South Africa should consider help from the IMF to fix its economy

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The prognosis that the South African economy is in dire straits is pretty obvious even to the untrained eye. The solution to the country’s present predicament is also pretty much understood. The International Monetary Fund (IMF) has recently produced a comprehensive view which deserves to be considered.

The IMF identifies three key ailments as causes of the country’s anaemic economic growth. These are low consumer and investor confidence and policy uncertainty.

Continued slow growth should be a matter of grave concern and ought to be treated as an emergency.

Thus far the short and medium term outlook suggests that growth outcomes will continue to be pedestrian. What is even more worrying is that over the past four years global economic growth has gained momentum, suggesting that the solution to South Africa’s vanishing growth lies in the country.

The new minister of finance, Malusi Gigaba, recently hinted that South Africa may be compelled to seek assistance from the IMF. I think the conditions are right for serious consideration of the proposal even though IMF programmes are not very popular with politicians.

There are a number of reasons for this. Requests for IMF assistance suggest that those who manage the domestic economy have failed. The fund’s programmes also come with clearly defined milestones, often described as “conditionalities”. But in most instances, these are well-intentioned and aimed at success.

It’s better to enter an IMF programme early before the situation becomes frantic. As medical doctors might argue, it is easier to deal with an ailment in the earlier stages before it reaches an advanced stage.

Desperate situation

The alternative to asking for help now would be continued poor growth outcomes which would have serious social and economic costs.

The country’s poor economic growth record spawned a number of problems.

A shrinking economy means tax revenue shortfalls. The fiscal policy response would be higher taxes or bigger budget deficits.

And then again, interest payments, the fastest growing government expenditure item, would grow even faster. Already, about 11 cents out of every rand goes into servicing public debt.

As the economy shrinks, more and more income would have to be spent on interest payments. Government’s ability to provide a social safety net in the form of social grants and other services, like education and health care, would be much more constrained. The service delivery protests that have become increasingly the norm would become even more widespread as the fiscus comes under serious strain.

Ultimately, the brigade of the unemployed would bear the brunt. Of course, the employed would also suffer because slow growth affects incomes.

Low and anaemic growth dries out consumer confidence. Job losses and subdued growth in incomes as a result of poor growth outcomes and prospects chips away at consumer confidence.

South Africa’s growth performance post 2008 has been very low. Over the past 10 years, the economy recorded an average of 2% growth per year. If this continues it will take more than 30 years to double average incomes in South Africa.

But if the country can increase growth to 5% as projected by the National Development Plan, it would take only 14 years to double average income. The higher the growth rate the shorter the time required to double incomes and bring people out of poverty.

Investor confidence deficit

The investor confidence deficit is largely as a result of ever increasing political risk, policy uncertainty and wrangling in the ruling party and lately revelations of alleged looting of public funds by the political elite.

But not everything’s broken. The performance of the country’s monetary authorities in the management of monetary policy is admirable.

Where there appear to be lapses is the asset and liability management of the National Treasury. And here, the massive losses of state owned enterprises readily come to the fore.

This is a blot on the canvas of fiscal policy management. And the much touted structural reforms that are required haven’t been forthcoming because the government lacks the capacity to formulate and implement the appropriate policies. In fact, even if it designed the correct ones, the investor community has little faith in its ability to carry them through.

Hence, the need for an IMF programme.

The IMF has the solution

An arrangement would achieve a number of objectives.

Firstly, the fund could help the country formulate policies that would unblock the problems that continue to inhibit economic growth and job creation. The mere adoption of an IMF programme would help address the question of policy uncertainty.

Secondly, the IMF is well placed to provide foreign exchange loans, bringing stability in the rand foreign exchange rate market. This in turn would improve investor confidence, leading to more investment in the country. Economic growth would pick up and there’d be an improvement in consumer confidence.

An IMF programme would send a clear and unassailable signal to investors that the country was committed to pursuing a given set of policy options. And it would make the commitment appear credible.

Matthew Kofi Ocran, Professor of Economics, University of the Western Cape

This article was originally published on The Conversation.

Voices of the poor are missing from South Africa's media

A typical community protest over the delivery of basic services in South Africa. A study shows protesters often resort to violence to attract attention.
Reuters/Mike Hutchings

Poor communities in South Africa feel that their voices are not heard and their issues not taken seriously by the media.

This is clear in the findings of an international research project on the role of media in conflicts arising from transitions from authoritarian rule to democratic government. It focused on four countries – South Africa, Egypt, Kenya and Serbia.

The study shows that in all four countries, citizenship conflicts are frequently reduced to judicial factors. The media’s approach to conflicts is to look at them from the perspective of rights rather than cultural factors.

In South Africa, rather than wilful distortion or neglect on the part of journalists, the findings expose systemic problems underpinning news agendas and coverage.

