I’m not entirely sure why President Cyril Ramaphosa went to Davos last week.
We were told that there was great interest shown in South Africa because of the Government of National Unity (GNU). One of the main reasons for that, whether the ANC likes it or not, is having the Democratic Alliance (DA) as its largest partner for burnishing the investment credentials of the ANC’s dire minority government.
However, American President Donald Trump was inaugurated last week as well, and though not present in person, he attended virtually. From the comments of Freddy Gray, the editor of The Spectator World, in his piece The Trump Resistance is almost dead in DC, that Davos Man was recalibrating to this new reality. And South Africa is in his cross hairs – for its anti-American (and anti-Israel) foreign policy.
Whatever Ramaphosa was selling, in one fell swoop he risked undoing all the good he was supposed to have done. It certainly wasn’t to achieve ”inclusive economic growth” which he clearly has been pretending is the force behind the GNU.
So what did he do? While at Davos, he signed the Expropriation Bill into law. At the forum where he was supposedly trying to woo investors to our investor-less shores. And he did this without any warning to the DA minister responsible for administering the Act: Minister of Public Works, Dean Macpherson.
Three aspects
There are three particular aspects of ANC governance that potential investors, local and foreign, see as the stumbling blocks to investing in South Africa. These are Expropriation Without Compensation (EWC), Black Economic Empowerment (BEE), and the National Health Insurance (NHI). Perhaps these three disincentives, together with their sponsor, the ANC, could be called “the Four Horsemen of South Africa’s economic investment apocalypse”.
A quick summary of the “trifecta” of investment-shedding acts follows:
EWC – In a press release issued on 24 January 2025, the IRR noted that “the passage of this Act into law introduces a system for expropriation which is heavily weighted in favour of the state and against the targeted property holder”. It matters not whether in practice the EWC would be used wisely and sparingly, which many believe will not happen. For investors, the mere possibility of having one’s land and property of all types expropriated, property for which they have spent precious time, energy, and resources to create, only to have their property rights expunged by a rapacious government, creates a sentiment that will send foreign companies into the warm embrace of stable investment countries like, say, the Democratic Republic of Congo.
BEE: A couple of weeks ago the Minister of Trade, Industry and Competition, Parks Tau, proposed the ill-advised, unconstitutional and deleterious Transformation Fund: a R100 billion-rand fund. Columnist for Daily Friend Ivo Vegter notes that the proposal is to confiscate the 3% of after-tax profits that companies are required, under broad-based black economic empowerment (B-BBEE) legislation, to spend on “enterprise and supplier development”. Vegter says further that the last thing our economic growth needs is Tau wanting to use it to fill up a R100 billion slush fund instead. Foreign Investors in particular do not like or understand why they have to be saddled with having to give ownership of their companies to parties they wouldn’t choose of their own volition. They would enrich a coterie of already favoured people. This would have negligible to no impact on the economic opportunities of the over 60% of black unemployed youth (18 to 24). Foreign companies don’t have to do it elsewhere, why should they choose to do it here?
NHI – The NHI is not a new “universal basic health” system for the benefit of all South Africans. We already have universal health care for the South African population – it’s just been mismanaged, unmaintained, and blighted by jaw-dropping corruption. The NHI is a super-tax intended, theoretically, to provide equal health care to all, and it will use the proceeds of private health care and taxation to improve a system that no sensible person believes the ANC can or cares to provide. To this end, the President took his socialist (i.e. raving and demented) health minister, Aaron Motsoaledi to Davos. Motsoaledi proceeded to shout at anyone who would listen to him, and those who wouldn’t, that opposition to the NHI is a “war between the rich and the poor”. The only problem is that without the “rich” – the vanishingly small tax base – and private expertise, the NHI will be what it always promised to be, a gargantuan pot of money to mismanage, misallocate, and steal. For foreign investors (and local members of private and public medical aids), the idea of being subjected to the vagaries of ANC-health care is not appealing. If they don’t have access to good, private health care, they’ll go where they can have such access, or at least where they’ll be able to set up their own.
Dean Macpherson, who will be the minister responsible for implementing and managing the Expropriation Act, said that on 5 December 2024 he had shared a legal opinion with the President on the Bill’s unconstitutionality. On 21 January 2025 the President told Macpherson that he didn’t agree with it. I wonder if he elaborated on his reasons.
Macpherson said on X: “As the minister of public works and infrastructure, there will be no expropriation of private property without compensation on my watch.”
The DA and other political parties, NGOs and business organisations are promising to challenge the Expropriation legislation in court.
The DA and others have panned the proposed Transformation Fund.
The DA and others (many others) are challenging the NHI policy in court.
Measure of the man
The measure of the man, our President, is reflected in his preparedness to sign the Expropriation Bill into law while at Davos! I’m sure it was a shot over the bow of the nasty competition in the ANC between those who support him and the coterie of malcontents who would prefer to align with the MK Party and South Africa’s swindler-in-chief, Jacob Zuma. It certainly wasn’t to promote investment!
The day after Davos ended – on 25 January 2025 – at the ANC lekgotla in Kempton Park, the President said that the GNU has a clear obligation to implement measures that advance the National Democratic Revolution (NDR) and improve the lives of the majority! Even the ANC isn’t obliged to advance the NDR – a moribund, archaic, and unworkable political theory based on a Leninist theory of advancing to the utopian chimera of the perfect society. (That is so last century, it should embarrass us to our collective core.
On the same day, the DA declared a formal dispute in terms of clause 19 of the Statement of Intent which was signed by the ANC and the DA when they agreed to the formation of the GNU.
DA leader John Steenhuisen said of Ramaphosa’s comment: “Not only is such a statement [about the NDR] immature, but it does not accord with either the letter or the spirit of the Statement of Intent.”
He noted that Ramaphosa had not only disregarded Macpherson’s constitutional objections to the Expropriation Bill, but he failed to even inform the Minister about when he intended to sign the bill.
A few weeks ago, Steenhuisen personally wrote to Ramaphosa about the NHI, to ask for a meeting to engage further ahead of the upcoming Cabinet Lekgotla. He hoped to prevent a repeat of the events from the previous Lekgotla, when the DA vehemently objected to the inclusion of NHI targets.
The President refused to meet Steenhuisen, the leader of his biggest coalition partner, over “the single most critical issue for the future of the GNU, and for the future of South Africa.”
Steenhuisen also noted Motsoaledi’s declaration of war on the GNU in front of the world at Davos.
Motsoaledi told world leaders assembled at the World Economic Forum that he is fighting a “war” against the people of South Africa “who don’t want their private medical aids expropriated, who don’t want higher taxes to fund a new looting scheme, and who don’t want our health system destroyed.”
Immature
Steenhuisen called this behaviour immature, arrogant and disrespectful. It is a symptom of a lack of respect towards coalition partners and the founding agreement.
“Whether the ANC likes it or not, the stability of this government as well as the security of the President’s own position depends entirely on the relationship between the two biggest partners inside the GNU.”
The DA should follow the agreed dispute processes to challenge the ANC, even though the ANC does not show the integrity to follow due process itself.
However, the DA must hold the ANC’s feet to the fire. Particularly since the person responsible for managing the dispute process is none other than Deputy President Paul Mashatile, the member of the “Alex mafia” and captain of the ANC’s “coterie of malcontents”.
Michael Morris, Editor-in-chief at the Daily Friend, correctly says that it is smart to use the strategy of staying in and making demands from within, because it compels the ANC to answer to the country by answering to the DA, or to spurn the country, if it spurns the DA.
When all is said and done, if the “red lines” remain crossed, the country will demand that the DA leave the GNU.
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