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ANALYSIS

ANC’s policy document wish list may yet alter South Africa’s future for the better

 From left: Energy Minister Gwede Mantashe. (Photo: Gallo Images / Philip Maeta) | Electricity transmission pylons in the Dunoon district of Cape Town, South Africa. (Photo: Dwayne Senior / Bloomberg via Getty Images) | President Cyril Ramaphosa. (Photo: Gallo Images / Sharon Seretlo)

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By Stephen Grootes

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23 May 2022  12

The documents suggest that important policy changes could be coming, that the provision of electricity could change, that the current model of state-owned enterprises is ‘dead’, that there should be less red tape for firms, and even a possible step away from the current model of black economic empowerment.

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BeyondWords

While the ANC’s policy conference in late June this year is officially about the battle of policy ideas, there are strong indications already that the power contest(s) will overshadow debates around ideology and delivery. And yet, the policy documents published by the party ahead of its conference are important, as they give an indication of what officially the future direction of the party could be.

The documents have now been published and they suggest that important policy changes could be coming, that the provision of electricity could change, that the current model of state-owned enterprises (SOEs) is “dead”, that there should be less red tape for firms, and even a possible step away from the current model of black economic empowerment. 

It should be remembered, though, that these documents are not the end of the process, rather they are just the beginning of discussions.

At the ANC’s 2017 conference, the issue that came closest to derailing the entire event was not the leadership battle, but the policy proposal to change the Constitution to enable the government to expropriate land without compensation for the purposes of land reform. 

In the end, the resolution was passed with important caveats.

However, this time around, within its policy documents, the ANC merely appears to note: 

“We have not had sufficient support to amend the Constitution to allow for land expropriation without compensation in certain circumstances, although there has been progress with the passing of expropriation legislation and strengthening of land redistribution processes.”

The Nasrec resolution calling for the nationalisation of the SA Reserve Bank gets similar treatment, saying that the “historical anomaly” that it has private shareholders has not been corrected. It then goes on to say this is because of the possible “undue enrichment of private speculators who have been lobbying for such an intervention as they hope to make massive financial gains from the process at the expense of South Africa and cost to the fiscus”.

This is a major change in the debate, as it suggests a reason why this “nationalisation” should not happen.

Of course, given the pressing need to get more electricity into the grid, the paper discusses this in some depth.

The document suggests that when it comes to embedded generation (to allow companies to produce and sell their own electricity), “the registration requirements for such projects need to be streamlined and red tape reduced”.

For those concerned about our urgent power requirement, this may be welcome, suggesting that the ANC will start the debate as fully behind the private sector generating its own power.

In fact, the document goes further, saying: “Such projects should be designated as Strategic Infrastructure Projects (SIPS) so that environmental authorisation regulated by the DFFE can be expedited.” (The DFFE is presumably the Department of Forestry, Fisheries and the Environment).

This would suggest that it would be easier and quicker to build and run solar and wind power plants.

However, if this policy proposal is adopted, from the way it is worded, it would also make it easier for someone to build a gas-fired plant, or even, for example, to use a barge operated by Karpowership.

There is also evidence that those who wrote the document do not want to move straight into the renewable era, but want to go through what is called the “gas transition”.

They write: 

“The growing opposition to oil and gas exploration needs to be confronted politically as it is clear that South Africa’s endowments of oil and gas could be a source of wealth as well as increase our energy security options, also noting the role of gas in the energy transition.”

On the face of it, this does resonate very strongly with some of the comments made by Energy Minister Gwede Mantashe.

It also flies in the face of a recent warning by the International Institute for Sustainable Development, which said that for South Africa to pursue a gas industry could be a costly “mistake”.

Certainly, it suggests that the ANC is considering and wants to press ahead with these plans.

The documents spend some time talking about social compacting, an idea that representatives from business, labour and government can reach important agreements to reset the economy. While this chimes with President Cyril Ramaphosa’s promise to enact a social compact, the deadline he set himself came and went last week.

It may also miss a much bigger point. The people who really suffer from our current economic situation are the 12 million unemployed. By the very definitions that the ANC uses within this social compacting plan, they would be left out of the process. And yet they are surely the biggest constituency in South Africa.

Deep within the documents is a carefully couched question that could open the door to bigger, and always hotly controversial, discussions around the future of black economic empowerment and our employment equity laws.

The point is made in this way: 

“Given the employment crisis in the country, if the choice is between a transformed entity that does not have production capabilities locally and a nontransformed firm that can expand capabilities and jobs, then the latter should be the appropriate choice. Do existing frameworks support such a decision?”

This appears to be a serious suggestion that it is more important for a South African company to employ people than it is for it to be properly transformed in terms of its ownership. That employment may be more important than transformation for the future ANC.

While delegates have obviously not discussed this issue yet, if adopted, this could be the beginning of a major change to the ANC’s current economic policies. The discussion at the policy conference is bound to be heated.

Long before the final discussion documents were published, there had been  consistent reporting that they would say that the current SOE model is “dying”. That reporting has been borne out in the final documents. It says that the “era of bailouts for SOCs [state-owned corporations] is over. It is not sustainable. Workers whose jobs are at risk must be reskilled and redeployed to where vacancies exist.” 

