SOUTH AFRICA’S ‘INVISIBLE ECONOMY’

Siyabonga Hadebe | 16.11.2018

It is quite a travesty when a mayor of South Africa’s biggest city shows glaring signs and deficiencies in his understanding of not only economics but social issues in an area where he is supposed to be in charge.

This week Mr Herman Mashaba boasted on Twitter that “I have just personally stopped this illegally act in our city. How do we allow meat trading like this? I am waiting for [Johannesburg Metro Police] to come and attend before we experience a breakdown of unknown diseases in [Johannesburg].”

And the poor police officers rushed to the scene to assist the mayor to arrest an informal trader.

The police joyously explained also on Twitter that Mr Mashaba had “just effected a citizens arrest.” The man’s problem was that he pushed a trolley down Harrison an Smit streets in the city center. His consignment were cow heads that were “not covered which is a health hazard.”

Mr Mashaba behaved like an alien from space. It is unclear if he had never seen that much of the city’s economy is informal, and that very few black businesses for that matter are listed in the JSE, or proudly occupy any of the glass buildings in Sandton.

Streets of Johannesburg have been buzzing with economic activity since days immemorial – men and women operate street stalls, taxis and other forms of businesses to make a living for themselves and their families. In fact, many people are important personalities and members of society today, thanks to informal trading.

At some point I once wrote that attitudes perpetuate what former President Thabo Mbeki called ‘two economies’ by pretending that economic activity only happens in the formal side of the economy. This sheepish approach leads to the belief that the majority of the black population sits and waits for hand-outs, and that they cannot do anything for themselves.

It is quite common to hear lamentations that blacks are good for nothing as they wait to cash-in on social grants and other freebies. The truth is that it is people like the trader whom Mr Mashaba ‘arrested’ who make even the clean economy -without diseases – to run.

The taxi industry moves millions of people not just in Johannesburg but countrywide to work in banks, retail shops, households, etc. Also, large businesses like MTN, South African Breweries, Standard Bank and Shoprite wouldn’t be as successful without the informal sector.

Spaza shops and shebeens are an extension of these companies’ distribution channels. Actually most liquor trade and airtime sales do not take place in Sandton, but in Thembisa, Snake Park and Mshenguville.

Hundreds visit Maye-Maye and nearby hostels to buy ‘inhloko’ and ‘mogodu’ as well as traditional beer and herbs each day. The hostel and street economies make more money than most business.

Maybe ‘izinduna’ need to extend an invite to His Worship to witness the music and dance on a Saturday morning. The booming market will captivate the city’s No. 1 citizen, that is guaranteed.

Of course, Mr Mashaba and those who think like him will be quick to point that these businesses don’t comply with municipal by-laws and that they don’t contribute to the fiscus.

That may be partly true but a cost-benefit analysis will assist to determine what could be desirable, that is, to see people doing nothing or it is better when they help themselves.

Money made in the informal economy re-enters the formal economy via value added tax and other ways. For example, this year the receiver of revenue collected around ZAR1.216 trillion, or U$D101.3 billion. The VAT contributed 25 percent to the this amount. It is fair to suggest that the informal sector accounts for a large portion of this figure, directly or indirectly.

Unfortunately, this calculation has not yet been done because the contribution of informal sector in the economy is largely neglected. For example, the unemployment rate is said to be in the region of 27 percent. One wonders if this is accurate if those employed in the informal sector are taken for ‘ghost’ workers.

Another point is that the country’s economic growth is often said to be hovering close to zero. Just a few months ago, there was an announcement that the economy was in a technical recession. But here again, the economic activity in the informal sector isn’t part of the national statistical calculations.

Louis van der Merwe says that the ‘invisible economy’ keeps “a large part of South Africa afloat.” A conservative estimation is that approximately 20 percent of all money spent within the country’s borders is spent in informal outlets, that is about ZAR46 billion per year. The taxi industry possibly worths more or less the same.

South Africa could be falling behind compared to the rest of the world. It is almost unfathomable that we speak about the ‘future economy’ when we fail to see the obvious.

The informal sector drives the South African economy, literally and otherwise. It should therefore be accorded the respect it deserves – economists of the future will hopefully help to achieve this.

Perhaps even our erudite mayor isn’t even aware that organisations like the Organisation for Economic Co-operation and Development (OECD) and the International Labour Organisation (ILO) recognise the importance of the informal sector across the world, and particularly in developing economies such as South Africa.

The OECD estimates that about 1.2 billion (40 percent) of the world’s population is employed in this sector, compared to 1.8 billion (60 percent) in the formal economy.

On the other hand, the ILO in June 2015 adopted the ’Recommendation concerning the transition from the informal to the formal economy’ strategy, or simply R204. Basically, R204 provides a roadmap for policies to facilitate move by businesses from the informal to the formal economy, but from a labour market regulation perspective.

What goes beyond the public’s awareness is that economies in Africa, Latin America and Asia are largely informal.

Closer to home, the figure for the informal sector is quite high in countries such as Zimbabwe, Democratic Republic of Congo, Malawi and Mozambique compared to South Africa, eSwatini and Mauritius.

But South Africa is going through economic difficulties, with most companies planning to retrench thousands of workers. For example, Standard Bank will cut 800 IT jobs, BCX 800, SABC up to around 2,000, Goldfields 1,500 and Lonmin about 12,000 employees.

Where will all these people go? In all likelihood they will become part of the informal sector, the self-employed.

After pulling Trump-sque moves, Mr Mashaba apologised not only for the ‘citizen arrest’ but also for anti-foreign tweet about Ebola.

Whether His Worship was playing political gimmicks or not, he certainly over-stepped the line. He cannot treat informal sector as invisible because it isn’t.

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LEARNING FROM ESTCOURT, BUILDING A NEW MODEL FOR ECONOMY AND BUSINESS

Siyabonga Hadebe | 11 November 2018

The American-owned company Masonite dominated the economic landscape of Estcourt, a small KZN midlands town, for many decades. It, together with Nestle’s first plant in South Africa and Eskort, provided employment to citizens of this once thriving town until very recently.

Launched in South Africa in the same year that the National Party came to power, Masonite is one of the companies that did not divest in the 1970s as a result of global economic sanctions against the apartheid government.

Located on the banks of Umtshezi (Bushmans) river, Estcourt had been flagship agricultural town since early days of British colonial occupation. Many wars were fought between the British and local AmaHlubi kingdom over the fertile land on which the town and many farms nearby are installed.

Much of Estcourt’s industry is directly linked to the farming communities covering the foothills of the Drakensberg mountains from Bergville to Balgowan. For example, meat and polony firm Eskort and Swiss giant Nestle depend on cattle and other farms that make the region’s scenic beauty alongside the N3 highway and in freezing cold areas perched on the rolling mountains.

Profile of Masonite and local economy

And Masonite itself owned thousands of hectares of land (22,548) in seven locations such as in the westernmost parts of Estcourt, close to Ntabamhlope mountain, and in diverse jurisdictions like Greytown, Harding and Ixopo. Masonite plantations included wattle, gumtrees and pine trees.

