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The importance of being a social movement activist in South Africa’s battle for clean energy

Mpophomeni Conservation Group

The decision-making framework provided by the South African constitution after the dawn of democracy highlights the importance of stakeholder engagement, thus increasing the power of activism. Vast stretches of the country are now earmarked for unconventional oil and gas exploration. Activists need to be vigilant that no application goes unchallenged.

In Oscar Wilde’s famous play, The Importance of Being Ernest, the hero pretends to be the honourable Ernest Worthing who to his surprise he turns out to be at the end of the play. Living a double life, John pretending to be Ernest, for the sake of marrying his beloved Gwendolen, struggles to keep appearance. When finally he finds out he has been the one that he pretended to be all along he exclaims with surprise “it is a terrible thing for a man to find out suddenly that all his life he has been speaking nothing but the truth.”

Environmental activists in South Africa must feel this pleasant shudder now that they find that battles against mining companies can be won. In a struggle that often seems to amount to a battle against almighty Goliath, hydraulic fracturing (“fracking”) applications throughout the country suffer defeats. Environmental activists are marvelling about the realization that they can actually be as impactful as they had always dreamed of being. Eleven applications for unconventional gas explorations encompassing vast stretches of the country are currently under review.

Exploration applications for unconventional gas first surfaced in 2008 when three multinational oil and gas companies – among them Royal Dutch Shell – expressed interest to explore the Karoo desert. The process, however, has been stalled as a moratorium was instigated to do research on the practicalities of drilling for unconventional gas in the Karoo. The Academy of Science of South Africa published a report examining the “technical readiness to support the Shale Gas Industry”[1] which found major challenges relating to potential unconventional gas-drilling activities in the country.

An apparent lack of knowledge concerning deep level water resources which would be affected by the deep-seated drilling technique are a worrying finding in a water-scarce country such as South Africa. The Academy also pointed to the lack of present infrastructure to distribute gas throughout the country. What is also notable is that the oil and gas companies’ potential to create jobs is put into doubt. Required skills for gas exploration are simply not available in the country.

Illicit mining deals at the heart of state apparatus

The government so far has sent mixed messages with regards to fracking, with President Zuma repeatedly calling shale gas exploration a ‘game-changer’ for the South African economy.[2] However, the Departments of Water Affairs and Sanitation as well as Environmental Affairs try to affirm their respective mandates to safeguard the country’s water resources and biodiversity. Other concerns at government level shared with farmers across the country regard the future of arable land. Decision-making around mining rights is currently taking place in very a volatile political environment. South Africa’s mining industry dubbed by critical voices as the ‘legacy of apartheid’[3] has once again come under fire. This time serious allegations emanate from “State of Capture Report”[4] recently released by the outgoing Public Protector suggesting that members of the cabinet have unduly favoured a notorious business family in pursuit of mining capital.

The Indian-born Gupta family is deemed to have great influence on the president’s decision-making. President Zuma’s son Duduzane has tight business relationships with the Gupta family. With a government perceived to be too close to mining capital, environmental activists share the impression that they have to take their fate for the sake of themselves and their children into their own hands.

Court victories call for legal battle?

The decision-making framework provided by the South African constitution after the dawn of democracy highlights the importance of stakeholder engagement. This ties social movements close to prescribed public engagements. In his book From Revolution to Rights, Steven L. Robins suggests that “post-apartheid NGOs and social movement activists have increasingly recognized the emancipatory potential of rights-based approaches.” For most middle-class activists legal battles have become the weapon of choice. This holds especially true for the battle against fracking.

Under the current framework it becomes almost inevitable for activists to challenge oil and gas companies on legal grounds. The Ministry of Mineral Resources (DMR) under an act known as the One Environmental System has become the watchdog of environmental compliance. There is great distrust that DMR will oversee the environmental provisions better than the Department of Environmental Affairs did formerly.

A ruling of Pretoria High Court [5] stopped oil and gas company Sungu Sungu in their plans to explore Sungu Sungu for flaws in their application. One of the two dedicated activists praised for the victory held that: “Had the farmers’ associations not worked together, put their trust in the legal system and put up the money to fund the appeal and court application this exploration process would have continued unabated.” In her opinion the fight against fracking has become technical due to provisions made by government prescribing Environmental Impact Assessments (EIAs) for mining and gas developments.

