It's time to peg the Rand low like China

One of the last remaining shoe factories in Cape Town.


Just the other day I was musing with friends why South Africa has not decided to peg its currency at a lower rate, so our manufacturing and services could blossom.

I have of late taken a keen interest in shoe manufacturing, as my girlfriend is a shoe maker. We have investigated manufacturing a range in Cape Town's dwindling shoe factories.

Besides the now growing skills and equipment shortage there is one startling fact that illustrates the South African problem. The average Indian factory worker gets paid about $24's per month. Compare that to a South African factory worker that gets $100 per month or higher.

In yesterday's business day Michael Power argues strongly for just the remedy we were talking about. Pegging the Rand low for the sake of being competitive.

My essential view — which I have doggedly maintained for more than a decade — is that the rand remains structurally overvalued. The main reason I give is that the rand’s current trading range is trapped in the straitjacket of what works for SA’s first economy. But, at this elevated rate, the overvalued rand prevents the second economy from having even the remotest of chances of working, literally and metaphorically.

Let’s start with the basics. SA is living way beyond its means; we have a current account deficit of 7,8% of gross domestic product (GDP). To balance our national books, we need inflows of foreign capital of about R3bn a week, or R600m a working day. Those economists who say it is “natural for a successful developing country to run external deficits and so import capital” need to read pretty much any post-1980 book on real-world economics. Even at the risk of generalising, no, it is not natural to run a deficit if you want to be successful. The emerging economies that have grown most — essentially the east Asian Tigers and now the waking dragon that is China — have been the ones that have put export-led growth first by adopting a hyper-competitive currency; this puts current account surpluses at the centre of their development strategy.

I feel sorry for those economists who simply cannot accept that the “developing countries run deficits” piece of conventional economic wisdom is precisely wrong. Sure, occasionally when global liquidity is abundant you can run deficits and get away with it. But, to paraphrase Warren Buffett, when the tide goes out, then you see who has been swimming naked. And boy, did that tide go out! And sure enough, now everyone can see that SA dispensed with its (no doubt Chinese-made) swimming trunks years ago.

It is time to catch a wake-up, SA. Is this roller coaster we are riding going to be the way we continue to run our economy for ever and a day? Is our economic development plan to become little more than a case of surfing the ebb and flow of the credit cycle, while all the time being subject to the capricious kindness of strangers and their capital?

Will we ever remain little more than a slave to America’s unhealthy rhythms? Must we wait for the planets to align in our favour again, enjoy the party that follows, only to rue the hangover that follows thereafter? And worst of all, by far worst of all, are we in the first economy going to continue to avoid addressing the plight of those trapped in the second economy, unemployable in today’s global economy given today’s rand’s exchange rate? And do we practise this last denial by turning a blind eye to the economically disenfranchised, buying off our consciences with the equivalent of an annual 3% of GDP transfer by way of social grants for 12,7-million people? (If you answer “yes” to the latter, shame on you.)

So now it is my turn to play a game with you, dear reader. Think carefully before you answer this question. I offer you the following choice. Do we build SA’s economy by sticking with the “First Economy First” approach and go with a strong rand? Or do we do what east Asia did and adopt a “Second Economy First” approach, using a more competitive and so much weaker rand? You know which option I would go for.

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Was I wrong about the Zunami?

Mhambi has gone on record a number of times that Jacob Zuma might be a better president than Mbeki. He would struggle to do worse. He is more approachable, direct and that he would be a better candidate for the South African poor, because he is left leaning.

Well, is the new ANC more left? Or are we due for some more talking left walking right?

Two recent pieces of commentary and the actions of the ANC themselves have made me have serious doubts.

John Kane-Berman said earlier this week that several commentators argued that the real opposition to the government now comes from within the ruling party, not from opposition parties.

"There is a grain of truth in this, but it is mainly nonsense.

...on matters of policy, the Mbeki government seldom faced much opposition from either his parliamentary caucus or his party at large. Former education minister Kader Asmal last year spoke out against President Robert Mugabe. This belated lone voice aside, Mbeki’s policy of appeasement towards Mugabe has all along had his party’s support. Steal elections, ruin the economy, destroy the rule of law, squash human rights and ruin lives — none of this stopped the ANC, taking its cue from Mbeki, from cheering Mugabe when he jetted into town.

Nor was there much dissent on AIDS. Mbeki flirted with dissident theories and employed an equally misguided health minister, but nobody in the ANC spoke out while they thus trifled with people’s lives.

No dissent either when the government stifled the probe into the 1999 arms deal by the standing committee on public accounts (Scopa). Scopa started off its probe in a non-partisan manner. Then Mbeki and the deputy president, Jacob Zuma, weighed in with the help of ANC chief whip Tony Yengeni and the acquiescence of the speaker, Frene Ginwala. Mbeki was not prepared to permit an independent investigation.

Nobody in the ANC was willing to stand up for the right — and duty — of Parliament to hold the executive branch of the government to account for its expenditure of the public’s money. Since holding the executive to account is a parliamentary function prescribed by the constitution, this means that the majority party’s willingness to stand up for the constitution is open to doubt.

Nor is there much prospect that anyone in the ANC will object to plans to destroy the independence of the Scorpions or to undermine that of the judiciary.

These are all matters of principle, not party-political issues. But there has been little dissent on key areas of policy either. This includes the pervasive policy of racial preferencing. If black empowerment policies have been criticised, it has been on the grounds that they benefit an elite rather than the poor.

In Beards only sign of a move to the left Aubrey Matshiqi agreed:

This shift to the left is supported neither by the resolutions of the ANC’s December conference nor by the content of the budget speech, unless an increase in social spending should be seen as the victory of Marxist-Leninist-Hugo Chavezist thought over Hugo Boss-inspired policy orientations.

