Wednesday, December 17, 2014

Memories of my first load-shedding

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17 Dec 2014 | Tony Leon | Original Publication:  Rand Daily Mail

It was long ago and far away, but it has eerie lessons for the present

WHEN and where did you endure your first “load-shedding”? Strangely enough, my first such encounter with a mass electricity outage happened long ago and faraway. It was in a city (and country) which is today the top-performing and arguably most modern economy in Europe and the financial centre of the world.

For a middle-class South African boy brought up in the stifling strait-jacket of Calvinist South Africa, London back in 1973 appeared alluringly cosmopolitan and free. David Bowie and the “drugs, sex and rock ‘n‘ roll” siren calls had even breached the walls of my Natal provincial boarding school. And for television-deprived South Africa, the idea of several channels of evening TV to select from seemed impossibly exotic.

Despite strong parental warnings to the contrary, but with the determination of a wilful 17 years, I cashed in the savings from birthdays and bought an air ticket, found a cheap hotel, and departed these shores in December 1973.

Talk about bad timing. My arrival in London coincided, almost to the day, with the introduction of the infamous “three-day week”. The UK at the time was hit by the double whammy of depleted energy supplies after the 1973 Middle East War and the Opec oil crisis (some things don‘t change) that drove up the price of coal, and a national strike as well.

The mighty National Union of Mineworkers demanded a huge pay increase. Hapless Conservative prime minister Ted Heath was unwilling to breach the wage freeze to meet the demand.

The UK economy, then called “the sick man of Europe”, was battling a run on its currency and high inflation. It all has a rather familiar ring about it, looking at our own current gloomy economic prospects and power constraints.

What was also far different was the severity of the UK equivalent of load-shedding of 40 years ago. Instead of celebrating New Year‘s Eve bathed in the lights of Piccadilly Circus and channel-surfing the TV, the lights were literally switched off and the evening TV screens went dark for four days at a time, or for long periods during the days.

However, the singular advantage of being a young visitor to Britain then was the strength of the rand, which at two to the pound went further than it does today. But for Britons it was misery. Hundreds of thousands of workers were laid off and the country plunged into national despair.

It also finished off the prime minister. Heath called an election two months later and lost power to Labour‘s Harold Wilson.

But Labour, which temporised with, rather than confronted, the trade unions, settled the strike but on terms that saw their five years in power end on an even worse note than the Conservatives.

Five Decembers later, in 1978, Wilson‘s successor, Jim Callaghan, presided over an even more dire economic crisis, the “Winter of Discontent”. This entered into grainy infamy with piles of unburied bodies in Liverpool and mountains of uncollected rubbish in central London. Strikes were now the rule, not the exception, and the economy was saved from collapse only by a bailout from the International Monetary Fund.

Having witnessed the three-day week, I watched a documentary on the second crisis the other night, Andrew Marr‘s History of Modern Britain. It is worth the viewing to witness how a country can come back from the edge of economic collapse and restore itself to the top table of economic performers.

There is a very telling point in the middle of this BBC documentary.

Marr describes how, in the middle of the winter of discontent, Callaghan confided: “If I were a young person today, I would emigrate from Britain.”

Many young South Africans are considering Callaghan‘s advice in their own situation. Many young Brits did indeed leave.

Callaghan called an election a few months later and lost power to Margaret Thatcher.

She had decidedly different views, and untried policies from taming union power to mass privatisations of state-owned industries. She destroyed the post-war consensus and divided her country, but arguably saved the British economy. Tough, but essential medicine.

Goldman Sachs, the global super-bank, was one of the chief beneficiaries of Thatcher‘s reform agenda when her “big bang” of financial sector reforms transformed British banking.

The South African managing director of Goldman Sachs, Colin Coleman, could hardly be called a “Thatcherite”, despite the position he holds. He has a far more radical and activist past than most other bankers around. He is also very bullish about the country‘s long-term future.