“These applications are first and foremost legal processes that can grant extensive rights to exploration companies and negatively impact on the rights of landowners and occupants. Exploration companies must earn the right to explore on privately owned land and to do that they must comply with the law,” commented dairy farmer Adele Slater. Other companies had to scale down proposed exploration areas as they were made aware that their applications fall in protected areas.

Opponents of fracking encourage each other to scan EIAs for flaws and raise funds for court battles. The technical language of the voluminous applications, however, makes it tough for largely under-educated rural potentially-affected communities to engage. Constitutionally there are short time frames to comment on mining applications that make it hard even for professional environmental practitioners to intervene meaningfully. Rural constituents potentially worst hit are side-lined by this process as mining applications are poorly publicized and information is only provided at selected public libraries often far from peoples’ homes.

Movement building

Narrowing the social movement repertory to “technicism and legalism” might cause “premature deradicalization”, as political economist and movement scholar Patrick Bond suggests.[6] In order to ensure activists throughout the country are all on the same page Frack Free South Africa organized a three-day festival ending with the unanimous adoption of a declaration stating that “invasive development such as for fracking and other extractives are taken in forums where local community representatives are not present so the outcome is imposed on them.“[7]

Because vast stretches of the country are earmarked for unconventional gas exploration activists need to be vigilant that no application goes unchallenged. Many believe that fracking can best be fought if there is no one well that will be opened. Frack Free South Africa is an umbrella organization assembling different organizations encompassing the farmer lobby as well as citizens’ movements alarmed about the advance of oil and gas companies in South Africa. The organization has an informal organizational structure with no paid members or official positions. Members alert each other of urgent meetings calling for immediate action. Frack Free South Africa shares the vision that drilling for unconventional gas might be fended off in its entirety. At public meetings of oil and gas companies Fracktavistas reiterate that they neither want to see gas wells in their backyard nor anywhere else in the country. Other than piecemeal battles against the establishment of new coal mines or closure of existing ones, anti-fracking activists still hope that fracking can be defeated overall.

Despite partial victories against oil and gas companies, activists remain cognisant that companies can always reapply for exploration and finally exploration rights at later stages. That is unless the government puts its foot down to ban fracking overall, victories will always be temporary.

The ironic ending of Oscar Wilde’s play provides that Ernest’s new wife pardons him for having been rightfully claiming to be the one he pretended to be. South Africa’s Fracktavistas might be excused in the future for their unlikely victories against big oil and gas.

* Jasper Finkeldey is a PhD researcher and teaching assistant at the University of Essex. He is currently visiting scholar at the Centre for Civil Society in Durban.

End notes

[1] http://research.assaf.org.za/bitstream/handle/20.500.11911/14/fracking_r…

[2] http://www.gov.za/node/632440

[3] http://www.iol.co.za/business/opinion/mining-is-the-legacy-of-apartheid-1981775

[4] https://de.scribd.com/document/329757088/State-of-Capture-Public-Protect…

[5] http://m.news24.com/news24/SouthAfrica/News/victory-for-farmers-20161107

[6] http://www.tandfonline.com/doi/full/10.1080/02589346.2015.1035483

[7] http://www.groundwork.org.za/archives/2016/news%2020161006%20-%20Matatie…

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Black girls “throwing tantrums” over hair? Excuse me

Screen-grab: looptt.com

To call a conscious protest by schoolgirls resisting racism a “tantrum” is myopic. Although apartheid has long been legally dismantled in South Africa, racism still exists and whiteness there still means being part of a privileged group; one whose traditions, religion, food and appearance – including hairstyle – is still the default norm.

It’s hardly surprising that BBC’s 2016 most influential women in the world list included Zulaikha Patel, one of the girls that led the protests at Pretoria High School for Girls (PHSG). She has reminded us that barely a decade after Indie Arie proudly sang, “I am not my hair”, matters of black hair are still very much political. The gains made by the Black Pride and Black Consciousness movements which sought to instill a sense of pride over Black aesthetics are perpetually challenged in institutions with policies that uphold racial hierarchies.

