Curiosity issue 3

Research . Rethink . Relearn ISSUE 3

CAPITAL. WHO OWNS YOU?

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ABOUT CURIOSITY

CONTENTS EDITORIAL: Capital – who owns whom and who owns you?

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Featured Researchers

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How South Africa was stolen

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Q&A: Bringing crooks to book

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NHLANHLA NENE: Guardians of the democracy

Curiosity is a print and digital magazine that aims to make the incredible research conducted at Wits University accessible to multiple audiences. It tells the stories of Wits’ groundbreaking research through the voices of talented researchers, students and academics. This edition focuses on capital in the context of political economy, monopoly capital, corruption and ownership.

CONTRIBUTORS Shirona Patel Head: Communications

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Dr Robin Drennan Director: Research and Development

FACE-OFF: Decolonising the economy vs Zumafication of economic transformation

How the ANC got its economic spots

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The unfinished business of apartheid

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Deborah Minors Senior Communications Officer

LORD PETER HAIN: Tackling global crime networks: A UK view

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Buhle Zuma Senior Communications Officer

ANTON HARBER: Lessons from muckrakers

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Schalk Mouton Senior Communications Officer

Media monopolies marginalise the poor

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BITTER-SWEET MONOPOLY: How junk food industries damage your health and taxes protect it

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PROFILE: PROFESSOR DORRIT POSEL The economics of getting hitched in Africa

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Capital and 21st Century mining

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LAYOUT AND DESIGN Thea-Lize Moolman

MINE THE GAP: Social and labour plans of SA mines

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COVER IMAGE Lauren Mulligan

Can a BRICS ratings agency rebuild SA’s economy?

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Reshma Lakha-Singh Public Relations and Events Manager

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Erna van Wyk Senior Multimedia Communications Officer

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COLUMN: The bitcoin headache – unexplained!

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HISTORY: Reimagining colonisation through art

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Lauren Mulligan Multimedia Communications Officer

Refilwe Mabula Communications Officer

PRODUCED BY: Wits Communications & Wits Research Office, 2017 Fifth floor, Solomon Mahlangu House Jorissen Street, Braamfontein Campus East TELEPHONE EMAIL WEB

: +27 (0) 11 717 1000 : wits.news@wits.ac.za : www.wits.ac.za

COPYRIGHT All material in this magazine is copyrighted and all rights are reserved. Reproduction of any part of the publication is only allowed with the express written permission of the Head of Communications of the University of the Witwatersrand. The views expressed in this publication are not necessarily the views of the University or its management or governance structures.

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EDITORIAL

PROFESSOR

ZEBLON VILAKAZI

DEPUTY VICE-CHANCELLOR: RESEARCH AND POSTGRADUATE AFFAIRS, UNIVERSITY OF THE WITWATERSRAND

Welcome to the third edition of Curios.ty, which features research and researchers that interrogate capital within the context of political economy, monopoly capital, corruption, and the rapid disruption of the status quo and the world as we know it today.

Let us consider the capital wielded globally in terms of the economic, social and political power of the big five tech companies - Apple, Amazon, Google, Facebook and Microsoft. The New York Times columnist, Farhard Manjoo, has provocatively referred to them as the ‘frightful five’, declaring that they control the world’s most important platforms – smartphones, app stores and a map of our global social interactions – in a way that is unprecedented in human history.

Who would have imagined a world where the largest hotel company (AirBnB) doesn’t own a single piece of real estate, and the largest private transport company (Uber) does not own a fleet of taxis? Take the new cryptocurrencies (Bitcoin, Ethereum, Ripple) that are traded on alternative exchanges or the latest Wits MOOCs available on the EdX platform. These examples are indicators of how global economies are being disrupted.

Recent events in North Africa and the Middle East – and the US Presidential election results – also point to the power of these platforms in reshaping regional political events in some of the world’s most powerful nations.

Moisés Naím, the Venezuelan thinker and internationally syndicated columnist, writes in his book, The End of Power, that globalisation, economic growth, a growing global middle class, the spread of democracy, and rapidly expanding telecommunications technologies have changed our world and created a fluid and unpredictable environment which has unsettled the traditional dominions of power.

Some refer to this context as the Fourth Industrial Revolution. It is a wave of change that uses technologies such as artificial intelligence, autonomous vehicles, virtual reality, and robots to enhance our cognitive abilities. Most previous technology revolutions enhanced our muscle power; this one is characterised by social and technical interfaces and will impact on the world of work and the economy.

