recorded on paper using their cellphones and send the image to the party’s national headquarters at Luthuli House, in Johannesburg. This is to prevent ballot results being tampered with.

What are the flaws in the system?

I believe the process is fair. But it would be fairer if there was a direct one-member-one-vote system instead of branch totals.

The flaws in the system relate to the extent to which rigging can take place. This can happen by wealthy politicians setting up ghost branches. Provincial executive committees also sometimes try to manipulate the outcome of the branch AGMs. This can happen through manipulating who gets chosen to represent the branch as a delegate to the national conference.

But the biggest opening to possible fraud is through using the issuing of ANC membership cards to “gatekeep” – stopping people from being able to vote in branches, or even from attending the conference. Membership cards, and being included on the membership list compiled by Luthuli House, national HQ (as opposed to lists kept by one’s own branch and provincial office) matter because they give individuals the right to vote at their branches, as well as at the conference if they’re chosen to go as a delegate.

During the last few conferences there were accusations that the Zuma faction of the ANC deliberately used the fact that renewals and new cards can take a very long time to issue to keep certain people from attending (and voting).

The issuing of cards is a mess. New members complain bitterly about waiting inordinately long periods - sometimes up to 21 months - to get their membership cards. Renewals can also take forever. The renewal of the late ANC former cabinet minister Kader Asmal’s membership card reached his widow five years after he died.

Sometimes, some members in good standing suddenly discover that their names have been removed from the membership register. The most high profile of these cases was Zweli Mkhize, the party’s treasurer and one of its top six leaders.

Five years ago an example of gatekeeping hit one branch’s delegate when he arrived at the national conference at Mangaung. He was told he was not a member in good standing. He was in fact an ANC Member of the Provincial Legislature. Only after votes were cast which saw Jacob Zuma re-emerge as party president was it conceded that he was actually a member in good standing.

Another potential flaw is that delegates who are mandated by their branch to vote for one particular candidate are persuaded – for example by being bribed when they get to the conference – to vote for someone else.

Voting at the conference is by secret ballot. The assumption is that branch delegates will behave with integrity and vote for the person their branch mandated them to vote for.

But even if they do accept a bribe, those reportedly offering the bribe have no way of knowing if the delegate actually did change his or her vote.

The ConversationSouth Africans, especially ANC voters, will be watching closely for any signs of rigging, bribing branch delegates to switch their votes, and other manipulations. If all is free and fair the process certainly equals, for example, the degree of democracy in UK and US parties choosing their leaders.

Keith Gottschalk, Political Scientist, University of the Western Cape

This article was originally published on The Conversation.

Monday, December 4, 2017

History explains why South Africans on the left argue for free passes for the rich

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Students from Wits University, in Johannesburg, during a protest for free education.
EPA/Kim Ludbrook

In a society like South Africa in which one racial group has dominated another, poor people are ignored in economic debates by those who claim to speak for them.

Take the calls for free higher education which featured prominently in student protests over the past two to three years. They are back in the limelight because President Jacob Zuma’s desire to spend billions on providing free tertiary education has prompted a public controversy in which he was accused of wanting to bankrupt the Treasury for political gain. Although it later became clear that Zuma only wanted to pay for students whose household incomes were below R350 000 a year, the reports revived interest in the free education demand.

Outsiders might find something curious about the higher education fees debate in South Africa. The demand that no-one should pay is an article of faith among people who occupy the left in the country. The view that the well-off should continue to pay so that the poor are funded is seen as a sign of conservatism. Elsewhere in the world, it is the left which wants the rich to pay for services to the poor.

This is no isolated case in South Africa. Another example is electronic tolling (e tolls) in the country’s economic heartland, Gauteng. Vehicle owners, including companies, pay the toll. People who use busses and minibus taxis, the vehicles of the poor, don’t. Anyone suggesting that it’s fair to expect people who own trucks and busses to pay for roads on which poor people can ride for free is likely to be dismissed as a right-wing zealot.

How did the interests of wealthy students and their families, or the owners of vehicles, become those of the left and social justice campaigners? Around the world, the views of well-off groups are often presented as those of everyone. The South African oddity is that those who in other societies would be arguing against free passes for the affluent, argue for them.