The company’s backward integration meant that it possessed the land and plantations as well as the logistics component. In terms of the latter, it maintained a fleet of trucks that linked its forestation and the factory in town. Its export business and corporate headquarters were located over 200 kilometers away in Durban.

In the same way, but at a more smaller scale, like the Fruit Company in Guatemala, Masonite and fellow companies operated an economic empire with the assistance of farmers. They all presided over a brutal system that oppressed the defeated and landless local black population. For example, workers at its timber plantation earned low wages and did not have much protection for many years.

Masonite was a successful and profitable business that ran for many years producing hardboard, soft board and door panels for local and export markets. It was until a few years ago that the company ran into financial troubles and was then split into its forestry and milling businesses. That was the beginning of the end for company. It was sold off.

The new owners Evowood announced in May 2017 that scores of workers, many of whom performed semi-skilled jobs, were going to be laid off. Those who remained or got re-hired were given no option but to accept a twelve percent pay cut. The majority feared that they were not going to find new employment in an area whose economy has been declining without a pause for over twenty-five years now. They relented.

It is now claimed that the forestry side of the company was taken over by another forestry giant Mondi, or the R&G Group.

The speedy ruralification of Estcourt and neighbouring Ladysmith, among others, is a quick reminder of the poor state small and rural towns in South Africa are deteriorating without any cogent strategy to save them.

Local economic development plans to revive these towns are nothing and worth less than the paper they are written on. Perhaps there is a thing or two that can be learned from a small, semi-rural country like Mauritius. The island relied on sugarcane for many decades as a source of foreign income. But in a very short space, it has diversified its economic to include tourism, manufacturing, and finance.

Nevertheless, it is worth noting that poverty and lawlessness grip these once mid-sized towns. The death of one company irrespective of size, as in the case of Masonite, is just one company too many, it does not matter whether it paid decent wages or not.

With so much effort trying to save a sinking ship, Masonite hit an iceberg and sank to the seabed like the Titanic. The company formally closed its doors and left thousands without jobs. What remains in Evowood is a pale shadow of a once multi-billion rand, listed firm.

The shareholder-primacy model

Nonetheless, the sad story of Masonite helps to draw a very disturbing picture about the overall conduct of most investors, who normally get away with murder because they provide jobs. The job-creation narrative insists on jobs at all costs and pays less attention to other factors.

Hence, there is an emerging trend in economic development circles which proposes that business practice must not only be about the bottom line. This so-called shareholder-primacy model stubbornly puts the short-term interests of shareholders above all else. It favours the idea that companies should re-invest profits into buybacks of their stock and also to focus on short-term business decisions that are only geared towards pushing up the value of the organisation.

The shareholder-primacy model is said to disregard the interests of workers, the environment and the community at large. Hence, those calling for change argue that if a company wants to measure its success it must include a number of indicators such as initiatives that directly benefit the community within it exists, skills development and protection of the environment.

To understand why the shareholder-primacy model is considered terrible for both society and business itself, one doesn’t need to look further than the Masonite case.

Replicate effect from investments

First, the biggest concern with foreign direct investments, and even local ones, is that their business model is more inward looking or shortsighted, and is not at all interested in broader socio-economic issues. If one has to look at major companies in Europe, they are an integral part of local, regional, national and continental economic development plans and priorities.

Masonite failed the community of Estcourt and surrounding areas while its shareholders pocketed millions of rands over time. Arguably, the company never really invested in local communities to be economically sustainable in the event the company closed down.

For example, no single enterprise may be said to have grown out of Masonite’s value chains, be it in forestry, pulp making, logistics and or sales and marketing. This appears to be case in economies that are dominated by monopolies from Michigan to Orkney. At one point a town is bustling with activity and enjoys almost full-employment but once they are gone, creepy ghosts takeover.

To counter this phenomenon, companies like Airbus, Mercedes-Benz and Nestle have very strong linkages with the institutions of learning, research bodies, small and medium enterprises (SMEs) and governments, from Brussels to tiny communities all over Europe. The aim is to create social and economic spinoffs from having large companies in their midst.

Airbus is a truly pan-European company with operations in various locations in Western Europe. It also enjoys strong supports of all governments and the European Union (EU). Before China, Washington accused European governments for promoting ‘non-market’ behaviour with their huge subsidies they give to the company.

Universities and SMEs have close cooperation with companies, particularly in areas of research and development. Since R&D and innovations come at a huge price, companies decided to use the capacity of researchers and small businesses to engage in innovation and product development.

So, it makes sense for Europe to talk about SME development because large corporations release some of their productive capacities to encourage entrepreneurship and growth of new high growth businesses in nanotechnology, mechanics and robotics. There is no need to guess why Germany is amongst the foremost innovators in the world.

In South Africa, the problem lies in resistance to change. Socio-economic costs as a result of lack of economic transformation will weigh in hard on companies as they will on communities. It is therefore pointless to talk about the ‘future economy’ when we still fail to recognise that we seriously need to change the face of the economy. Sharing will not take anyone’s power but will ensure that all get to be part of the economy.

Investments, alien invasive crops and dry rivers

Secondly, the area where Masonite had its plantations is a source of many water streams that go on to feed large rivers in Kwazulu-Natal province including Tugela and Umngeni. Sipho Kings of the M&G (9 November 2018) penned a beautiful piece of how foreign plant species “are taking over land and using up water.” The top five five of these species includes black wattle, gumtrees (eucalyptus), pine trees, triffid weed and cacti.

It is quite disturbing that Masonite planted black wattle (Australia), gumtrees, and pine trees (Europe and North America). The new owners of the plantations, be it Mondi or R&B Group (Forestco), will have to answer for environmental destruction of their predecessors.

The impact of this visible in a small communities of Kwa-Bhekuzulu and Ephangweni who have potentially lost over six waterstreams throughout the years that Masonite has been planting these water guzzlers on wetlands and sources of the rivers such as Mavunga, Msuluzi One and Msuluzi Two.

These rivers have not dried up due to global warming but Masonite is directly responsible for engaging in an dangerous business model over an extended period of time. Not only that, but fertilisers and other chemicals to grow the trees contaminated the land and aquifers in the area. The impact of this still needs to be validated to assist the communities to lodge a reparation claim against the company.

Investments and land use

Thirdly, it is likely that Masonite’s operations also impacted land use especially for agriculture, stock grazing and other purposes. The sudden and inexplicable drought and many ‘dead’ farms could be attributed to wattle, pine and gumtree plantations in upstream locations, which has forever left communities indigent.

The Status of Biological Invasions and Their Management in South Africa’ report compiled the South African National Biodiversity Institute explains that the invasive plants species, about 775 of them, have a “major or severe impact on biodiversity and/or human wellbeing”. Furthermore, the report estimates that 1% of South Africa’s territory is now under control of invasive foreign aliens, thus preventing over 115,000 large animals, such as cattle, the space to graze.

Indeed reparian communities in Estcourt that derived their livelihood from the small rivers in the past are left without water resources. This includes farms that were handed back to the affected communities as part of government restitution programme. It is thus possible that the state bought land that cannot be adequately developed as a result of not only overuse but also severe water shortages.

