Interesting article by Moeletsi Mbeki

I can predict when SA’s " Tunisia Day" will arrive. Tunisia Day is when the masses rise against the powers that be, as happened recently in Tunisia . The year will be 2020, give or take a couple of years. The year 2020 is when China estimates that its current minerals-intensive industrialisation phase will be concluded.

For SA, this will mean the African National Congress (ANC) government will have to cut back on social grants, which it uses to placate the black poor and to get their votes. China ’s current industrialisation phase has forced up the prices of SA’s minerals, which has enabled the government to finance social welfare programmes.

The ANC inherited a flawed, complex society it barely understood; its tinkerings with it are turning it into an explosive cocktail. The ANC leaders are like a group of children playing with a hand grenade. One day one of them will figure out how to pull out the pin and everyone will be killed.

A famous African liberation movement, the National Liberation Front of Algeria, after tinkering for 30 years, pulled the grenade pin by cancelling an election in 1991 that was won by the opposition Islamic Salvation Front. In the civil war that ensued, 200000 people were killed.

The former British prime minister, Margaret Thatcher, once commented that whoever thought that the ANC could rule SA was living in Cloud Cuckoo Land . Why was Thatcher right? In the 16 years of ANC rule, all the symptoms of a government out of its depth have grown worse.

Life expectancy has declined from 65 years to 53 years since the ANC came to power;
In 2007, SA became a net food importer for the first time in its history;
The elimination of agricultural subsidies by the government led to the loss of 600000 farm workers’ jobs and the eviction from the commercial farming sector of about 2,4-million people between 1997 and 2007; and
The ANC stopped controlling the borders, leading to a flood of poor people into SA, which has led to conflicts between SA’s poor and foreign African migrants.

What should the ANC have done, or be doing?

The answer is quite straightforward. When they took control of the government in 1994, ANC leaders should have: identified what SA’s strengths were; identified what SA’s weaknesses were; and decided how to use the strengths to minimise and/or rectify the weaknesses.

A wise government would have persuaded the skilled white and Indian population to devote some of their time — even an hour a week — to train the black and coloured population to raise their skill levels.

What the ANC did instead when it came to power was to identify what its leaders and supporters wanted. It then used SA’s strengths to satisfy the short-term consumption demands of its supporters. In essence, this is what is called black economic empowerment (BEE).

BEE promotes a number of extremely negative socioeconomic trends in our country. It promotes a class of politicians dependent on big business and therefore promotes big business’s interests in the upper echelons of government. Second, BEE promotes an anti-entrepreneurial culture among the black middle class by legitimising an environment of entitlement. Third, affirmative action, a subset of BEE, promotes incompetence and corruption in the public sector by using ruling party allegiance and connections as the criteria for entry and promotion in the public service, instead of having tough public service entry examinations.

Let’s see where BEE, as we know it today, actually comes from. I first came across the concept of BEE from a company, which no longer exists, called Sankor. Sankor was the industrial division of Sanlam and it invented the concept of BEE.

The first purpose of BEE was to create a buffer group among the black political class that would become an ally of big business in SA. This buffer group would use its newfound power as controllers of the government to protect the assets of big business.

The buffer group would also protect the modus operandi of big business and thereby maintain the status quo in which South African business operates. That was the design of the big conglomerates.

Sanlam was soon followed by Anglo American. Sanlam established BEE vehicle Nail; Anglo established Real Africa, Johnnic and so forth. The conglomerates took their marginal assets, and gave them to politically influential black people, with the purpose, in my view, not to transform the economy but to create a black political class that is in alliance with the conglomerates and therefore wants to maintain the status quo of our economy and the way in which it operates.

But what is wrong with protecting SA’s conglomerates?

Well, there are many things wrong with how conglomerates operate and how they have structured our economy.

The economy has a strong built-in dependence on cheap labour;
It has a strong built-in dependence on the exploitation of primary resources;
It is strongly unfavourable to the development of skills in our general population;
It has a strong bias towards importing technology and economic solutions; and
It promotes inequality between citizens by creating a large, marginalised underclass.

Conglomerates are a vehicle, not for creating development in SA but for exploiting natural resources without creating in-depth, inclusive social and economic development, which is what SA needs. That is what is wrong with protecting conglomerates..

The second problem with the formula of BEE is that it does not create entrepreneurs. You are taking political leaders and politically connected people and giving them assets which, in the first instance, they don’t know how to manage. So you are not adding value. You are faced with the threat of undermining value by taking assets from people who were managing them and giving them to people who cannot manage them. BEE thus creates a class of idle rich ANC politicos.