To see why, we must look at the history of the campaign against minority rule, which I discussed in a book on radical thought.

Economic inequality versus race

The first campaigners for economic change in South Africa were socialists and trade unionists who immigrated from Britain. They took the standard left view of the time – racial divisions were created by bosses and other fat cats who hoped to hang onto their privilege by dividing the workers. Because both black and white workers were exploited, they argued, they could and should unite against their common enemy, economic exploitation.

Within a few years, the view that economic inequality mattered more than race was killed by striking white miners who, in 1922, added to a banner reading “Workers of the World Unite” the words and fight for a white South Africa’.

Competition for jobs from black workers was one reason the miners gave for the strike. For the next seven decades, white workers made it clear that the privileges which their whiteness offered were more important to them than their supposed common interest with black workers.

The view that race was more important than economic inequality was shared by those who fought against apartheid. Although left-wing activists, particularly in the South African Communist Party, were active in the African National Congress, they gave up early on the idea that race could take a back seat to the fight for economic change.

Racial equality versus private ownership

In the late 1920s, the Communist International, to which the communist party belonged, adopted the theory of “national democratic revolution”. It committed communists to fight against colonialism and racial domination in colonised countries – the battle against capitalism could wait.

In South Africa, this “revolution” which even today is seen by some on the right as a call to destroy the market economy, was always about fighting for racial equality, not abolishing private ownership. Those who complain that the ANC has not delivered on this “revolution” are saying it has not done enough to end white control of the economy, not control by private owners.

While the ANC often used left rhetoric, black intellectuals and activists, including those in the South African Communist Party, reminded white colleagues who wanted to emphasise economic inequalities that racial inequality was more important.

This view was shared by movements to the ANC’s left. Instead of denouncing it for fixating on race rather than economic divisions, they argued that apartheid was a form of “racial capitalism” in which racial and economic exploitation was so intertwined that one could not survive without the other. While this meant that they could fight against racism while claiming they were fighting for socialism, it made race the central issue.

The enemy was white minority rule

The South African left may have read different books and chanted different slogans, but it endorsed the mainstream view that the key issue was racial inequality. Left-wingers earned their credentials by fighting harder against racial minority rule, not by fighting for economic equality – and they found no shortage of left-wing theories and slogans to justify this.

This history has shaped thinking, ensuring that there has never been a strong lobby, or an influential body of opinion, stressing the interests of the poor. If the problem is racial domination, it follows that economic differences within racial groups matter less, if at all. And so, it seems natural to demand changes which would benefit the rich by lumping them with the poor.

Since this prompts people to endorse policies which are biased against the poor, this analysis might seem to be a warning against racial thinking on the economy. It is not. The reason why race has always mattered more than economic inequality is that it is more important: black scholars and activists who emphasise race do so because this squares with their experience not only under apartheid, but now.

The point is illustrated, again, by the student protests demanding free higher education. A careful look shows that they are essentially about race – the protesters are rebelling against what they see as a failure of higher education institutions to take them seriously.

Two decades ago, the left-wing scholar Harold Wolpe– who started his academic career trying to convince the ANC and South African Communist Party that apartheid was simply a product of capitalism but who changed his position when he recognised how important race is in South Africa – wrote a paper on higher education change. He argued that historically white universities were expecting black students to change to fit into their culture rather than changing to meet the needs of new students as the racial make-up of their student bodies changed. It’s this failure to accommodate black student needs which prompted the student slogan “Fees Must Fall”.

The ConversationThe history described here shows why it seems almost automatic to present this demand for racial change in an economic slogan which would again send the poor to the end of the line.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.

Saturday, December 2, 2017

Options on the table as South Africa wrestles with funding higher education

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The storm clouds above South Africa’s universities could be dissipated with careful fiscal planning.
Reuters/Mike Hutchings

A report into the feasibility of offering free higher education at South Africa’s universities has finally been released. It has been nearly two years in the making, developed by a commission of inquiry that President Jacob Zuma set up in response to nationwide fee protests.