In my view, any shift in the short term that may occur in the ANC’s economic policy trajectory will most likely fall within the 1996 macroeconomic paradigm. This flows from my belief that the clash between newly elected ANC president Jacob Zuma and former party head Thabo Mbeki was more about a rift within the establishment and less about tensions between the establishment and an anti-establishment impulse.

Further more, the forces that united behind Zuma’s presidential ambitions should not be given some mythical leftist agenda — the support for Zuma by the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) had no ideological basis.

Zuma is much closer to Mbeki in ideological terms than he is to Zwelinzima Vavi of Cosatu and Blade Nzimande of the SACP. This is why he went to the World Economic Forum in Davos and told investors there would be no change in economic policy.

Aubrey is also concerned about the increase in the budget surplus because of unspent Government money.

"What I know is that I am less excited about the budget surplus than I was before. It seems a large chunk of the surplus comes from money that the government departments fail to spend.

...This is the same Parliament that has very little influence in determining budget priorities. The problem is that the budget continues to be the tail that wags the policy dog."

But the problem is of course that the government do not have the staff and the skills to implement their budget allocations. This will be a subject of another post of mine.

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Afro-pessimism is spiralling out of control

In today's Business day Prof Anthony Butler of UCT's Public policy department sets forth that simultaneous events have conspired to seriously dent confidence in South Africa, both internally and externally. These dents were possible in the context of widespread perceptions of crime, corruption and problems in the health service.

Apparently the Financial Times have talked of a “loss of faith” and the Wall Street Journal has been lamenting a “Dark South Africa”.

He sees the emigration accelerating and investment falling, and that this will feed a vicious circle that will make skills even dearer and harder to find, this in turn will exacerbate the problems of corruption, service delivery, crime, public health and especially Aids.

He also warns of white fears becoming irrational bleak.

Such multifaceted uncertainty about the future can open the door to a more profound, irrational terror. Some whites, in particular, when they reflect on their deepest fears, discover a submerged expectation that poverty and pent-up frustration must eventually result in a vast social explosion.

Others fuel their fears with a vague and unarticulated sense that the postcolonial African state must always fail. In minds where such doubts lurk, there is always fertile ground for apocalyptic visions to grow. Practical challenges become interlinked in a vicious cycle of crime, skills loss, moral breakdown, AIDS, political instability, panic, and emigration.

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The global left haunts the ANC

A week ago John Minto, the man responsible for organising vociferous protests in New Zealand against the Springbok rugby tours in the 80's, told the South African government: If you ever thought of giving me an award, not to bother.

John Minto
Originally uploaded by farrioth.

We protested to fight apartheid and were proud of that and then Minto continued:

However while political rights have been won and celebrated, social and economic rights have been sidelined. It is now 14 years since the first African National Congress government was elected to power but for most the situation is no better, and frequently worse, than it was under white minority rule.

The number of South Africans living on less than $1 a day more than doubled to 2.4 million in the first 10 years of ANC government. Despite strong economic growth overall poverty levels have not improved and the gap between rich and poor has increased with many black families being driven more deeply into poverty. Unemployment remains high at around 26%.

At times I feel just a little sorry for Thabu Mbeki and the ANC. Why? Because of what John Minto said next:

"Apartheid was accurately described as a “crime against humanity” by the United Nations and the ANC. I could not in all conscience attend a ceremony to receive an award conferred by your office while a similar crime is in progress."

"Long batons fly in Newtown as riot police block protestors in Rintoul Street from reaching Athletic Park for the second test, 29th August 1981".

Apartheid was very very bad. But it has to be said, the Nationalists had some very stiff competition if one wanted to judge governance, exploitation and violence in this part of the world.

And quite frankly they never made it into the premier league of any of these categories. Want violence I'll name you tow dozens other countries that were worse. Governance? I'll name even more, exploitation? You kidding me? The governments of Uganda, Ethiopia, Rwanda, Sudan, the Congo, Algeria, Kenya, Nigeria, Zimbabwe, the Ivory Coast, Liberia, Angola to name but a few, were all at times much more bloody, corrupt and in greater neglect of the well being of their citizens, than apartheid South Africa.

In short apartheid does not deserve the moniker of a crime against humanity, in the context of what was going down routinely all across Africa, unless you want to concede the title to half the countries on the continent.

For various but very particular reasons (left wing moral relativism, simplistic analysis, historical Anglo antipathy towards Afrikaners) South Africa got the lion's share of the global left's opprobrium. Opprobrium that was completely out of proportion if one considers the suffering caused by an array of brutal regimes and the scant attention their actions received.

This 'exaggerated' attention morphed into uncritical support for the ANC. This helped the ANC enormously. It helped them set up office and organise. It helped them hide the Stalinist closed authoritarian nature of the organisation's external operations. It helped them cover their incompetence, and it helped them cover the torture and disappearance of their own members.

A woman show signs of battle after protesters and red squad police clashed at the Luxford Street-Rintoul Street intersection during anti Springbok tour demonstrations in Wellington, 1981."

It helped obscure the fact that for many black ANC members the organisation was, not the creature of the Freedom charter, not liberal or progressive either. But a black Nationalist organisation at best, and for yet others it was just an instrument to attain power and resources.

But it helped the ANC secure negotiations and it helped them beat the Nationalists during negotiations.

But most importantly it also helped all South Africans, but particularly black ones get rid of the apartheid system. And less important, but also significant, it helped Afrikaners get rid of the Nationalists stifling and controlling morals and strictures.

