Has the Institute of Race Relations (IRR) embarked on a strategy of sabotage against South Africa?

One person who thinks so is City Press editor Mondli Makhanya, who wrote on 17 June (‘Don’t sabotage SA. It is not the way to go’) that the IRR hadbreathlessly announced’ that we were ‘writing an open letter to the governments of the US, Japan, China, Germany, France, the UK, Italy, India, Russia, Brazil, Canada, Saudi Arabia, Spain, Mexico, the Netherlands, South Korea, Australia, Belgium, Switzerland and Indonesia – the biggest contributors to the International Monetary Fund (IMF) – to tell them to be wary of dealing with South Africa.

(In fact, we have written to IMF donor nations to remind them of their mandate to ‘build and maintain strong economies’ and to avoid being misled in South Africa’s case into helping to sustain destructive policies and profligate spending, which, over the past decade, have only deepened the hardship of ordinary South Africans.)

Makhanya went on to argue that it was ‘stupid and dangerous’ for the IRR –a think-tank with a solid record of intellectual work and advocacy’ – to embark on this campaign, as it meant we had ‘become a country saboteur.

South Africa, Makhanya wrote, ‘needs as many positive messages as possible, and telling the world, including one of the most pre-eminent multilateral institutions, not to do business with the country is as destructive as the policies that the IRR warns of.

Debate is critical, and the IRR believes in taking detractors’ opinions seriously, not least because, right now, the subject matter is as serious as it gets.

For this reason, the IRR’s Hermann Pretorius penned the following considered response; City Press readers deserved no less.

Regrettably, however, core features of our response – shown in red in the original text below – were edited out, both in the print and online versions.

(To its credit, The Witness newspaper, which had also run Makhanya’s column, published the IRR’s right of reply in full.)

We can, at least, offer Daily Friend readers the unexpurgated version, to enable them to draw their own conclusions.

You be the judge.

Right of Reply: IRR makes no apology for reminding the world that South Africans deserve better

Hermann Pretorius

Just 24 hours before the Soweto Uprising 44 years ago this week, National Party MP for Ermelo G F Botha warned in the House of Assembly that ‘the fear and pessimism shown by the Opposition can do a great deal of harm to the economy’.

Even as the powerful political elite of which Botha was a part pitched South Africa into apartheid’s last bloody decade at devastating cost to the economy and to the lives of millions, it was content to lay the blame for the gathering crisis, and the lasting costs, on the few who had the courage to alert the country and the world to the inescapable realities. 

Mondli Makhanya’s attack on the Institute of Race Relations (IRR) as seeking to ‘sabotage’ South Africa’s prospects of accessing funding from the International Monetary Fund goes down the same perilous road (‘Don’t sabotage South Africa’, City Press, 14 July). It is as much an error today as it was then to mistake reasoned analysis advanced to secure better lives for all South Africans as an unpatriotic impulse akin to sabotage.

Mondli Makhanya’s attack on the Institute of Race Relations (IRR) as seeking to ‘sabotage’ South Africa’s prospects of accessing funding from the International Monetary Fund mistakes reasoned analysis advanced to secure better lives for all South Africans as an unpatriotic impulse akin to sabotage.

Makhanya is good enough to acknowledge our ‘solid record of intellectual work and advocacy’ – but fails to recognise that this record of more than 90 years is precisely what guides our current campaign.

The IRR is by no means opposed to IMF funding; we foresaw its inevitability when the COVID-19 pandemic hit. It is quite probable that more will be needed, on top of the concessional COVID-19 relief it is offering.

The case we are making is that these funds must be put to use in a way that assists South Africa’s recovery. This means that we need to understand and respond to the country’s problems as they exist. It would be a grave error to imagine that the problems South Africa faces now are solely – or even predominantly – the consequence of a public health emergency.

The pandemic hit South Africa as ‘a crisis on top of other crises’, to quote economist Dawie Roodt. It shows in the statistics. Since 2008, the highest rate of annual real GDP growth has been 3.3%. Even this was exceptional, and over the past five years, South Africa has not managed 2%. (The National Development Plan aimed at 5.4%.) Real gross fixed capital formation (investment) as a share of GDP declined markedly from a peak of 23,5% in 2008 to 17,9% in 2019 and a near record low of 15,7% in 2020. South Africa’s official unemployment rate stood at 29% at the end of 2019, and was one of the highest in the world. Among young people aged 16 to 24, who all too often lack both skills and experience, it stood at a staggering 56.4%.

Our analysis of why this is the case is based on solid evidence, and is publicly available.

Central to South Africa’s malaise is bad policy, which has significantly been driven by ideology, and provided an environment in which venality can flourish. Scandal after scandal has followed the country’s State-Owned Enterprises, even as billions in bailouts have been poured into them. Empowerment policy as it exists has encouraged rent-seeking and corruption, rather than entrepreneurship and productive risk-taking. Threats to property rights have done much to dissuade investment, a point made by President Ramaphosa’s investment envoys. 

Unless the roots of this are addressed, an infusion of dollars from the IMF will merely buy South Africa a little time to drift aimlessly on. In fact, by taking on a new loan, a burden for the future is created. These funds must be repaid.

Consider this: South Africa’s the gross debt to GDP ratio was 46.5% in 2014/15; this was projected to rise to 61.6% in 2019/20; and to hit 71.6% in 2022/23. Debt service costs, meanwhile, stood at 3.0% of GDP in 2014/15, and would rise from 4% of GDP in 2019/20 to 4.7% in 2022/23 – by which point it would be chewing up the equivalent of 14.2% of government spending (up from 9.3% in 2014/15 and 11.5% in 2019/20).