The lengthy report provides an accurate diagnosis of the state of higher education funding, as well as the problems it faces. But its proposed solutions are problematic. Many of its limitations arise from a failure to properly integrate an understanding of public finance and public economics into the analysis and recommendations.

The Commission’s report gets two critical things right – even though neither will please student activists. The first is that planned student numbers are simply too high and should be revised downwards. The second is that the country simply can’t afford free higher education for all students given its other priorities and weak economy.

But its recommendations are poor. Models are proposed that represent, I would argue, a significant step backwards from scenarios developed by the Department of Higher Education and Training two years ago. The department’s scenarios are indirectly supported in another report that’s just been released, by the Davis Tax Committee.

The tax committee endorses a hybrid scheme for higher education funding. This would retain and increase grants for poor students’ university fees. It would use loans to fund the “missing middle” – students from households that earn too much to qualify for government funding but still can’t afford higher education. If South Africa’s concern is really about immediate improvements in equitable access to higher education for poor students, this is the option that should be receiving the most attention.

The Fees Commission report

I have argued previously that one reason for the current state of affairs has been excessive student enrolment, relative to appropriate standards and adequate resources. Yet various policy documents propose rapid increases to enrolment in the coming decades.

The fees commission correctly argues in its report that these projected enrolment numbers are unrealistic. It points out that such high student numbers threaten quality and make adequate funding even more unlikely. It recommends that the numbers be revised downwards.

The commission also does well in recognising that – given the state of South Africa’s economy, public finances and other important government priorities – free higher education for all – or even most students – is simply not feasible or desirable. It rejects both the possibility of fully funded higher education and the demand for university fees to be abolished. But it endorses the abolition of application and registration fees, along with regulation of university fees.

There are three critical issues within the current student funding system.

  1. What household income threshold should be used to determine student eligibility for support from the National Student Financial Aid Scheme (NSFAS) to ensure all students who need partial or full support are covered?
  2. What resources are needed to ensure that all students below the threshold receive the adequate funding; up to full cost where necessary?
  3. How should the support provided be structured in terms of grants versus loans, or combinations of these?

The commission errs in trying to address these questions.

A worsening of equity

The fees commission’s fundamental proposal in response to the demand for free higher education is the adoption of an income-contingent loan (ICL) scheme. Under this all students regardless of family income who register for university are funded by loans up to the full cost of study.

These loans would be from private banks based on guarantees of repayment from government. In other words, after a specified number of years either the student or the government would have to start repaying the loan. There are numerous problems with this model.

The ICL would, in some ways, constitute a worsening of equity. Poor students who currently qualify for NSFAS grants would now only get loans.

In the ICL scheme, either students pay or the government does. The current state of the higher education system suggests a significant number of students will not be able to repay such loans. But nowhere does the commission calculate the implications for future government expenditure.

A number of other proposals are seriously problematic. One involves extending the loan scheme to students in private higher education institutions. This constitutes a dramatic change in post-apartheid policy, potentially leading to indirect privatisation of the higher education system without proper consultation or sound basis for doing so.

Another is the suggestion that higher education expenditure should be benchmarked as 1% of South Africa’s Gross Domestic Product. This is wrongheaded because it does not take into account the proportion of young people in the country or the state of the basic education system.

The Davis Tax Commission’s report is more narrowly focused but, perhaps as a result, endorses arguably the best and most feasible way forward for tertiary funding.

Better scenarios

The current NSFAS threshold is R122,000, which means that students whose households earn less than this in a year qualify for funding by the scheme. There are two problems: first, not even all students below this threshold are getting all the financial support they need. Second, there are students in the “missing middle” who are above the threshold. They cannot fully fund themselves but have no access to support.

In 2015 the department of higher education and training provided rough estimates of the cost of raising the NSFAS threshold and fully funding students below the different, hypothetical thresholds.

It estimated that increasing the NSFAS threshold to R217,00 and covering full cost of study for all students below that would require an extra R12.3bil in 2016/17 for approximately 210,000 students.

The Davis Tax Commission effectively endorses this scenario, proposing a hybrid scheme that retains and increases grants for poor students and university fees, but uses income-contingent loans to fund the missing middle. It estimates that an additional R15 billion could be raised annually for higher education through a combination of increasing the rate of income tax for the highest earners by 1.5%; increasing capital gains tax for corporations; and, raising the skills levy by 0.5%.