Last November, in the company of leading cabinet ministers, he published the Goldman Sachs report Two Decades of Freedom. Its upbeat note was premised. among other metrics, on his bank‘s forecast of 3.4% GDP growth for the year ahead. Ruling party apparatchiks were quick to proclaim it as proof positive of the “good news” achieved on their watch. Now, a year later, in a recent speech based on the reality of a growth rate a third of the forecast (1.4%), Coleman struck a more sombre note.

He drew attention to the “self-inflicted wounds” South Africa has imposed on itself. Key among these are in the arenas of labour conflicts, energy supply disruptions and what he terms “public sector institutional weakening, inefficient and poor governance and management”.

This is much tougher stuff than the report of a year ago, but in a deteriorating environment it is necessary to highlight. Among his proposed solutions is a call for a “team South Africa” approach so the huge economic inputs on offer from the private sector and elsewhere can be used to help put the country, not just a narrow ideology, first.

Deputy President Cyril Ramaphosa was appointed by the cabinet last week to rescue the three most-failed state enterprises — Eskom, SAA and the Post Office. Let‘s see if he goes wide or narrow in crafting solutions.

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Wednesday, December 10, 2014

Government indifference to business elite puts us in peril

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10 Dec 2014 | Tony Leon | Business Day

While Jooste and Bekker are fairly quiet about their political opinions, Rupert and Wiese are less so, writes Tony Leon

IN 1936, in The Snows of Kilimanjaro, American Nobel literary laureate Ernest Hemingway mocked F Scott Fitzgerald’s apparent obsession with the super-rich. Fitzgerald had mused: "The very rich … are very different from you and me." Hemingway’s withering literary retort was: "Yes, they have more money."

Nearly 80 years later, over the past weekend, the Sunday Times published its own list of SA’s wealthiest billionaires. No doubt the names on it inspire similar sentiments among readers — from admiration to envy or, in the case of the revenue service facing diminishing returns, an itch to extract even more of their income for the needy fiscus.

I couldn’t help but muse that nearly 40 years ago, during military conscription, I shared a billet in Pretoria with the top name on the list, Ivan Glasenberg. But, alas, none of his later revealed business acumen rubbed off on his fellow conscripts.

The paucity of women and infrequency of black names on the list inspired a lot of necessary comment. But I rather thought that the response of one reader captured the essence of the issue: "What SA really needs is more billionaires", of whatever stripe.

The listing is inexact, but it does provide a snapshot of many of the local super rich and the companies they have built or in which they have huge holdings.

My second musing was about the town of Stellenbosch and its university. Doubtless there is a thesis waiting to be written about what it is about the waters there which incubated so many of the post-1994 business leadership success stories of this country. It was hardly written in the stars, that a quartet of Afrikaans-speaking men — Johann Rupert, Christo Wiese, Koos Bekker and Markus Jooste — would achieve such global, never mind South African, prominence within two decades. And each of them has some provenance with this small town.

Of course generalisations of this sort are also inexact. Other business achievers of recent note such as Stephen Saad, Patrice Motsepe and Adrian Gore, got their business smarts elsewhere. And of course, simply the fact that this foursome are Afrikaans-speaking residents of the Western Cape can be as misleading as bracketing together Jacob Zuma and Lindiwe Mazibuko on the basis that both are isiZulu-speaking.

But while Jooste and Bekker are fairly quiet about their political opinions, Rupert and Wiese are less so. In an interview in Rapport Wiese made a revealing disclosure. Recounting a conversation with Motsepe who expressed his dismay at the absence of most of "the rich list" at this year’s presidential inauguration, Wiese countered with the unanswerable: "Well, I wasn’t invited."

Since the past weekend also marked the first anniversary of the death of Nelson Mandela, Wiese’s omission from the current president’s guest list was striking given the enormous attention which Mandela lavished on the then business elite of SA, from invitations to everything, to constant rounds of telephone diplomacy with its leading members.

Perhaps 20 years later the government no longer feels the needs for such interaction, or does not enjoy the "noises off" comment some might offer.

Perhaps the wise dictum of former US secretary of state Colin Powell that "no leader’s office should be an echo chamber" where the only conversation amounts to a chorus of approval, has been discarded.

