WHY I HATE SOCIALISM

Around 1am this morning when I woke up, I saw tweets from Economist Thabi Leoka summarising the statement from global rating agency S&P and their opinion on the dismal state of the South African economy. We are at a tipping point and this need strong political will to solve. For years we have debated if South Africa will become another failed African state the way Zambia, Zimbabwe, Uganda etc. went after the attainment of independence. We are only now realising the full negative effects of the economy mismanagement and corruption that became more apparent especially during the reign of Jacob Zuma. What is happening to SAA is not new it has happened elsewhere in Africa after independence. At independence in 1980 Rhodesian Airways was a vibrant airline with a fleet of aircraft and as we speak Air Zimbabwe has only 1 functioning old aeroplane with hundreds of employees. Zimbabwe Electricity Supply Authority the equivalent of Eskom in Zimbabwe is on its knees and it generates less than 700 mega watts of electricity and has to rely on imports from Eskom and Mozambique. In 2005 as part of insurance managers risk survery I once visited Hwange Colliery company that digs coal and pass it on to ZESA. It boggled my mind how a company would fail in a simple task of digging and transporting coal less than 15kms to the power stations.

National Railways of Zimbabwe once a giant in the Southern Africa region an equivalent of Transnet Freight Rail and PRASA combined in South Africa is on its knees. Almost all SOEs in Zimbabwe are technically insolvent as is the case in South Africa with the likes of SAA, ESKOM, Denel, RAF, PetroSA, SABC etc. Some have argued that blacks can’t run government and SOEs efficiently and that has been debunked if you look at the experience of Botswana. Botswana once a protectorate of Britain and when it attained its independence in 1966 it was one of the poorest countries in the world. I visited Gaborone in 1989 during a school trip from Zimbabwe, I can tell you there was nothing impressive about Gaborone then. At the end of 2006 my family visited Gaborone, I could see the marked difference and the road from Francistown to Gaborone was being constructed afresh yet Zimbabwe still relies on road constructed by Ian Smith over 40 years ago. I will be visiting the Botswana soon and I expect to see major changes. Now tens of thousands of Zimbabweans work in Botswana.

Another proof to debunk that blacks are incompetent is my experience in Zimbabwe from 2002 to 2007 as an insurance manager. I dealt with executives from big companies such as OK Zimbabwe, Zimasco, Bindura Nickel Corporation, Anglo American, Rio Tinto, TA Holdings, United Refineries, Cairns, Astra, Dairiboard, Kindgom Financial Holdings, Econet Wireless etc. and those companies were being managed predominantly managed by Africans. Some of those managers are my friends on social media and some of them were my MBA classmates in Harare in 2005. Many South African owned subsidiaries in Zimbabwe are being run by Africans in Harare despite their refusal to transform here in South Africa. Examples include Stanbic Bank owned by Standard Bank, Old Mutual, Zimplats owned by Implats of South Africa, Pick and Pay, Nedbank Zimbabwe, National Breweries owned by South African Breweries, Anglo American etc., Megapak Zimbabwe owned by Nampak, African Distillers Ltd owned by Distell etc.

The problem that these liberation movements did was to remove meritocracy and they started rewarding home girls and home boys and gave them complex institutions to manage. They rewarded political cronies to these top positions and ignored experts. As we speak African executives do not last long in these SOEs due to too much political interference. For example SAA was under the leadership of Ms Dudu Myeni for a number of years and from what I know her only qualifications was being a teacher and being close to former president Jacob Zuma. The government has no business running any business because of the way government is set up it is bound to fail. Government managers and politicians cannot stand up to unions because these unions are part of the governing party. In South Africa for almost every R1 the government collects almost 50c is going towards paying state employees and the percentage is rising at a faster pace than inflation yet we are seeing economic growth rates of closer to 0%. On average a government employee earns more that an employee in private sector. The government needs to be strict with public section unions on sustainable wage bill and also with how it manages public funds as any mismanagement has a direct negative effect on citizens and no wonder tens of thousands are migrating to stable economies. Money does not grow on trees.