The project, now in its second year, has drawn on content analysis of print media and interviews with journalists and activists.

Understanding conflict in South Africa

South Africa’s formal transition from apartheid to democracy in 1994 is often heralded as peaceful and smooth when viewed in institutional and procedural terms.

But there are lingering problems. Dissent over the unrealised dividends of democracy for the poor and widespread perceptions of government as corrupt have resulted in ongoing protests.

Anger over unemployment, housing, water and sanitation, electricity, corruption in municipalities, and health and crime have all been listed as reasons for the rising number of protests which started in the early 2000s.

The protests are not only aimed at getting basic public services such as water, sanitation and electricity. They are also part of wider disillusionment at the failure of democracy to meet basic needs as well as an attempt by the poor to be heard and included in democratic discourse and policy-making.

This “rebellion of the poor” can thus be considered “democratisation conflicts”. They are similar to those in other transitional democracies where the struggle for equality and human rights did not end with the advent of formal democracy.

While it is widely acknowledged that violent protests are becoming more prevalent in South Africa, the role that the media plays in the cycle of protest and violence is not widely understood.

Our ongoing study indicates that South African community protests receive unfavourable coverage. The reporting also routinely fails to provide depth and context to explain the underlying issues that lead to the protests.

Frequently protests are reported only inasmuch as they inconvenience a middle-class audience, for instance to inform them where traffic may be disrupted.

While journalists are often sympathetic to protesters, they strive for “objective” coverage so as not to come across as supporting a particular side. The result is superficial and limited reporting. Underlying structural issues are not unpacked.

Journalists list time pressures and juniorisation of the newsrooms as some of the reasons for limited in-depth coverage.

And commercial pressures also result in media focusing on protests as drama in an attempt to attract the interest of middle-class audiences.

Fighting to be heard

Very few media articles about protests include interviews with protesters. It seems that protesters’ voices remain unheard, even as their actions are reported. Communities report that photographers are often sent to take photographs without being accompanied by reporters to interview them.

Activists from poor communities report that they only get media attention when they go to extremes, such as causing damage. Protesters told researchers that when they called the media to cover their issues, they were asked if “anything is burning”. If nothing is burning, journalists don’t come and don’t report.

Activists report that with the failure of government channels of communication, and poor media coverage of their plight, the only way to be seen is to create a violent spectacle.

They say that participating in government-created spaces for engagement, such as ward councils and municipal integrated development plans, does not lead to satisfactory responses.

This suggests that protest actions follow a calculated logic, despite activists’ impressions that they are often depicted in the media as being out of control.

While there is some coverage in the media that protests are related to structural economic circumstances, they do not reflect the frustrations experienced by communities over government’s empty promises.

Also, scant regard is given to the failure of participatory processes to address grievances. No attention is paid to the failures of capitalism to address inequality. The heavy-handed response from government to silence protest is also underplayed.

Media coverage differs noticeably depending on the respective outlets. In print, the Daily Sun provides the most coverage of protests. This bears out the tabloid’s claims to provide news from the perspective of the poor and the working class.

Compared to their upmarket print media counterparts like the Mail & Guardian and Business Day, the Daily Sun is also the most critical of most aspects of democracy. It is often the only newspaper where sources are ordinary citizens. For media serving the middle class, sources are mostly drawn from officials or the elite.

Improving reporting of community protests

The activists we interviewed believe that media could play a big role in boosting democracy in the country by highlighting the issues poor communities face before they spill over into violent conflicts.

A focus on community politics could shine a spotlight on the most marginalised and vulnerable citizens, and in turn could help focus government attention where it is most needed. Media coverage – favourable or unfavourable – added pressure on government to quickly resolve issues.

Activists felt that they would prefer not to have to go to extremes to get media attention. But they also recognised that their protests kept community issues on the agenda.

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This article was co-authored with Rebecca Pointer, research assistant at the Centre for Film and Media Studies, UCT.

Herman Wasserman, Professor of Media Studies and Director of the Centre for Film and Media Studies, University of Cape Town; Tanja Bosch, Senior Lecturer in Media Studies, University of Cape Town, and Wallace Chuma, Lecturer in Media Studies, University of Cape Town

This article was originally published on The Conversation.

South African protesters echo a global cry: democracy isn't making people's lives better

EPA/Kim Ludbrook

Recent violent protests in South Africa have refocused attention on the growing number of demonstrations over government failure to provide basic services, such as water and electricity. The country is known as the “protest capital of the world”.

Research by the Centre for Social Change, University of Johannesburg seems to bear this out. Based on estimates from South African Police Service data, we found that between 1997 and 2013 there were an average of 900 community protests a year. In recent years the number has climbed to as high as 2,000 protests a year.

The situation in South Africa is not unique. Protests have been increasing globally, particularly since the 2008 global economic crisis.