A range of institutions continues to work together to marginalize Black women’s hairstyles and encourage them to invest in products that will rid them of their ‘kinky, curly, unmanageable’ hair – they are urged to embrace wigs, weaves, or chemically ‘straightened’ hair. Doing so provides them access to jobs, education and social inclusion in predominantly white institutions. Black hairstyles thereby come to signify whether one wants to be included (read “conform”) or excluded (read “militant”). Patel’s protest is entangled in historical attempts to police Black women’s hair. At PHSG, Black students have complained that they are not allowed to wear afros, are encouraged to straighten their hair, and were subjected to racial slights by staff [1]. As a PHSG Old Girl, I feel obligated to respond, as it may be a useful discourse for many grappling with hair, Blackness and whiteness in the ‘New South Africa’.

PHSG, a leader in multi-racial education

PHSG was one of the first schools in the province when it came to progressive and inclusive race policies – it was a trailblazer during its time. It sought to finally realize its founding principles of admitting students from all races by being one of the first schools in Gauteng (Northern Transvaal) to admit Black students during the apartheid era – at a time when it didn’t legally have to – and a time when racially segregated schools were not only normal but legal. So, in August, when the allegations of racism started to appear in the media, I was taken aback that it was happening at that school. The school has now become the center of a national debate about lingering racialized policies, exposing polarized racial discords.

When I was a pupil at PHSG in the 90s, the school’s code of conduct did not specifically address Black hairstyles. At the time it was a one-size-fits all policy that did not specifically mention what is typically considered “Black hairstyles” [2]. They tried their best to apply existing rules to us. Our hair battles with the administration were for them to allow braids and cornrows, which they eventually allowed. They encouraged Black students to have “natural” hairstyles (which included afros), thereby discouraging any type of “fancy” or expensive hairstyles. This seemed largely due to the need for students not to “stand-out” and conform but did not seem racially motivated. The rules that were applied to us were based on an interpretation of their general hair policies, which posited that hair should not be “neat” and “tidy”.

To place these rules in context, there were only a handful of Black girls at PHSG at the time – this was in the early 1990s before apartheid was dismantled. Malawi was the only African country to still have diplomatic relations with South Africa. Therefore Malawi’s envoys had diplomatic immunity which accorded them the “privilege” of being able to live in white neighborhoods. As such, my parents sought to admit their children in the schools that were closest to where they lived and where their children could receive the impeccable education that PHSG could provide.

Following school-wide deliberations that culminated in a vote to decide to become a racially “open” model C school, my sister, Thoko, became the first Black student at the school – I joined over a year later along with other Malawian students. Therefore, a written policy meant for just a handful of us was probably not necessary. The changing demographics of the school over the years probably necessitated a more concrete hair policy.

This has changed. The current code of conduct at PHSG has stipulations for braids, cornrows and other hairstyles that are worn by all students [3]. It doesn’t mention afros explicitly – it neither bans nor permits them. Therefore, some people wrongly believe the policy cannot be racialized because it applies across the board to students of all colors.

Reaction to the protest

An opinion piece by Lelouch Giard captures the lens with which a significant number of white South Africans analyzed the students’ complaints. Giard posits that the entire controversy simply and neatly boils down to a matter of playing a “race card” because a handful of Black students don’t want to learn or follow the rules everyone is subjected to and thereby are inclined to arbitrary call ‘racism’. In sum, it holds that in a post-racial South Africa in which colorblindness prevails,  Black students would rather “throw tantrums” over exaggerated accusations and shout ‘racism’ rather than improve their socio-economic status [4]. He fails to acknowledge that although apartheid has long been legally dismantled in South Africa, racism still exists and whiteness there still means being part of a privileged group; one whose traditions, religion, food and appearance (including hairstyle) is still the default norm and is not ‘othered’. His backlash to their protests seems reminiscent of ideas shared in popular movements such as Trumpism, Brexit and other white identity politics that have recently gained traction [5].

Systematic discrimination

Giard acknowledges that the afro symbolizes Black identity and expression. However, he doesn’t mention the political connotations which link the style to marginalized, non-conforming revolutionary women such as Angela Davis or Winnie Mandela. Rather, he links the style to unsubstantiated political connections between hairstyle and bad behavior when he addresses the reasons Patel may have left her previous schools – “The question arises: is it really just because of her hair, or her attitude (possibly as relating to her hair)?” He goes on to question her credibility because of it, and uses her attitude as a basis for invalidating her experiences at the school. He also objectifies her from the start of the article by introducing her as a “a girl who calls herself ….” which already indicates his own subjective attitude towards her.

