This article was first published on 6 June 2021. This was one of our 20 most read article of 2021.
My colleague Anthea Jeffery has written here on why, and contrary to most opinion, the proposals of the EFF and the ANC on custodianship are essentially the same, and she will soon publish on why Mr Ramaphosa’s recent assurances to the contrary are not to be trusted.
But I want to make another point around this saga and why you should take Dr Jeffery’s analysis very seriously and the implications that flow from it for the future both of South Africa’s economy and its democracy.
More than seven years ago (in February 2014) I told a journalist of the Independent group, who had called to seek my opinion, that the ANC intended to nationalise all land via something called ‘custodianship’ (you can read the IOL report in full here) and that its intention was further to nationalise other assets besides land. At the time the term ‘custodianship’ was little known and had seldom been used, but Dr Jeffery knew that it was coming and had briefed me accordingly.
The opening paragraph of that Independent journalist’s report read: ‘Two bills before Parliament mean South Africans could face Zimbabwean-style land grabs, with both agricultural and private property ownership being put at risk, says the SA Institute of Race Relations. But the claims were pooh-poohed by the government, AgriSA and the Institute for Poverty, Land and Agrarian Studies (Plaas).’
This really set the scene for what has transpired in the intervening period. We were out on a limb making a big call, but the government, organised agriculture and its constituents (that include the banks), and purported experts in academia said we were wrong.
A few paragraphs later, the report continued: ‘Frans Cronje warned farmers in particular to “start making plans” as the government’s land reform efforts “could devastate the rural economy on a scale comparable to Britain’s scorched-earth policy during the Boer War” and that “[draft] legislation could spell the end of private property rights in South Africa – not just in agriculture but across the economy”.’
An altogether different objective
That latter point distinguished us from the herd once again. Whilst much of business and the media believed the government’s expropriation efforts to be a land reform mechanism, we knew that the ANC was cynically manipulating the historical denial of property rights of blacks in order to pursue an altogether different objective – that intended to culminate in the nationalisation of healthcare services, pensions, savings, and banks.
Lastly we warned specifically that the state would take property not ‘as an act of expropriation’ … but as a ‘custodian for others’ and that ‘where the state takes [property] as “custodian” [this would mean there is] no right to any compensation’. We knew that whilst the state was talking up expropriation it was secretly busy laying the ground for the far more insidious policy of custodial takings. If you still don’t know the difference between expropriation without compensation and custodianship, then watch this edition of the Daily Friend Show, in whichDr Jeffery explains it.
The Independent report went on to quote the Department of Rural Development and Land Reform’s spokesman as ‘rubbish[ing] the claims’ and saying that the government had had ‘20 years to grab land, and in 20 years nobody had grabbed anything from anybody’.
At the time we noted that the department failed to assure that this would not happen in future, and over the years this kind of mis-assurance came to define the way in which the government answered the question of what its true intentions were. Cyril Ramaphosa, for example, has long promised that expropriation would be done within bounds the Constitution allows – which is very different from saying that his government would not seize private assets without compensation.
AgriSA was quoted in the Independent article as saying that we were quite wrong, as ‘(property) rights are constitutionally protected and the courts are bound to consider international law in interpreting the Bill of Rights which contains the property clause’. In addition, it argued, ‘the economic consequences of the large-scale taking of property without compensation will be disastrous for South Africa, which makes it very unlikely that our government will go this route’.
Hopelessly naïve
This was hopelessly naïve given that the government was already talking of the need to amend the Constitution, that the ANC in government had little regard for the courts (orders were already being ignored), while many of its policies were economically disastrous, a factor which had not stopped their keen adoption.
Professor Ben Cousins, who is held up as an expert on both land reform and the ANC, ‘accused the institute of scaremongering’ and was quoted as saying: ‘There is no way that the kind of “expropriation by stealth” strategy that they suggest the ANC is embarking upon will be approved by Parliament.’
