JAUNDICED EYE

South Africans, with the turbulent history that we have, are accustomed to periodically gazing into the proverbial abyss. 

And then, contrary to the precepts of Nietzschean philosophy and the rational expectations of the rest of the world, the abyss fails to gaze implacably back. Instead, it blinks. We yawn, rub our eyes, and life goes on pretty much as it did before.

After the tumultuous events of the past weeks, it’s remarkable how speedily South Africans’ legendary, some might say foolhardy, state of perpetual optimism has reasserted itself. The trauma has been assessed, processed, and instantly banished to a safe corner of our collective psychological survival kit. That’s the one best defined not by the nihilistic Nietzsche by a bit of comforting homespun folk wisdom dating back to the Boer’s Orange Free State Republic: “Alles sal regkom.”

Even though by the numbers, we’re deep in the dwang, the belief that “all will be fine” continues to prevail against all logic, 125 years later. Estimates of the immediately quantifiable economic costs range between a minimum of R50bn and, at the upper end at around R200bn. Estimates of lost jobs range between 75,000 and 150,000.

An as yet unquantifiable figure has been wiped off the rateable value of a substantial amount of the country’s building stock in the two biggest provincial economies, with grim implications for provincial revenue. KwaZulu-Natal, particularly, has been laid waste. According to the province’s agricultural union, Kwanalu, economic activities in more than half of rural towns has been totally destroyed.

But the commentariat’s consensus on the unrest is generally sanguine. It seems to be that while some tinkering will need to be done, things are not quite as bad as we initially feared.

There have been stridently renewed demands for a universal Basic Income Grant. After agreeably musing whether this was not, indeed, the moment to add a R200bn straw to the camel’s back, President Cyril Ramaphosa settled instead on a social distress grant that will cost R27bn and will supposedly only run to March next year.

And the National Treasury’s R39bn package of relief measures will be, we are assured, require no new state borrowings. It will be funded from an estimated R100bn tax windfall from the recent commodities boom.  

Phew! Isn’t that fortunate? Instead of the unrest being a knockout punch to an already staggering economy, it appears that South Africa could handle another round of unrest without skipping a budgetary beat.

Also, South Africans have again shown an admirable “make a plan” adaptability without waiting for state assistance that is bound to be slow and scrappy, squandered or stolen. Retail supply chains — despite looted and burnt down warehouses, torched trucks, and force majeure declared by the port, rail and pipeline authority Transnet — managed to restock looted shelves with almost miraculous efficiency. 

Private sector workers of all races whose premises had not been destroyed, defied danger and intimidation to report for duty. In my neck of the woods, the difference between a broken state sector and an innovative private sector could be seen not only in citizen groups taking over security functions. Because salaries would be paid whatever they did, most of the local council seized the excuse the unrest provided to close down all operations for a fortnight. In contrast, because they had to survive, most local farmers managed, at the height of the chaos and at great risk, to get some produce to markets.

It’s tempting to draw from the many heartwarming accounts that have emerged of ordinary citizens helping one another, indifferent to race and class divisions, that we’re unsinkable as a nation. And that instinct to remorselessly hunt out a silver lining affects many, including our economic sages. 

Writing in Business Day, Rand Merchant Bank’s chief economist, Ettienne le Roux, points to the speed at which the economy was already bouncing back from the Covid crisis as indicative of the country’s “inherent resilience”. The upside of the destruction, he argues, is that it will have a substantial economic “kicker” effect. 

Looted businesses that were not destroyed will have to be restocked. Those that have been destroyed will have to be rebuilt and while that happens, their surviving rivals will experience a sales boom.

“It is difficult to gauge how much will be reinvested, but early signs are encouraging … big business remains committed to SA and is determined to emerge from this temporary setback stronger than before. As for the damage done to business confidence, the first step towards repair has already been taken. Foreign investors … will surely draw comfort from the speed with which local firms have stepped up to express their commitment to fixing what has been broken and to continue doing business in SA,” Le Roux says.

This is a reassuringly optimistic view. South Africa is not a clapped-out skadonk hurtling out of control towards disaster. By this assessment, it has been dented by some potholes on the highway but is in essentially good enough nick to retain its roadworthiness certificate. 

The Le Roux scenario implies that both South Africans and overseas investors have substantially higher tolerances for risk than they did before. There’s evidence supporting that view.

At Sharpeville in 1960 on 21 March — now observed as Human Rights Day — white police officers shot dead 69 black protestors, sparking a state of emergency, an economic slump and increasing international isolation. In the 1976 Soweto riots the official death toll was 176 and it, too, changed South Africa substantially, among other things ushering in sanctions, diplomatic and sporting exclusion, and boosting emigration. 

But both those atrocities stemmed from the actions of a minority, white, government. The world appears to be inured to the depredations of a majority, black, government. 

At Marikana, in 2012, the police force controlled by an African National Congress government shot dead 34 miners. Not very much happened at all, except for a fillip to the platinum price. 

Now, in 2021, in a vacuum created by an ANC government more worried about the bad optics of acting against its supporters than in protecting citizens’ lives, at least 337 people have died. The rand has eased against the dollar but is still doing better than it has for most of this year.

We will not know for a while yet whether the sunny assessment by Le Roux is accurate. There are good reasons, however, to be sceptical. 

It is telling that for the first time since its formation in the mid-1970s to insure against political violence, the state insurer, Sasria, cannot cover claims out of its balance sheet. Nor is the government’s R3.8bn bailout this week going to be more than a fraction of what eventually will be needed.

Also, to the degree that corporates have not already divested from South Africa, they are essentially captives. There is no immediate alternative but to rebuild and put on a brave face. In any case, there’s money to be made and ultimately the extra costs imposed by the upheaval will mostly be carried by the taxpayer and the consumer.

In any case, it’s not the corporates but individuals to whom we must most carefully look for likely trends. Personal income tax makes up around 40% of our tax revenue, double that of companies. 

Those who run small and medium-sized businesses or are self-employed professionals are the ones most critical to a South African recovery. Not only are many of these individuals highly mobile in terms of emigration but an already existing inclination to move assets offshore will accelerate.

Journalist Alexander Parker writes perceptively in Business Maverick: “The scale of the damage … in time, will be measured not just by what is gone, but also by what is quietly not replaced; by what noiselessly goes elsewhere; by what is never begun; and by endeavour and enterprise that sets sail from other ports.”

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