After 1994 this global left's 'gaze' helped hold open debate in the country in a vice of silence, nobody dared criticize the ruling party. That was until the Aids deaths of thousands, creeping levels of inequality, blatant corruption and the intolerant battle for control of the ANC finally broke the spell.

But this progressive spot light has not gone away. As enamored as the Spanish speaking and American left of the world is with Venezuela, the English speaking world's lefties are fascinated by and have invested intellectually in South Africa. They are looking in a new way and they do not like what they see.

And as unfair as comparisons as the one above is in absolute terms (especially when compared to our neighbors) - they are still going to be made.

It's no help for Mbeki to point out that particularly since 2002 his government has with robust growth and an array of social grants - grants that very few developing countries have - managed to address poverty levels.

We are still measured with a different yard stick. The sword that helped struck down apartheid turns out was double edged. It will be wielded against the ANC. Their every move will be monitored like no other African government's actions will. But for South Africans by and large, like with the battle against apartheid, this is still a good thing.

John Minto again:

Receiving an award would inevitably associate myself and the movement here with ANC government policies. At one time this may have been a source of pride but it would now be a source of personal embarrassment which I am not prepared to endure.

Hear hear says Mhambi.

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Mhambi's South Africa 2007

Mhambi is very late with this posting, my summary of Mhambi 2007.

Last year I described 2006 as a watershed year for South Africa in my posting Mhambi's 2006. A year in which open debate returned to South Africa.

If you remember, as Steven Friedman explained, this was not because of a new found commitment to democracy amongst our ruling political class, but because of the battle for control of the ANC and the state between the Mbeki and Zuma camps.

So 2007 started off with many of these 2006 debates carrying into the new year. In these debates Xolela Mangau was one of 2007's most acerbic and eloquent voices against creeping country wide corruption. Others like Rhoda Kadalie waded in.

Steeds De la Rey

There were more heated exchanges at the beginning of the year about the De la Rey song. What did it mean? What would it bring?

Leeu van die Wes Transvaal
Originally uploaded by Wildebeast1.


Tim du Plessis changed his mind (and not for the last time in 2007) . In 2006 he warned of deliberate Afrikaner civil disobedience, but now announced the arrival of a more confident participatory breed: the New Afrikaner. Pallo Jordan, the minister of Arts and Culture, warned against De la Rey song inspired treason.

The song reached the press in both the UK and US. And in the process it served as an amusing outing of international prejudices about Afrikaners.

But nowhere was its meaning as debated as among Afrikaners. Lefty journo Max du Preez saw in it the worst: racism, atavistic nationalism, a longing for the past. But poets and writers Antjie Krog, Koos Kombuis were not convinced with that line of argument.

But before you think South African 2007 debates were dominated just by a pop song. They were not. By years end it was out of the news completely.

In the US, a debate raged over what extent apartheid could be compared to current events in Israel.

Angola the country South Africa helped wreck celebrated 5 years of peace.

Britain and racism

Rather arbitrarily the BBC decided to screen a blatantly racist tribute to colonial writer Rider Haggart. Perhaps not surprising as in 2007 it transpired that Britain is a society with little self awareness when it comes to racism.

2007 was a year when racism boiled over on British TV, when Jade Goodie and other white Big Brother contestants ganging up on Indian star Shilpa Shetty. The incident had the country in a tizz. The press especially were aghast, while admitting at the same time that the opinions expressed were prevalent in British society.

Many left commentators defended Goody: she was working class, and more likely to be exposed to multi-cultural Britain than her critics they claimed. A good example was Philosopher Julian Baggini who spent six months living in Rotherham, Yorkshire. In the Guardian he professed that he doesn't believe most white Britons are racists - even though he heard racist language almost everywhere he went.

On the cultural and media front trade union solidarity won the global award for the best union website. Gazelle released a funky a stomping Afrikaans electro track, while two movies cataloging life in gay South Africa, screened in London.

Facebook took the world by storm in 2007. Also in South Africa, despite the privatised national telecoms provider Telcom's parasitic and damaging impact on the countries internet ecosystem.

Bad news aplenty

Bad news about the break down of trust and public institutions came a plenty. Many of which, like the Hlophe affair and the scandalous neglect at the Frere hospital Mhambi never wrote about himself.

Wabenzi
Originally uploaded by Wildebeast1.


I did write about the alleged corruption of the National Health minister, who was not fired, even after it was claimed that she was an alcoholic and a thief. Instead the government tried to muzzle the press. There were other posts of Afro-pessimism. Events like the casual destruction of monuments in Standerton helped to spread the gloom.

The astounding growth of crime and the corruption inside the South African police continued to make waves internationally. Journalists like Jonny Steinberg tried to make sense of the corruption and crime.

In 2007 there were less reports of xenophobic attacks on other Africans by South Africans like which transpired in 2006 when scores of Somalis were murdered. Now the focus shifted to extreme indifference towards other Africans best illustrated by the death of Adonis Musati in Cape Town.

There were valiant attempts from South Africans to reach out to each other, like when Hansie Diffenthal tried to save Halaletsang Nkome.

The Rugby World Cup

But so too did the Rugby World Cup loom large. It became clear that racial make up of the South African Springbok team would be an issue. In fact, the ANC also wanted to change the teams ' iconic name.

As the first big match of the cup approached, between SA and England, the English press went to town with prejudicial reporting: South Africans were stupid and not "every inch Western gentlemen". The verbal barrage did not save the English from a battering on the pitch however.

Neither could the spectre of Che Guevarra help the Argentines against a rampant Springbok side.

Jusr before the final The Guardian published a curious rugby article by Gavin Evans, which was duly pulled apart by readers.