Giard’s tendency to focus on the victim does not acknowledge that systemic race discrimination still exists in the nation’s institutions and may continue to impact Black girls. Rather than acknowledging the possibility that she may have been subjected to racist comments by some of the staff members, he largely discredits her account and that of the girls that supported her. In fact, he seems set on proving that they were never wronged.

Alumnae have supported her claims arguing that some of the administrative staff in the school are interpreting the rules to mean that they can’t wear afros and need to straighten their hair. They note feeling harassed and being subjected to racial slights by faculty such as being called “monkeys” and being told that their head looks like there is a “a nest” on top of it. Although such behavior is unacceptable by any standards, Girard should, ideally, give equal attention to an administrative climate at the school that potentially allows teachers to act with impunity. Instead, he points to the social pathology of the Black alumni. He calls their experiences largely “imagined” or “exaggerated”. He also calls them “unsubstantiated” accounts. However, experiences of discriminatory harassment do not need his legitimization (or anyone else’s) to hold in a court of law.

If several girls experienced micro-aggressions by authority figures over several years, who is Giard to delegitimize their lived experience by telling them that they are wrong and are treated the same as everyone else? And even if they are treated the same, that comes with its own set of problems. In sociology and law disparate impact is when treating people the same results in a different impact for some groups. This can be liked to a school in France banning head covering for all its students, thereby unfairly impacting Muslim girls wearing hijab – or height requirements in the military which discriminate against women or having a single hair policy.

School of hard knocks

Lastly, to call their protest a “tantrum” when the issues that the girls are dealing with are real adult world problems is myopic. Black Women worldwide have to wonder if their hair will cost them a job regularly. It is an issue woman in the US military were dealing with as recently as two years ago and one that the US federal court recently ruled on. It’s not just a schoolgirl concern and they should be applauded for their consciousness, instead of being chided for seemingly not following the proper channels for complaints. Yes, protests should be the last recourse but that assumes that the girls never complained. In fact they did – and when they did, they were labelled as being too focused on politics and race [6].

Although hair was at the center of the issue, their concerns dealt directly with their right to gather, speak in their own languages and to be taught in an environment that is not hostile. Reducing this issue to race-baiting is short-sighted. All South Africans need to acknowledge that discrimination still occurs and still needs to be dealt with and in some institutions to be fully eradicated [7]. It can even pops up its ugly head in the nation’s progressive institutions because racism can’t be legislated away.

Although many alumnae are rightfully upset about the broad brush which the school is being painted with in the media, the incident may just be good for the school – the changes that it will make will once again make PHSG a leader when it comes to maintaining safe spaces for all leaners in South Africa’s schools.

 

End notes

[1] Nicholson, Greg, “Pretoria Girls High: A protest against sacrificed cultures and identities”, Daily Maverick, 30 August, http://www.dailymaverick.co.za/article/2016-08-30-pretoria-girls-high-a-protest-against-sacrificed-cultures-and-identities/#.WD8MLVy3XEl accessed 11 November, 2016

[2] Mabuse, Nkepile (2016), “Race or Rules”, Check Point ENCA, September 7th, https://www.enca.com/south-africa/checkpoint-race-or-rules

[3] Pretoria High School for Girls (2015/2016), “PHSG Code of Conduct for Learners” http://www.phsg.org.za/uploads/cms/files/code_of_conduct_leaners.pdf accessed 11 November, 2016.

[4] Giard,Lelouch (2016) “Hair Trends and Racism in South Africa” South Africa Today, 01 September 2016 http://southafricatoday.net/south-africa-news/gauteng/hair-trends-and-racism-in-south-africa/ accessed 11 November, 2016.

[5] Taub, Amanda (2016), “Behind 2016’s Turmoil, a Crisis of White Identity” , New York Times, http://www.nytimes.com/2016/11/02/world/americas/brexit-donald-trump-whites.html?_r=0 01 November 2016

[6] Pather, Raaesa (2016), “Pretoria Girls High School pupil: I was instructed to fix myself as if I was broken” Mail & Guardian, 29 August, http://mg.co.za/article/2016-08-29-pretoria-girls-high-school-pupil-i-was-instructed-to-fix-myself-as-if-i-was-broken, accessed 11 November 2016

[7] Naidoo, Jay (2016), “Pretoria Girls High: A microcosm of what’s wrong with South Africa”, Daily Maverick, 09 September http://www.dailymaverick.co.za/opinionista/2016-09-09-pretoria-girls-high-a-microcosm-of-whats-wrong-with-south-africa/, accessed 11 November 2016

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Popular democratic power is the way to challenge inequality

Abahlali

The most important task in the struggle for a more equal society is to build the power of impoverished people through building democratic popular organisations. It is through these organisations that the people can challenge the state and capital.

