Many years ago, during a rare meeting I asked then businessman Cyril Ramaphosa whether he thought black capitalists would behave differently to white ones. He emphatically said that they would, the implication being that they would be more sympathetic to the plight of the poor and more sensitive to the scale of inequality in SA. Black business would be different.
That was more than a decade ago and of course we are still waiting for evidence that he might be right. The facts suggest otherwise. Like their white counterparts, black capitalists do what all capitalists do and that is to try to take the shortest route to the maximum profit for themselves.
It stands to reason. It is that drive for profit, greed if you like, that gets entrepreneurs and executives up and working in the morning. They are feeding families, trying to maintain lifestyles they can’t quite afford. The reward needs to make the effort worthwhile.
Ramaphosa’s answer then, as I suspect it would be now, was naive and I was reminded of it when I read this week’s edition of his Monday morning newsletter. He started out waxing lyrical about a black empowerment transaction involving Wassa, a company owned and run by women, which had bought a liquid bulk fuel terminal operated by BP Southern Africa in East London. He was all over the place.
“With the 2020 report by the Broad-Based Black Economic Empowerment Commission showing that most economic sectors are falling short of their black women ownership targets, this acquisition by a black and female-owned company of a liquid fuel terminal is a historic development,” the president wrote. “It contributes to our national effort to redress inequality and ensure there is meaningful participation by the country’s majority in our economy.”
But you have to ask how the women of Wassa would behave any differently, once they’re in business, to the way BP had been running it for the past who knows how many years. They’ll have borrowed money for the acquisition. They’ll have loans to repay, ebitda targets, and balance sheets to protect, just like everyone else.
None of which deters Ramaphosa. “At the end of apartheid, black ownership of JSE-listed companies was less than 1%,” he said, repeating, for the millionth time, the worst-looking possible measure of ownership. “This figure has not improved much in the past 28 years.”
But then it suddenly has improved: “Between 2017 and 2020, nearly 500 empowerment transactions were submitted for registration to the BBBEE Commission. In key sectors such as construction, property, information and communications technology, tourism and transport, black ownership has exceeded targets.” My italics.
“Economic transformation and economic growth are intertwined,” he concluded. “There cannot be one without the other.”
That, there, is where Ramaphosa — and indeed the entire ANC — get stuck in a whirl that takes them down an intellectual plughole.
Transformation, real transformation, cannot happen without growth. It is entirely dependent on growth. When Ramaphosa and other ANC leaders complain about a lack of transformation they’re simply reflecting the fact that they have failed to grow the economy fast enough.
That, in turn, is because they display what we at school were taught were sure signs of insanity — doing the same thing over and over again and expecting a different result. The default, when confronted with this uncomfortable reality, is to try to regulate or legislate for growth. Which is just about impossible.
In a perfect world we could become a major global hydrogen supplier, an opportunity the Ramaphosa administration is almost perfectly structured to completely miss
Ebrahim Patel’s protection racket
We can see it today in trade, industry & competition minister Ebrahim Patel’s efforts to literally enforce the manufacture of more local products, to substitute imports. “Localisation” is going so badly that Patel is now offering manufacturers full-on anti-dumping duties against any product they make, in return for promises that the companies concerned will increase and protect jobs and not raise prices faster than the prevailing rate of inflation.
It is a massive failure of policy, a bona fide protection racket. One big poultry producer recently revealed it needed tariff protection to allow it to recover the costs of having to build a water treatment plant of its own after the plant managed by the local (ANC) municipality constantly broke down. The cost of the new private water treatment plant, you can be sure, was then treated as a poultry master plan “investment” and ticked off as a localisation success.
This is not to single Ramaphosa out, though he should know better. Growth is the only thing to chase. Everything stopping it should be cleared away with the utmost urgency. Its effect would itself be transformative.
Growth would create jobs. Growth would create enterprise, black and white. Growth would encourage confidence. Growth would attract investment. What’s not to like? It doesn’t have to be inclusive or even transformative.
But it just would be. And you get growth, first and foremost, by quickly and ruthlessly removing every imaginable barrier to the provision of reliable electricity.
To be fair, Ramaphosa, in his timid way, has tried. Auctioning digital spectrum was a good reform. So would involving private capital in our ports be a good thing, but the effort thus far is extremely tentative. But he is lost on energy policy, despite “winning” a battle with ANC chair and mineral resources & energy minister Gwede Mantashe to allow private companies to generate up to 100MW and wheel it through Eskom’s transmission system.