On a discussion group recently, a person remarked that ‘you just have to take a screenshot of this stuff and wait….’ Seven years later, exactly what Cousins said could in ‘no way’ occur has occurred – precisely as we called it.
For much of the past seven years the tone of AgriSA’s 2014 denials and Professor Cousins’ assurances would go on to reflect how the bulk of organised agriculture (with the exception of the TAU and SAAI), business, banks, the mainstream media (with the notable exception of Rapport), and civil society (with the exceptions of the Free Market Foundation, Sakeliga, and Afriforum) responded to our warnings.
This was, and is, not an unfamiliar position for our analysts given that their predictions prove time and again to be remarkably on the money around issues where the bulk of analysts turn out to be flat wrong. Why is that? How do we do it?
There are six differences between what we do and what the bulk of the analyst herd does:
- A first part of our method is to banish all political correctness from our analyses – our staff are free to entertain any idea or thought that the facts bring to mind even if it is an idea that is seen as risqué or controversial.
- A second part of the method is that all our assessments must be fact-based and I am confident in the call that no other independent group of analysts produces as much socio-political-economic data on South Africa as we do.
- Third, our analysts work very hard trolling through every document, draft law, policy brief, policy speech, and political minute they can obtain. We use original sources to inform our thinking and not news reports that tend to be way off a lot of the time in reporting what a politician actually said or a policy document actually contained.
- Fourth, we go to the trouble of obtaining first-hand corroborating information directly from policymakers wherever possible.
- Fifth, we do our analysis through the ideological prism of people and organisations we study. We press to understand, for example, how the ideological zeitgeist of the ANC causes it to view an issue? The answer, always, is very different from how the board of a bank would see that same issue.
- And, finally, we employ very clever people who think, and understand the ideological tides and currents that sweep societies, and we encourage them to make bold hard calls and stand by them.
Formulae to get your calls right
Match those six inputs with a great respect for our audience – my experience is that many analysts and economists lie to their audiences – and you have the formulae to get your calls right.
A most curious thing for me was how hostile the reception to those calls has sometimes been. We have reported above how AgriSA advised their members that our warnings on expropriation should be ignored. A bank that advises its clients on how to invest sent a memo to staff describing our work as ‘not fit for circulation’. A former German ambassador publicly berated one of my colleagues for his assessment of the ANC. The DA, in a former guise, uninvited us from briefing its caucus (we would have called its likely crash in the 2019 election). A miner chased us away when we briefed their exco on the ideology of ANC mining policy. A banker, who saw me on a Cape Town street, exclaimed how pleased he was that we were wrong in our warnings – that was in early 2018 shortly after Mr Ramaphosa became ANC leader. Hospital groups have rebuffed our NHI warnings, and pension funds administrators our asset-seizure warnings. But, of course, for each of these cases there were several groups that consulted us closely.
What do we think is coming next viz the ANC and property rights?
The party, as presently constituted and led, is now in the twilight of its existence and held together mainly by its cadre deployment network. For twenty years that network was financed by pilfering taxpayers’ funds, mainly via the cover of BEE transactions and employment equity appointments. It is a parasitic system of rent-seeking that slowly bleeds its hosts dry – as the growth, employment, and investment picture of our economy, when compared to many of our emerging market peers, attests.
The ANC’s expropriation effort of the past decade, and its recent moves in Parliament, are designed in the main to pivot the deployment network away from dependency on taxpayer funds towards tapping the vast pools of capital that lie in the savings, investments, and pensions of South Africans.
Prop up its cadre network
The ANC wants to obtain some control of these funds and apply them to prop up its cadre network via what it will try to convince the country are ‘infrastructure programmes’. But the programmes are nothing of the sort and ‘infrastructure spending’ is a new ruse to feed the deployment networks with cash.
