Business needs to see newly elected ANC president Cyril Ramaphosa acting “quickly and urgently” on corruption and state capture, says the CEO of Business Leadership South Africa, Bonang Mohale.
He says the announcement by President Jacob Zuma of a judicial commission of inquiry into state capture is a necessary if long overdue start to the process.
But Mohale isn’t going to get too excited until he sees the terms of reference.
“We want its terms of reference to be narrow as per the State of Capture report of the [former] public protector [Thuli Madonsela], to ensure that it doesn’t take another 10 years before it comes with concrete action. People who have been found to have stolen, looted, been corrupt and captured must go to prison,” Mohale says.
The international investment community and ratings agencies need to be shown, by his actions, that Ramaphosa is serious about tackling corruption – and there is no time to be lost.
“There is a lot of competition for foreign direct investment,” Mohale says. “Investors are tired of South Africa’s own goals. We have lost our shine and our brand has been badly tarnished. We have positioned ourselves for serial downgrades. We are expecting more to come.”
South Africa needs to recognise that it is facing a “fiscal cliff”, he says.
“Based on what we do now, we either fall off the cliff or we choose the high road.”
Ramaphosa will have his work cut out to encourage investment back into the country, Mohale says, and needs to get cracking.
Pronouncements of intent will no longer cut it. Investors and ratings agencies need decisive action.
“It will need a lot of actions that are deliberate, conscious and purposeful to instil confidence,” he says.
Ramaphosa needs to stop the state capture of state-owned enterprises, fire boards and executives who are captured, reverse “the diabolical reinstatement” of Matshela Koko and Prish Govender at Eskom, prosecute those not respecting the rule of law, and finalise the Mineral and Petroleum Resources Development Act that the Department of Mineral Resources has been negotiating for six years.
“That would go a long way towards instilling confidence in the economy,” says Mohale.
He says it is not for business to tell Ramaphosa what to do about Zuma. He and the ANC need to figure it out.
The question is whether Ramaphosa can do what business expects of him without recalling Zuma and appointing a new cabinet.
“It will be more difficult if he maintains the status quo. It will be much easier if he can demonstrate that he is willing to act in the shortest period of time.”
He says that until Zuma goes there can be no doubting the damage he can and will inflict on Ramaphosa and the country.
A clear example is his “opportunistically and unilaterally declaring fee-free higher education for the indigent, which will create chaos and be extremely damaging to the fiscus and economy”.
Zuma’s shock announcement on the eve of the ANC’s elective conference last month had nothing to do with a genuine concern for poor students, says Mohale.
It was the action of “a desperate president” trying to influence the outcome of the elective conference in his favour.
“Every ANC election manifesto has promised free higher education for the poor and yet nothing was done to plan for it, nothing was done to budget for it.”
Even Zuma’s belated announcement of a commission of inquiry into state capture was more likely based on a cynical calculation of what would serve his own interests than on a desire to do what was right for the country, Mohale suspects.
He points out that the announcement finally came, after a year of obfuscation and legal appeals, on the eve of the first meeting of the newly elected ANC national executive committee, where he knew his delay might be used as grounds for his recall.
“The timing of his announcement is quite interesting,” says Mohale.
“In the past 10 years President Zuma has demonstrated beyond any shadow of doubt that his actions are driven by ‘me, myself, I’, not the broader populace.”
Mohale believes that even if Zuma is not recalled his fate will be determined by the independent judicial commission of inquiry.
“We think it will have the desired effect.”
He says BLSA has requested a meeting with Ramaphosa, which it hopes will happen sooner rather than later given the urgency of the economic situation.
What will the message to him be?
“A number of things. We need to move very quickly now towards rooting out corruption and state capture so that we can focus on transformation, creating jobs and growing the economy so that we can start talking about the redistribution of wealth, not the redistribution of poverty.”
The organisation will urge Ramaphosa to take Zuma’s nuclear deal off the table as soon as possible.
“One of the things we don’t understand is why he can’t scrap the ill-advised, unaffordable and unnecessary nuclear deal when our integrated resource plan 2016 has demonstrated beyond any shadow of doubt that in our energy mix it should be the least of our options.
“And yet the president is hellbent to railroad it through for reasons that are opaque to business.”
BLSA will leave Ramaphosa in no doubt about the crippling effect a nuclear deal will have on the economy.
“First of all, how are we going to get R1-trillion when we already have a R51-billion hole in revenue collection?”
The definition of a fiscal cliff, he says, is when the revenue collected is less that the expenditure anticipated.
“We’re facing a fiscal cliff even without the nuclear deal.”
Business has communicated its strong confidence in Ramaphosa to ratings agencies and investors, he says.
“We’ve told them South Africa is now open for business.”
What about the populist noises Ramaphosa has been making in support of expropriation without compensation and radical economic transformation?
“We are absolutely concerned about some of those utterances, but we understand that these were resolutions of the ANC conference.
“Realism and pragmatism will set in.”
Published in Sunday Times – Business Times (14 January 2018)