Rupert underlined this point, and made a lot of the recent political weather. At the annual meeting of his Remgro Group, he opined: "The leadership of the country, quite frankly, is becoming very hard to defend abroad. The biggest insult is that they don’t seem to care what we think." And in a bow to populism he added that this dialogue of the deaf was not just confined to business but extended to "people in the townships".

The headline-treatment for Rupert was not that his comment was extraordinary; it was the rarity of such public expression by a certifiable leader of the corporate elite.

It is a matter of record rather than conjecture that on reading such a comment, Mandela would have been on the phone to Rupert within a hour or two. Different times then and now.

Perhaps the lack of response from the governing elite to the challenge of leading members of the business elite is at one level to be welcomed. It is a matter of more recent record just how easily stung our rulers and masters are when criticised. Far less harsh criticism than Rupert’s jeremiad led to a stream of invective from African National Congress secretary-general Gwede Mantashe in January last year.

The rather anodyne First National Bank advertising campaign "You Can Help" was pulled when the voluble Mantashe described the bank and various mining companies as, variously, "unpatriotic", "self-hating" and "treating the country like visitors". More darkly, business as a whole was accused of bidding to "control the state". Given the current electricity blackouts and a host of other ailments affecting the delivery of basic services, many might only wish that the latter was the case.

If, in fact, either Wiese or Rupert controlled Eskom, past form suggests they would hardly have lavished bonuses and salaries of R60m on its top executives for this year’s performance. They would have been shown the door.

But the absence of official comment on the Rupert speech did not prevent the "troll brigade" from commenting. One particularly bone-headed response in the comment section of BDlive was instructive, and perhaps widely held. Khayazonke opined: "The man’s amnesia is amazing, perhaps he has forgotten that his empire was built by the evil apartheid corruption." Indeed Rupert is the scion of one of the most prominent families of the past era. But famously his father began his empire in the back of a garage with £10.

They were doubtless assisted by proximity to the past regime, but the Ruperts were hardly its praise singers. Indeed, on the death of Anton Rupert back in 2006, then president Thabo Mbeki, also famously over-sensitive to any criticism from big business, struck an unusual pose in his encomium for Rupert the elder. He eulogised him as being "inspired by the spirit of righteousness and justice". He also noted approvingly that during the darkest night of apartheid, in 1985, Rupert had warned: "Do not embalm the corpse of apartheid, bury it."

In Wiese’s case, the facts also point to an early opposition-mindedness, long before it became fashionable. In 1977 he stood (and duly lost) as a candidate for the anti-apartheid Progressive Federal Party.

Anyway, the more recent corporate success stories of Rupert and Wiese have had a global dimension in the far tougher stream of international waters than the smaller, more protected shoals of the local economy.

Neither these nor other "inconvenient truths" will prevent the crude stereotyping and stigma-labelling which so characterises and debases the current discourse. But a little basic research might help it along.

There are many reasons why the mighty engine of the US economy has roared back to life, the recent extent of which has surprised even the closest market watchers.

But one of a host of differentiating facts between Americans and South Africans other than the striking similarity that we both live in countries with dysfunctional politics, is noteworthy.

It is the splendid disregard which American business has for political leaders it dislikes or whom they think harm their corporate, or even their cultural, interests.

• Follow Leon on Twitter: @TonyLeonSA



Wednesday, December 3, 2014

What Julius Malema and Nigel Farage have in common

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Tony Leon | 03 December 2014 | Original Publication:  Rand Daily Mail

They have mastered the shock tactics that keep them in the limelight

AT FIRST blush these two politicians have absolutely nothing in common.

The one is a sleek, silk-suited former city banker who quaffs a pint and proclaims the virtues of “little England”. Many of his supporters are fuelled by an anti-immigration anger which resonates with fed-up white voters.

The other is rotund, wears red overalls, has had no career outside of politics and wants “our mines back”. He is supported by marginalised poor black voters, many of whom would be delighted to see the back of the whites who “stole our land”.

But at second glance, both Nigel Farage, leader of the UK Independence Party, and Julius Malema, boss of the Economic Freedom Fighters, have far more in common than either might admit, even though they have never met each other.