The report notes that it costs the country approximately R6.5 million to fight the invasion by foreign species, both plants and animals. Unfortunately, the plants now cover 80000 square kilometres and continue to gobble about 7% of the water. The Eastern Cape and Western Cape are said to be the worst affected areas. Desertification of South Africa will be complete before we know it.

Now that Masonite has closed its doors, the communities feel the brunt and harshness of the company’s abrasive investment model. Not only are families hungry because breadwinners are jobless, they have no economy, no water and no land to turn to. While much of the focus has been on former mining towns like Dundee and Carletonville, the company’s legacy will forever haunt Estcourt for the present and future generations.

As sad the case of Estcourt may be, my view is that it provides South Africa will with a living testimony to see the effects of investments that went wrong. In order to balance jobs and growing the economy, a template is available to at least attract investors that understand the downside of profiteering.

Also, business practice should be slowly moving away from traditional accounting methods that dogmatically elevates profit-making over everything else. It would be pointless for any country to follow examples of ravaging the environment and disturbing settlement patterns of communities in the quest to grow the economy. South Africa needs growth and jobs but social factors should form the cornerstone of financial statements and reporting by companies.

Pine trees were introduced in South Africa around the 1930s as a source of fast-growing timber. They were also a bedrock of Estcourt’s economy and created jobs. But the fact remains they “choke our rivers,” and now they have to be eradicated.

Besides the need for Masonite and shareholders, past and present, to perhaps compensate Estcourt communities for strangling their livelihood – the Estcourt economic hardships present the world a chance of building a new model for the new economy and business practice.

CAN YOU LEARN CHEMISTRY IN ZULU OR PEDI?

Siyabonga Hadebe | 21.10.2018

The domination of other people is achieved through wars and ideas.

All the time we are told that certain people like Ganges Khan, Christopher Columbus, Shaka Zulu, Napoleon Bonaparte, and Adolf Hitler conquered other nations using power and grit.

However, there is generally less emphasis on ideas, culture and other “softer” issues, which also formed an integral part of their strategies and tactics.

Almost all history books tend to dwell more on wars fought between nations using guns and spears. There are never stories about cultural, language or religious conquest as a form of genuine war.

American author Jared Diamond in his 1997 book ‘Guns, Germs, and Steel‘ attempts to answer a complex question on how Europeans managed to dominate peoples of other continents.

Diamond gives a glimpse of what made Eurasians dominant; he doesn’t just limit to war and weapons. For example, he says while others had spears and boomerangs as well as walking on foot, Europeans had horses and guns.

The Ottoman empire annexed the whole of Middle East, parts of east Africa and the Iberian Peninsula to make economic gains and to spread their religion Islam, which went on to alter culture and the way people lived.

Today, the religion of Islam spreads from Morocco, through Tanzania and Pakistan, all the way to Indonesia. Lives of people were changed without their consent – that is the poor of subjugation.

Nonetheless, my interest is how ‘powerful’ states and other entities utilise ideas to subjugate or even kill the human spirit of other peoples.

As it is known, European expedition abroad can be defined using five elements or the ‘5Cs’ – i.e. Colonialism, Commercialism, Civilization, Christianity and eventually Conquer, to cap it all.

Transatlantic slave trade and colonialism did not take place as an accident but commercial interests of European powers (commercialism) were a primary motivation. France to this day still reap rewards from its former colonies in West Africa and Haiti.

Transatlantic slave trade and colonialism created the early foundations for global capitalism that we witness today, which will forever be in favour former colonialists, with fewer exceptions.

Taking another one element of Christianity, European settlers converted millions to their religion and left a thousand of nations empty, without soul. Amen should bring tears of sadness rather than spiritual fulfillment.

The European penetration to cover every inch of the African, and even the Americas, entailed propaganda and telling people wrong stories. One such was hallucinating people to worship a foreign god who will take them to a mystery place called heaven. Many to this day still hope to go to heaven.

This was necessary to maintain their dominance and to exercise power through conquering the mind.

As part of the big ‘onslaught’ on those who were colonised, amongst others, missionaries not only introduced the Bible but also translated it into different indigenous languages to make sure the message was more authentic, and super genuine.

The history of the Xhosa Bible began in 1833 when the first book of the Bible (Luke) was translated in Grahamstown. The first complete Bible followed in 1859 but was only published in one volume in 1864.

The first complete Bible in the Zulu language was published in New York in 1883, and Southern Sotho Bible in 1878.

Besides colonialism and its brute, Christianity is now probably the most important export out of Europe to date. Europeans managed to create subservient and tamed people who could be easily controlled.

In this regard, examples of the forced conversion of the African population to Christianity ranks amongst the worst in the universe.

The Pedi impis who fought the Portuguese incursion, then the Boers and finally the English were compelled to adopt the Bible to keep themselves entertained.

Instead of fighting endlessly with white settlers, their energies were exhausted in dancing ‘mkuku’ at the Zion Christian Church (ZCC).

The same applies to all-conquering Zulu men who ‘accepted’ Jesus by starting the Shembe congregation.

Proud Zulu soldiers were turned into silly rickshaws in the streets of Durban. They were like donkeys or horses, who had to carry smiling white ‘tourists’ on their backs.

Pedi men were first indigenous people to be ‘recruited’ to work as cheap labour in the gold mines around 18700.

For both the Pedi and the Zulu, the revolutionary spirit was gone just like that.

Europeans decided to only translate the Bible and not other great books in science, commerce and philosophy.

Religion is an old tested tool of mental oppression but other forms of learning too have proven equally effective too. Formal education was a ‘soft conquest’ as it forever changed the way Africans and others looked at themselves.

There were options of delivering a number of books and knowledge in indigenous languages: Adam Smith’s “Wealth of Nations”, works of philosophers like Friedrich Wilhelm Nietzsche, Karl Marx and Thomas Aquinas as well as great discoveries of Albert Einstein or Hans Tropsch.

This was not going to happen. Europeans wanted to create people who were forever going to be dependent on them in terms of ideas – in science, economics and other areas of human endeavour.

Local populations were only good as cheap labour to service their industrial and commercial enterprises. Education was paraded as a route to move up the economic ladder as if the locals would own the means of production one day.

The locally trained doctors, lawyers, teachers and administrators help to reinforce the European systems and oppression of local people. Education did not free the mind but it only gave the educated a false sense of worth. This phenomenon still holds true to date.

What was also very tragic in all of this was that the oppressed and religious peoples were told that their languages were not suitable for scientific thought.

Therefore, it would be impossible to teach science, mathematics, economics and technology in Venda, Nahuatl, Chichewa or Kikuyu. If a language like Zulu Swazi and related Nguni dialects have been spoken for centuries, surely there is nothing that could prevent them to deliver science and or intellectual thought.

To perpetuate stereotypes about blacks and knowledge, one silly person once said, “The best way to hide something from Black people is to put it in a book.” Probably what they do not say is that the book is written in English.

But how come a Black child is expected to learn in other people’s languages, be it English, French, Spanish or Portuguese?

Another imperialist decided to declare English an “international” language to discourage teaching in indigenous languages. We know that the French, Japanese, Chinese and Russians don’t even speak a single word of English.

Why bother about English when your mother tongue has carried you since birth?

