DITHER, dither, dither is the policy apparently favoured by the government. While top politicians focus on secret deals, key posts go unfilled, crisis warnings are ignored, promises remain unmet, questions are ignored, critics are threatened and corruption and incompetence rule at all levels of government.
It’s not a new story: neither the secret deals – nuclear this time but think arms and Gauteng e-tolling – nor the government’s failure to act in time.
Absence of forward planning on infrastructure and the damaging consequences thereof were dramatically exposed in January 2008 when Eskom’s power supplies crashed, closing mines and heavy industries for days on end.
Eskom is still in a state of disrepair and electricity constraints have put a cap on growth. The economy is crawling along, growing at perhaps 1.5 percent a year. So much for the 7 percent growth needed to create the 500 000 jobs a year promised by the government four years ago.
The same flaws were highlighted last week by disruptions to water supplies in Gauteng – a sign that water shortages could soon threaten the productivity and living standards of the country’s economic heartland. Former Water Affairs director-general Mike Muller and others have warned often enough of a looming water crisis due to growing demand and problems at municipalities.
Service delivery protests over water and electricity are common but even this threat to ANC grassroots support at the polls fails to propel officials out of their habitual sloth or distract politicians from their contemplation of future deals.
The problem is broader than infrastructure. Paralysis at the top of the government left the SA Revenue Service with an acting boss for more than a year, after the forced departure of former commissioner Oupa Magashula in July last year.
The post was finally filled last week by Thomas Moyane, who has served as national commissioner at the Department of Correctional Service but has no background in tax.
For six months the top job at Eskom was also unfilled, while the vital utility was left to the ministrations of its controversial acting chief Collin Matjila, whose appointment was opposed by both the opposition DA and ANC ally Cosatu. The former director-general at the Department of Public Enterprises, Tshediso Matona, will take over as boss on Wednesday.
Another vacuum is now looming. Despite the presence of two potential successors within the Reserve Bank – accepted by the markets as qualified to take over the helm – President Jacob Zuma has failed to promptly announce a successor to governor Gill Marcus, who will step down in November. The stability of local financial markets is heavily dependent on market confidence.
The delay in announcing the next governor of the central bank could not have come at a worse time.
Markets are in trouble again as strength in the US economy raises expectations the Federal Reserve will hike interest rates next year. As the dollar reached multi-year highs last week, commodity prices fell, stock markets tumbled and currencies slipped lower, with emerging market currencies particularly vulnerable. The rand sank to R11.26 on Friday – the weakest level in eight months.
The JSE all share index closed down 0.32 percent on the week on Friday at 49 663.64, a long slide from the 52-week high of 52 323.61, set on July 29.
Compounding the problem of stronger US growth, which is responsible for the tightening in US monetary policy, China’s growth outlook is disappointing. Last week investment bank Goldman Sachs slashed its outlook for China’s economic growth next year, to 7.1 percent from a previous 7.6 percent projection.
China has been the biggest market for South Africa’s exports and, if its economy slows as is now predicted, that market is less likely to grow.
Europe, South Africa’s second-largest export market, is also under pressure. A purchasing managers’ index released last week signalled that Germany’s manufacturing industry expanded at the slowest rate in 15 months in September.
Other destabilising forces are at work globally, with air strikes in the Middle East and a prolonged stand-off in the Ukraine. The situation is not conducive to economic growth internationally and it holds the potential to turn into something worse.
If South Africa is to keep afloat on the stormy seas ahead, something more is needed from the government.