Then, despite all this, the Springboks won. And Mbeki tried to surf the wave of glory. The Bok name became non issue.

Mbeki vs Zuma

He certainly needed it. Such was the the growing opposition to his control freakery that too many it seemed that he would loose the election for ANC presidency the end of the year. That placed many South Africans between a rock and a hard place who wanted neither Mbeki or Zuma in charge. Cyril Rhamaphosa entering the race was one of our great hopes.

Mbeki could and did continue to point out how the economy has grown under his leadership. But doubts remained about his success in addressing poverty.

But his Aids denialism still hung over him like a shadow, with Mark Gevisser confirming and explaining it upon the publishing of his monumental biography of Mbeki. 2007 was also the year in which a minimum number was put to the deaths caused by Mbeki's Aids inaction: 300 000.

Another book, Andrew Feinstein's After the Party, cataloged the ANC's move away from democracy and decent into grand corruption. Mhambi cerealised some of it.

By the end of the year it became clear that Mbeki would hit a wall. Some of us, Mhambi included, were optimistic. The inability of the incumbent holding on to power was that the openness had prevailed, a sign of democracy. And so Mbeki did hit a wall. Karplaks!

Better the devil you know?

Down went Mbeki, and enter stage 'left' Zuma. 2008 will no doubt be as interesting.

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Are things ok or not?

Mhambi wrote a week ago that the stats say its better. That was in response to a survey by Stats SA that showed on many levels (like housing and access to water) that the lives of South Africans have improved markedly.

Well, now a report from the South African Institute of Race Relations has come out which says, levels of poverty (persons living on less than $1 per day) has doubled from 1996 to 2005.

This is at the same time as a Word Bank Report that concludes that growth in many African countries appears to be fast and steady enough "to put a dent on the region's high poverty rate and attract global investment".

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Racial quotas ruled out

In what marks quite a sea change in opinion Sports Minister Makhensi Stofile, brother of SARU vice president Mike Stofile, who expressed a contrary opinion less than a week ago, has ruled out racial quotas. He pointed out that development needs to happen from an early age, and this should include focusing on nutrition. Many South African rugby fans remain sceptical.

Sports Minister Makhenkesi Stofile on Tuesday ruled out racial quotas for national sports teams.

"Quotas are out," Stofile told the parliamentary sports committee....

Stofile said black children, mostly poor, needed proper nutrition and facilities to help them develop the bone structure and muscle tone required for sports participation from an early age.

"We must kill the myth that … black people cannot play certain sporting codes because they are black," the minister told MPs.

About R200-million would be needed for this purpose annually, said Stofile, who argued for the creation of a national developmental rugby squad.

"We (the government) are not going to decide who must be on the team.

"All we are saying is: expose everybody, give them an opportunity."

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The stats says it's better

It's not all bad news. Mhambi has been very critical about the Mbeki government in the past. But Stats SA has just release new figures from a large public survey that points to significant improvements for all South Africans.

Life is improving steadily - at least in the area of housing and basic service delivery - for the 48-million people living in South Africa, according to Statistics South Africa.

According to the survey, 70,5% of households now live in formal dwellings, reflecting what Stats SA said was a "steady increase" from 64,4% in the 1996 census, and 68,5% in 2001.

The proportion of households with access to piped water grew from 84,5% in 2001 to 88,6% this year, with the Western Cape leading the pack with a figure of 98,9%.

Households still using bucket toilets halved to just over 2%, though just over 8% still had no access to any toilet facility.

Use of electricity as the main energy source for lighting increased from 69,7% in 2001 to 80% this year.

The survey found that the number of households owning a cellphone has more than doubled over the past six years.

In 2001 the percentage stood at 32,3%; this year it stood at just under 80%.

This was accompanied by a swing away from landlines.

Also showing a notable increase was the proportion of households owning a radio, television and refrigerator "in working order".

Those owning a computer almost doubled to 15,7%, but only 7,3% had internet access at home.

In the area of education, the proportion of people over 20 with "some secondary" education grew from 30,8% in 2001 to 40,1% this year, though the percentage of those with a grade 12 qualification dropped from 20,4% to 18,6%.

Though there was also a slight drop in the percentage of over-20s who had completed primary education, there was a substantial decrease - from 18% to 10% - in those who had no schooling at all.

The percentage of those aged from five to 24 years who were in school had increased by over 10% over the last decade to 74%, though the figure was now over 90% for those between six and 15 years old.

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Why do female Indian motorcyclists not wear helmets?

Mhambi has just spent a week in Gurgaon, a fast developing hub and an special economic zone, right outside Delhi India. Mhambi realised a few things on his visit.

There ain't such a thing as a bad curry in India.

But beware, even mild delicious curries, if eaten 3 times a day, could make for a queasy stomachs and burning toilet trips. Another epiphany - Mhambi would never want to be an Indian traffic cop, and most certainly would Mhambi never ever want to be poor in India either.

And why do female Indian motorcyclists not wear helmets?



Boom town Gurgaon

It's obvious that the country is experiencing fast economic growth. With an economy more than 9 times the size if South Africa and almost 4 times the size of Africa India, a country with over a billion people - will increasing punch its weight in the world.

But on the little I saw its infrastructure is very poor. Delhi's airport is allot smaller and lacking in facilities compared to O R Tambo (the ex Jan Smuts) in Johannesburg. It's highways badly designed and traffic a huge problem.

Inequality
Inequality is - like in South Africa - endemic. Mhambi is not well placed to comment properly on it and India's discriminatory caste system. Unlike South Africa violent crime is seemingly, rather rare, and violent robberies make it to the newspaper that would not have featured in Johannesburg's The Star.

