I’m no fan of Julius Malema but I have to accept that he has exposed the failure of the SA government to address the legacy of apartheid and is exploiting that failure to his own benefit. The uncharitable among you may attribute government’s failure to infighting and squabbling over the spoils of victory. And while there certainly does seem to be an element of that, I refuse to believe that this entire government is corrupt. There are too many people in the public sector – right up to ministerial level in some cases – who are quietly getting on with the job in difficult circumstances.
However, the fact remains that this government hasn’t done enough for the victims of apartheid. On that I agree with Malema but we differ markedly on the solution – but then my motivation isn’t self-enrichment. I’m not certain the same can be said for him. But I digress. The real point of this post is to highlight what I think is a brilliant solution to the reparations problem facing this government. I should note at this juncture that this post is an expansion of my editor’s note in the next issue of African Leader magazine, which role is one of my day jobs.
The idea, I have to admit, is not my own. Indeed, a good friend, @IvoVegter if you must know, alerted me the other day to an interview Denis Beckett did recently on his weekly Radio Today show, Quiet Revolution. The interview was with Leon Louw, director of the Free Market Foundation and you can download it here. Be warned though, it’s a wide-ranging discussion lasting for more than an hour. And while its all well worth a listen (especially the blast from the past when Beckett plays Jeremy Taylor’s Ag Please Daddy), the specific comments I’m referring to come about 42-and-a-half minutes into that hour.
Given that Louw is a lawyer by training, he tends to be quite verbose so I’ve edited what he said and put it in quotes to distinguish it from my own comment: “The present regime inherited the loot of the apartheid regime. People think that parastatals and SOEs were created by the apartheid regime. The answer is no, they were all private businesses that the apartheid regime nationalised and it was because the apartheid regime was nationalising that the ANC, in the freedom charter, was not for nationalisation and never was, as has been pointed out by the author of the relevant clauses, Ben Turok.”
What Louw proposes is that government take all that “loot”, and divide it up among black South Africans. It’s a two-pronged plan. Firstly, on the land issue, he points out that millions of poor South Africans currently inhabit state-owned land. His contends that government should give that land to them on freehold title (including the land on which RDP houses are built).
He reckons that will add a trillion rand (R1,000,000,000,000) to the economy overnight because it will give those disadvantaged South Africans something of value that they can sell or trade. On average, he says, it’ll put R100,000 into their pockets. Now, obviously, that’s debatable because a the value of a plot in Alex is not the same as the value of a similar-sized plot in TweeBuffelsMetEenSkootDoodGeskietFontein. So the idea needs work to ensure that equitable benefit accrues to victims of apartheid. At the same time, we need to make absolutely certain that the beneficiation process is not high-jacked and corrupted by the people meant to administer it. We’ve been down that road; Hell, we’re still on it.
Perhaps the second prong of Louw’s strategy can balance things out, which is effectively to privatise all the SOEs with shares being allocated to black South Africans. OK, he didn’t say “privatise”. He said: “We should give [SOEs to] black South Africans, in a giant give-away, directly for ownership by themselves, as Nelson Mandela himself propagated in the fifties…”
I used the word privatise because very few, if any, of the SOEs has consistently turned a profit in recent time. So my refinement of Louw’s idea is to invite private sector bids for 51% of these entities, with the balance handed out in dividend-earning shares to deserving South Africans with a net worth of less than some arbitrary figure of say, R20 000. That sounds so much more sensible than nationalisation of businesses that pay the tax that largely funds the government. So who is going to pick up the ideas, refine them further and run with them? Mr Zuma?