Politics to blame as SA hurtles towards downgrade

South Africa is inching closer and closer towards a downgrade to subinvestment grade. To blame, of course, is the increasingly fractious politics of the ruling African National Congress (ANC).

If former US President Bill Clinton had been South African, he would have said: “It’s politics, stupid!” Contrary to what he actually said when he declared: “It’s the economy, stupid!”, in our country, it is politics that is the main cause of uncertainties about the economy and our future. It is, in particular, the internal politics of the ruling party that has become the main ingredient of policy and economic uncertainty.

This is so because of the dominance of the ANC or, to put it differently, the fact that our electoral politics have been uncompetitive for the better part of the past 22 years. But it is because of the losses that the ANC suffered in last month’s local government elections that we saw the rand strengthening as a sign that the markets had taken the view that our politics were becoming competitive or less uncompetitive, something I suppose would be a good thing in the minds of big business and market players.

In other words, the outcome of the August 3 elections was not only an indication that alternation of power between the ANC and the opposition had become a possibility but also, more important, that the Democratic Alliance (DA) would, one day, possibly dislodge the ANC as the ruling party of the country. Given the policy orientation of the DA, this would be a big advantage to those who do not want the structure of the economy to be tampered with.

However, I am not suggesting that the economic policies of the ANC are a major threat in this regard. Apart from some left- sounding noises and rhetorical commitment to radical economic transformation, threats of a national minimum wage, similar threats about land reform and the hoax of black economic empowerment, the DA and the ANC are different sides of the same coin.

This notwithstanding, the world view of the DA is broadly aligned with the world view of dominant interests in the domestic economy and the global economy, as well as with the cultural majority (numerical minority) of South Africa. The ANC is a threat to the extent that the elements of our political class which command a dominant position in the ANC are the primary drivers of a political culture of rent-seeking, patronage and corruption.

Lest I be misconstrued, it is not my view that the dominant interests in the global economy and our economy want a change in our political order because they find the rent-seeking morally offensive. I am not that naïve. It is because of how, under President Jacob Zuma, there is a perception that the patterns of rent-seeking have shifted from West to East that Zuma’s ANC must go.

Given the fact that our economy is tied to the Anglo-Saxon sphere of influence, those who benefit the most from the colonial structure of the South African economy are offended more by the configuration of rent-seeking under Zuma than they are by rent-seeking itself.

While it is an objective truth that the Zuma Presidency is the main product of the ANC’s decline, for these economic interests, the crisis lies in the fact that the ANC and the country are run by the wrong people. It is because of this accident of history, not because of moral principle, that the dominant economic interests in South Africa find themselves on the same side as those who are genuinely disgusted with the venal and corrupt politics of some of the ANC elites. Their corruption and lack of commitment to good governance are a disruption to the patterns of profit to which they have become accustomed. As we have seen in countries such as Angola, corruption, patronage and rent-seeking are not a problem if they do not disrupt profits.

But things are not all gloom and doom. The crisis that the Zuma regime has imposed on our country is an opportunity for those with an important stake in our economy. Whatever you think about who is the devil or angel between the President and Finance Minister Pravin Gordhan who was, as the President says, imposed on him, the reality is that the Hawks-Gordhan imbroglio is causing more damage to the image of our country and the economy.

But this is an opportunity for actors external to the ANC government to impose policy measures from outside. In other words, by refusing to reconfigure its interests in relation to those of Zuma, the ANC is compromising our national sovereignty. Our economic policies will be written by ratings agencies and international and domestic investors and will become, as they are to some extent already, extensions of the economic policies of other governments.