In contrast, the commission’s proposals for raising funds for the loan scheme and other proposals – such as taking R50 billion from a surplus in the unemployment insurance fund for infrastructure investment – arguably violate some fundamental public finance principles and may be illegal.

The tax committee’s report suggests that the department’s scenario is feasible from a public finance perspective. If the government is genuinely concerned with creating maximally equitable access to higher education for poor students, this is the immediate option that should be receiving the most attention. The design and cost of a more modest income-contingent loan scheme for those students who are not covered, even with expanded support, will require detailed technical analysis and further discussion. Some related work has been done under the umbrella of a separate income-contingent loan initiative, the Ikusasa Student Financial Aid Programme, which could be useful. As the commission report notes in rejecting it, however, there are various concerns about the actual financial aid programme proposal that make it an unconvincing option at this stage.

The ConversationThe different all-or-nothing approaches being proposed by student activists and the fees commission risk the possibility of hundreds of thousands of poor and needy students not being assisted – even though the resources are available to do so.

Seán Mfundza Muller, Senior Lecturer in Economics and Research Associate at the Public and Environmental Economics Research Centre (PEERC), University of Johannesburg

This article was originally published on The Conversation.

Friday, December 1, 2017

South Africa should prepare for the worst case scenario: seeking help from the IMF

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IMF Managing Director Christine Lagarde at the “G20: Compact With Africa”.
Reuters/Mike Theiler

Prudence teaches that societies experiencing difficult and uncertain times should hope for the best but prepare for the worst.

South Africa should take this lesson seriously. It is facing a serious crisis. South Africa’s economy is growing too slowly to address its profound challenges of poverty, inequality and unemployment. Social tensions are rising. Business is not transforming quickly enough. The governance and solvency of key state-owned enterprises (SOEs) are collapsing. Government finances are deteriorating. Credit downgrades may limit government access to finance. The institutions of governance are decaying. The complex political situation is paralysing policymaking.

Countries facing analogous crises of confidence like Nigeria, Poland and Turkey have had to seek IMF support.

South Africa can hope that the situation will improve. But it should also plan for the possibility that it will not and that confidence in the government’s ability to manage its deteriorating financial situation will evaporate. This will lead to both higher borrowing costs and reduced access to financing for the government and state owned enterprises. It could also lead to state owned enterprises defaulting on their debts and their creditors calling in their government guarantees. As government loses the ability to fund its operations, it will be forced to turn to the IMF. It is the one organisation that can help it regain access to financing – on condition that South Africa agrees to implement an IMF approved set of reforms.

No-one wants an IMF programme for South Africa. First, it means the government accepting an outsider, dominated by rich countries, overseeing its economic policies. Second, IMF support will be conditioned on the country agreeing to painful reforms such as:

  • Reducing the government’s budget deficit and the current account deficit so that it can meet its financial obligations
  • Deregulation and labour market reforms designed to encourage investment.

But if South Africa begins preparing for this possibility it may be able to mitigate its worst effects and be ready to exploit whatever opportunities it creates.

Negotiating with the IMF

The South African government has considerable experience dealing with the IMF, which regularly visits each of its member states to consult about the state of its economy— the most recent IMF mission visited South Africa in early November. However, it is over 20 years since South Africa negotiated a financing arrangement with the IMF.

Unless challenged, the IMF is likely to condition its financial support on a standard recipe of reforms. However, over time the IMF has become more amenable to supporting the programmes proposed by its member states. It has learned that, while there are similarities between macro-economic crises in different countries, there is more than one strategy for resolving such crises. In fact, the optimal solution depends on each country’s institutional arrangements, history, and particular economic, social, environmental and political characteristics. It also depends on the impact of macro-economic policies on such social factors as gender, equity and environmental and social sustainability.

Yanis Varoufakis, former Greek finance minister, reports in his book on his experiences negotiating with Greece’s creditors that countries like Poland, through careful planning and shrewd negotiations, were able to convince the IMF to follow their plan rather than the IMF’s standard approach. His book also shows that the cost of failing to prepare adequately for negotiations like these can be very high indeed.