Welcome to the world of populist “anti-politics” which has taken centre stage in Britain, across Europe and is now firmly planted on our own shores as well.

It provides the rocket fuel for seething electoral discontent both here and abroad and makes the prediction of future election outcomes a mug’s game. Both parties have also shaken the very foundations of the political establishment.

They have forced the traditional parties to switch tactics and strategies, and sometimes junk entire policies to meet this new challenge to the political order.

 I arrived for a recent visit to London the day after Farage’s candidate  in Rochester and Strood, Mark Reckless,  had won the second by-election in a row for the surging insurgent party.

This was after Prime Minister David Cameron had boasted that his Conservative Party, from which Reckless had defected, would “kick his fat arse out of Westminster”. Well, he certainly didn’t do that.

The Conservatives were saved from complete ignominy only by the Twitter activity of Labour MP Emily Thornberry, the shadow attorney general. She had  tweeted a photo, without any adverse comment, of a house in the constituency on by-election day, draped in St George’s flags and with a white panel van in the drive.

In an uncomfortable echo of the Twitter storm here caused by Steve Hofmeyr’s silly comment and the Helen Zille “refugee” tweet, the Labour lady was denounced as a “snob”.

She was all the proof needed that the Labour Party was “out of touch with patriotic working class voters”, and  that the one-time champions of the proletariat were led by a “metropolitan elite”. 

Just to ensure that this narrative remained dominant,  Labour Party leader Ed Miliband, who resembles a dithering geek and goes from one stumble to another like Mr Bean on a bad day, fired her from her post.

The UK Independence Party  has the ability now, with Scottish Nationalists and even the limping Liberal Democrats (who managed their worst performance yet in the same by-election, netting less than 1% of the vote) and the Greens  to prevent either main party from winning and to require a three- or even four-party coalition to govern after next year’s election.

Back home, the EFF has mastered the tactics of parliamentary shock to such an extent that it has left the ANC flat-footed and caused the DA to change its normal parliamentary procedures to appear  more aggressive and nasty.

We have yet to see what impact the EFF’s media dominance has had on electoral outcomes, but the 2016 local government elections will provide some clues and some big dilemmas.

DA leader Zille noted  that based on the results of this year’s national election, the ANC is already below 50% in Port Elizabeth and Tshwane and hovers just over that in Johannesburg.

Having already lost heavily in Cape Town, Durban is the only major metropole that remains firmly within the ruling party’s grasp.

Given lower voter turnouts in local elections, it is quite conceivable  the ANC could lose out in four of the five largest cities. At least, that’s the theory.

Like in Britain, the moment you chose a coalition partner, the real problems start.

In the UK, the Liberal Democrats were once the party of the protest vote, but also a party of the centre left.  But when they formed a coalition with the centre-right Conservatives in 2010, they lost the bulk of their voters, hence their terrible result in Rochester and Strood.

 So with whom does the DA form a collation?

In all the hotly contested metros here, the EFF will hold the balance of power between the ANC and DA. Yet how could the party of middle-class propertied interests (the DA) form a local government with a party which has declared war on both this class and its interests (EFF)? For the ANC, the dilemma is just as great. With whom to govern: EFF or DA? And this for the ruling party is, in the phrase of international diplomacy, the “land of lousy options and outcomes”.

Meanwhile, for the insurgents in both the United Kingdom  and South Africa, the power of disruption forces opponents onto terrain that is both uncomfortable and unfamiliar.

Welcome to the world of “anti politics”. Its arrival has meant that for the next while,  certain outcomes and “politics as usual” are a thing of the past.

Monday, December 1, 2014

Helen Zille is 'fighting back'? I thought the DA banned that phrase

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1 December 2014  | Tony Leon | Original Publication: Rand Daily Mail

As the tide of woeful news grows, predictions of a dire future are gaining strength with some notable exceptions

Where you stand on an issue depends on where you sit. It's really quite amazing how the very same set of facts lead to radically different conclusions about what they mean. Take the travails afflicting South Africa at the moment. They make a long and depressing list and you're spoilt for choice on which to highlight.