My quarrel with BEE is that what the conglomerates are doing is developing a new culture in SA — not a culture of entrepreneurship, but an entitlement culture, whereby black people who want to go into business think that they should acquire assets free, and that somebody is there to make them rich, rather than that they should build enterprises from the ground.

But we cannot build black companies if what black entrepreneurs look forward to is the distribution of already existing assets from the conglomerates in return for becoming lobbyists for the conglomerates.

The third worrying trend is that the ANC-controlled state has now internalised the BEE model. We are now seeing the state trying to implement the same model that the conglomerates developed.

What is the state distributing? It is distributing jobs to party faithful and social welfare to the poor. This is a recipe for incompetence and corruption, both of which are endemic in SA. This is what explains the service delivery upheavals that are becoming a normal part of our environment.

So what is the correct road SA should be travelling?

We all accept that a socialist model, along the lines of the Soviet Union , is not workable for SA today. The creation of a state-owned economy is not a formula that is an option for SA or for many parts of the world. Therefore, if we want to develop SA instead of shuffling pre-existing wealth, we have to create new entrepreneurs, and we need to support existing entrepreneurs to diversify into new economic sectors.

Mbeki is the author of Architects of Poverty: Why African Capitalism Needs Changing. This article forms part of a series on transformation supplied by the Centre for Development and Enterprise .

www.leader.co.za/article.aspx?s=23&f=1&a=2571

He has always been quite vocal even in his brothers tenure as president.

Very highly educated too I believe.

Difference in thinking? Education!

very intersting, thanks for posting

by legitimising an environment of entitlement.

I think this one sentence stands out.

The reported article is slightly watered down when compared to below. I sense a hint of the usual rhetoric regarding the judiciary, media being used by white elite. They are in control of the judiciary and media and these are the tools used to slow corruption by PDI's? Seems a bit far fetched. It is a natural function of the judiciary and media in any state to keep corruption in check.

On SAFM this morning- Jay Naidoo was having a full go at the current state of the country, corruption, developmental state and the state of our education. It seems the old school are standing up and making themselves heard. Late Kader Asmal was quite vocal on the attacks on the constitution.

It's quite funny in the context of racing, this need for P to globalise racing and perhaps set up office in London????

The title of Moeletsi Mbeki’s new book, Architects of Poverty: Why Africa’s Capitalism needs Changing, has a progenitor: namely, the phrase architects of apartheid, which is deployed at the drop of a hat (a fedora from the 1950s, no doubt) whenever the bad old days come under rhetorical fire.
We’re used to hearing architects of apartheid, and thus Mbeki has done a neat trick here, forcing our minds to recalibrate the notions that inhere in the phrase – of powerful men doing wrong in Africa, for instance (they are black, suddenly, not white) or of the scale of the wrong (which now extends beyond South Africa’s borders).
Mbeki’s book is designed to posit “what needs to be done to break the stranglehold of the African elites on political power and to set sub-Saharan Africa once more on the road to development”. BOOK SA is pleased to bring you both the complete preface and a section of Mbeki’s chapter on BEE:
* * * * * * * *
Preface
The curator pointed to a large musket hanging on the wall – one of the items sold to Africans as part of the infamous Triangular Trade whereby manufactured goods were shipped from Europe to West Africa and exchanged for slaves, who were shipped to the Americas to grow sugar, cotton and tobacco that were then shipped back to Europe. This was mercantile capitalism in action.