[This talk was presented at a forum entitled, ‘Fighting Inequality – Talks on How to Change the World’, 23 November 2016, Oslo, Norway.]

Greetings to all.

I am Thapelo Mohapi the current elected General Secretary of the movement Abahlali baseMjondolo. I would like to begin by thanking our friends at Norwegian People’s Aid for the invitation to participate in this discussion.

Abahlali baseMjondolo is a democratic movement of shack dwellers and other impoverished and marginalized people in South Africa. Last year we celebrated our tenth anniversary. We are the biggest popular movement to have emerged in post-apartheid South Africa. Our movement was formed in Durban 2005 to fight for, promote and advance the interests and dignity of shack dwellers and other impoverished people. Although we do have branches in other cities, and are expanding into other provinces, our movement is concentrated in the city of the Durban and the Province of KwaZulu-Natal.

Our movement is best known for our struggle for land and housing in our cities. But we also take up all kinds of other issues such as equal access to schools, opposition to corruption and opposition to forms of development that, like mining, will displace people from their land. We take a strong stand in support of the full equality of women. We work in solidarity with migrant organisations to oppose xenophobia. But most importantly Abahlali (as our movement is popularly known) struggles for the human dignity of shack dwellers and other impoverished people. We place the question of human dignity at the centre of our politics. The movement is a space where the dignity of impoverished people is recognised. It is also a space where we come together to build our power and to use that power to struggle for a world where our dignity is recognised.

Land is fundamental to our struggle. We have occupied and held land in many new land occupations. We have also successfully resisted many evictions from old land occupations through popular protest and by using the courts. We have kept thousands of families on their land and in their homes. But, most importantly, we have built a politically conscious movement where we can, thinking together, develop a better understanding of poverty and what keeps us in poverty. Through the movement we can build our power together and organise and struggle for justice together. We are committed to a society and a world in which land, wealth and power are shared on an equal basis. We take the question of power very seriously and are committed to building the power of the oppressed. In our view a radical politics must start where the people are. It must be directed from below. We call this a living politics. Our movement and our struggle are organised around the values of ubuhlalism.

Our movement is very pleased to be able to send a delegate to this meeting. The Norwegian people played a very important in supporting the struggle against apartheid. We remember and acknowledge that role. But there is another reason why we are very happy to be able to send a delegate to this meeting. For many years the international solidarity networks that want to support struggles for social justice in South Africa have mostly chosen to support NGOs rather than popular struggles and movements. Norwegian People’s Aid recognises that there is an important difference between NGOs and popular organisations. Your organisation also understands that as oppressed people we must organise and liberate ourselves and that we are already organising and struggling everyday. For this reason we respect your organisation and see a way to building relationships based on solidarity, respect and equality.

In 1994 our parents stood in those long queues to cast their first vote in what was to become a “New South Africa”. We all thought that things would be better. Our parents had fought a good fight against the apartheid regime so that we could live a better life. But that better life did not come to the majority of the people. Millions are still living in abject poverty. Our lives count for nothing to the South African government. We are left to rot and to die in shacks. We are still living in the mud like pigs. We are still subjected to fire and floods. Every year lives are lost in these fires and floods.

When the new democracy came we found that our voices did not count to the government. When we raised our issues with the state we faced arrests, assault, death threats, slander and even murder. In Kwazulu-Natal, where I come from, there is what we call a politics of blood. In the year 2014 our comrades who were uncovering the corruption that was taking place in their areas had to pay a heavy price for this cause. They lost their lives in the struggle. Assassination has become a common feature of politics in KwaZulu-Natal. Today we have orphans, widows and widowers as a result of this.

Inequality is not just a matter of colonial and apartheid history. We continue to be actively oppressed today. Previous generations were made poor by colonialism and apartheid. We are kept poor by new forms of oppression. I would like to give three examples of this from three different branches of our movement.