The Delhi electricity grid is straining and power cuts happen regularly a couple of times every day. All large companies operate with their own back-up power. Yet internet access is affordable compared to South African prices, with a 512 mb line a mere £20 (R280) per month.

Worrying for South African industry and workers is the pay of Indian factories. Apparently the workers in India get only about an incredible £12 per month. In South Africa a factory worker can expect between £50 to £80.

It has to be said, that the cost of metropolitan living is much lower for the Indian poor than it would be for South African poor city dwellers. It's disconcertingand uncomfortable for the Indian middle classes but here the poor live and work among the rich. There is none of the apartheid architecture and town-planning that makes South African workers travel far, eat expensively and buy expensive clothes.

Workers unite

Workers in Gurguan and Noida, the other special economic area outside Delhi are not unionised like South African labour. In a BBC program about places like Noida and Gurgaon the contributers express the hope the the new global working class will organise and unionise, and mention that South africa is one of the few developing country examples where this is the case.

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Hell hath no fury like Rhoda Kadalie

It's difficult, tedious and not very nice to harp on about things going wrong in South Africa. Allot of my leftie friends suffer from bad news and battle fatigue. Thank goodness for journalists like Rhoda Kadalie and Xolela Mangcu that never shirks the journalistic watchdog slog.


Rhoda Kadalie
Originally uploaded by SouthAfricaLogue.com.

This week Rhoda Kadalie tackles the fact that:

PRESIDENT Thabo Mbeki will go down in history as someone who fired only one person from his cabinet, and not for mismanagement but for being a political competitor.

She runs through a list of cabinet ministers that deserve the sack and in particular she does not mince her words when it come to the portfolio for agriculture and the affairs of the Landbank:

I can go on and on about our cabinet ministers, whose services should be terminated for good reason, but the one who escapes scrutiny is Agriculture Minister Lulama Xingwana. Her failure to stem the farming crisis is astounding. The Cape Times reported recently that 20000 farmers have left the land because of “low import tariffs and the dumping of cheap agricultural products from rich countries where farmers are heavily subsidised”. Add to that the more than 2000 farmers murdered since 1994, and the picture looks grim.

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Sexy shoes, rugby and way too much work

It's the sexy shoes' fault. That, the Super 14 Rugby triumph of South Africa and much too much work.

You can be forgiven if you thought Mhambi took the freeway, never to return. It was the 6th of May the last time I posted. Ages ago. My defence?

Your honour firstly Mhambi's lovely girlfriend has just finished her first shoe and handbag collection. Mhambi gave his moral, emotional, video and web site building support.


Some of the shoe leather featuring Pienaar prints being cut.

And was it worth it. The collection - called But how do we play this? - was designed in collaboration with South African artist Peet Pienaar and is ground breaking. Not only is it does it look contemporary, sexy, sophisticated, but the collection was made from sustainable materials. And if we get the funding to mass produce it, it will be produced in South Africa.


Laura in a shoe factory in Cape Town.

South Africa is not the cheapest place to produce shoes, but its one of the cheaper places where there is a minimum wage and minimum working conditions for workers. We hope to use this as a way of marketing the shoes. These shoes are sexy AND ethical: They will increase your pulling power and then when you finally fall asleep you can do so with a clear conscience.

My second defence is the rugby! I have been spending all my spare time on Keo :) Thirdly I have been working too much. But that's not really a good excuse is it. I will post more about the rugby, why too much work is scientifically proven to be a bad thing and the sexy shoes - soon.

Perhaps you can get to see them here on Mhambi first ;) At Mhambi style and substance always go hand in hand.

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Telkom should be nationalised now

A free market in telecoms is near impossible. But many young tech enthusiasts are blissfully ignorant to this fact. South Africa is no different. Often one hears the mantra, by the ZA-digirati: If only there was proper competition in South Africa, then the outrageous internet and telecoms costs would come down.


Telkom Hellkom Djouma
Originally uploaded by Deon Louw Botha.

How does this idea explain this story then?

Mhambi read via Wired Gecko about report on Engadget that the Indian Government aims to supply each citizen with a 2Mbps internet connection by 2009. Wow, amazing.

"...now the real hotness is in connecting up an entire nation. According to IndiaTimes, the government is proposing that all citizens of India receive complimentary 2Mbps internet by 2009, and the service would be provided by the state-owned BSNL and MTNL. Officials backing the plan are hoping that giving all residents access to high-speed internet would "boost economic activity""

The government intervening to supply cheap telecoms dumbfounds most of the tech ideologues. Even when it worked before in places like South Korea.

Ideologues?

Yip, you heard me. In the West the prevailing orthodoxy is such - there must be competition in telecoms provision, because the free market must prevail, service will spread and it will drive down prices. A British academic, Richard Barbrook, hit the nail on head when he coined this pervasive ideology the Californian ideology. It's worth a read.

A brief look at the history of telecoms should indicate that things are not that simple. Telecoms tend to be natural monopolies. The economic value of the network rises exponentially with the connections or users added, and considering the costs of constructing the network, especially the last mile, it's economically inefficient to have two separate networks. If left alone the larger network will swallow the smaller.

In practise Western governments accepted this fact. The USA realised that for the US to get a large network they should allow AT&T to develop unhindered, but to regulate the prices and the the roll-out to sub economic parts of the country (called universal service). Although nominally a private company Ma Bel (AT&T) under these conditions grew fast and provided all Americans with cheap phone calls. The government regulated its prices but the economy of scale it achieved made it still possible for AT&T to be hugely profitable.