So what should South Africa do to ensure that it gets the best possible deal?

First, South Africa must establish clear and realistic objectives for the plan that it wants the IMF to support. Second, it must get its diplomatic ducks in a row so that it can strike the best possible deal.

Fixing the budget

As a priority South Africa should focus on restoring a sustainable budget situation. This will require government to make some painful policy choices about levels of expenditures as well as the purposes for which funds are allocated.

The government can build confidence in these choices if it can show that:

  • the benefits exceed the costs and that the costs are being equitably shared.
  • Policy choices are based on both the human rights imperatives stipulated in the South African Constitution and on promoting growth.
  • it’s serious about addressing the governance problems in state owned enterprises and government departments.
  • it is complying with the legal procedures applicable to government finances and the open budgeting processes that it used in the past.

Finally, government must encourage other social actors – such as business and labour who have contributed to the crisis – to help mitigate the pain. A demonstration of broad support would help convince the IMF to support the government’s strategy.


As Varoufakis’ experience shows, the cost of under-estimating the impact of international economic diplomacy on the outcomes of complex international financial negotiations can be unacceptably high.

The South African government must therefore prepare to sell its programme to the IMF. This requires it to appoint negotiators who have a good understanding of both the IMF as an institution and global financial diplomacy. They can make the South African case in the way that is most likely to convince the IMF staff and Board of Executive Directors to support the South African programme.

These negotiators should also seek to exploit all the benefits that South Africa can harvest from its membership in the institutions of global economic governance. For example, they can tap the experience and expertise of groups like the G24, a lobby group for the interests of IMF developing member states in which South Africa participates, to help it prepare for these negotiations.

The ConversationThey can also draw on the stores of information in international organisations like the IMF, the World Bank and the African Development Bank that have had extensive experience dealing with developing countries facing macro-economic crises. Access to this information should be a benefit of membership. The executive directors that represent South Africa at these institutions can help the government gain access to this information and, if appropriate, identify the relevant experts to consult.

Danny Bradlow, SARCHI Professor of International Development Law and African Economic Relations, University of Pretoria

This article was originally published on The Conversation.

Sunday, November 26, 2017

South Africa moves one step closer to a sugar tax -- and a healthier lifestyle

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South Africa has joined only a handful of countries in the world close to imposing a sugary drinks tax. A new bill that imposes a tax on sugary drinks has cleared the first of three hurdles in South Africa’s law-making process. One of two houses of parliament has approved what is being called a health promotion levy. The bill is expected to be passed by the other, The National Council of Provinces, and then signed in by the President. Implementation is expected in April 2018, but industry interference may still have an impact. The Conversation Africa’s Health and Medicine Editor Candice Bailey spoke to Karen Hofman and Aviva Tugendhaft about the tax.

How important is the sugary drinks tax and why?

The decision by South Africa’s Parliament is a very far sighted decision. It shows that the country’s parliamentarians fully understand the health implications of a product that is excessively high in sugar and has no nutritional value.

The sugary drinks tax – or health promotion levy – is expected to prevent a wide-range of obesity related non-communicable diseases. These include diabetes, cancer, stroke and heart disease. This is important because South Africa’s public health sector is severely overburdened. Public hospitals are seeing on average of 25 000 new hypertensive cases a month as well as 10 000 new diabetic patients each month. These are estimated to be only half of the real numbers because both are silent conditions.

The effect of the reduction in the prevalence of non-communicable diseases will be twofold: it will help the country to implement National Health Insurance (NHI) as an overwhelmed health system will be a barrier to NHI. And it will reduce the negative effect that chronic non-communicable diseases have on economic growth because of the impact on the workforce due to increased absenteeism and decreased productivity.

Already, there are signs that obesity related diseases are affecting the country’s economic growth rate.

The sugary drinks tax will also help people make healthier choices. In Mexico, after a sugary drinks tax was implemented soda consumption decreased by between 7% and 10% and water consumption increased.

