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African Briefs

 Africa Brief                                                                             29 March 2016

 SA economy guidance    

 by Cees Bruggemans                   words 1250

Besides many global influences working in on us, there have so far been only a few notable political events these past four months that have truly had a bearing on the economy, and how markets and economy may choose to respond to future events.

These were the 9/12 Nene firing, the 13/12 Gordhan reappointment, the drama concerning Nkandla in the constitutional court, and this besides various political revelations of recent weeks igniting intensification of political debate.

Africa Brief                                                                             21 March 2016

Other-worldly behaviour     

by Cees Bruggemans                   words 1170

As the years shorten into months, and then weeks into days, after which even hours start to offer breathless testimony to the grossness of Man, it becomes difficult to keep a straight face. For the grossest turn or twist hasn't taken place, or there is a bigger one on its way. At least, that is how it seems.

This is clearly not sustainable. Something is miscalculating badly, something else is playing Black Widow. Something needs to give. But which way?

Africa Brief                                                                                    13 March 2016

Powerful Symbolism     

by Cees Bruggemans                    words 900

In a traditional society with strong patriarchal features, thriving on patronage, to throw the rudder, turn things upside down, doing the unexpected, the humble thing, sends an all powerful message.

Finance minister Gordhan started it last month following his frugal budget preaching public sector belt tightening (though not, let it be emphasized, fiscal austerity) by electing to fly economy class Cape Town – Johannesburg. This Thursday Deputy-President Cyril Ramaphosa followed his lead, also electing to fly economy class on SAA on a domestic flight.


 

When it comes to status symbols, and power signals, the huge corner office on the top floor, the army of trophy assistants, the big car, the bodyguards, the flashing blue lights and cavalcade with army of motor riders in the lead, and then obviously business class seats domestically, and first class internationally, are some of the perks separating the elite from the plebs.

Private sector potentates long ago decided that this had gone far enough for hired hands and working stiffs, costs needed containment, and perk curtailment followed in many companies. Economy class for everyone except the Board and CEO. But the public sector kept going the other way, as if there were no limits.

When political recklessness and lawlessness were finally called to account these past three months as credibility effectively had gone out of the window, it felt like the end of an era and the dawning of a new one.

Not that everyone got the same message, parliament this past week giving the President a 16% salary hike, and presumably not forgetting his extensive wifely allowances, sending quite a different signal in a 6% inflation environment and deeply constrained times in which belts are made to tighten.

It was therefore interesting that Cyril Ramaphosa picked this week of all weeks to side with Pravin Gordhan, offering his own example to 400 Parliamentarians, the 1.5 million strong public sector, and to 54 million South Africans beyond.

The fat-cat times are over, we are seriously off mission, and things need to change, most symbolically with the perks. It reminds of that handful of American motor industry executives a decade ago wanting to fly hat in hand to Washington in their private planes to demand yet another bailout, only to be impolitely told to take the car, if they wanted to do so and hope to achieve anything. And so these good old boys had to hastily pile into a car and do Detroit-Washington by road, a long and demanding trek. Very humbling, too. Just what was needed.

The more nuanced aspect today in our case is our deputy president flying commercial, and economy at that, while the presidential plane is in high demand, especially for nearly weekly distant overseas trips, the relevance of which is often difficult to fathom, seeing that our most pressing problems are all at home, and mostly of our own making by causing the economy to stagnate and therefore not having the money to take the nation forward on many fronts.

It is by now apparently safe to distance oneself politically from the limitless high life lived by some, sending a signal that there are those who take a more economic approach serious.

Soon, it may no longer be safe for any parliamentarian or civil servant to be seen flying anything else but economy class domestically, for still not doing so would send out the wrong political signal, also from a career point of view?

Want to be counted as relevant? Fly economy. Nice marketing slogan for someone wanting to address a brand new market segment.

Of course, it would be so much more stronger a signal if SAA were now to elect to reduce its business class offering on domestic flights to two front row seats only (besting Comair), and severely question anyone wanting to make use of it.

Preferring to fly with that space empty would be even more impressive, with a strong signal to all those suffering taxpayers in economy class. One better, still, would be to abolish business class domestically altogether and go head-to-head with Kulula. Profits wouldn't necessarily suffer all that much (for far too many have all these free-ticket perks)?

Certainly just anything of this coming to fruition (it would take about a month to re-engineer plane configurations, if enthusiastically embracing this?) would be light years removed from wanting to lay on extra flights to Durban & Port Elizabeth for demanding parliamentary friends of the SAA chairman. Why, by the way, hasn't she been promoted yet to a distant ambassadorship and the three month mandatory diplomat training-course, too? Or do these things take time?

An era is ending, a new one is dawning, as generational change is coming, the process of choosing a new leadership being well underway, even though it may still take a while to be fully effected.

It may as yet not change our economic prospects, but one presumably has to start somewhere, even if only with symbolic gestures. But if powerful enough, these are a strong hint of what could be next. The key change moment was last December. We are now seeing the building stones being slotted into place one by one of a yet greater movement.

The economy may eventually follow if business can once again find herself in this newly shaping dispensation, rather than finding itself shunned as so much superfluous baggage. Exciting times, these.

 

Cees Bruggemans                                                                          

Bruggemans & Associates                         

 

Website www.bruggemans.co.za

Email  This email address is being protected from spambots. You need JavaScript enabled to view it.

