South Africa’s new president, Cyril Ramaphosa, pledged to confiscate land from whites and gift it to the blacks without compensation to heal the injustices of colonial rule’s ‘original sin’. His first speech as acting-president called upon the audience for ‘the return of the land to the people from whom it was taken…to heal the divisions of the past.’ Policy choices that echoes of Zimbabwe’s land grabs under Robert Mugabe’s land redistribution programmes 1999-2000 to correct colonial and Apartheid-era injustices.
After years of incompetence, corruption, abuse and scandal, the decade-reigning president, Jacob Zuma was forced to resign. Hopes were high and optimism buoyant the new president to open the door to a new chapter of prosperity for the country. He rose from prison to the rich list and was described by Nelson Mandela as one of the most gifted leaders of the ‘new generation’ of apartheid leaders. Ramaphosa was a former affluent businessman who has lived through the Soweto poverty, imprisonment for his role in resisting apartheid, trade union activism and splendid personal prosperity in his 65 years.
He bowed out of politics in 1999 after narrowly missing out on leadership of the ruling African National Congress (ANC) to succeed Mandela. It was perhaps a fortuitous happenstance, for he secured major deals with McDonald’s and Coca-Cola’s local ventures as they had to partner with non-white shareholders. His wealth amassed, and he became 42ND on Forbes Africa’s wealthiest in 2015, boasting a net worth in excess of $450 million.
A master of backroom politics, he successfully ousted the master of political survival, Jacob Zuma. He passed into office without a single vote cast, greeted with cheers from the assembly. A testimony to his trademarks of pragmatism, patience and deal-breaking from the inner track.
His inaugural speech to the Cape Town Parliament laid out directives to heal the scars of the past injustices and divisions that have torn apart the fabric of South Africa.
Zimbabwe used to be colloquially known as the ‘bread-basket’ of southern Africa, exporting to the rest of the region.
Things turned darker, however, when he started talking of the 1600s European colonists seizing land from indigenous tribes by force. It was not empty rhetoric that he roused the members on. He specifically outlined confiscation from the white farmers without compensation: ‘the expropriation of land without compensation is one of the measures that we will use to accelerate redistribution of land to black South Africans.’
The naivety of the sit-in President in claiming it would be handled in such a way that would not harm the economy may be echoed by the Zimbabwean famines as political and economic policy were followed to near perfection as recipes for poverty.
Parallels with Zimbabwe’s economic suicide
Thousands of white-owned farms were confiscated by the government, and the farmers were forced out. Zimbabwe used to be colloquially known as the ‘bread-basket’ of southern Africa, exporting to the rest of the region. It did not take long for food production to plummet in the absence of professional and experienced farmers from 2.2 million tonnes of corn to 500,000 in 2002. A textbook case of world-class agricultural powerhouse reduced to famine and United Nations’ World Food Programme handouts. Does a similar fate await its neighbour?
Hyperinflation and a multidecade depression followed Mugabe’s actions. The world’s first trillion-dollar note was issued as hyperinflation went over a billion per cent a year. By 2016, they had a 100 trillion-dollar notes. If ever there was an economic model that you would not wish to follow it would be the advice of Gideon Gono, Head of the Reserve Bank of Zimbabwe since 2003.
You would have thought that first row seats to the Zimbabwean Zanu PF shit-show would have been caricature enough for South Africa to learn from her neighbour’s lessons. And if they had turned a blind eye, they could not to the millions of starving refugees that flooded across their shared borders.
What’s evidence based policy?
Whatever one’s stance on issues of social justice and compensation for past injustices that have created legacy inequalities, it would seem patently clear that pursuing such policies would bring suffering to the very people Cyril claims to be helping.
We live in a world bound by certain realities and limitations. One such reality is excessive land distribution or taxation for that matter discourage investment. Nationalisation has no incentives to innovate and improve technological efficiency. Tariffs to insulate the remaining private industries is usual port of call to protect cronyism from outside competition. Make your legal system so strict no one can license new businesses and commerce can be made illegal, and entrepreneurialism will inevitably be smashed.
Print money like there’s no tomorrow, because there’s nothing like hyperinflation to dismantle an economy. Meanwhile, switching to US dollars or denying convertibility of your own currency almost puts the nail in the coffin of foreign direct investment.
