- Mar 6, 2004
Read more: https://www.politicsweb.co.za/opinion/the-imf-can-do-what-the-anc-cantIn a recent article in Business Day (8 August) Peter Bruce took issue with my PoliticsWeb piece of 1 August (“Our Coming Train Crash”) in which I argued that for South Africa now “all roads lead to the IMF”. I went on to say that this was not undesirable since it would mean that the necessary structural reforms would be forced through and this would cause a fundamental re-orientation of South Africa’s economy and politics.
In another apparent response the Reserve Bank Governor, Mr Lesetja Kganyago, argued that South Africa could avoid an IMF bail-out: “We don’t have to get there. These problems are within our grasp, we know exactly what must be done.” As Fin24 put it (August 8), “He added that the government would need to take bitter medicine in order to prevent matters from spiralling out of control.”
Mr Bruce also wants the ANC to act without the spur of the IMF but his argument is different:
“No one should want the IMF in here. Cost cuts and labour market reforms are just the beginning of a restructuring. The political effect is frightening...the ANC shrivels and the EFF grows. An IMF bailout 100% fuels populism.”
The first thing to note here is the deliberate and studied vagueness with which both these gentlemen refer to the things that need to be done. This is very much in line with the Presidency and the Treasury, both of whom talk about the need for “tough measures” and “hard choices” but never get round to telling us what these are. Mr Kganyago simply refers to “bitter medicine”, while Bruce mentions cost cuts and labour market reforms but says these “are just the beginning”, without somehow being able to tell us more.
If you think about it, what this means is that the government, both these gentlemen and, indeed, various businessmen who have inveighed about the need for (unspecified) hard decisions, are all somewhat nervous about actually speaking aloud about what needs to be done. If you reflect on this general timidity you realise that all these parties – including the government – are anxious not to have their names associated with the list of reforms which come under the heading of What Is To Be Done. To be fair, the cases are different. Mr Kganyago and a businessman like, say, Mike Brown of Nedbank, are under clear professional constraints not to fully speak their minds. Mr Bruce, on the other hand, is free to speak the unvarnished truth.
But if everyone is scared even to mention what restructuring means, what real chance is there that the government will actually name all these reforms, take responsibility for them and drive them through? I certainly wouldn’t put any money on that. If any of these gentlemen wish to place a bet with me on this, I will happily take it. But if I am right about this then it means that Messrs Bruce, Kganyago and not a few others, are in denial. They want to keep suggesting that the government can and will act simply because the alternative makes them very uncomfortable. Come now, gentlemen, this is not speaking truth to power or even to yourselves.
I have in fact spelt out very fully the list of necessary reforms in Fighting for the Dream (2019) and, indeed, before that in How Long Will South Africa Survive ? (2015 and 2017). I am aware that this is not comfortable reading for many but, for the life of me, I cannot see why one should be bothered to write anything at all if one doesn’t try to tell the whole truth as far as one is able. We only get one life after all. This is not a dress rehearsal. Why waste one’s time?
However, let me summarise again. We need to get rid of affirmative action, BEE and EWC. We also need to privatize many, probably most, of the SOEs and to liberalise the labour market so as to let the ten million unemployed compete for jobs. Why are wages for textile workers more than ten times higher in South Africa than they are in Ethiopia? The result of that is that the Ethiopian textile industry thrives and employs many thousands of people, while ours is dead. We also need to cut our civil service and public sector wage bill pretty drastically by a mixture of redundancies and wage freezes.