Suspiciously, almost all European ethnic groups learn in their mother tongue. Swedish and Polish have fewer speakers than Zulu, Yoruba or Lingala. The issue of numbers and cost is rarely brought up.

Zulu Swazi and related Nguni dialects have more speakers than speakers of Finnish, Swedish, Danish, Polish, Hungarian, Latvian, and Estonian combined. But each of these have a better standing in the global hierarchy of languages.

Also, their children are taught pythagoras theorem, chemistry and sociology as well as accounting in these languages.

The truth is that the situation wasn’t always like this in Europe.

Ottoman Muslims were in eastern and southern Europe for almost 1,500 years (an area significantly larger than the British Empire at its peak). The imperial invaders brought with them science and technology as well as mathematics, astronomy and medicine.

Europeans learnt from the Ottomans, not that all their languages, perhaps with the exception of German, Russian and few others, were ready to be “languages of science” by default.

Then it means that it is also possible to do the same in Africa in order to make scientific knowledge accessible to everyone. Any language is ready to adopt science, accounting and chemistry without problems.

Afrikaans, for example, was “kitchen Dutch” for many years until it was standardised and adopted as a language of Boers.

Today a large population of South African whites learn engineering, math, biology, architecture and finance in their home language starting from primary school all the way to university.

Using examples below, consider how simple it really could be to teach chemistry in Zulu or any other indigenous language.

The term for oxygen (O2) in Afrikaans is “suurstof”, probably borrowed from German word “Sauerstoff” or Dutch word “zuurstof”. The word means “sour dust”, in isiZulu it would be “umlotha omuncu”.

The English word “carbon” is the same in Spanish but in German is “kohlen” and “koolstoff” in Afrikaans. In Zulu the same word means “ilahle”. Then “carbon dioxide” (CO2) is “Kohlendioxid” or “Kohlenstoff”, which literally means “umlotha wamalahle”.

Water (H20) is “amanzi” (in Zulu) or “metsi” (Sotho).

Thinking about decolonisation of science? Then it means that we need to escape shackles of mental slavery.

As we argue about White Monopoly Capital, we must remember that it is possible to learn engineering in Zulu, Chichewa, Shangaan, and Kiswahili.

The decision to make Kiswahili as a second language in South African education system isn’t enough if the language also doesn’t open the doors to science and other forms of tertiary learning.

To conclude, to discourage what is argued in this post the educated natives and their friends will immediately ask: Since (South) Africa has so many languages, which one do we choose? Oh Zulu is only spoken in southern Africa, why bother making a language of science? How will we afford to do all of this?

Language is not a competition but a tool to help you read, communicate and learn. Yes, you can learn Chemistry in any language including Zulu, Pedi, Xhosa, Tswana, Shona and so forth.

NB: Please remember to follow our website at https://shadebe.wordpress.com

ZIMBABWE’S ECONOMIC STRUGGLES; IS IT BUSINESS AS USUAL OR A PLATFORM FOR CHANGE?

Siyabonga Hadebe & Luther-King Junior Zogli*

Saturday, 20 October 2018

Like a patient that has been terminally ill for a long time, it appears that the Zimbabwean economy has opted for euthanasia to end its pain and suffering. It appears that President Emmerson Mnangagwa’s charm offensive to lure new investments since he took the helms of affairs isn’t enough to prevent a collapse of the economy.

It is argued that former President Mugabe inherited a functioning and prosperous country at independence in 1980, with adequate infrastructure and incorruptible civil servants. The country was said to be hundreds of years ahead of most of Africa. Zimbabwe, a onetime powerhouse in the export of maize, cotton, beef and tobacco, now only exports its educated professionals, who are fleeing the harsh economic conditions in the country in droves.

The deteriorating nature of Zimbabwe’s economy cannot be overstated, as everything that can go wrong has gone wrong in the country. It is in arrears of nearly US $1.8 billion to its international development partners and World Bank figures show that as of 1960, Zimbabwe’s (gross domestic product) GDP per capita was higher than four of its Southern African counterparts.

The country’s GDP per capita was five times that of Botswana in 1960 but as of 2015, Botswana’s is seven times Zimbabwe’s as shown in the following figure:

Inequality is also very high in the country with a Gini coefficient of about 0.5 and the bottom 10% earning 3% of the country’s income while the upper 10% earn 34%. It is therefore not surprising that about 21% of Zimbabweans live on below US $ 1.90 per day.

With the world’s third highest informal sector contribution to GDP (61%), majority of these poor Zimbabweans are in the country’s dominant agricultural sector which contributes about 67%, manufacturing 7% and services 25%. The overreliance on the fragile agricultural sector is a recipe for disaster as UN Zimbabwe report showed that the El Niño-induced drought which affected key crops in 2016, reduced maize production from 0.7 mt/ha to 0.6 mt/ha.

Late in 2017, Bloomberg observed that economic chaos “has been a regular feature of investing under former president Mugabe’s 37-year reign in Zimbabwe because he frequently blindsides markets with policies that have devastating consequences”. When Mugabe was ousted in a ‘soft coup’ there was a positive mood all over that Zimbabwe would finally get out of the woods.

One of the notable policy decisions by the Reserve Bank of Zimbabwe (RBZ) to try and solve a crippling currency shortage, was to print a new form of money (bond notes) which resulted in an inflation rate of 500 billion percent in 2008, the highest inflation rate to have even been recorded. Consequently, the Central Statistics Offices in June 2008 declared that it “would no longer be releasing inflation figures.”

Many Zimbabweans apparently resorted to buying equities as a refuge as the central bank printed hundreds of millions of its new so-called bond notes. “Instead of me having a fictitious bank balance, I would rather invest the money on the stock market,” said Walter Moyo, a 39-year-old shop manager in Harare who recently purchased shares in Delta, Econet and African Distillers.

Zimbabweans already knew that inflation would spiral and wanted to preserve their wealth and one of the main challenges is that, the true value of Zimbabwe’s pseudo currency is unknown. However, many people use it in the informal economy to mop out US dollars from the formal system, reducing the amount of dollars available in circulation.

Visiting the bank to withdraw cash has not been an option for citizens because most lenders are short on US dollars. The greenback has been the main currency in use since Zimbabwe scrapped its own worthless dollar in 2009.

In the second half of 2017, it was reported that “there is a fear that Zimbabwe is returning to its previous days of excessive currency printing.” This strategy was always going to end in a travesty one more time.

Although people had money in their bank accounts, they were only allowed to withdraw as little as US $50, US $150 or US $200 per week. Swiping to buy in shops is the option they are given, without limitations. They buy what they can electronically— appliances, cars, gold, property or, and for those with limited resources, shares. But the economy quickly stagnating to a cash economy because of cash shortages in the formal sector hence people resort to the greenbacks as a store of value.

Also, as bad money replaces good money, so are the dollars being stolen and replaced with bond notes. Most companies have been struggling to access the foreign currency to make foreign payments for raw materials making a number of them are sourcing the foreign currency on the black market. For example, manufacturers sell their products directly to the consumers because they cannot wait any longer for payments (that will never come) from retailers who often buy merchandise on credit. Streets at night are abuzz with trucks selling products to people.

