Treating taxpayers’ money with respect | Fin24
In partnership with

Treating taxpayers’ money with respect

Oct 08 2018 12:46
Andile Ntingi

Fierce critics of the ANC’s economic policies attach many labels to the ruling party - one of the most enduring ones being that the ANC is led by communist Marxists.

This description of the ANC is, however, misplaced and is probably best suited to the EFF, a party unwavering in its belief that farms, mines, and banks must be placed under state ownership and wealth generated by these assets be redistributed to the poor. 

But the evidence suggests that the ANC is not a communist Marxist organisation: rather, it is a party anchored in democratic socialism, similar to that found in Scandinavian countries like Denmark and Sweden, where one finds extensive welfare systems existing alongside free-market capitalism.

In South Africa, we have a ruling ANC running a welfare system. Yet the economy is dominated by the private sector, which generates the bulk of the wealth that is taxed to fund government social grants, education, healthcare, and housing for the poor. 

In this regard, the ANC and the Scandinavians are similar, because they don’t believe in state-planned economies (as the Chinese, Russians, and the Cubans did in the 1950s, 1960s, and 1970s).

During his famous three-hour Rivonia Trial speech, made from the dock on 20 April 1964 before he was convicted and sentenced to life imprisonment for his role in opposing apartheid, Nelson Mandela denied that he was a communist. 

He gave a description of his political ideology, which resembles democratic socialism (although he did not describe it as such). 

“I have denied that I am a communist, and I think that in the circumstances I am obliged to state exactly what my political beliefs are. 

[…] Today I am attracted by the idea of a classless society, an attraction which springs in part from Marxist reading and, in part, from my admiration of the structure and organisation of early African societies in this country. 

The land, then the main means of production, belonged to the tribe. 

There were no rich or poor and there was no exploitation,” said Mandela.

He then continued: “From my reading of Marxist literature and from conversations with Marxists, I have gained the impression that communists regard the parliamentary system of the West as undemocratic and reactionary. But, on the contrary, I am an admirer of such a system.”

In the 25 years since coming to power, the ANC has never pursued the nationalisation of farms, mines, and banks. Instead, it has presided over the privatisation of state-owned enterprises (SOEs), particularly under the administrations of Nelson Mandela and Thabo Mbeki. 

This includes, for example, the partial privatisation of the Airports Company South Africa in 1998,  the sale of 30% of Telkom in 1996, and 75% of the Komatiland Forest in 2004.

Privatisation was an integral part of the Growth, Employment and Redistribution (Gear) macro-economic policy, which was a business-friendly policy that stimulated growth over the course of its implementation between 1996 and 2006.

Under the leadership of President Cyril Ramaphosa, privatisation is back on the table following widespread corruption under the watch of former President Jacob Zuma, which has left many SOEs financially crippled and in need of capital injections.

The government does not have the money to keep on bankrolling SOEs that are deliberately mismanaged for the benefit of politicians. 

Ramaphosa realises that the SOEs must be restructured and partially privatised in order to bring in private investment as well as the managerial expertise lacking in SOEs (especially after meritocracy was sacrificed by corrupt executives). 

The partial surrender of SOE assets to private hands will, of course, require the tightening governance systems, the collapse of which allowed for massive corruption in the procurement of goods, services and infrastructure at SOEs like Transnet, Eskom, the SABC and Denel.

Even the R50bn economic stimulus package announced by Ramaphosa recently is designed to bring in private sector investment and is therefore extremely business-friendly. 

Ramaphosa is quite clear that the South African economy can be lifted out of a technical recession by carrying out policy reforms that stimulate private investment (rather than implementing unnecessary state intervention).

Clean governance

In 2002, a senior ANC official told this writer that he admired the Scandinavian model of clean governance and “taking good care of its own people”.

As Danish Prime Minister Lars Løkke Rasmussen told students at Harvard University in October 2015, Denmark was, contrary to common belief, not a socialist planned economy.  

Instead, it was a market economy with an expanded welfare model providing free universal healthcare coverage for its citizens, free education, and benefits for the unemployed, sick, and disabled. 

“So, what is the catch, you might ask. 

The most obvious one, of course, is the high taxes. The top income tax in Denmark is almost 60%,” Rasmussen explained. 

“In total, Danish taxes come to almost half of our national income compared to around 25% in the United States. Quite a substantial difference.”

Perhaps, finally, we should point to that very important difference between the social democrats of South Africa and those of Scandinavian countries:

The Scandinavians treat taxpayers’ money with respect while the politicians and officials of this country are prone to wasting or abusing it instead of providing quality social services to its people.

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.  

This article originally appeared in the 11 October edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

anc  |  taxpayers  |  governance