Reading director general of government communications Phumla Williams’s defence of SA’s desirability as an “investment destination of choice” reminded me of the rejoinder of Upton Sinclair.
In 1935 this American Pulitzer Prize-winning author and political activist wrote: “It is difficult to get a person to understand something when their salary depends on them not understanding it.”
Williams, the government’s top and best-paid spin doctor, in her column in Business Day (May 16 2022) takes vehement issue with a reader, Oliver Dickson, who dared suggest SA’s investment prospects were suboptimal. Her retort: “His myopic assertion that our country is a poor investment destination rings hollow and fails to appreciate what the government has done over this short democratic period and what it continues to do in taking the country forward.”
The problem with Williams’s defence is it is filled with indignant vehemence and righteous assertion, but is very light on supporting facts and glosses over, or panel beats, those the reader advances: in short, high on calories, low on protein.
In the face of innumerable indices which indicate our downward tumble on every front — from continuous electricity outages to mining exploration (we account for less than 1% of the world total invested), to ports’ operations (we are in the bottom of the world table) and, crucially, education (78% of Grade 4 pupils surveyed in 2016 could “not read for meaning in any language”) — she offers three basic rebuttals.
First, there is “a plan”. This she references to the long-forgotten National Development Plan, which President Cyril Ramaphosa co-authored. The problem here is the NDP, which always takes second place to the political impulses of the ANC, directly contradicts her assertion on our investibility. On the one hand, it asserts that the minimum GDP growth required to dent the “triple challenges” (poverty, inequality and unemployment) she references is 5.3%, not the bottom of the barrel 1% to 2% we have eked out in recent years until today.
This directly correlates to a second metric identified in the same NDP: the need to achieve 30% of GDP in fixed investment vs the 14.2% we have mustered. In other words, if world and domestic investors were flocking here, we would have raked in the desired percentage rather than that we have achieved.
Greg Mills, of the Brenthurst Foundation think-tank, once described our country as “policy rich and execution poor”, a precise fit to endless plans and policies too often observed only in their breach.
But in the policy document (NDP) touted by Williams there is a precise formula on how real rather than fantasy growth is attained. Its concluding premise is very clear: “Successful countries have what is called a ‘future orientation’. Their policy bias is to take decisions that lead to long-term benefits, as opposed to short-run solutions that could have negative effects later on. Such countries generally prefer investment over consumption, have high savings rates, sound fiscal policy, a high degree of policy certainty and clear rules of engagement for the private sector. A clear and predictable policy environment enables businesses to take a long-term perspective on growth and development.”
Amen to that, though with the exception of “sound fiscal policy” every item on the NDP wish list is flagrantly contradicted by the policies and practices of the government Williams speaks for. Indeed, beyond flagging the NDP itself, it would be curious to know if she has acquainted herself with its contents.
Second, Williams, in keeping with the tone of her political masters, underlines a great deal of the pain, suffering and dispossession of the previous era of racial discrimination and exclusion. That is perfectly fair as a history lesson and sociological explanation. However, when it comes to getting the hard-fought-for investment buck from a myriad other contenders worldwide, where each sovereign has its own pain and history, the strategy is less obvious. And whatever its other merits, it is the opposite of the NDP recipe for success, namely “a future orientation”.
Last week the Mining Indaba in Cape Town provided a forum for international and local metals investors. The critical state of our undesirability as a mining investment destination was highlighted by Canada’s Fraser Institute placing us in the bottom 10 of mining destinations in the world. Then the country was treated to the war of words between two government departments — mineral resources and energy vs state information and technology — blaming each other for the lengthy delay in buying a new mining cadastral system which, as Hilary Joffe of Business Day notes, “would enable SA to ignite exploration”. Sadly, despite repeated promises or a publicly accessible mapping system of licences and applications and registering rights, no exploration investment is likely. But it certainly is a boon to the corrupt.
The third leg of Williams’s defence is the much touted figure that SA has achieved “an impressive 95% of [the] ambitious target of [Ramaphosa’s R1.2-trillion investment drive”.
The figure is contested by financial experts. The editor of the Financial Mail, for example, dismissed the figure as “largely political hot-air money that would have been spent on sustaining operations anyway, particularly in the case of the mining sector where companies … have long-term budgets for mines with a life of 20-plus years”. The editorial ended with the plaintive cry: “What Ramaphosa should be giving industry, rather than investment pledges, is simply more electricity.”
And if all these investment dollars are current and tangible, why is growth so low, unemployment so high and government borrowing about R2bn every day to fund itself?
At the weekend I participated in the marvellously restored Franschhoek Literary Festival (disclosure: my wife Michal is board chair) and was in an engaged discussion with political analyst Ralph Mathekga. Just as he was making a strong point to our panel chair, Ferial Haffajee, and the audience that we should give up any hope of reform from central government and focus on city administrations, we were plunged into darkness as another bout of load-shedding kicked in. He could not have scripted it better.
The next day I sat riveted as billionaire Magda Wierzycka spoke to Bruce Whitfield about her new autobiography. Her back story is hugely impressive: she arrived here as a teenage refugee from Communist Poland, barely able to speak English. Hard work, deep application and a good brain led her, over time, to the very summit of the investment industry here and beyond.
It was noteworthy that Williams commended those “patriotic citizens” who expose corruption. It was Wierzycka, often entirely alone in the business community, who called out former president Jacob Zuma’s state capture and then personally funded its expose through a trove of emails and documents she placed, at some peril to herself, in the public domain. At the time Williams held high office in government communications.
But what does the certifiably “patriotic” Wierzycka say about our investment desirability? She advised the audience: “South Africa is currently uninvestible. I am not saying it won’t be investible in the future, but currently it is not.”
Government should heed the warning and make corrections, not (rhetorically) shoot the messengers or bury the message in confections of spin.
Tony Leon, a former leader of the opposition, now chairs Resolve Communications. @TonyLeonSA