Any society or social order that we have practised hitherto that has confiscated or collectivised property has discouraged investment by the very people who live and work on it. Their investment in their own land and property leads to trade on positive terms that is mutually beneficial for all parties involved. Throw in a healthy dose of innovation to raise productivity, and you have the only tried and tested means to inexorably create wealth.
A legal system that doesn’t issue clear titles of ownership precludes any arrangement of formalised property or exchange, condemning your citizens to false interactions and subsistence agriculture.
Make your legal system so strict no one can license new businesses and commerce can be made illegal, and entrepreneurialism will inevitably be smashed.
Keeping people poor is hard work, but pursuing nationalisation, isolation, collectivisation or confiscation of justly acquired private property and preventing a stake in the country will achieve that goal sure enough. Modern poverty is a miracle that modern governments appear too adept at creating, as Leon Louw explained while executive director of the Free Market Foundation of SA ‘Poverty, not economic growth, is the real miracle today.’ As for the $600 billion in aid that went to Africa in 45 years for development, wars and natural disasters; two-thirds was estimated to never reach the intended recipients. Instead, it was caught up in the long supply chains, consultancy fees, misallocated or embezzled and spent on unnecessary luxuries for ruling elites or to consolidate power and remove opposition forces or parties.
South Africa: the new Zimbabwe?
One presidential term is all it would take regardless of robustness and diversification of the economy. If you had pillaging of state institutions in a similar fashion to Zimbabwe’s GMB then you’re in trouble. Investors run for the hills and the currency collapses in value overnight on FOREX markets worldwide. Granted, South Africa has excellent infrastructure for the region, but so did Zimbabwe in the 90s. It is well maintained, but if left in the wrong hands, it will start to crumble. State capture at current trends and institutionalised corruption that compromises, or waivers, key democratic tenets will destroy any confidence in the government.
In ousting the widely unpopular Zuma, Ramaphosa receives brief respite from judgement. A champion of the people who has come to end years of misrule. Mismanagement has opened eyes to change and responsible governance.
Constrained by his own people’s faith, attention, the international community and his business interests in South Africa’s welfare, the new President would do well to move away from liberation-style politics and instead focus on policy-based politics, where political affiliation is earned not expected.
The ANC has been under the most pressure it has ever experienced since 1994. Water shortages, weak growth at rates below the rate of population increase, high unemployment (>25%) and inequality with a Gini coefficient of 60 (European countries are typically high twenties).
The poor are witnessing western conglomerates turning large profits, notably white-owned enterprises such as commercial farms and wineries. The ANC had been bleeding support and decided to stir the masses on topics of redistribution to the majority black populations. Now its new leader has taken up the same banner of land distribution without compensation. Land that in many regards may have been purchased legally on the open market, paid tax on the transfer and subsequently.
Any further transfers of commercial farms to black people may see a collapse in SA’s local food production. Most of those transferred are no longer viable.
Why is SA in a pickle?
Market socialism has led to suboptimal education and healthcare. Jacob Zuma fired Pravin Gordhan, minister of finance – the only person who could swiftly put SA back in step with buoyant economic growth. The parallels between Robert Mugabe and Jacob Zuma were becoming more visible by the day. Dictatorial narratives and unsound economic ideas would be pushed through without impact assessments or contingency plans.
Designs on an All-Black African state are very much the pinnacle for the ANC hardliners, as white persecution and harassment has led to a declining population of SA whites year on year. Law and order is disputed and vigilantism on the rise with SA’s rape and homicide rates some of the highest in the world. While Cyril has been praised for ousting his power drunk president, the question of whether he will see wisdom is another. The tide of corruption in the inner circles that pillages state-owned institutions and attacks the judiciary and constitution will need addressing.
2018 is crunch point for the DA, however, time shall tell. Where you find a government and ruling elite that has not managed to distribute the country’s wealth across races and geographic spaces for the population as a whole; naturally, people will feel left behind. Resentment and disaffection marred with political engagement can be a costly affair.
Even with noble intentions, the lessons of the past should not be shunned as mere inconveniences. Perhaps Cyril may have done better with an Uncle Ben as he rose into such a troubled office with the timeless advice, ‘with great power comes great responsibility.’ TMM