In a new book, my colleagues from the Centre for Social Change and I attempt to understand South Africa as part of the global protest wave.

On the face of it, protests in South Africa look quite different. They tend to be fragmented and happen mostly in black townships and informal settlements. The occupation of central public spaces in towns and cities, as we are seeing in Venezuela, happens seldom.

While there are important differences there are also commonalities. Whether protests focus around the “1%” as they did during the Occupy movement or around the lack of service provision in townships, protesters around the world are critiquing the failure of a representative democracy to provide socio-economic equality.

Broken promises

South Africa’s governing ANC came into power in 1994 on the promise of a “better life for all”. There have been important gains, such as increasing access to electricity from 51% of the population in 1994 to 85% in 2012, but inequality remains endemic. Recent data from the World Bank confirms that South Africa remains one of the most unequal countries in the world.

As part of research by the Centre for Social Change we spoke to protesters all over the country. A new book from the centre highlights the extent to which protesters are raising not just concerns about the quality of service delivery but also about the quality of post-apartheid democracy. As Shirley Zwane, from Khayelitsha, near Cape Town, explains:

We don’t have democracy!… We [are] still struggling… you see if we are in democracy there’s no more shacks here… No more bucket system… we supposed to have roads, everything! A better education… There is a democracy?…. No, this is not a democracy! They have, these people in Constantia, Tableview, Parklands, they have a democracy, not for us!

For Shirley the quality of post-apartheid democracy is linked to the provision of basic services. She is not alone in this view.

Research by Afrobarometer has found that compared to other countries in the region South Africans are much more likely to emphasise the realisation of socio-economic outcomes as crucial to democracy. That South Africans should view housing and services as central to post-apartheid democracy is unsurprising given that apartheid systemically denied the majority of people these rights.

Crisis of affordability

Community protests are fundamentally about the exclusion from democracy experienced by many black working class citizens since the end of apartheid in 1994.

Although the provision of services to the previously marginalised black majority has increased substantially, black working class households face an increasing crisis of affordability.

In sectors covered by a minimum wage, the real median wage increased by 7.5% between 2011 and 2015. But last year inflation on an average working class food basket was 15% and certain staple foods, such as maize meal, increased by as much as 32%. This has put a real squeeze on working class households especially when, due to high levels unemployment, each black South African wage earner supports four people.

Structural challenges

The crisis of affordability facing black working class households also compounds the structural crisis within local government.

In South Africa local governments are responsible for delivering services. Over the past 15 years local municipalities have increasingly had to find ways to fund these services through their own tax base. Many have resorted to cost recovery measures, for example by introducing prepaid meters. Their introduction has been behind many protests.

The financial difficulties for local and provincial governments looks set to get worse. In the country’s latest budget the National Treasury cut their funding as part of R25 billion budget cuts. In the case of Gauteng, the scene of the most recent protests, this amounted to a R2.9 billion rand cut over three years.

To fill the gap, municipalities and provinces are going to have to look increasingly to their own tax base to fund service provision. A difficult prospect when slightly more than half the population survives on R779 or less a person a month.

A global crisis

As Professor Michael Burawoy argues in our new book, the nature of the crisis varies from country to country. In South Africa the crisis represents the forcible exclusion of many black working class households from democratic institutions, largely because of their inability to afford socio-economic goods. For instance, while access to electricity has increased, access is increasingly mediated by prepaid meters, therefore the ability to access service is inextricably linked to the ability to afford them.

It’s this exclusion that leads many to say that democracy is only for the rich. Globally, people are beginning to search for new solutions to these problems with many being drawn to left-wing movements and political parties, such as Podemos in Spain. Whether such a comparable movement can emerge in South Africa remains to be seen.

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

This article was originally published on The Conversation.

Parents and learners shut down East London high school

They demand that the Department of Education provide transport for learners who walk over 8km

By Mbulelo Sisulu
31 July 2017

Learners, teachers and SGB members outside Uviwe Senior Secondary in Scenery Park township. Photo: Mbulelo Sisulu

Parents and learners of Uviwe Senior Secondary in Scenery Park township in the Eastern Cape shut the school down on Monday. This came after their requests for scholar transport to the Department of Education went unanswered.

Uviwe Senior Secondary has many times since 2009 asked the provincial government to provide the school with transport for its learners.

According to the School Governing Body (SGB), the education department had failed to meet its own promise to provide transport for learners like 18-year-old Thandile Gujulwa. He is among a group of learners that travels over 8 kilometres to and from school. This is because there are no high schools in the neighbouring township of Khayelitsha where he lives.

On 30 July, the SGB, parents and learner representatives met. They decided to close the school until the department provided Uviwe with scholar transport.