In the 80's with the rise of Thatcherism and Ronald Reagan, right wing ideologues launched an assault on this old idea of a public telephone monopoly under government control. Competition was forced into all markets and also this market. But this particular one was no free market. To create competition a web of legislation, regulation and monitoring had to be spun, else the incumbents would just swallow up the new comers.

After more than a decade of a dearth of true competition, the UK started showing some of its benefits in 2003. Broadband prices started to fall, and true competitors entered the market. By this time however countries like South Korea enjoyed much higher bandwidth at lower prices for a number of years. That is broadband provided by monopoly state owned companies.

Why had competition taken so long to take hold in the UK? BT, the UK incumbent, had tried every trick in the book to forestall competition in the last mile. (The so-called local loop.) Competitors had to be allowed to connect to BT's local exchanges, because it would not have been economical for them to replicate this infrastructure. It was even claimed that BT had engineered its technical protocalls to interface less effeciently with that of its rivals. But with the vast amount of resources thrown at the problem of opening up BT (including regulatory splitting it into two seperate parts, one of which only business is to allow acces to the local loop), eventually it paid dividends.

In the US they did not try to solve the real problem at all. Instead of opening the local loop they split AT&T into a number of geographically defined telcos. They kept them separate via regulation. Each was a monopoly in his own back yard. Prices predictably went up. Today with regulation lifted somewhat, the telcos are swallowing each other once again.

What can South Africa learn from the US, UK and Korean experience?

It is possible to create a competitive market of sorts in telecoms, but it takes years, and complex legal and technical regulation, constant vigilance and strong willed enforcement. The simpler route to the information super highway, is to ditch the copious amounts of regulation and have one national monopoly, with no or little profit motive.

Currently, with Telkom, South Africa has the worst of both worlds. A private company that's not properly regulated. That coupled with tech stake holders barking up the wrong ideological trees is a recipe for disaster. No wonder predatory elites can use this state of affairs to milk South African internet users dry.

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Flash app graphs societies

Mhambi was sent this very cool flash based graphing tool - Gap minder - which represents World social indicators in the most facinating ways.

Look at this graph of the worlds countries, the vertical axis representing life expectancy and the horizontal income per person (GNI) (Press the button to see an animation of the data over time and note how almost all the dots slowly move to the top right hand corner (Higher life expectancy and income).

Note how a few of the blue dots (Africa, sudenly reverse) including South Africa in 1992. This represents the tremendous inpact of Aids. But the impact is not inevitable. Takle a look at Uganda. Also very interesting is Sudan and the Congo, who although plagued by terrible wars for many years has not seem the same devestaion in life expectancy.


Rwanda however shows the devastaion of the genocide.

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Left rhetoric right wing actions

James challenged me the other day because of something I said in my post "De la Rey is a left wing icon":

"It is a somewhat astounding fact that the Nats during their rule, consistently decreased economic inequality amongst and between all South Africans".

What did you base that on? Not to be argumentative, but if inequality was decreasing in a noticeable way between black and white under apartheid, then why was there any disatisfaction with it? If you have some kind of source that you drew that statement from, I'd really like to read it....

And too right. It is a contentious statement and deserves to be backed up with fact. Especially since the ANC has come to power South Africa has endured its longest peroid of continued economic growth in history. All south Africans should be richer.

All South Africans should be richer

The Nat's record was not consistent in the beginning but they did reduce poverty AND inequality, especially under Vorster and PW Botha.

"Despite the steady improvement in the wages of workers since the 1960's, the racial disparities were such that South Africa was near the top of the inequality league in the world."

(South Africa now tops this league.)

"From the early 1970's the government and employers initiated a steady process of redistribution away from whites that changed the position considerably. A significant redistribution of income was the result...

By 1994, blacks contributed R23 billion to government revenue, and received R34 billion in cash and in-kind transfers from government of which the largest part went on social welfare, housing, health and education."

"Whites still received nearly half of the amount the state spent on public services, but they received much less in services than the amount of tax they paid, while blacks were receiving considereably more.

Spending on social welfare for colored and Asians rose at an even more rapid rate than on blacks, and accelerated after 1984 when the government embarked on systematically reducing the disparities that still existed between the three groups that participated in the Tricameral parlaiment."

The social spending contributed to a severe fiscal crises that the state experienced from the mid 70's, other contributing factors being the War in Namibia and Angola, and the expansion of the civil service.

"A severe tax burden now weighed heavily on middle-class whites... according to an IMF study, whites by 1987 paid on average 32 percent of their incomes in tax, but received only 9 percent back in benefits."

These qoutes are from Stellenbosch academic Hermann Giliomee's book. The Afrikaners - Biography of a People.

He notes that the government started to encounter serious resistance from certain whites because of these progressive taxation policies.

He concludes his book with the end of the Nat's rule. He states that during 1948 to 1994 - the period of their rule - the economy grew four and a half times, and that the life expectancy of all South Africans increased. He notes however that the phycological damage of apartheid was heavy. The book has allot more information, numbers and references if your interested.

Contrast that to the dramatic drop in South African life expectancy since 1995.

The World Socialist website analyses the UN Development report on South Africa for 2004:

It acknowledges that there have been some positive aspects, like the building of many houses, but cats aspersions on the quality of these house since the housing subsidy dropped. It continues:

"Between 1995 and 2002, life expectancy at birth is estimated to have declined from 61.4 years to 51.4 years, indicating a 16.3 percent drop. This is largely due to the massive impact of Aids.

The statistical average hides a worse reality. In 2001 the life expectancy of blacks was 51, contrasted to whites with a life expectancy of 69. In 2001 more than 28 percent of blacks in the 30 to 39 age group were estimated to be HIV positive.