Most important, to understand where this might lead, is this: the ANC sees no point in destroying the private sector economy or sending investors running for the exits. Its revolutionary objective is to harness the wealth in that economy to feed its vampiric needs – moving from one host to the next as each is bled dry. Doing this requires some measure of cooperation from the host. A party leader once confided in me that it would be better to keep the hosts alive but that internal jealousies and factional conflicts where such that whenever the ANC sank its teeth into a victim the victim was sure to die. Think of the examples of Eskom, SAA, Denel, the Land Bank, the Post Office, and almost every ANC municipality, and you see that – and why, with a pile of corpses in its wake, the ANC now needs to get its teeth into private capital.
If the ANC fails to feed its deployment network the consequences will probably be sufficiently serious that it disintegrates from within, accelerating the demise it suffers from without as voters desert it (don’t buy the story that ANC voters are sticking with the party; polls show that it is shedding support and its national vote tally is down 12 percentage points since 2004).
If the ANC does seize assets via either custodial (or related regulatory takings) or plain old expropriation it could stick around for a while yet. The question then is whether banks, insurers, and medical industry firms will permit the party to seize the assets they hold on behalf of South Africans? Given what I have said on the ANC’s objectives to harness, as opposed to destroy, wealth in private hands it is very much in the power of banks, insurers, and chambers of commerce and agricultural unions to stop the expropriation process should they choose to do so. The ANC never moves against a determined opponent and knows to pull back when resistance stiffens – it needs the co-operation of the victim and it is no good if the victim runs screaming into the night lest the townsfolk emerge with wooden stakes…. But appeasement and indulgence motivate the ANC to move faster with its expropriation ambitions.
‘Everything is up for grabs’
Late in the day organised business is waking up to the risks. BUSA recently remarked that the government’s expropriation policies mean that ‘everything is up for grabs: from moveable and financial assets to intellectual property’ (an earlier draft of this article had a sentence that read, ‘rise and shine sleepy heads, it’s a brand-new dawn’, but we took that out because it is very rude).
Discovery is reported to have said that it will not allow its assets to be seized – a moot point perhaps once the Constitution has been changed.
AgriSA said last week that the government’s proposals would do great damage, which is better than sitting in the deputy president’s lap (as the union was once wont to do), and telling its members of the great breakthroughs being made in brokering deals with the ANC.
But my experience is that even now few senior business leaders (the exceptions know who they are) understand what is going on and who they are striking their deals with and in any event many of them are so very rich that whether South Africa fails or not would not change much for them – and hence they are not truly up for doing the right thing; it is just easier to go along with it all. The awakening may therefore not amount to much, particularly when I tell you that BUSA went on to say that the ‘biggest issue [with expropriation legislation] is that it explicitly defines property as “not limited to land”’.
A good question is whether the ANC will reform to save the economy from the going-along-to-get-along attitude of the organised business community. I think the answer remains no. Structurally, in its current form, if you understand the internal balances of the ANC, that is no longer a possibility. If great pressure were applied to the ANC by organised business, I would be open to changing that assessment though – such pressure is a very powerful political tool. The ANC has, however, run out of most of the things it needs to govern successfully – from money (the current budget deficit has only been eclipsed three times since the formation of the Union of South Africa), to confidence (in serious places the ANC is not seen as credible), policy (its growth strategy is premised on an expropriation policy), intellect (its leaders proposed the growth strategy) and electricity, where the quantum required to grow the economy at emerging market rates is no longer there.