With my South African mindset I queried the wisdom of European slavers selling guns to Africans: surely the guns would be turned on the Europeans, I ventured, betraying my ignorance about the workings of the African slave trade. The curator, a patient professor from the University of Dakar, explained that it was the Africans who caught the people in the interior and sold them to the owners of the ships that transported them to the Americas to be sold into slavery. So it was the Africans who needed the guns to protect
themselves against the communities they raided for people to sell.
This little drama happened in the dingy Slave House on Gorée Island, off the coast of Dakar, the capital of Senegal.
The Slave House was, in reality, a prison-cum-warehouse, the ground floor of which was used to house Africans destined for enslavement in the Americas. Upstairs were the traders’ quarters, linked to the ground floor by a dramatic staircase. The cupboard under the stairs served as a solitary confinement cell for ‘difficult’ slaves. The curator told me that tears had trickled down Nelson Mandela’s cheeks when he was shown the isolation cell.
The Slave House is the only building on Gorée Island whose back door opens directly to the sea. It’s known as ‘the door of no return’. The people walking through the door onto waiting ships would never see their home country again.
Fast forward from the Slave House to the oil rigs along the Gulf of Guinea. One evening I flew from Lagos to northern Namibia along the gulf. Running the length of this amazing coastline are hundreds of oil rigs, rendered visible at night by the flames of the natural gas they flare. The rigs are not connected to the mainland; they pump crude oil from the bowels of the earth to waiting oil tankers – those ships again! – which carry the oil straight from the rigs to the great oilrefining industries in the United States, Asia and Europe; another commodity Africa is selling to the rest of the world. In the past it was its people; today it is its natural resources.
*
These two experiences are what led me to the central theme of this book – the way the powerful in Africa instead of enriching their societies sell off the continent’s assets to enrich the rest of the world. In return for this service these powerful Africans – who I call the political elites – receive the crumbs from the tables of the foreigners who make their fortunes by processing Africa’s resources.
What I have described, whether slave trade or oil trade, is known as mercantile capitalism. Mercantile capitalism is the earliest form of capitalism and its principle is buying cheap and selling dear. Capitalism in the West has moved a long way from the days of mercantile capitalism; it went through the stage of industrialisation and Western countries are now referred to as post-industrial societies.
The problem with Africa is that it is still locked in the mercantile stage of capitalism. The challenge facing the continent is how to modernise capitalism from mercantilism to industrialism. Two countries are an exception to this observation – South Africa and Mauritius.
Why don’t the powerful in Africa ever learn that mercantilism is a road to nowhere? Africa needs new rulers – the people themselves – who understand that the path to a prosperous future lies in hard work, creativity, knowledge and equity.
from the chapter on Black Economic Empowerment
Black Economic Empowerment (BEE) has not … proved to be the fatal blow to South Africa’s oligarchs that Nelson Mandela and black nationalists of his era once envisioned. In fact, it strikes a fatal blow against the emergence of black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians, some retired and others not, who have become strong allies of the economic oligarchy that is, ironically, the caretaker of South Africa’s deindustrialization … BEE in South Africa is, in reality, another attempt to siphon savings from private-sector operators in an environment where there are no peasants and where most of the private sector is locally owned.
The fact that BEE is an uphill battle for South Africa’s political elite is the result of the ability of the private sector to resist dispossession. But these are early days. Time will tell who will emerge best from what could be a titanic struggle by the political elite – recently joined by organised labour – to confiscate the wealth of South Africa’s current private-sector owners.
An even bigger question, however, is what impact these struggles will have on the growth potential of the South African economy … Most people in South Africa, in Africa, and the rest of the world naively believe that BEE was an invention of South Africa’s black nationalists, especially the African National Congress (ANC), which won the first democratic election in April 1994, leading to Nelson Mandela becoming the country’s first black president. This could not be further from the truth. BEE was, in fact, invented by South Africa’s economic oligarchs, that handful of white businessmen and their families who control the commanding heights of the country’s economy, that is, mining and its associated chemical and engineering industries and finance.
The flagship BEE company, New Africa Investments Limited (Nail), started operating in 1992, two years before the ANC came to power. It was created by the second-largest South African insurance company, Sanlam, with the support of the National Party government-controlled Industrial Development Corporation (IDC), a state-owned industrial investment bank created in 1940. The formation of Nail was soon followed by the creation of Real African Investment Limited (Rail), sponsored by mining giant Anglo American Corporation through its financial services subsidiary Southern Life.
The object of BEE was to co-opt leaders of the black resistance movement by literally buying them off with what looked like a transfer to them of massive assets at no cost. To the oligarchs, of course, these assets were small change.
Sanlam created Nail by transferring control of one of its small subsidiaries, Metropolitan Life, 85 per cent of whose policy-holders were black, to several ANC and Pan Africanist Congress affiliated leaders. The device used was to split shares of MetLife into a small package, dubbed high-voting shares, which gave the politicians (funded by a loan from the IDC) control of the company. Overnight the politicians were transformed into multi-millionaires without having had to lift a finger because all the financial wizardry was performed by Sanlam’s senior executives. All the politicians had to do was show up at the party to launch Nail and thank their benefactor. Even the debt the politicians incurred was largely fictitious as it was MetLife that had to pay it back to the IDC.