This may well be the strongest indication yet that the retrenchment process the SABC went through 18 months ago could become a norm for the SOEs – and that major change is coming.

Of course, this has been promised before.

Also previously promised, is a commitment to cut red tape for smaller firms. However, it appears the party may be going further than in the past when it says the government should, “remove micro enterprises which operate best in the informal sector out of the Small Business regime[n] to remove the red tape”. It also says that municipalities should “remove the requirements for payment of permits by informal traders and provide necessary support…”

This may be the beginning of a better understanding of the needs of smaller firms by the governing party.

ANC discussion documents are often an interesting mix of honesty, imagination and, sometimes, hubris. It is entirely possible that other issues take over what is mentioned in this economic document. However, it is also possible that what the party has published here does lay an important basis for the conference discussions and possibly our future. DM

Nigeria’s nightmare

by michael roberts

 

Nigeria has just had a general election to elect a new president and Congress. Nigeria is often ignored in the global scheme of things.  But it is the largest country in Africa with around 200m in population and a larger national output than South Africa. It is rich in natural resources (especially fossil fuel energy) and its people.  But it is appallingly poor.  Nigeria is the prime example of a country, fashioned by imperialism from various original large tribes originally for the slave trade and later into a state for the extreme exploitation by multi-national companies.  The Nigerian elite (based on the military and oil businesses) has taken its cut from this exploitation and rules through patronage, corruption, and in the recent past by outright military dictatorship.

For the last 20 years, however, there has been a semblance of democracy, with ele ctions for governments.  But this democracy is relative.  In the mainly muslim inland north-east, there is a bitter battle going with Islamic terrorist groups (Boko Haram) who seek to impose strict Islamic rule over swathes of part of Nigeria.

But at least, in 2015, the last president of Nigeria, Goodluck Johnson, conceded defeat to the current President without trying to stay in power using the military and chicanery- for the first time in Nigeria’s chequered history..  The general election this time pits the incumbent Muhammadu Buhari (76 years), of the governing All Progressives Congress (APC) against the opposition People’s Democratic Party (PDP) led by  Atiku Abubakar (72 years).  The APC purports to be a centre-left party opposed to austerity and in favour of better conditions for Nigerians, while the PDP advocates neo-liberal pro-market, pro-oil company policies.

Buhari’s platform is «to be tough on insecurity and corruption» (which ironically was little changed under his presidency), and he wants to complete much-needed infrastructure projects. Abubakar is a pro-business free marketeer whose main pledges have been to privatise giant state-run companies and float the embattled naira currency.  In practice, as in the US, there is little to choose between the two main candidates. Both men are from the mainly muslim north of the country which is where Buhari gets his support; Abubakar gets his from the south and south-east.  The capital Lagos with its urbanised 20m swings between the two parties and will decide the result.

Both leading candidates are muslims by religion and both intend to do nothing to change the nightmarish poverty and inequality in Nigeria, or even to establish equality before the law and protect human rights.  As one middle-class urban voter put it: «They [Abubakar and Buhari] are both terrible people and not fit to be president … I don’t think Atiku will bring any real change if he wins. And all the «experience and leadership» they’ve sold us at all levels, what has it brought us really?»

While they are in their 70s, more than half of Nigeria’s registered voters are under 35.  Nigeria is a youthful country with a very fast growing population.  Indeed, on current trends, Nigeria will double its population to 400m by 2050 and by any stretch become the most important state in Africa.

Young people (0 to 19 years of age) account for more than 54% of the population and their conditions are dire.  Currently nearly a quarter of the working age population is unemployed, while the youth unemployment rate reached an all-time high of 38% in the second quarter of 2018.

The Nigerian economy is a one-trick pony, as are many in Africa controlled by imperialism.  Oil and gas production dominates; so all depends on the price of oil globally.

The Nigerian capitalist economy operates mostly for the foreign multi-national oil companies.  There is little investment outside of energy.  Overall investment to GDP moves with the vagaries of the crude oil price and since the sharp fall after 2010, it has fallen to a 20 year low.

Investment in any capitalist economy, including Nigeria, depends primarily on its profitability.  It is difficult to get decent data to measure the overall profitability of Nigerian capital.  But using the Penn World Tables, I reckon it looks something like this.

The profitability of capital seems to follow closely the price of crude oil, demonstrating again that the Nigerian economy is imbalanced and structured to benefit only international oil, and not even domestic capital.  In the boom period for the oil price in the 2000s, GDP growth took off and the rate of profit on capital (on my measure) rose 60%.  But since 2010, the oil price has halved and Nigeria’s real GDP growth has disappeared.

And the falling oil price and Nigeria’s slide down has meant a rising budget and external trade deficit.  That means the next government will be applying yet more austerity for the people while trying to restore profitability for the energy industries.

With the sharp drop in the oil price in 2016, the economy quickly slipped into recession and the slow recovery since 2017 has had little effect on providing jobs for young people and others. No wonder the biggest national group of immigrants trying to get into Europe from North Africa are Nigerian.