In the Briardene community, where I come from, we were about to be evicted by a wealthy businessman who happens to be a provincial police officer. We are a community of 280 families. He would come to where we live, armed and with other police officers, and demolish our shacks. In 2012 he burnt our shacks with petrol. We lost everything. We then decided that we should go to the street and protest outside his house against this injustice. We were sick and tired of this abuse by this particular person. He came to us and pulled out his firearm and opened fire at the crowed. One of the community members was shot and injured in the process. Fortunately he was not killed. The bullet hit him in the thigh and broke his bone. That was the start of the struggle. We were alone in this. We tried to speak to the government officials to assist, but they could not assist us. The local councillor was in favour of us being removed from this land. We have been living in this community for more than 20 years. I grew up in this area. Both my parents passed on in this community.

This businessman then approached the High Court in Durban to get a court order to evict us. We were about to be evicted in a place where we have lived for more than 20 years. We did not have a legal representative to prevent the eviction. We then approached Abahlali baseMjondolo for assistance. We leant to organise and build our power from below. At first we had to represent ourselves as the community at the High Court. But later Abahlali assisted us with a very good legal team. We managed to successfully fight against this eviction with the help of Abahlali. Through organisation and struggle we as the community have managed to achieve a lot. Today we are still on the land. We also have sanitation in the form of toilets and water. We are also united, democratically organised and working with comrades across the city, the country and the world for a just social order.

In Cato Crest, Abahlali has a powerful branch on the Marikana Land Occupation. The people decided to build on this land after they were left out in a government housing project because they were not members of the ruling party. Here our members were evicted more than 24 times. The municipality disobeyed a court order that prevented them from demolishing people’s homes. Because the politicians and government officials regard themselves as bigger than the law they continued to demolish people’s houses.

In a protest march which took place in September 2014 in the main road in Cato Crest a 17-yearold girl was brutally murdered by the police. Also in the same year Nkululeko Gwala, who was the chairperson of Abahlali in the branch of Cato Crest, was murdered by unknown hit men. The people who murdered him have not been apprehended till today. Gwala was publicly threatened by the chairperson of the ANC in Durban just before his assassination and we believe that the politicians were behind his murder. This was a very difficult time in our movement. Some of our leaders had to go underground. This was not the first time. Some of our leaders and members also had to go underground in 2009. We had to hide from those who wanted to kill us.

We have been killed and tortured by the very people whom we entrusted with our votes. Our crime is that we are standing up for our dignity. When we struggle for houses we are struggling for something that is in the Freedom Charter and that is also a right that is enshrined in the Constitution: the right to housing.

Today the people of Cato Crest are still holding the land and are living peacefully. This is through the struggles that the people went through. It is through struggle that we managed to win the right to land. That struggle included road blockades, rebuilding after each eviction, court action, solidarity with comrades across the city and international solidarity. It is struggle that builds collective power from below and opens the road to freedom and justice.

In KwaNdengezi the ward councillor was involved in the selling of government houses in daylight. Our chairperson in this branch, Ms Thuli Ndlovu, was assasinated for uncovering this corruption. On the eve of her death two councillors threatened her over the phone. Fortunately in her case the two ward councillors were convicted and sentenced to life imprisonment together with the hit man that they hired to carry out their dirty work.

Through these hardships the movement has grown immensely. We have about 35 500 members in good standing in the Kwazulu-Natal province. We have managed to create a home for thousands of people in our movement.

In the past people who are living in shacks were undermined. They were taken as people who can’t think. Government, many NGOs and some academics all treated us as people who couldn’t think. But through our struggle we have built our power together and we are now able to participate in many of the discussions that effect our lives. The government today recognises us as a movement. They have started to recognise us as a movement because our struggle, over ten years, has forced them to recognise us.

However we have a long way to go before we can build a more equal society. For us the most important task in the struggle to build a more equal society is to build the power of impoverished people through building democratic popular organisations. It is through these kinds of organisations that we can challenge the state and capital. We are always keen to make alliances, based on equality and mutual respect, with others, in South Africa and internationally, who share our commitment to democracy, dignity and justice.

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South Africa’s junk credit rating was avoided, but at the cost of junk analysis

NOVANEWS
Punch NG

Major investors were hoping Zuma would fall, but the ruling ANC turned to well-tested strategies to yet again protect him. And although credit rating agencies had offered pessimistic commentary on Zuma’s reign in their most recent statements, they did not downgrade South Africa to junk status. But the whip remains poised above the country’s head, awaiting next June’s ratings.

