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

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.

South 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.

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

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 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.

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

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 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.

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

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.

Diplomacy

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.

They 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.

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 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.