Wholesalers engage in unofficial three-tier pricing regime. In this regard, retailers and other businesspeople are charging extra for payments made in bond notes or bank cards but less for US dollar cash transactions. The same item can have three different retail prices, costing US $80 when using cash, US $100 using bond notes and US $120 when one is uses a bank card. This form of pricing system will have an adverse effect on the poor majority as they may not have the means to buy their daily basic needs at three different prices.

Besides internal hoarding, it is reported that millions of US dollars illegally leave the country for neighbouring states. This situation emanates from the fact that Zimbabwe has been Southern Africa’s only ‘dollarised’ economy. It thus makes it susceptible to currency exports because the US dollar is stronger and is preferred as a store of value. The US dollar is regarded as a foreign currency for non-dollarised economies in the SADC region, and beyond. Zimbabwe suddenly became a source of the US dollar, one of the world’s strongest currencies, for the rest of Africa. As a result, Zimbabwe is prone to ‘externalisation of the US dollar’, which entails the conversion of Zimbabwe dollars into foreign currency without going through the RBZ.

Economist Tapiwa Mhute argues that, “an immediate and noticeable effect of dollarisation was price stability and reduced inflation”. This may be true but, Zimbabwe was however enjoying borrowed economic stability because the country never had an official agreement with the United States Federal Reserve to use its currency. Political relations between Washington and Harare have been frosty for about two decades and it was quite surprising that Zimbabwe elected its foe’s currency. Maybe it would have been better if the RBZ only pegged the local to the US dollar, and not adopted the greenback as a legal tender for day-to-day transactions.

The implication of using the dollar with no official agreement is that in the event of shortages of notes, the RBZ lacked options of either printing or submitting a request to the US Fed for more dollar notes. Without US dollars, it means that standard liquidity cannot be maintained in the economy. Among some serious misfortunes, Zimbabwe’s industrial production has remained subdued and with no substantial exports to inject much needed foreign currency into an ailing economy; the US dollar reserves in circulation started to dwindle.

Foreign investors like JPMorgan and Templeton, which sold some holdings before the currency crunch got really bad, are stuck watching the crisis unfold. They and other managers of African and frontier funds are invested in Zimbabwe because at US $11 billion, its market capitalization is bigger than Botswana, Ghana and Zambia combined. Companies like Delta and Econet are also doing well financially by catering to the country’s 14 million consumers.

In 2015, pulling money out of Zimbabwe was not as hard as the central bank made US $231 million available to pay investors abroad to repatriate cash, but that sum fell to US $ 5 million in 2016 and just US $700,000 in the first quarter of 2017.

Zimbabwe had an option of formally adopting a South African rand, for example, instead of the greenback as a solution and to stabilise the economy until it develops the required structures for a new currency. It looks like South Africa doesn’t have a problem with offering assistance to its neighbour. South Africa’s foreign minister Lindiwe Sisulu recently remarked, “South Africa is always ready to help Zimbabwe, but they have to ask.” With Zimbabwe adopting the Rand, certain modalities would have to be worked out to protect the integrity of the South African currency.

The rand, by the way is a de-facto currency for some countries in the Southern African Customs Union, which includes Botswana, Lesotho, Namibia, South Africa and eSwatini. Furthermore, the Common Monetary Area (CMA) links South Africa, Lesotho, Namibia and eSwatini into a single monetary union as the three countries have adopted the rand with some success.

Although these countries maintain their own currencies, these are all pegged to the rand. In the case of Botswana which is not part of the monetary union, it pegs its pula to a basket of currencies, with the rand given the greatest weighting.

A similar arrangement has been suggested within Zimbabwe in the past without success, signifying that the proposal being advanced in this piece is not new after all. But there is a need for Zimbabwean economic policymakers to act swiftly to stabilise the economy before being able to stand on their feet. If not, the tales of the country will be told in a similar fashion as Titanic. Some reasons given for not considering the rand were not completely rational as Zimbabwe’s former finance minister Tendai Biti claims Mugabe rejected proposals to adopt the rand, as he argued: “Why should we use another person’s currency”? A school of thought suggested the US dollar option made a lot of sense, not knowing it was a plot to nefariously amass wealth.

The reality however is that, Zimbabwe conducts more than 60% of all its trade with South Africa, according to the country’s Treasury, and three million of its citizens are estimated to live in the southern neighbour. Among others, the late Morgan Tsvangirai, Bankers Association of Zimbabwe, Confederation of Zimbabwe Industries and economist Ashok Chakvarati have also called for the adoption of the rand.

RBZ deputy governor, Kupukile Mlambo agrees, “It would make sense for us to use the rand as the main currency because we can benchmark prices – we trade almost nothing with the US, but we trade with South Africa so we can benchmark with them.”

In its address to members of the Parliamentary Portfolio Committee on Finance and Economic Development, the Bankers Association of Zimbabwe reported that “In 2015, Zimbabwe lost US $1,8 billion to externalisation. It is further recommended the US dollar be reserved to make offshore payments and local electronic payments only.”

Basically, US dollars are disappearing from the country’s banking system and have not found their way back into the economy, thus perpetuating an already dire liquidity crunch.

Zimbabwe’s Cambridge trained minister of finance Prof. Mthuli Ncube has proposed three options for the country to get out of the present economic problems; adopting the US dollar as the only currency, adopting the rand by negotiating to join the rand monetary area, or adopting a new Zimbabwean dollar.

As part of the stabilisation programme, Ncube further proposed a number fiscal policy reforms such as cutting public spending, parastatal reforms and tax hikes.

Zimbabwe’s main opposition leader Nelson Chamisa who called Ncube “a good man who was joining a bad team,” also suggested a new currency to be pegged to the South African rand during the build up to recently held elections.

During the opening of parliament in September 2018, President Mnangagwa appeared to contradict Ncube when he suggested that Zimbabwe will “continue with the use of the multicurrency system up until the current negative economic fundamentals have been addressed to give credence to the introduction of the local currency.”

There is plenty of money in Zimbabwe – bond notes – but no one wants to use them. In the meantime, both President Mnangagwa and Prof. Ncube do not favour return of the decommissioned Zimbabwe dollar. They say the country will continue to use bond notes and the multiple currency system until the local economy stabilises.

A team of IMF economists are billed to have consultations in the later parts of 2018 to assess the country’s economic situation. In addition to help from the development partners, Prof. Ncube and his team have to make some sustainable but cruel choices NOW, to ensure the country’s fortunes take the right turn, just as the “Asian Tigers” went from low-technology, agricultural economies to industrialised and high-tech economies in a surprisingly short period of time. Clearly for Zimbabwe, there is a long way to go.

*About the authors:

Siyabonga Hadebe is an independent commentator on socio-economic, politics and global matters based in Pretoria.

Luther-King Junior Zogli, PhD, is an economics lecturer and researcher at the Durban University of Technology.

ECONOMICS AND POLITICS ARE ‘ENDANGERED SPECIES’ – THEY MUST JUST DIE!

Siyabonga Hadebe | 17.10.2018

The advent of technology and social media has altered too many things in society today. Business, science, health and finance are some of the areas that have changed by technology, good and bad.

