Asset stripping is one of the uglier manifestations of present day capitalism. While the phenomenon is modern, the script is ancient - straight out of Aesop’s fable of the industrious ant and the feckless grasshopper.
The story starts with a business assiduously building up its asset base over many decades, rather than declaring huge dividends for shareholders.
Like the fabled ant, it’s based on the philosophy of not gobbling the entire harvest but carefully salting away resources to protect against the lean times.
Unfortunately, asset strippers sense juicy pickings like scavengers sense carrion. The strippers grab managerial control, often through the ploy of promising the greedy grasshoppers - um, shareholders - to “unlock value”. Meaning, let’s loll about in the sun and binge on the granary.
Anything that can be turned to cash is sold and soon a once-comfortably solvent business is reduced to hand-to-mouth survival, with nothing to cushion it when the hard times come. And come, they always do.
And that’s exactly what the ANC and its partners in asset destruction, Cosatu and the SACP, are doing to South Africa (Pty) Ltd.
They are hijacking a century of accumulated sovereign wealth and hocking it for dosh to splurge on Blue Label and sushi.
These alliance grasshoppers have over the past 25 years financially eviscerated Eskom and SAA.
At PetroSA, they sold off the country’s entire crude oil reserve of 10million barrels at $28 a barrel at a time when the international price was closer to $40.
All that “unlocked value”, straight into the pockets of some very fortunate offshore investors.
A fortnight ago, Auditor-General Kimi Makwetu briefed Parliament that it was uncertain whether PetroSA could continue operating. So, too, the South African Nuclear Energy Corporation, as well as its subsidiary, Pelchem.
In last week’s Budget, Finance Minister Tito Mboweni painted a bleak picture of two state-owned concerns, Denel and Transnet. Both have been chowing their harvests as if there is no tomorrow, white-anting their own organisations through a deadly combination of theft and incompetence.
South Africa has more than 700 state-owned enterprises (SOEs) and it’s unlikely that the picture is any rosier with them. But it is not only SOEs that have been turned into cash cows for the cadres. All of South Africa’s infrastructural assets have been looted or allowed to decay.
The rail and road infrastructure has wasted away, except where under control of private enterprise. Almost two-thirds of local government entities are dysfunctional or almost dysfunctional.
Not a week passes without new revelations regarding the hollowing out of South Africa and none of this stems from the whimsy of fate. This situation is not because of the unfortunate confluence of circumstances, or the miscalculations of some inexperienced executives, or apartheid.
This dismal state of the nation is a direct result of the ANC’s grasshopper mentality - a genetic predisposition to short-termism. From this blighted DNA stems the determination of many in the alliance to reap what others have sown, rather than bother over-much with the tedious process of growing from seed.
One should therefore take with a pinch of salt the sudden apparent determination of the ANC under President Cyril Ramaphosa to curb corruption, to put in the hard yards and to defer gratification. No matter how well-intentioned the president, his approach barely commands a majority on the party’s national executive. Within the party’s powerful, policy-determining membership structures and broader tripartite alliance, it is a minority view.
South Africa has been there before. It was to a very large extent because president Thabo Mbeki championed cautious economic policies and the shrinkage of the SOE sector through privatisation, that he was ousted by the ANC hard left, the unionists and the communists.
Worker-ant Ramaphosa may meet the same fate. Grasshoppers rule, okay?
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** The views expressed here are not necessarily those of Independent Media.