While Nigeria may have the largest GDP in Africa, with 200 million people, its income per person is shockingly low at just 19% of the world’s average.  «Inequality in terms of income and opportunities has been growing rapidly,and has adversely affected poverty reduction. The North-South divide has widened in recent years due to the Boko Haram insurgency and a lack of economic development in the northern part of the country. Large pockets of Nigeria’s population still live in poverty, without adequate access to basic services, and could benefit from more inclusive development policies. The lack of job opportunities is at the core of the high poverty levels, of regional inequality, and of social and political unrest in the country.» (IMF report).

Inequality is huge, with the gini coefficient of inequality of income over 40.  Nigeria has the highest proportion of people earning below the World Bank’s definition of poverty in the world!  Out of 180 countries, Transparency International places it the 144th least corrupt – in other words, it is near the top for corruption. Nigeria’s annual inflation rate is permanently in double digits, with interest rates for borrowing near 20%.

The choice for the people in this election is between the incumbent president, an ex-general who participated vigorously in previous military coups and dictatorships but is now a «converted democrat»; and an oil tycoon.  No wonder the voter turnout is likely to be only around 45% of 73m eligible to vote; the unemployed youth and poor do not vote (except with their feet).  So Nigeria’s nightmare is likely to continue.

 
michael roberts | February 24, 2019 at 1:55 pm | Categories: capitalismeconomicsProfitability | URL: https://wp.me/pLequ-467
 
 
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Boko Haram have just murdered 2,000 people – so why aren’t we talking about it?

How and when the terrorists will be defeated nobody knows, meanwhile the bodies keep piling up

Baga after a previous Boko Haram raid. Much of the village has been destroyed in this month’s attacksBaga after a previous Boko Haram raid. Much of the village has been destroyed in this month’s attacks (AP) AP

On Saturday, Boko Haram murdered 2,000 people. Amnesty International called it the «deadliest massacre» in the history of the extremist group. Homes were burnt down and buildings destroyed as corpses of men, women and children lay in the street. A survivor harrowingly spoke of  «stepping on dead bodies» as he escaped. Those that could grabbed what they could and fled.

The attack has been described as «heartbreaking,» «barbaric,» and «senseless». And it is. But it won’t change anything in Nigeria.

The attack took place in Baga, a town in the non-oil producing, non commercial north-east of the country, a region that has felt the brunt of the Boko Haram insurgency. There’s an uncomfortable truth about Nigeria: division runs deep, and the lives of northerners are seemingly not as valuable as southerners. Had these attacks had taken place in Nigeria’s oil hub Port Harcourt or the commercial centre, Lagos, would they slip under the radar so easily? Would the victims be so easy to forget? I doubt it.

Then there’s President Jonathan. He swiftly offered his condolences to the French over the Charlie Hebdo attack, but has yet to make an official comment on the slaughter of his own people. But why would anyone expect anything less? This is after all the same President who took 98 days to meet the parents of the Chibok girls and who 48 hours after a bomb blast killed dozens in Nyanya, was photographed dancing at a rally in Kano.

Under Jonathan’s watch, Boko Haram have killed thousands and left more than a million people displaced. When the President does acknowledge the carnage, the response is almost always the same. “We will bring justice to the savage terrorists known as Boko Haram,» he said in his new year’s address. “They will be defeated.”

How and when, nobody knows, meanwhile the bodies keep piling up.

There is seemingly no concrete strategy or plan to combat the insurgency. The army is in crisis. Soldiers have openly complained about corruption within the ranks, lack of equipment and low morale, to no avail. 54 soldiers were recently sentenced to death for mutiny.  In an open letter to the President, an army officer warned that if these issues were not addressed «there will be no country called Nigeria

Jonathan’s failures are clear but they will not make him unelectable.

And what of Nigerians? Why no marches? No riots?

It’s not that no one cares. They do. But Nigerians, known for their collective forgetfulness, have the uncanny ability to «suffer and smile» as the late Fela Kuti aptly put it. No one is more aware of the bloodshed than Nigerians, but hearing about raised towns and bomb blasts has become eerily routine. Bad things happen and it’s crazy, but hey, that’s Nigeria for you. God will see us through.

International condemnation has come in thick and fast with calls on the Western media to increase its coverage of the savagery, and for Western leaders to act.  Unless Boko Haram expand their reach, the West will not benefit from intervening in the conflict, so there will be more outrage, more condemnation, more talk but little to no action. But even if the West do get involved, at what cost? Are we really ready for another Libya or Afghanistan?

With the Presidential election weeks away attention has already shifted away from Baga and the political manoeuvring is in full swing.  The opposition is using the attack as proof of Jonathan’s ineptitude and the country’s need for change, and the Presidency is arguing the statistics of the dead have been «exaggerated» in a bid to derail Jonathan’s campaign.  It is predicted to be a tight race.

And what of the dead? There will be no marches for them. No memorials. Like Damaturu, Gajihana, Gwoza and dozens before them, the names of the towns will be forgotten, the names of the victims will remain unknown.  In the south, life will go on. A resolute few will continue to demand justice, until the victims are replaced by others and a new trending topic starts. Nigerians have seen this movie before and sadly they will see it again.

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