My first job after high school was working for the government as a temporary teacher from 1996 to 1997. I had to adjust when I joined the private sector in 1997. My first posting was a school very close to the border with Mozambique in Mudzi, we had one bus plying our route. Each month teachers would miss school one Friday and one Monday as you had to catch the bus in the morning on Friday in order to get to the nearest bank in Murewa. On the Monday you would catch the bus in Harare on Monday morning and only arrive at work in the evening. Everyone on the same grade earned the same salary your performance did not matter, people would be paid slightly more depending on the number of years in service, qualifications etc. Some of the most demoralised people I ever met were teachers. In private sector a person is not paid according to qualifications but mainly due to the value they bring to the company. You might have 40 years experience and a young guy who just finished Matric can potentially come and earn more that you if he can give more value to the company. It is no coincidence that China has rose over the last four decades and is on course to overtake United States to become the biggest economy in the world. The following quotation from former Chinese leader Deng Xiaoping sums it all,” It doesn’t matter whether a cat is white or black, as long as it catches mice”. Deng led China through far reaching market-economy reforms. China is no longer a socialist country as they discover that it does not work.

The same laid back workers you find in organisations such as Home Affairs especially at Beitbridge Border post, if you put them in private companies they will become top performers. In government there is very little consequence management. I will give an example, a few months ago I knocked off work around 6pm and I left home to go and pay our electricity and property rates monthly bill. The revenue office at Tramshed Pretoria CBD is supposed to close at 7pm. Around 6:50pm as I climbed the stairs, I met three ladies on their way home and they asked me if I was going to City of Tshwane offices and I said yes, they then informed me that they had already closed for the day and they started laughing. I looked at the time and I thought they were joking and I proceeded to the entrance and sure enough it was closed a good 10 minutes early Wow. Incidentally last year, I was working on a shift that ended at 8pm on a Thursday evening. Exactly at 7:59pm, I received a call from a client who was worried that the guard who had been arranged early in the day had not arrived at 6pm as discussed. It took me almost 30 minutes to sort out the problem. I could not say sorry my shift is ending in 60seconds I can’t help.

Another problem is with unions. A few months ago, I had a discussion with a gentleman and he told me that he was a headmaster/principal for a government school around Pretoria and in the same sentence he told me that he was the union representative. That discussion has been bugging me ever since. From my school days and my days as a teacher, I always knew that the headmaster is the manager for the school on behalf of the department of education. How can a manager also be a unionised worker? So the unions have a say on who gets promoted. How does he then manage teachers and other staff members at the school. In my 22 years working in the private sector both as an ordinary employee or as a manager, I had never came across such a confusing situation. Maybe it explains why the standard of education in most government township and rural schools is below par. A school manager should not involve himself or herself in union matters period. The biggest hurdle that President Cyril Ramaphosa will have is dealing with the unions in both parastatals and public service, he better not blink as we are on a tipping point. SAA owes more than R13 billion, ESKOM has a debt of over R400 billion and Road Accident Fund has a short fall of R26 billion. Other SOEs such as PRASA, Denel, SABC etc. also owes billions of Rands.

The ruling party has indicated that it is ready to implement the National Health Insurance and that is a disaster waiting to happen it will be on the scale of Eskom if not worse. I see government employing tens of thousands of health and support employees who will demand huge salaries thereby increasing public spending to unsustainable levels. My take is that the government has no business running businesses, they should rather spend their time enforcing existing laws such as Employment equity and establishing the enabling environment for business.

I really fear for the future of South Africa. If South Africa is downgraded by all rating agents, I fear the Rand devaluing further and the foreign debt repayments increasing. The disaster we saw in Zimbabwe will be a picnic given the volatility of the South African society and the huge size of South African economy. We saw this week the Monetary Policy Committe of South African Reserve Bank was nervous about cutting interest rates. I remember vividly the crisis in Zimbabwe after the fall of the Zimbabwean dollar in 1997, the Reserve Bank of Zimbabwe increased interest rates to try and defend the country, I struggled to pay my debts then. Imagine the disaster in South Africa if interest rates are increased by even 3% many people will not manage. President Cyril Ramaphosa and Ministers Tito Mboweni and Pravin Gordhan please do not blink. I hope the leader of the opposition Mr John Steenhuisen supports the president in parliament should the vote of no confidence motion be introduced to stop Mr Ramaphosa from going ahead with the necessary restructuring processes.

God bless South Africa and Africa.