Having run out of money, SACP-ANC government needs to expropriate assets to fund patronage and the NDR – IRR

29 October 2020 - The South African government has run out of money. To sustain its ideological pursuit of the National Democratic Revolution (NDR), an unashamedly Leninist project to convert free or mostly free economies to socialism and ultimately communism, and to fuel the vast patronage machinery underpinning its fragile unity, the governing SACP-ANC alliance has turned to grabbing assets through expropriation and the fundamental erosion of property rights.

The South African government has run out of money. To sustain its ideological pursuit of the National Democratic Revolution (NDR), an unashamedly Leninist project to convert free or mostly free economies to socialism and ultimately communism, and to fuel the vast patronage machinery underpinning its fragile unity, the governing SACP-ANC alliance has turned to grabbing assets through expropriation and the fundamental erosion of property rights.

This is the core takeaway from a live-streamed discussion last night between the IRR’s CEO Dr Frans Cronje, Head of Policy Research Dr Anthea Jeffery, and researcher and analyst Gabriel Crouse. The discussion, hosted by IRR Deputy Head of Policy Research Hermann Pretorius, offered an immediate response to the Medium-Term Budget Policy Statement (MTBPS) delivered yesterday afternoon to the National Assembly by Minister of Finance, Tito Mboweni.

In his scathing analysis of the MTBPS, Dr Cronje cast the Treasury’s growth forecast into doubt, pointing out that such forecasts from government had been historically off by an average of 50%. GDP growth forecasts of -7.8% in 2020, 3.3% in 2021, and 1.7% in 2022, Cronje argued, were likely to be overly optimistic. Warning that GDP growth of 3.3% in 2021 shouldn’t be considered a recovery, Cronje further pointed out that comparing South Africa with other emerging markets illustrated just how low Treasury’s expectations were.

Said Cronje: “We expect emerging markets between 2021 and 2023 to average growth of around 5%. But it’s the target of South Africa to reach 1.5%, growth of around a third of our emerging market peers around the world.”

Added to the low expectations of South Africa’s economic performance, Crouse pointed to the stark reality that GDP would not recover to pre-Covid, 2019 levels, already weak by global standards, for some years.

Said Jeffery: “Everybody is familiar with the Covid lockdown, but the problem is that for most of the last decade we have had a policy lockdown. The problem is not policies that are good but just badly implemented, or lack of certainty about policy, but bad policy that is destructive of economic growth, and this is because of ANC ideology.”

The ANC’s historic and long-standing commitment to the NDR, in coalition with the South African Communist Party (SACP), formed the ideological impetus for antagonism to prosperous free markets and for policies that had had severely detrimental consequences for the South African economy and middle class. Jeffery argued that this was not political coincidence, but a fundamental NDR tenet of ensuring broad opposition to so-called capitalist failures and ever greater reliance on the state as the economic engine of the country.

Said Jeffery: “If that is your aim, you do not want to see the free market thriving. When capitalism is doing badly, then it’s possible for the government to lay the blame, not on bad policy and the NDR, but on the capitalist economy as the scapegoat.”

Yet, when considering the priorities of government, reflected in the policies of the Ramaphosa government and Minister Mboweni’s MTBPS, against the priorities of ordinary South Africans, a striking disconnect emerged.

Jeffery noted opinion polling data gathered by the IRR in 2018 and 2019, some of it yet to be published, showed the priorities of the vast majority of South Africans diverged markedly from the ideological pursuits of the SACP-ANC government. Land as an issue, vaunted by the ANC and its ideological allies as a vastly important issue for South Africans, paled in comparison to more pressing matters of living standards – unemployment, fighting crime and corruption, and improving education ranking high among these. For race-based policies such as BEE, Jeffery noted, there was “not much enthusiasm”.

Said Jeffery: “We asked people whether they would support a party that promised massive land redistribution or one focused on economic growth and jobs, and a huge majority, some 80%, opted for growth. What that shows, is that there’s a majority of moderate opinion. The government is for radicalism and ordinary South Africans want growth, jobs, an end to crime and a way ahead that’s stable and prosperous. There’s little in Mboweni’s budget in the manner of generating economic growth, creating jobs, or bettering education.”

But, warned Cronje, the policies of the Ramaphosa government must be seen within the context of the broader SACP-ANC ideological project. The heated debate on the destruction of property rights was not just about land – land, Cronje warned, was just being used as the “wedge” to drive forward the erosion of property rights so as to empower the ANC to get its hands on further assets.

Said Cronje: “The real target is financial and other assets. If you look at the data, debt projections and so on, the government is running out of money.”

While making much of certainty, in specific reference to agricultural land, Mboweni failed to provide any. Far from setting forward a fiscal or economic framework that would allow for vital certainty, especially on the critical issue of property rights, Mboweni failed to do more than pay cheap lip service.

Said Cronje: “[Mboweni] is not an analyst or independent observer; he could have gone on to say that ‘this is how we provide the certainty’, or say that property rights should be respected, and that the government will abandon the drive to change the constitution. He just says something must be done.”

The inability of Minister Mboweni to promote real, growth-enhancing reform stemmed from one of two causes: either there was no reform strategy, contrary to the fanfared trust of the business community in President Ramaphosa, or the antagonism to pragmatic, growth-enhancing reform in Cabinet was overwhelming any initiative there might be to pursue it. The impediment to a prosperous South Africa remained the fundamentally anti-growth policies of the government, made most manifest in the aggressive erosion of the right of South Africans to own what they had worked hard to earn.

Said Cronje: “If you invest in SA your investment is increasingly vulnerable to arbitrary seizure. Positive commentary is absolutely wrong on the facts.” Based on the catastrophic outflow of capital from the country, Cronje noted that “there’s deepening certainty that the South African government will remain hostile to investments and will turn to looting wealth.”

Says Pretorius: “This is why the threat of expropriation without compensation (EWC) is now more potent than ever.”

“The reality is that South Africa can have a future or EWC – not both. South Africa can have jobs, good schools, service delivery, investment, economic recovery, upward social mobility, a fighting chance to win the fight against corruption, real land reform – or we can have EWC. Not both.”

Despite the dire situation facing the country, Cronje stated that there was still hope for a bright South African future, but that such a future would not materialise if South Africans remained unengaged in the public sphere on issues of such importance as the assault on property rights and the vilification of property owners. Better ideas needed to be promoted and given vocal public support.

Said Cronje: “There is so much we can do. What needs to happen next, and what is already starting to happen, is that thousands of people must take those ideas into society, take hard, practical steps to secure their own future” and, in so doing, “ensure fellow South African citizens get a decent shot at living a good, happy, safe and prosperous life.”


Media contact: Hermann Pretorius, IRR Deputy Head of Policy Research – 079 875 4290; hermann@irr.org.za
Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za
Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za
 
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