Standard&Poors (S&P) gave South Africa a fearful few hours of anticipation last Friday, just after dust from the political windstorm of the prior week settled. The agency downgraded the government’s securities that are denominated in the local currency (the Rand) although it refrained from the feared junk status on international securities. It was a moment for the ruling business and political party elites’ introspection, but in heaving a sigh of relief they are not looing far enough.

At a time of near-recessionary conditions and rising unemployment, local and international observers are probably mistaken to consider President Jacob Zuma a nearly spent force. The ruling African National Congress (ANC) turned to well-tested procrastination and cover-up strategies to yet again protect Zuma last Monday. The prior weekend’s meeting of the ANC National Executive Committee (NEC) had considered the notion that he should step down, presumably to be replaced by his deputy, the billionaire (and former trade unionist) Cyril Ramaphosa, well ahead of the scheduled December 2017 ANC leadership vote. (The other major contender for ANC president is Zuma’s ex-wife, outgoing African Union chairperson Nkosazana Dlamini-Zuma, with ANC Treasurer Zweli Mkhize a potential compromise candidate.)

A reported third of the NEC delegates were supportive of his recall, but Zuma once again remained in control. The party’s ability to ‘self-correct’ appears to have expired, with a great many leaders ‘captured’ by a carefully-constructed patronage system centred on three immigrant-Indian brothers, the Guptas. Deputy Finance Minister Mcebesi Jonas provided evidence of that system last March, in the form of the Guptas’ oral offer to him to become Finance Minister (along with a $43 million inducement) if he served their interests in major procurement contracts.

ANC Secretary General Gwede Mantashe then announced, “We will deal with the broader picture. We are refusing to be narrow in dealing with this matter because the threat is bigger than this one incident.” In May, however, he ended the Gupta ‘state capture’ investigation, saying it was ‘fruitless’ supposedly because of inadequate evidence. Last month, however, the outgoing independent Public Protector, Thuli Madonsela, released a blockbuster report summarising the evidence of Gupta malfeasance, which compelled the electricity parastatal leader to step down in humiliation.

Last week was even more eventful, what with the internal ANC attempt to oust Zuma. No doubt, opposition parties from the centre-right (Democratic Alliance) and far left (Economic Freedom Fighters) quietly welcomed the continuation of Zuma’s reign because a far worse outcome would have been his replacement by Ramaphosa. In spite of his role in the Marikana massacre, he will be a harder opponent to ridicule in the months ahead.

Again rated just shy of junk

But major investors were obviously hoping Zuma would fall, and that Ramaphosa’s ascension would end the career threat against their favourite ANC politician, Finance Minister Pravin Gordhan. Given how much power the credit ratings agencies wield, Gordhan appears to have been spared an anticipated cabinet reshuffle in which Zuma goes for broke. The agencies retain this power because while Fitch, Moody’s and S&P offered pessimistic commentary on Zuma’s reign in their most recent statements, they did not downgrade South Africa to junk status. The whip remains poised above South Africa’s head, awaiting next June’s ratings.

The reprieve left the whole economically-aware population of South Africa cautiously celebrating. However, last Friday’s statement by S&P – typically a stricter judge than Fitch and Moody’s – lacked logic and conviction, aside from predictable neo-liberal nostrum to cut the budget deficit and reduce labour’s limited influence even further. On the other hand, S&P’s incompetence may allow South Africans to better dispute the all-encompassing power of ratings agencies.

For these are dangerous institutions whose mistakes – e.g. as the 2008 world financial meltdown gathered pace, giving AAA investment grade ratings to Lehman Brothers and AIG just before they crashed, as well as to Enron four days before it fell in 2001 – can be catastrophic to investors and the broader economy.

No wonder the Brazil-Russia-India-China-South Africa (BRICS) Goa leadership summit in October agreed to explore “setting up an independent BRICS Rating Agency based on market-oriented principles, in order to further strengthen the global governance architecture.” However, given how poorly “market-oriented principles” hold up in the chaotic world financial system, and given the dominance of neoliberal economic bureaucrats within the BRICS, this strategy appears as self-defeating as the BRICS’ alleged ‘governance’ reform of the International Monetary Fund last December. Then, aside from South Africa (which lost 21 percent of its vote), four BRICS increased IMF voting shares at the expense of Nigeria and Venezuela (each of which lost -41%), and many more poor countries from Africa and Latin America.