We are years off seeing the wins from that, though, if at all, as bureaucracy slows everything down. Given the green light and guarantees of a market, enough renewable energy (wind and solar) could be installed in 18 months to completely eradicate the need for load-shedding no matter how poorly Eskom’s plant performs. But we won’t let it happen.
Eskom would take the power on offer though it insists that its lines in the Northern Cape, where the sunshine is the most profound, can take no more renewable power. But the $8.5bn promised to us by the US, the UK and the EU at COP26 in Glasgow could fix that problem with money to spare.
But we won’t spend it. That’s because the money, which we may not now even get because of our clear sympathy for the Russian invasion of Ukraine, has — surprise, surprise — become the subject of a tussle between competing factions and ideologies in Ramaphosa’s overcrowded cabinet.
Patel — quite reasonably, actually — wants some of the money to help kick-start the production of hydrogen, a fuel for the future, in SA. Green hydrogen is a byproduct of solar-powered power generation. In a perfect world we could become a major global supplier, an opportunity the Ramaphosa administration is almost perfectly structured to completely miss.
Mantashe wants to drill for oil and gas offshore, for crying out loud. Others want to see a “just transition” replace threatened jobs and energy infrastructure in Mpumalanga and Limpopo, where most of Eskom’s coal-fired fleet lives. So somehow we need to spend the money building solar and wind power where the network is strong but the weather is not so reliable.
Ramaphosa will, also typically, perhaps especially as he heads for the ANC’s elective conference this December, make political choices before practical ones. He wants growth but he doesn’t want to pay a political price for it. The idea is, instead, that we pay for it.
It is why, without much debate, Mantashe is quietly proceeding with plans to erect a giant gas-fired energy complex in SA. Gas is his “transition fuel” of choice between today’s failing coal and tomorrow’s green renewables. Ramaphosa will tread on Mantashe’s toes only with extreme caution.
The sad thing is that, tacitly or directly, business supports Mantashe, conveniently forgetting that every time the ANC has spent a lot of money procuring anything — arms, locomotives, personal protective equipment — it has turned into an opportunity to loot.
It just makes you want to weep. The insanity, the repetition, the uselessness of it all
Condemning SA to the minor leagues
The gas infrastructure being proposed was calculated back in 2019 to cost around R300bn. By the time it is ever built (new terminals at ports, power plant conversions, pipelines) it would be both obsolete and running at more than a trillion rand.
Not a cent of that is required, as Australia is about to show us. A new Labour government there is determined to become the world’s leading renewables-powered economy. This is the scale of ambition we lack. The sun has another 4-billion years to burn. Wind speeds, once feared to be slowing down in what was being called a “global stilling”, have begun to increase again since 2010. Climate change is beyond doubt. Battery costs are falling and battery technology is improving almost daily.
By delaying, for the sake of politics, a rapid and direct transition to renewable energy, we are condemning future generations of South Africans to lives of penury. We are positioned, right now, to lead the way to zero-carbon energy simply by willing it to be so. The technology is there. The political will is not.
We are positioned, right now, to become an exporter of choice as the world changes and consumers begin to demand that the products they buy have no carbon footprint. But the longer we make things with Eskom’s carbon footprint (from cars to avocados), or the one Mantashe wants to create with gas, the longer we remain in the minor leagues, dependent on the old colonial mining economy to rescue us every time commodity prices peak.
We are at a historical inflection point. Make the right growth choices now, set the right ambitious export targets and help companies reach them profitably, and we take an unforgettable ride together.
Make the same poor choices over and over again and we will, with absolute certainty, miss the boat. Hydrogen may be the fuel of the future and we may be an ideal place to produce it, but dozens of economies are in this same game now. Every day without leadership and ambition is a day lost.
Former prime minister Jan Smuts once said that SA was a place where neither the best nor the worst ever happened. But we can dream.
Certainly, Ramaphosa can, as he did in his Monday newsletter.
“This week,” he declared, “I am announcing the appointment of the new Broad-Based Black Economic Empowerment Advisory Council. This council, which comprises government, business, labour and other stakeholders, was established to champion the cause of economic transformation.”
It just makes you want to weep. The insanity, the repetition, the uselessness of it all. I enjoy living here. For all our troubles, it’s a privilege. I enjoy living in a loud and messy and sometimes scary democracy. I enjoy working for an SA media company funded and owned fully by South Africans.
I do not enjoy living under a government that cannot think.
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