Denialism at root of SA's rot
Watching Finance Minister Pravin Gordhan deliver his mid-term budget speech reminded me of a movie mature readers might remember, A Guide For A Married Man. It was a spoof produced during the "Mad Men" era in the '60s, when men smoked excessively and women slaved over the stove.
It starred Robert Morse, who, ironically, is a cast member of Mad Men , and Walter Matthau. The movie chronicles Morse's attempts to teach his coworker, Matthau, how to cheat on his wife.
The lessons play out in a sequence of amusing skits featuring popular actors of the time. In one sketch dubbed Deny, deny, deny, comedian Joey Bishop is caught in bed by his wife with another woman.
His wife is shocked. But rather than respond apologetically to her agitated questioning, he and his bed partner calmly dress up and tidy the room. The mistress serenely leaves the premises, while Bishop saunters to the living room, sits on an armchair, lights a pipe and opens a newspaper.
Dazed by his behaviour, his wife starts to believe she was hallucinating and, after re-examining the now tidy bedroom, returns to her husband and meekly inquires what he would like for dinner.
Treasury is one of a few government institutions I think can hold its head up high. The same applies to the Reserve Bank, SARS and the Competition Commission.
Gordhan and his predecessor, Trevor Manuel, have rigidly stuck to conservative policies through extremely trying economic times, brushing aside the temptation to succumb to political forces and spend recklessly. Their discipline and determination have earned them the admiration of their global peers and the international investment community - reflected in the wide range of funds that hold our bonds as well as their participation in important gatherings of world financial ministers.
A large part of their success is attributed to South Africa's private sector, which has grown its contribution to the fiscus even in the face of the ruling party's incompetence, corruption, poor judgment, absent leadership and lack of vision. That, however, is beginning to wither. Revenue will fall short by around R5-billion on budget, the upshot of the financial crisis in Europe, our principal trading partner, and a slowdown in the world's two largest economies, the US and China, according to Gordhan's mid-term assessment.
Troublesome conditions at home are also beginning to add to Treasury's woes, eroding its ability to finance expansion and satisfy an ever-increasing percentage of needy households that survive on social handouts.
The budget deficit - broadly the amount by which government expenditure exceeds tax revenue - is climbing, requiring supplementary borrowing, while our current account deficit (the difference between our exports and imports) is creeping to high levels.
Still, the finance minister is correct in assuming there is no crisis - yet. South Africa's balance sheet is in good shape. But that's not what is haunting the rating agencies and the international investment community.
The recent wildcat strikes have highlighted labour's disenchantment with government, trade unions and industry. The violence has dealt South Africa's image as an investment destination a dastardly blow. And, so far, the current administration is falling short of producing an acceptable plan to tackle the grievances that are undermining its legitimacy, raising the spectre of further upheaval down the road.
Requesting the public to tighten their belts and reiterating government's commitment to large-scale infrastructure projects, the details of which remain scant, as the finance minister suggested last Thursday, provides little comfort. Neither will attacks on the many critics outside South Africa, who make negative pronouncements, ease the pressure.
When Anglo American CEO Cynthia Carroll resigned last week, foreign analysts were quick to point out the harm the group's South African assets have caused her. They believe the ongoing labour strife and rising input costs are diminishing the company's value on global markets. They even went as far as suggesting future management should either unbundle the South African investments to shareholders or ring-fence them in a separate listing.
It is clear South Africa still faces a number of threats. Without structural reforms and a government adequately equipped to meet these challenges, our future prosperity remains uncertain.
Flippantly dismissing any disapproval as unfounded is short-sighted and misleading. Who can ever forget "Comic Ali" - Mohammed Saeed al-Sahaf - the Iraqi Information Minister, who, with tank shells exploding in the background, promised a worldwide TV audience a triple guarantee "there are no American soldiers in Baghdad". Deny, deny, deny.