Twitter  @ceesbruggemans

LinkedLn

 

Short Profile Dr CW Bruggemans

Chairman, Bruggemans & Associates Consulting Economists

Consulting Economist, Avior Capital Markets

Consulting Economist, Ince (Pty) Ltd

Consulting Economist, Hellmann Logistics (Pty) Ltd

Consulting Economist, Bureau for Economic Research (BER), Stellenbosch

Honorary Professor of Economics, University of Stellenbosch

 

 

Africa Brief                                                                                       3 March 2016

Dancing on the ceiling    

by Cees Bruggemans                   words 840

Dancing atop a dying body? The economy still has many innate strengths, in terms of installed capacity, and some 11 million skilled, experienced labour and a further 4 million informally employed. You can do something imaginative with such resource accumulations from past efforts.

Instead, the economy is given poor direction, daily losing its true bearing and confidence, slowly shutting down its growth engines, aimlessly adrift and sinking deeper into the water. There are apparently more important things in the body politic to do than thinking straight about the economy. Instead, thinking crooked and charmed wishful thinking tends to have the inside track. Projecting growth forward then becomes a relatively straight line business – sloping down, but how steeply?

Africa Brief                                                                                       1 March 2016

Deciding the Century     

by Cees Bruggemans                    words 780

Clearly things aren't quite normal in a constitutional democracy when the head of state runs the place like a fiefdom, sharing its spoils with cronies, who dig ever deeper in, eventually committing sufficient overreach to trigger a reaction.

By whom? That other discredited head of state (Richard Mulhouse Nixon) coined a phrase for those whom you could not see but who were present in numbers and could be counted upon when called upon – the Silent Majority.

Africa Brief                                                                             28 February 2016

The Mask Must Fall    

by Cees Bruggemans and Prof Willie Esterhyse                   words 700

The essence of the SA story is traditionalism and modernity. They sit uneasily together. Indeed, you can't have both. In the end, it is a choice that determines how society evolves. This is not unique to SA. In some form or other this choice is encountered in (many) other parts of the world, and long ago it marked today’s rich societies, too. It is one of those things that is encountered along the way to the future. And decides much.

Modernity became well vested in the Southern African continent, but during the past decade traditionalism made a comeback, capturing the main instruments of modernity (state institutions, rule of law) and proceeded to recast things. In effect creating a parallel medium, where state authority and traditional choices ruled supreme, recasting society within the body of a social democracy still using a market economy. A growing eastern-inspired imprint with strong traditional roots was taking shape on a western body slowly made to fade.

Africa Brief                                                                             21 February 2016

Invigorating Wake-Up Call     

by Cees Bruggemans                    words 1300

It came as an utter surprise, and shouldn't have done, considering the 1990s antecedent. This business of overreach, of completely driving something into the ground, only to reverse direction. But is the reversal so complete? Or is it merely a matter of jollying along pliable recalcitrants while persisting with a chosen path? As the True Path throughout?

In the mid-1990s, the new ANC-led government also embarked on a fundamental shake-up and make-over of our society, only to be convinced (at the last moment it seemed) by credible overseas comrades not to destroy too much of the existing order, but instead use it to its advantage in developing the nation. The own input to this intricate process was to prevent a collapse of public finances necessitating the need to call in the IMF. For this would have invited prescriptions of the kind totally unwanted. The ANC, and only the ANC, would decide how SA would be made to change. And if this meant getting its financial house in order all by itself (even outdoing the IMF), so be it.

Africa Brief                                                                             16 February 2016

Engaging without Changing Gears   

by Cees Bruggemans                 words 750

It is really very simple. Having got itself deeply into a total dead-end, with a policy framework that doesn't deliver the growth and structural change goods, in an unfriendly world, making the most fundamental banana peel mistakes along the way, government would now like to co-opt a deeply worried private sector while still proceeding steadily on its chosen course. That's really only engaging without changing, the cat not losing its spots, potentially resulting in more costly breakdancing.

This in contrast to taking the same end destination goals for so long envisaged, but using a different set of policy frames, aligning with private business rather than trying to stealthily co-opt it, achieve genuine buy in, get the results wanted, and encounter a different attitude globally. That would be genuine partnership.

Africa Brief                                                                             7 February 2016

Muddling Through NO option     

by Cees Bruggemans and Prof Willie Esterhyse                  words 670

Borrowing from the British experience, their long drawn-out social muddles of the 19th and 20th century, in which social conscience (Labour) and greed a.k.a. commercial self-interest (Capitalists) battled each other, though not quite to a standstill, society finding its way through the resulting maze in time by famously “muddling through”, getting there in the end, even if often via byways, South Africans are fond of also using this phrase to describe what they are going through today.

Except we are not describing a 200 year experience, but something possibly much shorter in duration, much more intricate in complexity and as intense, if not more so, in emotion.

Africa Brief                                                                             31 January 2016

The Life of Theobald M     

by Cees Bruggemans and Prof Willie Esterhyse                  words 800

When history comes knocking, it looks like one darn thing after another but isn't. Exceptional personalities are of every age, yet when they rise to prominence they tend to be major tools, for good, bad or very bad. In our own modernity one can think of Kruger and Rhodes, Smuts and Verwoerd, Mandela and Theobald M.

Excuse me, goes the chorus??? Forgive me, you haven't been introduced yet, but there is a Theobald M in your future, and the trick is to be ready and recognise him/her in the crowd of forgettables in which they are traveling. For the moment is rapidly ripening when history will touch Theodora M, and the magic will start unfolding.

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