This is compounded by the drop in the total number of health professionals, which, according to the South African Health Review, declined between 2000 and 2002. According to the UNDP report: “In many hospitals and clinics around the country, there are insufficient medical and support staff to handle the workload. There are simply not enough funds being allocated to the hiring of additional staff and the payment of more attractive salaries.” The inequitable distribution of health services is also evident...

The level of inequality is confirmed by the Gini coefficient. A Gini coefficient of one indicates perfect income inequality, while a Gini coefficient of 0 indicates perfect equality. The report notes that in 1995 the Gini coefficient for South Africa was 0.596, rising to 0.635 in 2002. The report goes on to note: “In view of this rising income inequality, only six percent of all people who reached retirement age of 65 in 2000 can be regarded as financially independent. About 47 percent of people retiring are dependent on their families, 31 percent have to continue working and 16 percent rely solely on a pension from government...

The UNDP report states: “Steep wealth inequality ... contributes to persistent and rising income poverty and inequality.” This is in a context where the ruling class has “enormous corporate power and a direct influence over the economic lives of the majority of South Africans.” The government’s pro-business policies have undoubtedly added weight to already powerful corporate influences...

Ernst and Young Management Services reported that in 2003 R42.2 billion ($US620 million) worth of BEE deals were made. But the beneficiaries of these deals belonged largely to the politically well-connected elite.

The opposition Democratic Alliance noted that 60 percent (R25.3 billion) of these deals “accrued to the companies of two men [both close to the ANC leadership]: Patrick Motsepe and Tokyo Sexwale”."

One of the most worrying aspects is that school enrollment has also dropped, and while some claim the average South African is not getting a better edication, this is contested by some Wits academics I spoke to. Mhambi can stomach allot, provided he knows that South Africans are getting a propper education. But if we are not bettering the youths education, then our tomorrow will probably be worse.

Symbolic and material happiness

You ask that if the Nats decreased inequality, why were black South Africans unhappy? I spoke only of economic inequality. I don't know how old you are, but if you were old enough to have rememered the apartheid days, you would hopefully realise how dehumanising it was. It made you feel as if you don't belong, that your a second class citizen.

Essentially black South Africans were unhappy for the same reasons asAfrikaners today, who are by and large doing well economically, but very unhappy.

Don't believe the World Socialists? You can read the 2006 UN Human development report for yourself, where south Africa did significantly worse.

And chew on this chart of South Africa's Human Development Index vis-a-vis other territories from the UN's 2006 report.



But if you drove around South Africa today you knew this already. Quite frankly the poverty and conspicious consumption you see everywhere is obsene.

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How many $100 laptops could Oprah Winfrey buy South Africa?

Originally uploaded by Pan-African News Wire File Photos.

You may know Oprah Winfrey has opened a $40 million school for girls, south of Johannesburg. Apparently this is a greater sum than the US government spent on development in the whole of Africa last year.

Mhambi says many thanks Tannie Oprah. But Mhambi would wonders how many of Nicolas Negroponte's $100 laptops she could have bought with $40 million and if it would not have been money better spent?

A quick bit of maths brings me to believe that Oprah's money could have bought 400,000 laptops. Which is quite allot. Who would she give it to? I would suggest the poorest children in Gauteng.

The South African government has divided all school pupils into 5 categories according to how poor they are. In Gauteng, the smallest but most developed province there are 383,674 pupils in the poorest and largest category. This province would be ideal, relatively densely populated and with good roads, the wireless mesh technology built into the laptops could cast a wireless blanket.

Oprah could have given all of these poorest pupils $100 laptops, and probably could have covered of the next poorest category with what she will need to maintain the school and pay its staff. Just imagine 400,000 plus laptops creating their own wireless mesh all over the province and giving access to the poor to the Internet.

Mhambi is no pedagogue but he reckons that if you give children the opportunity they will learn to use these instruments themselves, without too much hassle, as if by magic. (Many South African teachers have no clue how to use a computer). Imagine the creativity it could unleash?

Now if only the South African government could deal with the predatory monopoly that is Telcom and bring down internet access costs.

And if Joe Modise's estate could repay the £500,000 and $10 million bribes for British Hawks and German subs, we would be looking at another 110,000 plus laptops, and if Shaik and Zuma...

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Mhambi's South Africa 2006

Open debate, Aids, Gays, Poverty

2006 was a watershed year for South Africa. It was a year that saw more open debate than at any time since the all democratic elections of 1994. Why? Because the monolithic ANC dominated political discourse was shattered with the infighting between the Zuma and Mbeki camps.

tragedy in south africa...aids has left a mark (South Africa)
Originally uploaded by Matt'satwwJ.

Deputy president Zuma was of course cleared of a rape charge and then the charge for corruption was withdrawn.

For the first time people and the press felt free to openly question excepted wisdom on many issues. As with most open debate, some times this questioning was good, "should the government not have spent more on the poor?" Sometimes bad: "Why give gays rights?" The specter of political campaigning along ethnic and tribal lines also raised its ugly head.

But one of the most benign effects of this opening up was that it allowed more debate on Mbeki's disastrous Aids policy that has the cost the lives of thousands of South Africans. By year end the government had changed its policy, lets hope they can implement this new policy far wide and fast.

The question remained, was this a sign of a maturing democracy or just an opening up as a consequence of a jostling for power in the ruling party?

De la Rey makes a comeback

It was also the year in which some detected the stirrings of resurgent Afrikaner nationalism and unity. A response to the renaming of towns and cities, crime, corruption, affirmative action and a general sense of exclusion of the once dominant group. This even found expression in phenomena like the extremely popular De la Rey song of a young Afrikaner, Bok van Blerk.