Lastly, tackling chronic noncommunicable diseases will ensure that South Africa doesn’t lose the gains it has made in life expectancy after the introduction of antiretrovirals to treat HIV infections. Life expectancy has improved to 62.5 years of age after falling as low as 52.1 at the height of the AIDS pandemic in 2003. Without further policies to promote health, the country’s life expectancy is likely to reverse. This has been seen in countries like Brazil.

The initial lobby was for a 20% sugar tax. But in the end it was only 11%. Is it good enough?

It’s a start. The sugar tax is similar to the one introduced in Mexico which contributed to a 17% reduction in the consumption of sugary beverages among poor people.

Once the tax is implemented in South Africa it will be monitored and an evaluation will be done to establish if it has helped.

What will this levy mean for consumers?

The industry is clearly against the tax. This was illustrated by the fact that the chairperson of the finance committee in parliament, Yunus Carrim, spoke out about industry interference in the process.

The sugar industry sees South Africa and sub-Saharan Africa as their growth market This means that they will continue to find a way to increase profits. We’re expecting to see the industry change their products in an effort to ensure their bottom line is not affected. The tax will be levied on sugar content, which will hopefully encourage industry to lower the sugar content in its drinks and create healthier alternatives.

The sugar tax has been criticised because it deals with only one factor among a myriad that lead to obesity. What’s your response?

This is true. But that criticism only stands if you view it as a single event. The levy is the first step in a very long journey of a range of different interventions that will need to happen.

This was also the case with tobacco. The first step was a tobacco tax. This halved smoking rates over two decades. It was followed by the banning of advertisements and very clear labelling about the dangers of tobacco.

The health promotion levy – which research shows is by far the most effective mechanism – will need to be followed by clear and transparent labelling. We need to move away from just having sugar levels listed in grams on the back of cans. There should be labels in large letters on the front of cans informing consumers about the number of teaspoons of sugar they’re drinking.

The ConversationThe second intervention should be marketing and advertising regulations of these drinks, particularly to children.

Karen Hofman, Program Director, PRICELESS SA ( Priority Cost Effective Lessons in Systems Stregthening South Africa), University of the Witwatersrand and Aviva Tugendhaft, Deputy Director, PRICELESS SA, Wits/MRC Agincourt Rural Health Transitions Unit, Wits School of Public Health, University of the Witwatersrand

This article was originally published on The Conversation.

Lessons for South Africa's Jacob Zuma in Robert Mugabe's misfortunes

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The political troubles of Zimbabwean President Robert Mugabe comes with lessons for his South African counterpart Jacob Zuma.
REUTERS/Siphiwe Sibeko

President Robert Mugabe’s endgame in Zimbabwe holds various lessons for his South African counterpart, Jacob Zuma, as the latter too, considers his prospects towards the end of his presidency. The first, obviously, is that while, from the pinnacle of power, a country’s president may feel the monarch of all he can survey, it is always possible that the blade of the guillotine is just around the corner.

Accordingly, it is always prudent to keep at least two bags packed for a hasty exit: one full of suit, shirts, underwear and socks, another full of foreign currency (preferably dollars or Euros). You just never know how things might pan out, so it is best to be prepared.

Following the almost-coup, Mugabe has been in a stronger position than many African dictators before him because the African Union has in recent years become a lover of democracy and a hater of coups. It therefore now demands that changes of leadership must have at least a veneer of constitutionality.

This has always been the Zimbabwean military’s weak point during this past week of flirting with political power. Hence its insistence that, despite its take-over of the airwaves, State House and parliament, alongside its house-arrest of the president and his family, its actions are not a coup.

In turn, this has provided Mugabe with a considerable degree of wriggle room, which he has sought to exploit to the full. Indeed, it has remained his key bargaining chip, not least because the African Union does not want to be seen as party to the overthrow of a hero of African liberation.

Explicit political actor

Zuma will feel confident that whereas in Zimbabwe the army has long been deeply involved in the ruling party’s internal affairs and the wider political arena, the South African National Defence Force is not an explicit political actor. He stands in no fear of a military coup (or even a Zimbabwe-style non-coup). Yet he does have to worry about what happens within his political party, the African National Congress (ANC).

