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Ramaphosa’s commitment to corporatist consultation sounds very democratic. But it is a mistake. For almost ten years now the World Bank, IMF, OECD and the ratings agencies have all said that South Africa needs serious structural reform. It must radically reform its education system — the weakest in all Africa. It must liberalise its labour market, which currently works only to the advantage of a tiny labour aristocracy; it must slash its public service both by personnel and wage cuts and it must clean up its SOEs, which have all been bankrupted by their venal and incompetent management. The problem is that in each case this would involve confrontations with the trade unions which are a key part of the ANC’s alliance, so the government has always backed away and instead promised to bring down the budget deficit.

However, the failure to enact structural reform has undermined all efforts at fiscal consolidation. The public service unions (the main component of Cosatu) continually insist on and get wage settlements way beyond inflation. In their last three-year deal, concluded when the economy was actually shrinking, they got 26 per cent plus an increase in benefits worth another 3 per cent. The shortage of well-qualified personnel — due to the weak education system — pushes up salaries for the elite. And the SOEs need continual large bail-outs to save them from bankruptcy. There is simply no hope of Ramaphosa getting out of this mess if every policy has to be carefully brokered between government, business and the trade unions.

Take the SOEs. The state arms-manufacturer, Denel, and the South African Broadcasting Corporation both ran out of money to pay salaries a few months ago and only desperate temporary expedients are keeping them from closing. South African Airways has been bankrupt for many years now and exists only on continual state bail-outs. But by far the most important, Eskom — the electricity company — now owes more than $35 billion, has seen its staff double in the past five years even as its output fell, pays the highest average salaries in the country and has run out of money to pay salaries.

The government’s answer was to illegally raid the civil service pension fund to keep things going and to ask the local banks to lend Eskom $1.72bn. to tide it over for a few months. All foreign banks have backed out, the local banks are “considering” and even so Eskom’s bankruptcy will be only months away. This was, under apartheid, the world’s eighth biggest utility, legendarily profitable and producing the cheapest electricity in the world. Yet the government can’t afford Eskom to go bankrupt because all its debts are government-guaranteed and because cross-default clauses mean that any SOE that goes bankrupt automatically results in a calling in of loans to all the rest.

It is obvious that any solution to the Eskom mess has to include large staff redundancies, a pay freeze, and the large-scale sale of assets — and something similar applies to all the other SOEs. There is no hope of getting such solutions agreed by Cosatu or the Communists. The same is true of the crises in education, the rigidity of the labour market, and public service pay. There is simply no road to structural reform through consensus-seeking corporatism. Yet to agree to structural reform is to admit that the whole trajectory of ANC government since 1994 has been wrong — and it also means a fight to the death with the South African Comunist Party, the unions and the ANC Left.
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April 16th, 2018
9:04 PM
While Thabo Mbeki deprived black South Africans of retroviral drugs the Apartheid regime caused a much greater genocide. Its rule resulted in millions of black South Africans, mainly infants and children, dying of starvation because they were deprived of food.

April 13th, 2018
3:04 PM
There is much truth in this piece but it gives white South Africans a free pass.They have white Messiah Syndrome deeply embedded—most senior positions in companies are held by whites not because they are more competent but because most whites have refused to change and embrace meritocracy. The decisions are made in secret white laager committees—so nothing has changed from Johan Anthoniszoon "Jan" van Riebeeck’s days.

April 9th, 2018
5:04 AM
This article did not cover the other aspects in all this. Julius Malema...he is the greatest danger to peace.

Eddie Goldschagg
April 8th, 2018
8:04 AM
R W Johnson.There are a lot of people who certainly will not like what you said, but you hit the nail on the head. Thank you. I will follow you with interest.

April 8th, 2018
7:04 AM
As a South African I ask. What is the next step?

Craig Schweitzer
April 6th, 2018
5:04 AM
Att: R.W. Johnson I am a South African, am a third generation citizen and spent my entire life living in Johannesburg. We get bombarded with political opinions from numerous sources. People comment of current affairs from various perspectives, and often with differing agenda's. I read your article with interest, and was captivated from your first sentence. You have so succinctly documented exactly what is happening in South Africa (and Africa) right now, that I feel your article should be used as a reference point in understanding the political and economical situation of this country before continuing with a political direction. I feel that the reality, which you have described, should be understood, and the course of our future altered to fix our future outcome, not for the benefit of the quarter million only. Thank you for writing this article, I will certainly share it far and wide, and intend following your future commentaries.

Johann Fourie
April 6th, 2018
2:04 AM
A most interesting summary of events of the past 20 + years, albeit alarming at times.Full marks to the authour.

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