This financial razzmatazz was designed to achieve a number of objectives. It was intended to:
wean the ANC from radical economic ambitions, such as nationalising the major elements of the South African economy, by putting cash in the politicians’ private pockets, packaged to look like atonement for the sins of apartheid, that is, reparations to black people in general;
provide the oligarchs with prominent and influential seats at the high table of the ANC government’s economic policy formulation system;
allow those oligarchs who wanted to shift their company’s primary listings and headquarters from Johannesburg to London to do so;
give the oligarchs and their companies the first bite at government contracts that interested them; and
protect the oligarchs from foreign competition while opening up the rest of the economy, especially the consumer goods and manufacturing sector, to the chill winds of international competition.
All these machinations were eventually incorporated into South Africa’s democratic Constitution by the creation of a category of citizens, apparently 91 per cent of the population, to be known as Previously Disadvantaged Individuals (PDIs). The ingenious legal notion of previously disadvantaged individuals created the impression that all black South Africans could or would benefit from BEE. This legitimised the co-option payment to the black political elite by dangling before the black masses the possibility that one day they, too, would receive reparations for the wrongs done to them during the apartheid era.
BEE and its subsidiaries – affirmative action and affirmative procurement – which started off as defensive instruments created by the economic oligarchs to protect their assets, have metamorphosed. They have become both the core ideology of the black political elite and, simultaneously, the driving material and enrichment agenda which is to be achieved by maximising the proceeds of reparations that accrue to the political elite. As we shall see below, this has proved to be disastrous for the country.
Reparations
The black elite, which describes itself as made up of PDIs, sees its primary mission as extracting reparations from those who put it in a disadvantaged position. To achieve this requires the transfer of resources from the wrongdoer – perceived to be white-owned businesses and the South African state – to the victim, the PDIs. By this logic the South African state owes the PDIs high-paying jobs. This transfer of wealth from the strong to the weak is what has come to be known as BEE.
Enormous consequences follow from this apparently simple formulation:
1. In order for the wrongdoer to be able to pay reparations, the wrongdoer has to maintain a privileged position. This is the principle of fattening the goose that lays the golden egg. What this means is that the corporations that were allegedly responsible for victimising the PDIs must not be transformed beyond putting a few black individuals in their upper echelons. The protection of these corporations has gone so far as to allow them to move their head offices and primary listings from Johannesburg to London in order to shield them from possible economic and political upheaval in South Africa. At a broader level, the battery of Washington Consensus policies – which include trade liberalisation, balanced budgets, privatisation, inflation targeting, as well as the small state – all serve to protect the interests of South Africa’s big business, one of the two main payers of reparations.
2. For the victim to continue to draw reparations it is critical that he or she remains perceived as a victim and as weak. This means that the former freedom fighter must be transformed from a hero who liberated South Africa into an underling. The payment of reparations to the black elite thus achieves the opposite of what it is claimed it was designed to do, that is, make its members leading players in the economy. In reality, it makes members of the black elite perpetual junior support players to white-controlled corporations.
3. One of the most destructive consequences of the reparations ideology is the black elite’s relationship with, and attitude to, the South African state. As the state is said to have been party to the disadvantaging of the PDIs it is therefore also perceived to owe them something. By way of reparations the state must therefore provide PDIs with high-paying jobs. By extension, the assets of the state are seen as fair game. The approach of the black elite to the state is, therefore, not that of using the state to serve the needs of the people but rather of using it, in the first instance, to advance the material interest of PDIs. Not surprisingly, corruption under the ANC government has grown by leaps and bounds, leading Transparency International – the worldwide watchdog on corruption – to downgrade South Africa in the world’s corruption tables. According to the Transparency International Corruption Perceptions Index South Africa dropped from number 34 in 2000 to number 54 in 2008. In 2008 the least corrupt countries were Denmark, New Zealand and Sweden and the most corrupt country was Somalia, ranked at 180.1 Ironically, one of the most important restraining influences on the abuse of the state for the self-enrichment of the black elite is the white-controlled corporations – the abovementioned layers of golden eggs – because these corporations need the South African state to function efficiently in order to provide a stable business environment as well as functioning transport and communication infrastructure. The judiciary and the independent mass media also play an important role in this regard.
4. The ideology of reparations traps members of the black elite into seeing themselves as the beneficiaries of the production of other social groups and therefore primarily as consumers. To facilitate their role as consumers the black elite sees the state essentially as distributive rather than developmental. Most importantly, the black elite don’t see themselves as producers and therefore do not envisage themselves as entrepreneurs who can initiate and manage new enterprises. At best, they see themselves as joining existing enterprises, the process of which is to be facilitated by the distributive state through reparations-inspired legislation. This is the most striking difference between the black elite of South Africa and the elites of Asia, where the driving ideology is entrepreneurship.