Social interaction has transformed from face-to-face engagement to ‘spending’ time with millions of people that you have never met, that you are unlikely to ever meet and some reside very far away from you. The world is a click of a button.

Social media has altered human interaction. WhatsApp, Facebook, Google, Twitter and Instagram as well as many others are responsible for sharing of tons of data in a minute. Even traditional messengers in the office never transfer so much information in their lifetime.

The only area that appears very reluctant to exploit technology and social media is politics. Admittedly, politicians, political formations and their followers have twitter or Facebook accounts. But they still view them as a by-the-way thing.

Will Harris says, “Politics is such an outdated business.”

These days it is quite common to hear people call each other ‘QWERTY revolutionaries’, in reference to a computer keyboard, because most people still believe in physical activity. Political activism is viewed from an old tainted lens that purports that activism means you have to be in the streets.

Political rallies and door-to-door campaigns, and even television and newspapers, have very limited reach compared to different social media platforms. A successful political rally draws about fifty thousand people. Compare this to the number of people who see or react to Donald Trump’s tweets and their reach.

One tweet by Trump has an average of ten thousand comments, over forty thousand likes and an unknown number of people who reads them.

To put your mind at ease, Trump has 55,1 million supporters. Emerson Mnangagwa (250k), Evo Morales (450k), Cyril Ramaphosa (330k), Julius Malema (2,2m), Gwede Mantashe (277k), Helen Zille (1,3m) and Barack Obama (102m).

Of all these people, Trump is a potent user of social media for all purposes. In fact, he has altered the way politics, democracy and consultation as well as advocacy and information sharing are done.

He does not need to call a press conference or political rally to inform his followers, American publics and the world about his decisions and what he thinks about many issues. His protectionist ideas were first seen on Twitter. And since then he has launched effective trade wars, demonised the UN system and also promoted his anti-migration ideas.

Trump has blown apart the walls of Congress, state institutions and embassies that have always served as bastions of confidentiality and secrecy. Democracy has no barriers as it was conceived in Athens a long time ago, amid with greater reach.

Unfortunately in African countries, including South Africa, internet access and related technologies as well as free speech are a deliberate stumbling block. For, the price of data makes it impossible for people to spend adequate time on the net navigating ideas. Let alone to engage their public representatives.

Also, many local politicians and councillors are not using social media to communicate and or engage their constituencies. This is a serious drawback because people are denied an opportunity to raise issues and to create awareness.

Democracy means elections and nothing more in our countries.

Social media has potential to create more transparency and accountability. People and their representatives interact in real time without waiting for tired, outdated modes like branch and council meetings. Are politicians are afraid to discuss serious issues with people who voted them to power?

Public gatherings (sometimes called imbizos and lekgotlhas) are equally ineffective but they still serve some purpose because the digital divide keeps out millions of people who reside in townships and rural areas. Hence, the agitation for liberalisation of information technology is relevant to allow more people to gain access to gadgets and information resources.

Even parliaments are just too lame to be taken serious in terms of the role they are meant to perform. Parliamentarians are in any way made up of people drawn from stagnant political parties, and are politicians themselves. They are are left far behind as the executive runs amok.

A modern society lives and eats information. All this information is right on their fingertips, literally speaking. Thus, to dismiss anyone who politically active in virtual spaces as a ‘QWERTY revolutionary’ bothers on refusal to admitting to have missed the eight o’clock bus at Park Station.

What is happening to politics is not new, the world of sports has undergone massive transformation in the past 20 years. When television sets became cheaper and widely available, numbers of people who attended games at stadiums dropped significantly all over Europe.

Then football minds turned to broadcasting rights, which suddenly transformed the broadcasting to a multi billion dollar industry. To this day, for example, the English premier league has a following all over the world. And teams get most of their revenues from broadcasting rather than from gate-takings.

The same cannot be said about politics since it has dismally failed to move on with times for a number of reasons. Politics tends to be constrained or limited by space and issues. Politics is focused on matters within certain geography, and issues pertaining thereto.

Attempts to making truly regional and global icons and issues have been thwarted by old concepts of sovereignty, national interests and border demarcations. For example, it is inconceivable for a Ghanaian to support and vote for the Mozambican political party like Frelimo or Renamo. Paul Kagame is not elected by Tanzanians, Japanese and Ethiopians.

And within countries, this stratification is quite rife. Provinces, municipalities and wards operate as mini-states which makes it difficult for dynamism to take place. The situation gets worse in federal states like Switzerland and the USA, where regional politics almost trounces national issues.

Western Europe has tried to integrate different countries but politics has moved in the opposite direction. Hungarians and Danes still vote according to what they perceive as relevant to their countries. The Brexit vote in Britain and the rise of Trump in the US are a serious wake-up call to remind all of us that as much as life changes, politics is more or less static or degenerating.

The point I am making is that as much as everyone talks about a ‘modern society’ and relevance of technology, the custodian of society management (politics), for a lack of a better phrase, is not prepared to cope with the changes happening in society. Politics is left very far behind.

China still limits access to social media. South Africa closed alternative media in The New Age and ANN7. The West has Wikkileaks’ Julian Paul Assange trapped in the Ecuadorian embassy in central London. Saudi Arabia killed journalist Jamal Khashoggi at its consulate in Istanbul.

It is not just journalists that get killed or jailed for talking the truth to power, and or against what they perceive as injustices. Thousands of people, mainly ordinary citizens, disappear in countries each year. Millions of people get dismissed from work for raising their concerns.

Unfortunately politics is an instigator in all of this because it is too conservative and least prepared for change. It will be interesting to see how long politics will survive going forward as the nature of society becomes elusive in shape and form.

One thing is certain, politics is struggling to keep up with changes in society, whose very interests it is supposed to act. Its conduct and action, in both repressive regimes and democracies, are a cause for concern.

Politics has not changed its script for hundreds of years, it risks becoming extinct in the short term. For politicians, “you are either in government, in which case you do everything you can to remain in government, or you are in opposition, in which you do everything you can to get into government.”

One commentator says, “there is no middle ground between the two extremes of opposition and government, and consequently all politicians of all parties will prioritise those things that more immediately meet their objectives and defer those things that don’t.”

Politics is never concerned about the future. We see this every day in our country: scandals are not an accident but they tell you that politics is about myopia and self interests. Also, we have never thought of what would happen should people not turn up at electoral stations to vote. What politicians do after that?

Politics isn’t alone. It’s close cousin economics is dying faster and is dragging politics to grave with it. Politics and economics are guilty of serving minority interests at the expense of everyone. That is the reason the likes of Michael Jackson, Apple, Coca-Cola and CNN shadow both.

I think it is time for politics and economics to die. There is no need for their obituaries.

WHY WOULD THERE BE SO MUCH INTEREST ON A R2BN SCANDAL AND NO FLINCHING ON BIGGER ONES?

Siyabonga Hadebe | 17.10.2018

When the Nkandla issue first broke out somewhere around 2012, it was said that former president Jacob Zuma had a home loan on his residence in rural KwaZulu-Natal.

The then presidential spokesperson Mac Maharaj said in statement, “We reaffirm that President Zuma does indeed have a bond on the residence with one of the national banks and he is still paying it off monthly.”