White intellectuals made their voices heard to. In concert authors like Brink and Malan lamented the parlous state of law and order. Malan saw a sad decay, but Brink saw slaughter in the future. Nadine Gordimer was mugged in her home, but she stayed positive, preferring to blame the government for not helping the poor.

The meaning of Africaness

Another intellectual, Van Zyl Slabbert, articulated another new trend that became increasingly visible during the year. The growing racial exclusive ideology that only black South Africans could be African, and not white coloured or asian ones.

It was not just South African white writers that were negative, so too people like UK Guardian South African correspondent Rory Carroll. He never quite fell for South Africa because it "took a sledge hammer to his cherished progressive ideals".

Another Brit, Nick Broomfield, managed to produce both the most entertaining and most out of touch documentary of the year about South Africa, "His big white self".

A booming economy

All this pessimism while one could be forgiven for asking what all the fuss was about - the South African economy appeared in rude health - growing at record levels for a record period. But, the growth has so far been very slow on delivering South African jobs. The rich is getting richer and the poor poorer.

Violence

White trash
Originally uploaded by Hermosdef.

Violence continued across the country as in the past few years. Black South Africans were still more likely to be killed than white ones, usually by other black South Africans and often by somebody they know. If you were foreign and black you were in real danger. Especially Somali business men were targeted in a spate of killings across the country.

PW Botha, the last apartheid defending leader of the country passed away.

There was increasing debate about the countries history. Events like the Battle at Cuito Canavale in Angola are set to become a political battle field going forward.

And it was reported that nearly 800,000 white South Africans had immigrated since 1994. That's nearly 20% of the total.

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SA growth fails acid job test

Groom Farm Morning03
Originally uploaded by Picherthis.

Business day reports that inspite of record breaking economical growth, the South African economy has failed to produce the number of jobs to reduce poverty.

THE economy continued to create jobs in a slow and steady fashion in the third quarter, increasing the number of people employed in the formal, nonfarming sectors by 73000 (1%). According to Statistics SA, which released its quarterly employment statistics yesterday, this brought the increase from the same quarter last year to 193000, or 2,7%.

The quarterly figure was an improvement on the 62000 jobs created in the second quarter but analysts said it was still insufficient to make a significant dent in unemployment, which is estimated to be 25,6%.

Government wants to reduce the unemployment rate to 15% by 2014, and has established the Accelerated and Shared Growth Initiative for SA (Asgi-SA) with this aim in mind.

According to Business day this is especiallly true in South Africa's second largest sector, manufacturing. Why could this be? Apparently measures taken as part of Asgi-SA are intended to boost economic growth to an annual average of 4,5% until 2009 and 6% between 2010 and 2014. But why is Asgi-SA delivering growth but not all important jobs?

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SA grows - to grow faster we need more skills more roads

The Business Day reports that the South African economy is in record breaking territory. One worry is the high debt house hold ratios, and the low levels of saving. And to sustain and even better it, the country needs better infrastructure and skills - that it does not have now.

THIS year, SA’s economy made history, reaching record highs and long-time lows measured by a range of rates and ratios.

The “making history” idea was the starting point in a paper on SA’s economy by Harvard economist Jeffrey Frankel and colleagues at Stellenbosch University. They commented that by early this year, economic growth, consumer spending, household debt, the gold price and the current account deficit were at levels not seen since the early 1980s, while inflation and interest rates were at lows not seen in more than three decades.

Since they presented their paper, a few more records have been broken. The budget surplus (now expected next year) would be the first on record (though the records go back only to 1960); household debt has risen even higher; interest rates and inflation are no longer at the lows seen in the first half of this year; but SA’s equity and bond markets have seen an unprecedented R102bn of foreign investment so far this year. Household debt is at a historic high and national savings at a historic low. But investment spending has risen to 18,7% of gross domestic product — the kind of level last seen in 1990. We’re still some way off the 25% that government has targeted as the level needed for SA to sustain growth of 6% or more, but it’s headed in that direction. And raising the rate of investment, public and private, is core to the Accelerated and Shared Growth Initiative (Asgi-SA).

...

But is it too late? The question is raised by Nedbank economist Dennis Dykes in the bank’s latest Guide to the Economy. There is evidence, he argues, that the investment drive has come too late and economic growth is likely to be constrained in the short to medium term. Dykes points to the lack of efficient transport and energy infrastructure and capacity. That is being addressed, but will take time.

But the problem is not only public infrastructure; Dykes notes the private sector also lacks effective productive capacity, hence the shortages. Net domestic investment (after depreciation) has been below 6% of gross domestic product (GDP) for over two decades; under the circumstances, it’s surprising the economy has grown as well as it has.


Read more.

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Boom times for SA economy

Construction at sunset
Originally uploaded by Parks ZA.

South Africa has just entered a record seven year economic upswing. The expansion largely driven by the contruction sector and services. Mining and agriculture continue to play a smaller part of the economy - which, in the long term can be only a good thing. Agriculture incidently contributes only 3% to South Africa's GDP. It ain't a Boere-republiek no more.

Because os this growth some commentators are lambasting a growing chorus of fierce critics of government: Why are you moaning, the economy is in rude health.

Sonneskyn en Chevrolet

Well, yes, but so was the economy booming it in 1975. In fact, SA had the fastest growing economy in the world then, but a highly unequal one, full of conspicious consumption. We all know what happened in 1976.

But all things being equal, economic growth is good news, and here is some more: The government has changed its controversial Aids policy, which the UK Guardian also sees as a sign of a weakening of the power of president Mbeki. And Australia, oft mooted as an alternative venue for the 2010 world cup, has backed SA.

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