book.co.za/blog/2009/06/03/book-excerpt-...y-by-moeletsi-mbeki/

Slightly of topic

Malema forks out R78 000 in cash for 5-star break

ANC created 'Malema monster'



Jacques Dommisse, Media24 Investigations

Cape Town - Julius Malema, the controversial ANC Youth League leader, paid R78 000 in cash for a three-day frolic with five friends at the "colonial" and ultra-luxurious five-star Royal Malewane next to the Kruger National Park.

His luxury adventure occured shortly before his re-election as ANCYL president three week's ago in an election campaign which saw him repeatedly sell himself as a champion of the poor.

The news comes on the heels of reports that he has also recently enjoyed a fine holiday in Italy and that he has flattened a R3.6m Bedfordview home to build another one.

Malema and the management of the Royal Malewane, located in the famous private Thornybush Game Reserve adjoining the Kruger National Park, refused to comment on the visit.

However, Media24 Investigations has confirmed with five sources with direct knowledge that the Malema visit occured. Three sources confirmed that the bill was settled in cash.

Media24 Investigations understands Malema and his group of friends were invited by a therapist who works at the luxury spa at the lodge.

The therapist, whose name is known to Media24 Investigations, is also a girlfriend of one of Malema's close friends.

Employees of the lodge get free nights there as part of their benefits and Malema was invited to spend a night for free. He paid for himself and his five friends to stay on for three nights altogether.

It is uncertain how many of the people in his group a free night remained.

Lodge insiders said the Malema entourage did "the normal tourist things", such game drives, luxury picnics and spa treatments.

The advertised cost per person per night sharing is almost R11 000.

When Malema settled the bill on behalf of the group, the administrative staff’s eyes widened when he presented them with R78 000 in cash.

All liars

Malema himself was tight-lipped. Youth League spokesperson Floyd Shivambu said he would not talk to the media and that claims that the trip occured were lies.

"They are all liars,” he said. He said he had spoken to Malema about the matter and that he had declined to comment to Media24 Investigations.

Shivambu then told our reporter "fuck you" three times before finally telling him to "fuck off" (see transcript below).

Juan Pinto, director and general manager of the Royal Malewane, said the lodge’s official policy was not to comment on any guests.

When asked about the account which was settled in cash, he said any questions about Malema had to be asked of Malema.

According to the lodge's advertising material, Malewane is a Big Five destination, boasting a French Chaîne des Rôtisseurs Blazon Award for its restaurant.

The spa offers a variety of treatments and guests can view wildlife at watering holes just metres away from where they are enjoying their treatment.

A transcript of the telephone conversation between reporter Jacques Dommisse (JD) and ANC Youth League spokesperson Floyd Shivambu (FS) requesting comment from Malema.

JD: So, why did you put the phone down?

FS: Hey?

JD: Why did you put the phone down?

FS: Hey man. You are doing a wild goose chase. I say that if you want to go ahead and write, go ahead and write because he won't speak to you. It never happened, okay? He [Malema] doesn’t want to talk to you.

JD: Why will you not let me speak to Malema?

FS: I said he doesn’t want to. Why must he speak to you? He has no obligation to speak to you.

JD: Because he is a politician.

FS: Yes, but I said no. You cannot force people to speak to you.

JD: I don’t understand?

FS: He will not speak to you. You cannot force someone to speak to you if they do not want to speak to you. He does not want to speak to you. I have just spoken to him.

JD: How do you know he doesn’t want to speak to me?
FS: Because I just spoke to him now.

JD: How do you mean you have just spoken with him? I don’t understand.

FS: Fuck you.

JD: Say again?

FS: I said: “Fuck you”

JD: Are you swearing at me?

FS: Yes.

JD: Why are you doing that?

FS: What is your problem?

JD: I have no problem.

FS: Fuck you. Fuck off, ok.

JD: Oh, so you now said it for the fourth time?

FS: Yes.

JD: Can you please give me a contact number for Julius Malema?

FS: I don’t want.

JD. Ok. Thank-you. Goodbye