This was the beginning of a prolonged saga which many people thought was actually directed at former president Zuma.

But I wish to argue that issue pertaining to Zuma’s Nkandla homestead was in fact beyond the former president on three fronts:

(a) First, the publicity of the building of the Nkandla residence and the attached mortgage was a way of setting the record straight that rural communities must understand the difficulties involved in accessing finance to build their homes.

Capital, through major lending institutions/ banks had an indirect interest in the whole saga, and sponsored the negative news with a long term view of seeing the Ingonyama Trust annulled.

For mortgage lenders the desired outcome from the scrapping of the Ingonyama Trust is simple, they will have access to a market of more than 6 million in the province of KwaZulu-Natal alone.

(b) Second, anyone who transcended the rural-urban divide by offering financial solutions to rural property owners would be ‘guillotined’ since capital desperately wants to take control from tribal authorities.

The Venda-based VBS Mutual Bank is just but one example of how anyone who plays in this lucrative market will be hanged or stoned in public to die.

(c) The rural-urban divide will continue to exist for as long as African scholarship and institutions continue to subscribe to Eurocentric concepts and norms, especially on land ownership and economic theory.

Former president Zuma may have left office on 14 February 2018 but his silhouette appears to still hang over South Africa. Media is still interested in him although there is evidence he is repaying his loan. Perhaps he is seen as an instigator together with the EFF as far as the issues of the economy and land are concerned.

In hindsight and after a series of many developments in both local politics and economics, one is tempted to revisit the Nkandla matter in order to contextualise two critical matters: i.e. (i) the proposed scrapping of the Ingonyama Trust; and (ii) the placement of the VBS Mutual Bank under under administration/curatorship by the South African Reserve Bank (SARB) on Sunday 11 March 2018.

When the Nkandla issue erupted, the City Press reported that “the land on which Zuma’s home stands was owned by the Ingonyama Trust, headed by King Goodwill Zwelithini, which managed 32% of all land in KwaZulu-Natal on behalf of the state for the benefit of its occupants.”

The newspaper further added that “it had been unable to locate public records to support Zuma’s claim that the Nkandla property was bonded.” This was after the City Press had confirmed with the Ingonyama Trust and the deeds office records that “no bond had been registered against the property.”

Although the interest on the Nkandla matter was said to be on the substantially inflated costs incurred to upgrade the former president’s homestead, but reality pointed towards a suspicion that “the invisible hand” was interested in launching the rural property market. There was simply no interest in uncovering procurement irregularities.

The security upgrades to the Nkandla residence were estimated at R250m.

The Nkandla saga involved two issues: the mortgage loan that Zuma said he had on the property as well as irregular/ unauthorized expenditure.

However, Zuma was only asked by the court to repay about R7.8m for “indirectly benefitting” from the upgrades. A lesser known bank called VBS Mutual Bank provided the relief to the former head of state.

The bank has been in operation since 1982 and started with a customer base of residents from the then homeland of Venda as clients, specialising in home loans. Now it is engulfed in a huge scandal of looting of R2 billion.

Those in the field of development economics would be au fait with work done by the Peruvian Economist Hernando de Soto on the informal economy and on the importance of business and property rights.

De Soto divides the world into two groups: the ones who have defined property rights [urban] and those who do not have property rights [rural].

According to this treatise, legally protected property rights are “the key source of the developed world’s prosperity, and the lack thereof is the reason why many nations remain mired in poverty.”

De Soto then argued that “no nation can have a strong market economy without adequate participation in an information framework that records ownership of property and other economic information.”

He also proposed that in order to deal with the scourge of poverty, there is a need to provide the world’s poor with titles for their land, homes and unregistered businesses.

De Soto calculations indicate that this would unlock up to U$D10 trillion in assets, or “dead capital” in the hands of rural/ informal settlements worldwide.

This argument further states that property titles “would allow the poor to use their small homes or land in order to borrow money and start businesses, [and eventually assist in] unlocking the entrepreneurial potential of billions of people.”

Of course, De Soto’s assertions stand to be proven as the informal economy continues to thrive all over the world.

Nonetheless, it appears that global capital is interested in finally getting rural South Africa integrated into international capitalism, and markets, by entrapping millions with debt.

Certain individuals believe that by applying De Soto’s proposals South Africa will not only eradicate its high poverty but it will also skip to become a highly developed nation.

Almost all the beautiful houses that are in rural South Africa are fully paid compared to homes in urban areas including some townships, towns and cities. This is a source of frustration for banks and the entire capitalist network locally and abroad.

Consider this example, a home in high-end Pretoria suburbs Silver Lakes or Waterkloof easily fetches ZAR35m but a property in nearby rural areas such as those in former KwaNdebele or Tlhabalatsane cannot even be graded, and land is free of charge.

The same goes for properties in Ballito and Umhlanga, houses start from ZAR3.5m but a property in Mandeni, KwaDukuza, Maphumulo and Ndwedwe largely falls into the informal category.

What is also puzzling, when one lives in a township and or rural area insurance premiums for vehicles are higher.

Nobody has dared to seriously challenge this perpetual existence of two economies in South Africa besides wanting to turn townships/ rural areas into becoming a fortress of white capital.

Major townships like Soweto and Umlazi still have a large informal economy but big retailers have moved in to suck out wealth. There is no proof that the existence Jabulani Mall, Maponya Mall (Soweto), Denlyn and Mahube (Mamelodi) and Mega City (Umlazi) have brought any real change to people’s lives except for lousy jobs.

Nevertheless, the findings of the Motlhante Commission appear to be in line with De Soto’s thinking that the Ingonyama Trust Act of 1994 should be dissolved because it was “abrogating the land rights of those it exists to protect.” It also views land holding in rural areas as a wasted opportunity.

This finding does not only seek to entrench one of the important cornerstones of neoliberal economics – the security of tenure – but also seeks to open a new market for mortgage lenders. In addition, the mining industrial complex is equally interested.

As things stand many people oppose the interest in the Ingonyama Trust and its castigation, for a number of reasons. King Zwelithini came out strongly to warn against anyone who wants to take take away land from the people in rural KZN.

The monarch got the backing of many in the province, and outside KwaZulu-Natal. Afriforum have jumped in for selfish reasons.

Sensing the coming trouble, the iLanga newspaper reported that Xhosa King Zwelonke Sigcau’s kingdom would also support the Zulu kingdom in the fight against the commission’s recommendation.

Spokesman Xolile Ndevu said, “Even though we [AmaXhosa Kingdom] don’t have a structure like Ingonyama Trust this report affects us too. Our view is that the land must be given back to the Kings so that each can distribute such to their people.”

Ingonyama Trust may not be an ideal mechanism for land ownership through its “permission to occupy” (PTO) certificates, something which experts say falls short to full ownership rights provided by a full title deed.

The origins of the Ingonyama Trust will forever controversial in many people’s minds. However, the motivation to start with the likes of Ingonyama Trust were plausible – this was more like a sanitized version of “land expropriation without compensation” on lands admistered by Africans instead of stolen lands, presently in the hands of corporations and individuals.

My view is that the Ingonyama Trust represents land owned by blacks (through the King), with all its pitfalls.

