It’s hard to believe that in just a few weeks it will be two years since Ace Magashule issued that NEC statement, extraordinary at the time, that called for the Reserve Bank to pursue a policy of “quantity easing”.
I didn’t imagine, after that, which left the finance minister, Tito Mboweni, and the Bank governor, Lesetja Kganyago, scrambling to affirm the central bank’s independence, that the ANC secretary-general would outdo himself. And last week he certainly did.
After being told by the rest of the party’s leadership, he decided not only that his impending appeal made the suspension invalid, but also that he could unilaterally suspend the president of the ANC and the country, Cyril Ramaphosa. Never mind if one is the president at Luthuli House, or is responsible for making the tea, one would think he or she would be entitled to some kind of process, and at least a hearing, before being summarily suspended.
It’s perhaps a good thing that the comrades have moved on from their obsession about the Bank, how it conducts monetary policy and its ownership structure. It’s an indication that they’ve moved on from proxy wars into actual ones, about things they understand. The positive that can be taken from their more direct fight is that it’s likely to have a decisive end one way or the other.
As for Ramaphosa’s “suspension”, that’s for labour lawyers to ponder, and they would seem to agree that there is nothing to see there. The question is whether it makes Magashule’s ultimate expulsion from the party more likely.
As this was going on, the investment community was eagerly waiting for the review of the country’s credit rating by Moody’s Investors Service. Unfortunately that didn’t come with the agency late on Friday saying that expected reviews on SA and a few other countries wouldn’t be coming after all.
It was not unfortunate in the sense that we were expecting an upgrade of any kind. In fact, there was broad consensus that nothing would change. As SA is already a couple of notches below junk and the outlook is negative, it could well be argued that this was a case of no news being good news.
There are some in the country who are under the mistaken impression that ratings don’t matter, especially now that the country is already rated junk.
Imminent danger
But it matters and even within that noninvestment-grade sphere, there are degrees of “junkness” and that has real consequences for the price SA is charged to borrow in financial markets that affects how much money is available for education, health and other services.
While there is a debate about the feasibility of a basic income grant, what is beyond negotiation is that it’ll be much more affordable for a country rated in the high As than the low Bs or even C — which indicates imminent danger of default and therefore means higher borrowing costs.
The lack of an action from Moody’s on Friday, on the eve of an ANC meeting that was likely to be dominated by the Magashule issue, is disappointing as it would have been an opportunity to remind the ANC leadership what matters, while they squabble over Zoom.
As it is, the meeting has taken on the character of a university SRC meeting, much like the one at the end of March that gave Magashule and others facing criminal charges a month to step down. It’s been characterised by a lack of discipline and selective leaks of the happenings inside the meeting. It makes one wonder why they didn’t just go ahead and televise the event.
From the leaks it’s clear what isn’t being discussed. Based on what has come out, the leadership isn’t overly concerned that Covid-19 cases are edging upwards again. They definitely haven’t been preoccupied with the emergence of new variants in the country and how we should be reacting. It’s highly unlikely that they will have found time to discuss the country’s vaccine programme that simply won’t get off the ground. The latest delay due to issues at a Johnson & Johnson plant in the US can’t be blamed on the government, but they add to the sense of despair as we head towards winter and a potential third wave.
Fix potholes
Likewise, don’t expect anything meaningful on how to solve Eskom’s financial problem, something that, according to public enterprises minister Pravin Gordhan, is always coming soon, just like we should be expecting to hear about a strategic equity partner for SAA in the coming months. At least on that one, we have all learnt to just ignore what the government says, ensuring there is zero chance of being disappointed.
Will they be talking about the absolute failure of local government? Johannesburg, the country’s supposed economic power house, has to turn to private companies to fix potholes. It has been said one of the advantages of the Covid-19 induced bans is that the affluent can holiday at home. A drive through any small town in SA will show that Johannesburg’s roads are world-class in comparison.
It would have been interesting to know how many NEC members read the full version of former president Thabo Mbeki’s article, published in Business Day, in defence and celebration of the 25th anniversary of SA’s constitution. In it he lists a number of documents that have defined and refined the liberation movement’s core demand for a non-racial SA.
The last one is “Ready to Govern”, published in 1992. No-one watching the events of the weekend would believe that. It’s unlikely that they would have taken notice, but a reminder from Moody’s of what is at stake would have been timely.