SGB treasurer Nwabisa Mgxwati told GroundUp that they were “sick and tired” of empty promises. “Since 2009, this school has been applying for scholar transport. Our government wants something to happen first in order to act. There are many bodies that have been found in the bushes where [Gujulwa] travels through when he comes to school,” she said.

Mgxwati said that they had informed the department last week of their intention to close the school until their demands were addressed. “We did not get answers from them,” she said.

Student leader Sibulele Sinqane said that learners supported the shutdown. “The final exams are just around the corner but we [agree on] this decision. We cannot be happy while other kids risk their lives when they go to school,” he said.

Fundiswa Jose, Ward 5 committee member that deals with education at the Buffalo City Metro Municipality, said she was concerned after hearing about Gujulwa’s situation. Acting school principal Vuyani Mgqolozane said that there was nothing the school could do when parents and learners closed the gates on Monday morning.

Eastern Cape education department spokesperson, Mali Mtima, said the department was aware of the matter. Mtima said that a committee has been set up to deal with the issues at Uviwe. “We hope the committee will fast track this matter so that kids can go back to classrooms,” he said.

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Published originally on GroundUp .

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Ice causes death in many ways, overdose is just one of them

Most people are unaware of the severe impact ice has on the heart.
from www.shutterstock.com.au

Methamphetamine (usually colloquially referred to as “ice”) is a major public health problem in Australia. When we think of methamphetamine-related death, however, we tend to focus on overdose. This is a very real and valid concern. But the extent of the problem extends far beyond drug toxicity.

Methamphetamine dependence is associated with an array of serious social, mental and physical health problems that include heart disease, stroke, suicide, mood and anxiety disorders, psychosis, and violence. The footprint of methamphetamine is far wider than that of many other drugs. Close to half of deaths occur in rural and regional areas, a great many users are employed, and half have never injected a drug. These are not the “usual suspects” for drug-related death.

In a new study we looked at all of the methamphetamine-related deaths that occurred in Australia from 2009 to 2015. There were 1,649 such deaths over that period, and the annual rate doubled from around 150 a year to 300. Of these deaths, 43% were due to drug toxicity.

In the case of methamphetamine, overdose typically results in heart arrhythmias (where the heart isn’t beating properly) and seizures caused by the drug. Importantly, even modest amounts of methamphetamine may cause heart arrhythmia and death. The remainder, however, were due to other causes.

How methamphetamine affects the heart long-term

In a fifth of cases, death was due to methamphetamine combined with disease, most commonly heart disease. Methamphetamine is cardiotoxic, meaning it causes damage to our heart muscle, and causes disease in our arteries.

There’s a circular pattern here. Methamphetamine damages the cardiovascular system. The drug also places strain on this system by increasing the force of the blood against the artery walls (it’s a “hypertensive”). Users are then placing strain on damaged hearts. And this damage accumulates and does not reverse.

There’s also a real risk of stroke, and we saw 38 such cases among young people, a demographic not commonly affected by stroke. Importantly, the damage to the cardiovascular system occurs regardless of how the drug is used. Smoked, injected or swallowed – it is the drug that does the damage.

How methamphetamine fatally reduces inhibition

Methamphetamine is also associated with traumatic injury and death, as it causes a high degree of disinhibition, impulsivity, aggression and impaired critical judgement. There were 300 completed suicides related to methamphetamine over our study period.

There were around 300 deaths from suicide linked to methamphetamine, and the methods used were more violent, which is linked to the aggression, violence and aggravation caused by the drug.

Some 15% of all methamphetamine-related deaths were due to traumatic accidents, most commonly motor vehicle accidents. Methamphetamine users commonly believe the drug improves their driving. It does not. What it does improve is the risk of injury and death. All of these deaths were avoidable.

What can we do?

Knowledge of the risks is a start. Many users might assume a racing heart and chest pains are part of the experience of using methamphetamine and not realise these are signs of a system under stress. The heart disease we are seeing in methamphetamine users will be a problem for decades to come, long after they cease use.

In terms of our treatment system, drug treatment centres need to be aware their methamphetamine patients may be at risk of heart disease. Doctors also should ask about methamphetamine involvement if young people are presenting with heart conditions.

Over the past few years there has a been an intense focus on methamphetamine in the wake of evidence of increasing use and harms, including in rural and regional areas. By examining the causes of these deaths we have uncovered that, unlike many other drugs, the harms are very diverse, particularly with regard to the extensive association with heart disease.

This suggests that even if use goes down, we will have a major public health problem for our hospital and community health services for many years to come.

Another striking finding of this research is that very few of those who died were in treatment at the time. Our treatment services are already under intense pressure and this underlines the urgent need for more resources to go into treatment and trials of new medications.

Shane Darke, Professor at the National Drug & Alcohol Research Centre, UNSW

This article was originally published on The Conversation.