Do Cyril and Tito dare break the racial quota taboo at Eskom?
Unrealisitic employment equity targets, along with with privatisation and its bloated staff, need to be up for discussion or we are doomed to darkness
Thursday is the most downcast budget day since the arrival of the ANC in government in 1994.
Back then, the international isolation of the departing apartheid regime coupled with the minus growth of the local economy under siege had left the new administration with a bare fiscal cupboard.
Indeed, incoming minister Mac Maharaj, a confidant of new president Nelson Mandela, explained the dire inheritance vividly: “There was simply no money to do what we had planned ... we had to dump our blueprints and start from the beginning.”
These dismal financial straits are well remembered by the former head of the ANC economic desk during the transition, Tito Mboweni, who entered the 1994 cabinet as minister of labour.
There are no shortages or irony and frissons of déjà vu that the same Mboweni, today 25 years older and doubtless wiser, has to table a hardship budget with a huge hole in it called Eskom. And, how and with what measures in parliament on Thursday afternoon he will bail out the state electricity provider and generator will consume budget-watchers and weigh heavily on every economic indicator, even before he concludes his speech.
Mboweni, as labour minister, was the best friend of organised trade unions and, with every bill he piloted and with each measure he enacted, he won many friends and shored up alliances with the comrades. Yet his ex cathedra remarks since being recalled to government as minister of finance have indicated his realisation that the state cannot be employer of first and last (and often only) resort. Nor can SA simply sacrifice all know-how and expertise on the altar of racial quotas and stringent enactment of employment equity prescriptions. The legislation that birthed the idea that racial bean-counting would be the highest form of government activity, often contradicting and undercutting all its other objectives, was also led by Mboweni.
But since I have both personal affection and considerable regard for him, this is not an ad hominem attack on Mboweni Marque 1 as opposed to the dismal national accounts he has to somehow balance, as Mboweni Marque 2, this afternoon. The sky has blackened with both the proverbial chickens coming home to roost and the rolling blackouts which have shocked the nation, and rocked the government.
The incoming administration of Mandela’s ANC was not responsible for its inheritance in 1994; in many ways it was the victorious victim of its discredited predecessor. It is perfectly true that the campaign against the SA economy which it had launched in exile and the homegrown revolt boycotting payments for municipal electricity and other services would make its task in government more difficult. But these were seen as necessary, arguably the only, means of bringing the apartheid government to both its knees and to its senses. In other words, necessary down payments for liberation and power.
But the current crisis confronting SA, of which the unprecedented stage four load shedding is only the first instalment (future load sheddings can go to stage eight, after which the grid shuts down entirely and there is zero electricity), is entirely the consequence of ANC policies or the lack of them.
Tough choices are what effective, joined-up government is all about. President Cyril Ramaphosa told parliament that he was “the man in the arena” who in the rousing words of President Theodore Roosevelt was “prepared to spend himself in a worthy cause, and ... if he fails, at least fails while daring greatly”.
So the key question, given the electricity crisis we now confront, is whether “the man in the arena” and his finance minister are in fact “daring greatly” or will fail because they will not face up to the enormity of the crisis we all now confront?
The initial pre-budget signs are, alas, not very reassuring. In some ways like a boxer going into the ring against a fearsome opponent, Ramaphosa-Mboweni have shackled their hands behind their backs. Unless, of course they are involved in feints and shadow boxing while planning to confront the real problems through indirection and deflection.
But this is not a time for game-playing. We cannot have our cake and eat it. Boris Johnson promised that with glorious Brexit and we can see what a right, royal mess Britain is making of its departure from the European Union.
But back to our own mess.
The gods that failed
The Mandela government premised a great deal of its pre-governmental thinking on inheriting a grand cornucopia of riches from its vanquished predecessor. When, on taking office, it discovered a budget deficit of more than 8% and that 92% of all government spending was, according to historian Martin Meredith, consumed by current (not capital) spending, it did not double down on its socialist imaginings and romantic attachments to expanding the role of the state into every reach of the country. It cut its garment according to the cloth it received. Hence, the quick response of the markets to this informed sensibility.
The Ramaphosa government today could rewrite the 1949 classic The God that Failed. Dubbed “a confession” by its editor, the British socialist politician Richard Crossman, it contained essays by six leading former members and sympathisers of Soviet communism. These apostates chronicled their personal disillusionment and ideological course reversal in the light of the murderous tyranny revealed in Stalin’s mass killings and show trials.
Of the authors, the most famous was Arthur Koestler who had nine years before published his groundbreaking (and indeed ideology-smashing) novel Darkness at Noon. What an apt title indeed for load-shedded SA right now.
How is Ramaphosa and, depending on what Mboweni says this afternoon in parliament, and not on Twitter, the finance minister shackling the fight to save a reliable electricity supply?
Simply this: if you are in the fight for your country’s future, then everything has to be put on the table. It’s not a political smorgasbord where you can pick a few delicacies which cause no offence but do not resolutely resolve the crisis. It means, to mix metaphors, going the whole hog.
And three of the top items that seem to be entirely off limits to discussion and debate are privatisation, the huge staff inflation at Eskom and the unrealisitic and unyielding employment equity targets imposed on the utility.
Just how difficult the topic of employment equity has become to even mention, was revealed when a leading DA MP was asked about the effect of affirmative action on Eskom and she suggested that this was a racist question!
Actually, the Venezuelan-born Harvard University economist Ricardo Hausmann – whom I had the immense privilege of inviting to a seminar series I conducted there a decade ago – is certainly no racist. In fact, in addition to his high-octane erudition and intellect, he is both a fan of this country and its aspirations under democratic rule. Little wonder our own national treasury has such high regard for him.
In July 2017, the Centre for Development and Enterprise, an SA think tank, arranged for Hausmann to address it.
On de-skilling institutions to achieve racial outcomes, he offered this profound thought: “Know-how can be quickly hired, but it cannot be quickly transferred from one person to another. It certainly can’t be extracted, like teeth, from the brains that possess it.”
His observation was followed by a warning: “South Africa risks following countries like Zimbabwe, Venezuela and Algeria, where their governments inherited a stock of know-how in the brains of people new leaders may not have liked.”
On Sunday, Rapport’s specialist labour correspondent, Jan de Lange, led with a scary headline (translated), “Eskom Chases Away Whites”. Although the same writer’s August 2 2015 report on the same topic was recently dismissed by Eskom, this Sunday he doubled down on it. He quotes the power utility’s affirmative action plan which requires, by March 2020, that 1,308 fewer whites (including 336 engineers) must be on its books. This is apparently due to “pressure” from the department of labour.
Throwing away your qualified expertise in the name of a preordained racial target seems reckless. But indeed Eskom is overstaffed, and the World Bank advised it has more than 20,000 more employees than needed; in the past decade an additional 16,000 were taken on, inflating its payroll costs from R9.5bn to just shy of R30bn. Yet the government, silent on the employment equity distortions, is adamant not one job will be lost.
Of course, privatisation in whole or in part will bring some needed rigour, market discipline and effective management into the mix. But this too is taboo talk.
Something has to give, and soon: either we stick with the “gods that failed” or we have reliable and continuous electricity supply at reasonable cost. We cannot have both.