Even if his favoured candidate, Nkosazana Dlamini-Zuma, were to win the party leadership at the ANC’s December congress, Zuma’s continuing as South African President might be seen as a political embarrassment. If strong contender Cyril Ramaphosa wins, even more urgent calls will be made from within the ANC for the him to be “recalled” because he will be viewed as an electoral liability.

It is a fair bet that, whoever wins, an excuse will be made for a delegation from the party leadership to visit the president and to ask him to stand down. Just ask former President Thabo Mbeki who was fired by his own ANC. If Zuma refuses to cooperate, then the ANC might turn to parliament, where enough ANC MPs might feel emboldened to vote with the opposition to dethrone him.

Fighting for survival

Like Mugabe, Zuma will be battling for a dignified exit. Even more urgently, he will be fighting for survival. In previous years, Mugabe may have feared the prospect of retribution for his sins, and would have been determined to secure immunity from prosecution.

Now, at 93, he is confident that once out of office he will be left in peace. He may or may not appreciate the irony that, unlike his country’s last white ruler Ian Smith, he will not be able to stay in Zimbabwe after he has been forced to stand down, but he will know that he has to leave.

Neither the army nor Zanu-PF will want him hanging around, fearing his ability to continue pulling strings. So off he must go, to South Africa, Dubai or Singapore (anywhere with a few decent shops for his shopaholic wife Grace). His major immediate concern then, we may presume, is safe passage and immunity for his family. We may further presume, that there is lots of money stashed away in foreign bank accounts to keep the crocodile from the door.

Zuma’s tricky position

Zuma is differently placed. If he loses the Presidency he stands in all sorts of dangers, not least of which is prosecution for past financial crimes and the prospect of his ending his days in prison. In other words, he has much more to bargain for, and he will be doing so from a considerably weaker position. Not least of his problems is that he is a lot younger than Mugabe, so could spend quite a few years in jail.

Zuma’s major strength is that, whoever wins the party leadership, the ANC will probably want to grant him immunity and get him out of the way, as otherwise they face the prospect of their former leader facing a corruption trial during the lead up to elections in 2019.

But for a start, there is no provision for presidential immunity in the constitution, and its grant would face a strong challenge in the courts. Furthermore, if the Gupta or other Zuma allies in the project of “state capture” were to be prosecuted, Zuma could face being dragged into court as a witness.

In short, Zuma will realise that it will make sense to hot-foot it out of the country, preferably to a comfortably authoritarian country which will turn down requests for extradition.

The fickle people

What Mugabe is learning now, and it is something of which Zuma should take good note, is that the people are an ungrateful lot, and are likely to turn against you just when you most need their support. Up till a week ago, it was presumed that Mugabe retained the backing of all who mattered in Zanu-PF and that he would again be its candidate for president at the next election. But now, like many a dictator, he is having to learn fast that the people no longer love him.

Past allies, like the war veterans, had already turned against him, repudiating his apparent bid for his wayward wife, Grace, to replace him. Zanu-PF Youth leader, Kudzai Chipanga, initially declared his willingness to “die for Mugabe” and labelled Major-General Constantino Chiwenga, the leader of the non-coup, a traitor when the army first intervened. After being locked up, he shamefacedly read out an abject apology, begging forgiveness, and pleading the inexperience of youth.

This has been followed by all 10 provincial organisations of Zanu-PF calling for Mugabe to go, and even encouraging ordinary people to join the marches being organised by opposition parties and civil society demanding his dismissal.

Zuma is too wily a politician not to know that once he loses the party presidency, his support base will drain away, and that he will become known as yesterday’s man. Yet like Mugabe, he will take comfort from the regional body, the Southern African Development Community (SADC), for there is nothing his fellow presidents dread more than the prospect of any one of their number facing impeachment.

He will also know that, unlike Mbeki, whose stature in Africa remains high, he has no viable future as a roving ex-president. Zuma will know that if he wants to enjoy his retirement in peace, he has to leave South Africa before he gets tangled up in court proceedings.

The ConversationHis best option will be to grab those two suitcases, make a hasty exit and move in next door to Bob and Grace in Dubai.

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation.

