SA under President Cyril Ramaphosa has failed on such a broad spectrum of policy — from electricity and now water, to local government, health, mining, logistics and crime — that it is hard to pick out the most damaging. For me, without question, the most spectacular under-achievements have been in trade, industry and competition.
In an interview a few days ago in the Sunday Times, trade, industry & competition minister Ebrahim Patel, now in his umpteenth year in more or less the same job, was bemoaning the EU’s new carbon border adjustment mechanism (CBAM). The mechanism will tax imports into the EU from manufacturers around the world that produce too much pollution in their production processes. And that includes where they get their electricity from.
The EU has had this tax pending for ages. The EU Commission reckons it will be able to raise more than €9bn a year by 2030. Much of the revenue will go towards financing the EU’s Covid recovery package, so it is not going to walk away from it without a fight.
But in the absence of an industrial strategy that anticipates the way the world is changing, SA is going to argue that it is changing too fast. We are going to fight. “We’ve pointed out the very significant impact this will have on industrialisation on the African continent,” Patel told the Sunday Times. “CBAM, together with other measures on deforestation, will impact very significantly on our ability to export. We are taking our discussion to the World Trade Organisation in a few weeks’ time.”
He will not be the only exporter complaining, but as far as SA is concerned nothing has debilitated our industrialisation quite like Patel’s policies, always with the enthusiastic support of Ramaphosa. In his performance agreement with the president, Patel promised to introduce “six (industry) master plans finalised and implemented during the period of the administration”.
He did — an auto industry plan was already in place and he did retail, poultry, sugar, steel and furniture. Two months away from the end of the administration, though, the country’s largest sugar producer has collapsed, its biggest steel maker is being offered every inducement possible to not shut down half of its business, and Patel’s Competition Commission is taking the country’s biggest poultry producer to court.
And he has still not been able to produce a definitive plan under which the local arms of the world’s biggest vehicle manufacturers might be able to plan for the production of electric cars in SA.
What he tried to do was to draw the country’s manufacturing and trading elite into his circle, and they happily went along with him. In the process a host of small and medium-sized businesses that may not have been so blessed were left to fend for themselves. They weren’t real in Patel’s mind. Not unionised and poor payers. The import duties Patel raised to protect these elite businesses from competition — many of their CEOs signed up as master plan “champions” — did real damage to smaller importers and fabricators.
His assault on construction bosses after the Competition Commission levelled charges of collusion against them in the wake of the 2010 Soccer World Cup has shrunk what was a huge industry to a shadow of its former self. They may have deserved the fines they paid, but the wider price of the business-bashing he and other ministers so happily indulged in at the time is far more obvious today. Now Patel chases the big banks to the Constitutional Court with wild charges of manipulating the rand, appealing even the most devastating rejections by the lower courts.
He also promised Ramaphosa he would “initiate one new market inquiry and implementation of recommendations of one concluded market inquiry per annum” in order to “reduce high levels of economic concentration”. And he has — in retail, in e-commerce, and now in poultry. But to little effect, if any, other than to load more costs and pile more management time onto established taxpaying businesses.
Patel is a unionist at heart, and most of what he has done you could have predicted. But it is hard to argue in the wake of this administration that he is the right man to run a sophisticated economy in a competitive world. Ingratiating and charming, he might make an effective foreign minister. But if Ramaphosa is so easily persuaded it is possible to create a perfect economic model in this country for a left of centre government, then he clearly cannot comprehend the damage done in his name.
Patel is Ramaphosa’s fault. Nothing better measures that than the president’s utter failure to prepare the country for a future in which sophisticated consumers in sophisticated markets such as the EU will demand, whatever their governments might want, increasing evidence that what they are buying is at the very least carbon-neutral.
When there was $8.5bn on the table to help us green the economy two years ago, we were all over the donors in the West. Now that it’s locked in, we are trying to slow down the rate at which we stop using coal and other fossil fuels. In fact, we are about to try to introduce an enormous new infrastructure plan for natural gas.
We complain that the 2023 closure of the last unit at Eskom’s Komati power plant left people there with no jobs. But that closure was a direct and explicit condition of a $750m World Bank loan that we fought tooth and nail for. It was surely not the World Bank’s job to find employment for them.
But that’s us, the forever victim. We pound the table for a “just transition” but a slower energy transition isn’t about the coal jobs being left behind. It’s about the coal profits to government’s big donors. A truly just transition would go at the fastest possible pace to catch up with the markets we want to sell into, so our kids can work.
Not us. Now that decarbonisation is getting away from us, now that Eskom’s key metric, its energy availability factor, continues to slide no matter how many plans and promises are made, we’re setting off to protest about how the world isn’t waiting for us. It’s a bit pathetic.
• Bruce is a former editor of Business Day and the Financial Mail.
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