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Must Read: Max Du Preez Asks Private Sector To Set Up a R150-billion Fund to empower South Africans

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Cape Town: ‘The spring that we are facing is not an Arab spring, but a spring of promise of development and greater harmony.’ That is the perhaps unexpected prognosis by political analyst Max du Preez, speaking at the annual i3 Summit presented by Sanlam Investments and Glacier by Sanlam in Johannesburg and Cape Town last month.

Du Preez likened the country to a properly functioning nuclear power station, always able to cool off before meltdown.

‘I can say with conviction that we have had much darker days as a nation – mass killings, displacement of people, drought, famine. Every time, we made it through because of our built-in self-correcting mechanism. In two years’ time we will not be talking about state capture anymore. The pendulum is swinging back; the deadlock of the past five years is broken. And this time it’s not being brought about by a messianic leader but, importantly, by the people themselves.’

Du Preez pointed to parliament finally discovering its role as the people’s watchdog over the executive, and that opposition parties were working together for the first time. Live TV coverage of debates in the portfolio committees is ‘the greatest gift to democracy,’ he said. The public is increasingly becoming aware of the abuse of state enterprises.

The severe shock to the economy brought about by President Jacob Zuma’s firing of Finance Ministers Nhlanhla Nene and Pravin Gordhan was in fact a silver lining, said Du Preez. For the first time many ordinary citizens, including ANC members of branches, realised it was part of the global economy; the party’s constituents felt it in their pockets, and expressed their displeasure.

‘At least now we’ve turned the corner,’ he said. ‘We have reason to be proud and optimistic. Open societies such as ours don’t fail. We do not have a problem of religious fundamentalism, terrorism, recurring natural disasters, military uprisings, or regional or tribal strife. Our constitution is guarded by an independent judiciary; we have infrastructure, banks, a free press, communications, transport.’

However, Du Preez warned against believing the ‘Pollyanna scenario’ also applies to our institutions. ‘Our institutions are increasingly under assault.’

‘The political temperature is dangerously high at the moment; there is justified anger that the inequality, mostly along racial lines, is the same as it was in 1994. There is deep resentment that racism is still so alive. There is great frustration that Black participation in the economy is still miniscule and among the poor the anger is deeper. This is not what we dreamed about in 1994. So, the temptation to play on populism was just too much for some politicians.’

Populism is divisive and plays into people’s most basic fears and prejudices. It only really gained momentum in 2007 after the Polokwane leadership conference. ‘This populist narrative has raised the political temperature further and normalised insults across the racial divides, shortening the time we have left to transform our economy and reduce inequality. Stability is currently our greatest asset.’

Du Preez argued that we should embrace radical economic transformation, as it would ensure the stability of the country. ‘But how do we implement radical economic transformation without it resulting in radical looting or radical ruin?’

‘South Africa’s long-term success lies in education,’ he said, labelling the present situation of underfunded schools and unqualified teachers ‘a crime against humanity’. The government’s inattention to education ‘has done more harm than white monopoly capital’.

‘To their shame, business leaders have sat back for two decades and made policy and transformation the problem of government. Instead of getting involved corporates sat on huge amounts of capital and watched the country deteriorating. Right now, I advocate that the private sector sets up a R150-billion development fund for mass-scale skills training and on-the-job apprenticeships, and insists on having worker representatives on their boards of directors.’

‘It is time for radical solutions. If it doesn’t happen, the pace of decline will speed up.’

Du Preez said another remedy for the current socioeconomic malaise would require an acceptance that a Singapore-like form of state capitalism, coupled with rapid wealth redistribution to the poor via higher social grants, was required. He acknowledged that this was a taboo subject among the South African business community opposed to wasteful state-owned enterprises and welfare handouts.

‘It is a myth that social grants lead to lazy people who are dependent on the state. Brazil uplifted 50 million people by that process.’ Grants were not unconditional – recipients had to prove they spent the money on education, vaccinations, food, and so on. It had a knock-on effect, providing stability to communities but also fostering entrepreneurs who previously had no fallback.

As for state capitalism, Du Preez said Singapore followed a strict recipe of strong corporate governance, a focus on high skills levels, and the use of technology. All of which built a stronger economy, more jobs, and better state-provided benefits and incentives for the poor.

‘Needless to say, none of our state enterprises follows that model – not Denel, the Post Office, Eskom, SAA, or the SABC. How do those wasteful bureaucracies benefit poor people?’

Du Preez said the ANC’s commitment to radical economic transformation has to be met halfway. The issue of land ownership, for instance, should not be seen by the private sector as a desire on the part of the state to confiscate commercial farms. Rather, it was a need to correct historical matters of ownership.

The problem thus far was that the government has wasted billions of rands by bungling the settlement of land claims, and not knowing what to do with land it has already appropriated.

Instead, Du Preez said, newly empowered farmers in South Africa could be encouraged to follow the Ethiopian example, where even single-hectare farms, properly managed and supported by both private and public money, are economically sustainable. A million families in Ethiopia have found stability through small-scale farming.

The populist politics around land invasion and nationalisation espoused by the likes of Julius Malema and certain ANC politicians were not long-term solutions, said Du Preez. Venezuela and Zimbabwe provided vivid proof of that policy’s failure.

What makes Du Preez hopeful is that South Africa’s credit downgrade has deepened the ordinary citizen’s understanding of how the economy works. ‘An understanding of the economy is a real asset for a democracy. Citizens now realise cheap promises could have unintended consequences and will make them poorer.’

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