A ‘new dawn’ programme
If you still have doubts about our assessment of the ANC or lingering ‘new dawn’ hopes, or think that my colleagues and I are mad, then consider the case study of the government’s Covid-19 programme. This is a ‘new dawn’ programme. It was carried out under the full control of Mr Ramaphosa and his Cabinet and with the full cooperation of the business community. The result is a death rate already counted as amongst the highest in the world. Last year’s economic reversal was amongst the deepest in the world. Terrible civil rights violations occurred as the army was deployed to enforce a cruel lockdown. Until last week South Africa’s vaccination rates lagged behind those of Somalia and Afghanistan – the most decrepit of the world’s war-torn scrublands. This week the vaccination rate was still three-fold behind that of Zimbabwe – a bankrupt dictatorship without even a credible currency. But at least our vaccination rate is now in the black. A few weeks back Gareth van Onselen remarked that South Africa had a negative vaccination rate after sending a million vaccines that it had received away against the best advice. The much-vaunted vaccination registration system broke down, causing it to be repaired in a manner – if two of South Africa’s leading health policy academics are to be believed (which they surely are) – that caused it to deny healthcare workers from registering for vaccines. And all of this was run under the auspices of a ministry that, if news reports are to be believed, was busy pilfering the pandemic funds.
If the above is the best result that government and organised business could come up with, and they tell us that it is, in the face of a most serious health emergency then you must be daft if you believe the same people when they tell you they have a plan to save the economy.
The obvious way out now is for ordinary people to come together in great numbers to pressure both the business community and the government to embrace reform. My colleagues will show over the coming several weeks that South Africa’s people are pragmatic, sober, and united in what must be done – it is the leaders of society and the elites that divide the country and let it down.
From churches to civil society groups to our own in-house efforts of building the Friends of the IRR, the new Freedom Advocacy Network, and the #RacimsIsNotTheProblemmovement (that launches tomorrow), I have been uplifted time and again at the great upwelling of public common ground and plain goodness that exists across our country.
As these groups grow and organise they come to apply pressure and that is a very powerful thing, as under great pressure corporate and political leaders do bend. More of these movements are emerging every year and if they get great numbers behind them the pressure they exert as consumers and as voters could be sufficient to turn the country and may save both the organised business community and the ANC.
Brilliance of a supernova before its destruction
But even if those efforts fall short and the ANC obtains its expropriation powers, I don’t know if it will survive these. Seven years after our explicit custodial taking warning the ANC stands on the verge of acquiring this great power. This will be the greatest power it has ever possessed and the looting will be without precedent. Just imagine vampires with the freedom to spend pension funds and confiscate game farms. For a moment, the looting will see the ANC light up, fleetingly, with the brilliance of a supernova before its destruction. A space website I consulted on how stars die reads that ‘(when) a massive star runs out of fuel, it cools off. This causes the pressure to drop. Gravity wins out, and the star suddenly collapses. Imagine something one million times the mass of Earth collapsing in 15 seconds…The collapse happens so quickly that it creates enormous shock waves that cause the outer part of the star to explode!’ This is what may lie ahead for the ANC a few years after it starts taking assets without paying.
No matter how it turns out I think we are near an end game of sorts. Business may take a hard line and force the ANC back to a point from which the party might reform. Business and the ANC may continue their ultimately deadly liaisons, as vampire and consenting victim, and people, who suffer the consequences (as we now see under Covid), may come together to push both back. Or the rent-seeking status quo between organised business and the ANC may continue right up until the last cash is drained and the star collapses in on itself. If the constitutional edifice and rule of law survive that collapse (the removal of property rights protections cause us to doubt whether it can) then rebuilding will begin, but if not, then we enter failed state territory.
Time frames? I expect much of this to play out over the next decade.
Fight even harder
What should you do? As ever, get your Plan Bs in order – for your assets, career, children, and business. If you’d listened to that advice when we first offered it, you will be robust enough to withstand any of the above sets of events and can therefore dedicate what time and money you have to spare to fighting really hard to help stop the expropriation threat. If you did not follow the advice, it is becoming late to start developing a truly robust Plan B and your best bet therefore will be to fight even harder.
If you are the man who wrote that you never read Dr Jeffery because she writes nonsense and that you are perfectly happy to accept Mr Ramaphosa’s assurances, then I bid you bon voyage, urge you to hold on tight, and ask that you send a postcard from wherever in the great cosmos the events that lie ahead will sling you.
[Image: Gerd Altmann from Pixabay]