Why rich white people are getting angst in their pants
President still has some way to go in repairing the trust deficit between the government and the taxpayer
You’d think Jacob Zuma, not Cyril Ramaphosa, had won the ANC’s December 2017 election, judging from the amount of angst I encountered at the Knysna Literary Festival this past weekend.
The mostly wealthy, white property owners and sprinkling of foreign swallows gathered on Thesen Island on Saturday morning were eager for reassurance that SA still offers a secure investment and viable future for their offspring.
At the panel on the economy, chaired by author and commentator JJ Tabane, relief greeted my conclusion that SA is finally headed in the right direction after years of backsliding, though progress will likely be grindingly slow.
“The good news is that the bad news is in the price,” added fellow panelist Investec strategist Chris Holdsworth. He explained that since fixed income markets are expecting Moody’s to change SA’s rating outlook to “negative” and ultimately to junk status, should Ramaphosa’s reforms cause it to delay or not downgrade SA at all, the markets will need to correct.
And should SA begin to emerge from the crisis of confidence caused by ongoing political and economic uncertainty, consumers and corporations are well placed to spend and invest again. Usually profligate spenders, SA consumers have retreated into savings mode for over a year. The last time this happened was the very early 2000s, according to Holdsworth. But this means when things turn consumers will be in a better position to spend.
It’s the same for SA corporations, which have been returning cash to shareholders rather than investing because of the risky environment. If they can be coaxed out of their defensive positioning they won’t lack the means to ramp up investment.
The challenge for Ramaphosa is to overcome this crisis of confidence. At the level of organised business he has done well in rebuilding trust and gaining support. However, judging from the Knysna Literary Festival audience, he still has some way to go in repairing the trust deficit between the government and the taxpayer.
Tabane provoked a backlash from some participants at a glamorous soiree at Simola Golf Estate on the Saturday evening when he cautioned that SA was a “ticking time bomb” and they “couldn’t continue to live as an island of privilege in a sea of poverty”. The metaphor was never more apt given that his audience was being wined and dined in a mansion on the crest of a hill, with Knysna’s glinting pewter lakes and lagoons stretching out on all sides.
Well, he poked the bear and the bear hit back: South Africans are prepared to pay all their taxes, railed one visibly aggravated woman, but the money is just being stolen! This is one aspect of state capture that cannot be quantified – the rip in the fabric of trust between society and the state.
Tabane persisted that there was still scope for people to do more locally, to assist in educating the children of their domestic workers, for instance. People were unimpressed. Many do that already (and more) but are mindful that it’s just a drop in the ocean given that SA’s problems are deeply systemic.
Ramaphosa is doing what he can to reignite social cohesion and restore national pride – he is urging us to all pick up litter, for instance. I only hope he doesn’t expect the guys from Simola and Thesen Island to join him. They don’t litter and have little patience for those who do. Nor should they.
It seems SA’s long walk back into the light is going to be ploddingly slow, with several false starts and much grinding of teeth. The bottom line is that the cumulative layers of damage inflicted during the Zuma years have undermined SA’s competitiveness and solidified the economy into a low-growth trap. It will take genuine reform and the consistent application of good policies over many years to peel back these layers and extricate SA from the mire.
• Claire Bisseker is a Financial Mail assistant editor.