These figures, drawn largely from the February Budget Review, reflect the situation before the impact of COVID 19 or an IMF loan was factored in. We are likely to see a much more concerning picture when the revised budget is tabled.

Our fiscal situation is dire.

Frankly, South Africa can’t afford to get this wrong. Hence our call to creditor nations to understand the dynamics at play. South Africa’s political leadership has, sadly and unforgivably, chosen to follow a course that undermines rather than encourages the wealth-creation the country needs. Creditors should be in command of the facts, and South Africans need to know that these funds are to help rebuild the country, and not finance another round of looting, state capture and policy programmes that stand to cripple South Africa’s future.

We agree with Makhanya when he observes that ‘there are enough wreckers inside the ANC who endanger the nation’s standing and wellbeing through their actions and utterances’. Just so. But who, then, is really sabotaging the country – those who drive it down this path, or those who point to the consequences of such ‘actions and utterances’?

And what is the responsibility of those public intellectuals and influencers – in the media, business, academia and so on – who, like Makhanya himself, recognise that things are very wrong, yet stop short of exposing the links between the country’s problems and the decisions of its leaders?

Makhanya argues that our course is ‘not the way to go’. Yet, as before in our history, the risk lies in pretending that all is well. This is not a pretence the IRR is willing to leave unchallenged.

Looking back at the events of 1976, it is obvious today just how wrong the MP for Ermelo was at that time about the real threats facing South Africa. The consequences are instructive. The 10th anniversary of the uprising found the country in a bleak crisis; in the news on 16 June 1986, South Africans learned of a car bomb in Durban, 22 people killed in violence across the country over the preceding four days, and a mass stay-away. There were draconian emergency regulations, and a complete ban on ‘unrest’ reporting, with every item of news having to be cleared by the Bureau for Information in Pretoria.

Another decade would pass before the ratification of the democratic Constitution.

We are a very different country today, yet, once again, our prospects and welfare as a people are threatened by the bad decisions of politicians, and the IRR makes no apology for calling out the threats, and reminding those with influence that South Africans deserve better.

Hermann Pretorius is Deputy Head of Policy Research at the Institute of Race Relations

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4 COMMENTS

  1. At least you and Mondli have something in common. You both publicly shamed the same ‘racist’. That must count for something surely?

  2. Well the danger with this campaign is that your intentions can be misunderstood. Whilst you see it as warning the international community; others reasonably wonder why you don’t focus on winning this argument in South Africa. Right or wrong – it is politics – this plays into the perceptions of liberalism in South Africa as rather foreign or its main proponents having more loyalty and faith in western powers than fellow South Africans. Like everything else in politics it is a judgement call and hopefully for the IRR the benefits outweigh the costs.

    In terms of the reply nothing edited out changes much or would have changed the argument much which essentially claims we (IRR) are acting in RSA best interest by warning the international community against supporting a democratically elected government’s policies that we think is damaging. (This is different to a conflict situation, human rights abuses and international law violations – see how this might look like asking foreigners to help win domestic political contests? Probably plays well in the RSA liberal community – but doesn’t it say something about liberalism in South Africa and its organic roots?)

  3. I commend the IRR on writing their letters as outlined in the article. What is not adequately outlined is that the letters sent outline systemic racialism entrenched in the BBBEE and EE legislation and recently tested in the High court. Of course the High court cannot do anything but interpret the law of the land. This is in addition to the inherent corruption and state capture demonstrated so many times.
    That the ANC led government is guilty of SOE support in spite of the demonstrated cadre deployment with concomitant corruption, racial bias is applied to this spending, no matter the justification for this bias. That the ANC and government has formulated these policies in an effort to redress past wrongs, which the current south african has no longer the benefit of, is really beside the point. What is the point is that the ultimate purpose of the letter is to let the lender know that the policy framework of the country, and its stated direction of EWC, NHI, BBBEE and EE has been demonstrated many times over to render the country on a negative path(Venezuela to name one), and the most likely scenario being that any new lending will be defaulted on due to a further collapse of the economy due to these policies.
    As a research think tank, the IRR are calling this “market direction” led by the policy framework of the government of the day. I would think that is the mandate.

  4. Apart from wrecking the economy, the ANC government has firmly institutionalised discrimination against minorities, the latest example being the exclusion of Corona pandemic related financial aid in the tourism sector – to great acclaim by the relevant minister’s peers. Both are solid grounds for requesting donors and creditors to be alert and discretionary in allocating funds.

    In the 1970s the ANC themselves set a precedent for influencing government policy through a campaign of international awareness.

    Lest we forget, unlike the IRRs responsible initiative, the ANC’s approach included the imposition of sanctions which led to terrible economic consequences for particularly black innocents in the 1970s and continued unabated in the 1980s even after it was obvious that political change was inevitable.

    The continuous service delivery protests that reflect infrastructure collapse, the collapse of health care in the Eastern Cape at this critical juncture in time and the Zondo Commission’s revelations about unbridled corruption make it the moral obligation of any responsible institution to lobby the international community with the intention of ensuring aid is conditioned to prudent fiscal policies, constructive development and accountability.

    As the ANC and others championed the anti-apartheid struggle so South Africans and particularly minorities now need new champions to ensure equality and good governance. Thanks to the IRR for being one of them.

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