Groundswell against nuclear in South Africa could put paid to a power deal

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President Jacob Zuma has appointed David Mahlobo, a close ally as energy minister.

South African President Jacob Zuma, has a maximum of 18 months left as head of state. This time he hopes to rescue a nuclear power deal involving a proposed contract to build between six and eight new nuclear reactors in South Africa.

In an attempt to push through the deal, Zuma has appointed his former minister of state security, David Mahlobo as energy minister. The president trusts that Mahlobo, a close ally for over ten years, will act decisively to implement the deal. He appears to be under orders to get a deal with Russia done and dusted.

The nuclear deal contract is for nuclear reactors to produce 9600 megawatts of power. This would be five times the amount of energy generated from Koeberg, South Africa’s only nuclear power plant which generates a maximum of 1844 megawatts.

But the facts show that the country does not need this extra power. Demand for electricity has come down every year since 2011. And the National Treasury argues that the costs, in the range of at least R1-1,8 trillion, will be prohibitive.

Nuclear energy will also be the most costly electricity source, according to work done by energy experts. In a climate where the state utility Eskom is deeply in debt and is therefore trying to raise the price of electricity by 19.9% for the next few years, investment for nuclear will force up the cost to consumers, and meeting the borrowing requirements will put unnecessary pressure on an already stressed economy.

Zuma’s push for nuclear continues to emphasise how isolated he really is. The anti-nuclear lobby is no longer confined to environmentalists. Large sections of civil society, business, academia and even sections of government have come out against it. My hunch is that democracy will win, and the people will triumph over a tainted and over-extended kleptocrat.

Massaging the energy strategy

Zuma’s efforts to get the deal underway have been stopped in their tracks following a court ruling that declared previous attempts to privilege Russian interests as illegal. The court ruled that before the deal can be reinstated, it has to go through a public participation process and parliament has to approve it. The court also ruled that state efforts to put Eskom in charge of procurement were illegal, as the proper procedures weren’t followed.

It is unlikely that even Mahlobo can meet these legal requirements in the time that his boss has left in office.

Mahlobo’s first step has been to try to speed up the state’s energy strategy – which was supposed to be updated in April 2018. Although the plan is supposed to be updated every two years the 2010 version – which called for more nuclear procurement – is officially still on the table. A subsequent revision in 2013 questioned the need for nuclear. But this plan was never tabled in parliament by the Department of Energy.

The 2018 plan being promised by Mahlobo is expected to re-emphasise the commitment to nuclear. Zuma wants the plan fast tracked. But by speeding it up, the government has indicated to parliament that it will be excluding a public participation process.

This is likely to be challenged given that the plan is the closest thing South Africa has to a national discussion on its energy future.

But even if the plan can be massaged in Zuma’s interests, it won’t be enough to ensure the deal goes through. It will be challenged by political parties and NGOs who are prepared to litigate to challenge a rigged plan if necessary.

Additional hurdles

The public participation process that the national electricity regulator must manage – as prescribed by the April 2017 court judgement – is far from being established. The regulator was berated by the court for not doing this. It has to happen before procurement takes place. The process will provide the perfect opportunity for organisations to make the case that the scientific, environmental and economic arguments against new nuclear are backed by solid evidence.

Even if this process approved the orders of new reactors, there are other hurdles to be cleared. Before the competitive procurement process can be initiated, South Africa would need to renew a series of legal memoranda of understanding with vendor countries. These include France, Russia, China, South Korea and the US. This would ensure that these are free of contractual content, and then sanctioned by parliament. Only then can the procurement proceed legally. And government would have to ensure that the process abides by the Constitutional requirements of “fairness, equity, transparency, competitiveness and cost-effectiveness.”

This means that it will be illegal and unconstitutional to offer Russia preferential treatment in guaranteeing that it secures the deal.

Any transgression of the law or the Constitution will be met by litigation from the environmental lobby. It will be strengthened by an array of other actors, ranging from tax and anti-corruption to human rights activists.

The ConversationZuma can of course flout the rule of law, but would he want to jeopardise what is left of an already problematic legacy over this more or less unwinnable issue?

David Fig, Honorary Research Associate, University of Cape Town

This article was originally published on The Conversation.