This week the main question to ponder is why, given utterly zany politics and the stagnant economy, was South Africa not downgraded all the way to junk? S&P lowered the risk rating of local state securities, but not the sovereign (foreign) debt grade. The main reasons S&P gave are telling:

“the ratings on South Africa reflect our view of the country’s large and active local currency fixed-income market, as well as the authorities’ commitment to gradual fiscal consolidation. We also note that South Africa’s institutions, such as the judiciary, remain strong while the South Africa Reserve Bank (SARB) maintains an independent monetary policy.”

Translation:

  • “the country’s large and active local currency fixed-income market” = pension and insurance funds keep buying government bonds because residual exchange controls force 75% of such funds to stay inside SA and create a large artificial demand for state securities;
  • “the authorities’ commitment to gradual fiscal consolidation” = Gordhan promised that the budget deficit will fall from this year’s 3.4% to 2.5% by 2019, even though this requires cuts into the very marrow of already tokenistic social grants. It will result in recent increases for 17 million recipients falling below the inflation rate faced by poor people;
  • “South Africa’s institutions, such as the judiciary, remain strong” = not only do the courts regularly smack down Zuma’s excesses, but more importantly they also religiously uphold property rights, which in South Africa are ranked 24th most secure out of 140 countries surveyed by the Davos-based World Economic Forum; and
  • “the SARB maintains an independent monetary policy” = in spite of incredibly high consumer debt loads (nearly half the country’s active borrowers are ‘credit impaired,’ according to the National Credit Regulator, having missed three repayments), the SARB has raised interest rates six times since 2014, to levels amongst the world’s highest.

Another reason S&P is optimistic is supposedly that “The trade deficit is declining on the lower price of oil (which constitutes about one-fifth of South Africa’s imports),” but in reality, the trade deficit just exploded. South Africa had a $1.4 billion trade surplus in May, but this became a $330 million deficit in October. Meanwhile over the past month, the oil price soared 21%, from $43 to $52 per barrel, and last Friday, OPEC’s latest collusion to cut output aims to push it past $60 in coming weeks. (And the stronger Rand witnessed over the course of 2016 did not offset that rise: over the last month, the rand fell from 13.2/$ to 13.8/$; its last peak was R6.3/$ five years ago.)

Revealing silences

Not only are S&P’s rudimentary observations off target, the silences in its statement are also disturbing. If we consider crunch problems that might lead to a drastic financial crisis here, S&P was surprisingly blasé about the country’s foreign debt. The last SARB Quarterly Bulletin records that debt at the highest ever (as a ratio of GDP) in modern SA history: 43% (higher than PW Botha’s default level of 40% in 1985).

Neither does S&P mention illicit financial flows (which have been estimated by Global Financial Integrity at $20 bn/year); or the balance of payments deficit due to profit and dividend outflows (usually more than $10 bn/year) following excessive exchange control liberalisation; or South Africa’s exceptionally high international interest rates on 10-year state bonds, at 9% (3rd amongst 60 major economies, only lower than rates in Brazil and Turkey which both pay 11%). Corporate overcharging on state outsourcing – which the Treasury’s Kenneth Brown says costs taxpayers $17 billion per year – does not warrant a mention.

To S&P’s credit, however, the agency gave critics of big business at least minor affirmation by observing “the corporate sector’s current preference to delay private investment, despite high margins and large cash positions.” In an opposite signal, though, S&P also gave the country’s leading disinvestor, Anglo American, an improved rating on Friday (all the ratings agencies had reduced Anglo to junk status in February). S&P isn’t about to downgrade the disinvesting firms, and state-directed reinvestment – e.g. as in 1960s South Korea – is not on the cards. So in media coverage this foundational critique of our big corporates’ ‘capital strike’ was only barely mentioned by a sole local periodical (Business Report).

It still strikes me that like the Gupta and (Stellenbosch-based Afrikaner tycoon) Rupert families, the three rating agencies will continue attracting the accusation of “state capture!” insofar as the public policy this neoliberal foreign family dictates is also characterised by short-term self-interest, occasional serious oversights and national economic self-destruction. The only reasonable solution is progressive delinking from the circuits of world finance through which these agencies accumulate their unjustified power.

Posted in South AfricaComments Off on South Africa’s junk credit rating was avoided, but at the cost of junk analysis


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