PETER BRUCE: We should stick to what we’re good at: mining, farming, tourism

SA has dodged a bullet. Last week Moody’s, the global debt ratings agency, upgraded the outlook on our debt from negative to stable.

For the uninitiated, the outlook is not the rating, but a stable outlook means the next time Moody’s rates our debt (usually twice a year) it is most unlikely to downgrade us beyond the two levels below investment grade to which we have already been subjected.

The shift in outlook is encouraging. Cheers to the National Treasury and finance minister Enoch Godongwana. They stood up for fiscal discipline and this is the result. Not long ago our sovereign debt threatened to grow beyond 100% of GDP. Now it looks  like peaking, for the moment, at about 80%.

When we finally regain investment gradings from Moody’s, Fitch (which also upgraded its outlook to stable this year) and S&P, we’ll be able to borrow at decent interest rates again. Let us all pray that the lessons of profligacy have been learnt.

Pray, because you can be sure that not for one second does the governing ANC recognise what just happened. The old “colonial” mining economy, the one where we dig rocks out of the ground and export them, just came to the rescue again. It is why we are still a functioning economy.

So great has been the surge in prices for commodities we mine that mining company profits have exploded. And that means the tax they pay to the government is unexpectedly large and the government can continue to make Covid and other welfare payments comfortably into the future, and still make a contribution to getting our debt down. You can’t tax a loss.

Think of the nightmare had the ANC been able to put its own actual economic policies into action. We would not be exporting those rocks. We would instead be making whatever it is our current customers for rock make. We would abandon our lucrative place in the global economy for one where we compete with products made by manufacturers that have been in their game for decades.

Nothing will persuade the ANC we should not “beneficiate” our rocks more. They assume that would mean more jobs, but actually the products we “beneficiate” would be up against stiff, entrenched competition. We would swap a strength for a weakness. We would be slaughtered.

Sadly, you will search in vain for any opposition party with policy founded on the obvious (to me at least) truth that we should stick to what we’re good at. We are miners and farmers and we have a beautiful country people like to visit and relax in.

All three — mining, farming and tourism — are in effect export industries. Tourism brings in forex without us having to do any more than be nice to visitors, but we still manage to make a hash of it. In 2019, Stats SA says 16,6-million tourists visited. We should be pitching ourselves at 30-million by 2030.

There’s debate now about how long the mining boom can last. Some say it’ll soon be done, and that our ports are in any event so inefficient we can’t export all of what we produce. My own guess is that the Russian savagery in Ukraine will push the boom out a few years. So great is the revulsion in the West at Russian butchery it could take 20 years for some balance to return to the global economy.

Meanwhile, the Russians are going to find markets for its commodities hard to hold. Blockchain will ensure no Russian chrome or platinum finds its way into a car in the West.

That bodes well for SA, however distasteful the reason. And it also opens for us a real opportunity to ditch the defensive “localisation” hubris that passes for industrial policy here. For the most part localisation has underwhelmed. Last week its prime engineering “champion”, Bell Equipment, announced it plans to stop making its huge articulated  dump trucks here.

Still, our opportunity is to become a top global manufacturing export location. It is fatal to assume the invasion of Ukraine marks the end of globalisation when in fact it merely reshapes it. Ukraine will make manufacturers spread, not consolidate, their operational risk.

We should be talking about abandoning the ponderous so-called Just Transition from coal-fired energy to renewables and go hell for leather for renewables. We should increase our plans for wind, solar and battery power tenfold. We should be the first serious economy to get to carbon zero. Forget gas and other substitutes. They’re expensive and dirty and corruptible.

In less than 10 years the world is going to be consuming products with the lowest possible carbon footprint. We can have that here in double quick time with a little vision and drive. Not only could we build an 80,000MW renewables power fleet inside 10 years, but every single nut and bolt of it could be made right here.

That’s more new employers and the jobs they create than we can imagine. And when we have green power to spare we could get out and chase down manufacturers from around the world looking for a good place to make the green products of the future. Finally, a project for all of us to get behind.

• Bruce is a former editor of Business Day and the Financial Mail.