Our ever-weakening currency - or the country's share price, as it is sometimes termed - has fallen more than 70% against the surging greenback in just over four years. The public service wage bill now gobbles up 42.2% of all government (read taxpayer-funded) expenditure and three million civil servants make the government the biggest single employer in South Africa by far.

Yet, across a swathe of functions, the state is barely functioning, from supplying electricity anywhere to safe drinking water in Gauteng.
The flagship national airline is the scene of boardroom battles even as it battles to stay aloft. The South African Post Office cannot deliver letters and even the much-admired South African Revenue Service is mired in allegations that one of its units ran a brothel.

Property rights, one of the key compromises in the constitution, are under threat, and not just from the land grabs by the Economic Freedom Fighters in Pretoria. A flurry of laws are excavating under the foundations so carefully constructed at Kempton Park in the early 1990s.

Our growth rate has dropped from the 5% achieved a decade ago, and the once-mighty tripartite alliance has been rent asunder.

The day after Nelson Mandela died, in December last year, the parliamentary speaker of his time, Dr Frene Ginwala, noted that in place of his normal batik-style shirts, South Africa's first democratically elected president "always wore a suit to parliament as a sign of his respect for the institution". And it wasn't just his sartorial choices that mattered both there and in the courts of law. He arrived, did his duty and even took the occasional judicial and political bullet that went against him.

The scenes of chaos in parliament two weeks ago - especially the fateful decision to send the police into its inner sanctum - show how far we have fallen since then, not least in our own estimation and in the eyes of the world, which has long since moved beyond the "miracle rising" narrative we once gave to a globe in need of heroes.

But is it a tipping point into failed-state status or simply a fork in the road to more competitive politics? Despite its enormous numbers at the moment, is the ANC staring long-term decline square in the face?

Of course, the governing party will reel off a host of statistics, from three-million houses delivered to 16million social grants deposited every month, to justify its claim that life is better today than it ever was.

But even for those sitting far away from government, commentators reading the tea leaves predict different futures. Just last week, two of these scenarios were on offer.

Financial analyst Magnus Heystek read the last rites for the rainbow nation on the back of what he called "jackbooted thugs in the most hallowed halls of democracy". I never thought of my former place of work in such sacrosanct terms. His conclusion set the Twitterati ablaze. Forecasting the demise of offshore investments, Heystek prognosticated that within five years the effects of weakening economic growth and further currency decline will see the "jackbooted bankers" from the Reserve Bank - "overnight and without warning" - switch off the offshore investment tap.

So, if you think your rand-hedged investments are a safe haven, think again, he suggests. He ends his cheery note with this zinger: "There are only two types of ex-Rhodesians in the world. Those who took all their money out of the country and those who wished they had."

DA leader Helen Zille is made of sterner stuff than this "apocalypse just now" scenario. Strangely, she describes herself as "exhilarated" by the recent events inside and outside parliament. She reads into the "deep crisis" in party and state the seeds of a campaign of "fighting back" (long after I thought the phrase was banned by the party) by civil society and through the accumulation of actions and pushback, "a prefect storm for fundamental change".

Her reference point is the Leipzig Moment in East Germany 25 years ago, when the people's demands for reform and freedom became unstoppable and eventually toppled the government and the Berlin Wall.

Of course, a major factor beyond "people power" in that revolution was Soviet leader Mikhail Gorbachev's decision not to use force to prop up his satellites. Locally, Marikana suggests that a different scenario could unfold here.

But what certainly links the collapsing Soviet empire with our state, apart from ideological nostalgia, is that when the money runs out, all settled futures become unknowable.

As US scenario consultant Ian Wilson said: "However good our futures research may be, we shall never be able to escape from the ultimate dilemma that all our knowledge is about the past, and all our decisions are about the future."

Perhaps before either packing your bags or at least sending your assets offshore while you can, the more earthy remark of former editor Steve Mulholland might chime with both history and expectation. He said: "Ever since I was five years old, I was always told that South Africa had five years to go before it exploded. Well, I'm 78 and we're both still here."

Leon is the author of Opposite Mandela (Jonathan Ball) Follow him on Twitter: @TonyLeonSA OR on Facebook: