New South African President Cyril Ramaphosa made headlines when the ANC leader backed legal changes that could allow land reform to redistribute land from traditionally powerful white owners to the Black majority.
But this populist posture aside, Patrick Bond writes from Durban that the new administration is seeking to deepen pro-corporate neoliberalism and austerity.
A longer version of this article can be found at Links International Journal of Socialist Renewal.
Cyril Ramaphosa’s soft-coup firing of Jacob Zuma from the South African presidency on February 14, after nearly nine years in power, has contradictory implications. Society’s general applause at seeing Zuma’s rear end resonates loudly, but concerns immediately arose about the new president’s neoliberal, pro-corporate tendencies — and his legacy of financial corruption and class war against workers.
New legislation Ramaphosa supports will limit the right to strike, while the new budget has cuts and tax rises that hurt the poorest.
After Zuma, more extreme fiscal austerity and a return to mining-centric accumulation under Ramaphosa will amplify misery. The first evidence came on February 21 when the finance minister, the corruption-tainted Malusi Gigaba, imposed austerity and liberalised exchange controls.
End of ‘Zuptanomics’
Zuma’s fall was due to the balance tipping in recent weeks between patronage-based support within his African National Congress (ANC) leadership — mainly a result of large-scale corruption paid for by a fast-rising public debt — and the resulting threat to the ANC’s 2019 electoral prospects.
Two months ago, the ANC’s leadership narrowly voted to replace Zuma with Ramaphosa as ANC president in the hope he could restore the party’s prestige. Yet Ramaphosa is himself guilty of sustained corporate tax-dodging and accumulation of hundreds of millions of dollars via sometimes controversial projects.
Ramaphosa has little more than a 15 month window in which to erase the electorate’s visceral memory of the so-called “Zupta” circuits (named after the close ties between Zuma and the mega-wealthy Gupta family) as well as Ramaphosa-aligned “White Monopoly Capital” that has so malevolently influenced the South African state in recent years.
The Guptas’ “state capture” strategy began in the early 2000s, but came to public attention during a luxurious Gupta family wedding in 2013. Moreover, to pay the US$2.5 million bill, the Guptas and their allies raided an agricultural support fund meant for black farmers.
Former finance minister Pravin Gordhan reckons about $1.25 billion a year was lost to Zupta looting, particularly via big energy and transport contracts. To be sure, however, that is a small fraction of the $22 billion lost annually to overcharging on state procurement contracts by what is the world’s most corrupt business elite, as ranked by PricewaterhouseCoopers (PwC).
In Johannesburg, Cape Town, Stellenbosch and Durban circuits, PwC reports that “eight out of ten senior managers commit economic crime” — especially procurement fraud, money-laundering, asset misappropriation and bribery.
Upon winning the ANC leadership last December, Ramaphosa graciously thanked his predecessor. Only two legacies were mentioned: promoting the 2012 National Development Plan (NDP), and providing four million South Africans with free AIDS medicines.
The AIDS accomplishment raised life expectancy by 12 years from the early 2000s to 52. But the Treatment Action Campaign’s world-historic battle against Big Pharmacorp profiteering had already been won in 2004, long before Zuma assumed the presidency in 2009.
Ramaphosa will proudly enforce the NDP, as he was its co-author. Lacking climate-change consciousness, the plan’s top priority infrastructure commitment is a $75 billion rail line, mainly to export 18 billion tons of coal.
A wicked combination of patronage politics and neoliberalism is likely to continue. On February 26, Ramaphosa announced a new cabinet that includes the return of two former finance ministers celebrated by the financial markets — Nhlanhla Nene and Gordhan.
The new deputy president, David Mabuza, ran the eastern Mpumalanga province since 2009. Mabuza’s predecessor in that job, Mathews Phosa, was scathing about his reputation as a corrupt thug: “He's engulfed in this cloud of scandals … People fear him. They talk about the killings in the province, when they talk about them, they link them with him.”
The leader of the new South African Federation of Trade Unions (SAFTU) Zwelinzima Vavi, was also critical: “Ramaphosa’s appointment has changed nothing. He has reshuffled names but remains rooted in the corrupt and pro-business ANC led by his predecessor.”
Talk left, budget right
On February 20, Ramaphosa offered these fine words in his State of the Nation Address: “The most important people in this country are not those who walk the red carpet in parliament, but those who spend their nights on the benches outside its gates.”
But on February 21, the administration raised the Value Added Tax (VAT), which will disproportionately hurt the nearly two-thirds of South Africans who survive below the poverty line.
The VAT replaced a general sales tax in 1991 at the behest of the International Monetary Fund. This prompted strong protest by the Congress of South African Trade Unions (COSATU), which successfully ensured some foodstuffs were exempt. COSATU lobbying also ensured the last VAT rise was in 1993.
COSATU President S’dumo Dlamini said: “Now, 25 years later, we are increasing VAT. It’s not good at all for the poor. It’s not good for those workers who are toiling every day.”
In a statement, the South African Communist Party added: “It is simply untrue to argue, as the Minister of Finance did, that the 20% poorest will be unaffected by the VAT hike. What is more, other indirect taxes, like the increase in the fuel levy, will further impact on the cost of living especially for the poor.”
The monthly Child Support Grant will rise by 6.6% to $35.50 per month by October, as against an expected 5.4% inflation rate. However, anti-poverty NGO, the Pietermaritzburg Agency for Community Social Action said for more than 12 million children reliant on the grant, inflation has been rising much faster.
The old age grant to 3.4 million pensioners also rises above the official inflation rate, to $148 a month by October.
As for winners, several years of fierce university student protests were rewarded with an average $1.65 billion annual funding rise through to 2020.
‘Full-blown neoliberal assault’
But revealing where the society’s real power lies in the world’s most unequal major country, Gigaba imposed no substantive wealth tax.
SAFTU leader Zwelinzima Vavi criticised the government for leaving the main business tax at half its 1994 level: “Corporate taxes are not being touched and it’s a full blown neoliberal assault on the poor.
“This is being done in the mistaken belief that if the rich are spared they would then invest their money and that the poor will eventually benefit. It’s the whole notion of a trickle down economy which has proven to be a disaster.”
Indeed, Gigaba’s trickle-out permission for insurance and pension funds to remove another 5% of their assets offshore via relaxing exchange controls also bears examination. To let the investors search abroad for higher returns than the 8.1% that South Africa’s own state bonds pay — still among the world’s highest — is to invite yet another financial tragedy.
Gigaba admits that “high foreign debt redemptions” will hit hard within a year. But at close to $160 billion (48% of GDP) as measured by the SA Reserve Bank, South Africa’s total foreign debt is now way beyond any historical precedent.
In all these respects, Ramaphosa fits in with general neoliberal tendencies also seen emerging in other BRICS nations — as the combination of Brazil, Russia, India and China are known. This comes as the mantle of pro-globalisation policies shifts from the US to China.
He may never adopt the faux anti-imperialism of Zuma, but Ramaphosa can be expected to turn to nationalist themes given his extraordinary past record in student politics, organised labour and the ANC when it was a liberation movement.
But it is the record of an uncaring, unpatriotic capitalist — widely viewed as having blood on his hand over the 2012 killing of 34 mine workers striking against a company of which Ramaphosa was director — that the new president must live down.
Otherwise, a new nickname may stick to this government in the period ahead: the Ramazupta regime.
[Patrick Bond is co-author of South Africa: The Present as History (Jacana Media, 2014) and author of Elite Transition: From Apartheid to Neo-liberalism in South Africa (Pluto Press, 2014).]