The calls for reforms to remove the king as the sole trustee are amenable, but shifting the entire land ownership model to suit Eurocentric legal frameworks is objectionable and unwelcome.

The pretext of granting people land rights is suspicious and strange as it appears to deflect attention from the real issue, land taken under colonialism and apartheid.

The VBS Mutual Bank proved that it was feasible to work within the existing framework to lend money to people in rural areas. How is it possible for them to operate in rural areas where there is just common land?

Though mainstream banks have not been willing to provide loans to people in rural communities, VBS Mutual Bank had “shown understanding of the nuances of doing business in these places.”

The VBS bank went against the tide and gave home loans to people who resided in rural areas (and in the townships). It understands that clients value their homes whether in rural or rural areas.

The VBS Mutual Bank crashed, following Treasury’s instruction to municipalities to stop investing with the institution. As a result, a number of councils withdrew more than R1 billion from the bank, causing a major liquidity crisis.

A decision was made that Nedbank to take over VBS Mutual Bank “operational activities.” The EFF reasons that this was a way of launching Nedbank in the Limpopo market, that the bank had previously failed to penetrate.

One would consider the liquidity challenges of the the bank as something that could have easily been avoided by allowing municipalities to bank with VBS again. Any form of bank crisis is deemed a failure or bad sign in global economics. The SARB decision to recapitalise the African Bank a few year ago should be seen from this angle.

Why would anyone, including the National Treasury/SARB, allow it to happen if they are seriously concerned with health of the economy?

With all its wrongs, the VBS Mutual Bank is receiving different treatment for its antiquated conduct which was not condoned by the establishment.

My overall conclusion is that the imminent fall of VBS Mutual Bank places the burning issues of land ownership and the question of SARB ownership on the high table. Focus on Floyd Shivambu, true or not, is a way of sidetracking the public from the real issues.

The VBS problems (bar the much publicised acts of corruption) and the demonization of the Ingonyama Trust are tangible proof that full participation and ownership of the South African economy by the black majority still remains a distant dream.

If blacks were ever to be allowed to be part of the economy, it has to happen under certain conditions that are not known to anyone but capital and its political front-runners.

The bank appeared to be unmoved by going into markets markets where the big mortgage lenders financiers feared to go. The attack on the Ingonyama Trust is a clear indication that the rural areas had already been identified as a new potential market for the big banks.

The rural areas are the very place that the VBS did not agree with the dominant white-leaning economic thought. White-leaning economic thought, which drives banks and other lenders, asserts that rural areas as a “dead asset” and therefore no mortgage loans should be extended to over 50% of the population.

How on earth is money ever going to flow in the direction of the black majority when rural areas are treated as a dump in South Africa? Strange enough, white-owned farmlands are fully integrated in the economy. Then we act as if we are not aware why poverty and violence are high townships and rural areas. This is where most blacks live.

Maybe there is a need to save the VBS and to take leaf from its least famous rural development model. All those involved in corruption must be removed and the bank continues to operate. Other than that it is quite amazing how a R2 billion scandal attracts so much interest compared to larger ones.

Economy of the future probably doesn’t need even matric, but lifelong learning

Siyabonga Hadebe | 16.10.2018

As one person who has never seen any reason for passing or failing kids, especially in junior grades, and also who doesn’t see the motive behind judging little ones, I am encouraged by what the Singaporean government is trying to do.

The Swiss-based World Economic Forum (WEF) says that the small Asian nation “will no longer compare students’ performance to each other.” The reason for this is that there is a need to show that “learning is not a competition”, so maintains the country’s Ministry of Education.

In South Africa we are busy falling over each other trying to place kids in schools each year because we haven’t built enough. We also argue endlessly about the roles of Sadtu and Cosas to no end. Ill-discipline in our schools was topical after a student stabbed a teacher class. Now a few weeks later, this is almost forgotten.

While we are busy reacting and haggling, other countries are already on advanced chapters preparing for the future. They realize that reacting to change instead of leading change could be their downfall.

Singapore is serious about preparing young people for the future. In this regard, it says report books will no longer show students’ position in the class to let people focus on their own progress and discourage unhealthy comparison with peers.

Moreover, students aged between 6 and 8 will not have any exams. Instead teachers will use assessments “to check for understanding and give feedback.” Mid-year exams will also be discarded altogether for some older students too in order (a) to free up more time and space in schools, (b) to adjust to new subjects, or (c) to motivate self-learning.

As a former British colony like ourselves, Singapore has rightly identified the limitations and shortcomings of old methods of teaching and assessments. Our obsession with a ‘pass mark’ means that thousands of pupils fall through the cracks.

Also, the eminence of matric exams is challengeable in that the entire twelve or so years of schooling will be decided by six exams. Failure to pass has potential of disrupting a child’s future for good.

It is quite disappointing to hear adults arguing about a pass mark of thirty percent rather than asking for innovative ways to get the best out of our children through education. We somehow think that the future is in good marks. This may not be true.

The Singaporean Ministry of Education says it wants to reduce excessive focus on marks and help students meet the challenges of an increasingly complex world…”by becoming lifelong learners.” Schooling is about learning rather than getting good or bad marks.

Lifelong learning ensures that the students are always ready to learn something new to increase their knowledge and understanding of the environment around them. There are no limits to learning and access to knowledge must be freely available to all.

The Singaporeans predict that by 2022, “the job skills we need will look very different with soft skills – like creativity or leadership -likely to increase in importance.” As a result, the ministry reasons that employees will need an extra 101 days of retraining and upskilling.

It is no wonder Singapore continues to surge forward economically and the likes of South Africa do not progress forward. The problem lies in our approach and understanding in terms of what needs to be done to make our country ready for the future that is forever uncertain.

Singapore holds a distinction of being the only country in the world that was forced to have independence without asking for it. After independence from Britain in 1963, Singapore felt that its future could be more secured if they merged with neighbouring Malaysia.

But this arrangement was short lived. The Economist says that Singaporean politicians “chafed at provisions written into Malaysia’s constitution which granted the federation’s ethnic-Malay majority special privileges.” In August 1965 it was ejected by Malaysia.

When Lee Kuan Yew inherited the island after the unusual fallout with Malaysia it “was a fragile, poor backwater.” Strange enough the new state looked to Africa for inspiration. Raila Odinga recalled that “a team of Singaporeans came to Kenya to learn our lessons, since we were then a more developed country than they were.”

Many years later, Singapore is now one of the world’s top countries. Their solution was on what they continue to do until this day, forward planning and ability to prepare adequately for the future. A simple thing like changing how education is delivered and its role in shaping the future are clear indications that that we still have a long way to.

Seeing my eighteen-year old studying for his matric exams, I am ashamed to tell him that he is growing up in a country that suffers from shortsightedness as we spend hours talking politics and less his future. My heart sinks further when I think that his younger brothers too will also be following an uncleared path to the woods.

Our education system doesn’t what we are always told by experts. It is just plain outdated by probably three decades already, and we are about to miss the future.

Unless we think hard about what we desire for our country, South Africa stagnate and fall behind everybody else. Education and how we teach our children can set us on a great path to a brighter future. There is something to be learned from Singapore.