South Africa will not escape this revolution. We will need to grapple with these changes as we simultaneously contend with transformation, social cohesion, poverty, inequality and unemployment. If not sufficiently daunting, we need to manage these changes in the context of sluggish economic growth still reliant, largely, on resources.

These are some of the questions that Wits researchers and students are exploring. By extension, Wits will implement a new research and postgraduate strategic plan (2018-2022), that speaks to the transformation of the future, whilst addressing the challenges of today.

Professor Zeblon Vilakazi

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FEATURED

RESEARCHERS Visiting Professor Ivor Chipkin is the Executive Director of the Public Affairs Research Institute.

He completed his PhD at the Ecole Normale Superieure in France and was based at the Wits Institute for Social and Economic Research between 2001 and 2004.

He received an Oppenheimer fellowship in 2005 and took up a position at St Anthony’s college at the University of Oxford. He published Do South Africans Exist?

Nationalism, Democracy and the Identity of ‘the People’.

Tawana Kupe is an Associate Professor and Vice-Principal of the University of the Witwatersrand. He served as the Dean of the Faculty of Humanities and is a former head of the School of Literature and Language Studies and head of Media Studies at Wits.

His research interests include media, development, democratisation and globalisation.

He has edited a book entitled Broadcasting Policy and Practice in Africa and has written several book chapters and articles in refereed journals.

A number of Wits experts are featured in this edition of Curiosity. Due to space constraints, we feature a limited number of short biographies below, but we encourage you to view the profiles of all researchers and contributors at: www.wits.ac.za/curiosity

Palesa Madi is an attorney in the Centre for Applied Legal Studies at Wits and the Chairperson of the Wits Chapter of Students for Law and Social Justice. She has worked in litigation and advocacy on matters related to gender, basic services, rule of law, environmental justice, business and human rights.

She has been working on matters related to evictions, domestic violence, the Marikana Commission of Inquiry and has also made oral submissions to Parliament.

Nhlanhla Nene, the former Minister of Finance was appointed as the interim director of the Wits Business School (WBS) this year. He will continue to engage with the WBS after a permanent head of school is appointed . Nhlanhla served as Chairman of the Public Investment Corporation and helped manage the funds of the State pension scheme from 2008 to 2014. Since May 2016 he has been resident advisor at Thebe Investment Corporation.

ADDITIONAL CONTRIBUTORS

Professor Dorrit Posel is an applied economist who holds the Helen Suzman Chair in Political Economics at Wits. She analyses microdata and uses this to understand economic behaviours in and across households and the labour market to evaluate the ways in which we measure wellbeing. Prior to Wits, Posel held an NRF/DST South African Research Chair in Economic Development at UKZN. Posel is a Distinguished Professor who holds an NRF B-rating.

Vishnu Padayachee is a Distinguished Professor and the Derek Schrier and Cecily Cameron Chair in Development Economics in the Wits School of Economic and Business Sciences. The Chair fosters research in sustainable development and democracy, macroeconomic policy and transformation within the framework of SA’s transition to democracy. Padayachee’s research explores South African capitalism; new directions in central banking and monetary policy; inequality, macroeconomics and capitalism; and SA’s economic policy debate.

Chris Malikane is an Associate Professor of Economics in the Wits School of Economic and Business Sciences (SEBS). He holds a PHD in Economics and is the Director of the MacroFinancial Analysis Group at SEBS. He was awarded the Edith Henry Memorial Award for Outstanding PhD Dissertation in Economics, New School of Social Research, New York in 2007. Research areas include macroeconomics, monetary economics, financial economics, development economics, political economy, growth and business cycles.

Fatima Bhoola Prof. Susan Booysen Prof. Fred Cawood Prof. Ivor Chipkin Prof. David Everatt Prof. Anton Harber Prof. Karen Hofman Robert Krause Prof. Tawana Kupe Lord Peter Hain Prof. Chris Malikane Palesa Madi Aadil Mahomed Gabriele Mohale Lumkile Mondi Nimisha Naik Prof. Vishnu Padayachee Prof. Dorrit Posel Shaun Smillie Prof. Garth Stevens Prof. Imraan Valodia Prof. Zeblon Vilakazi

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HOW SOUTH AFRICA IS BEING STOLEN

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As South Africa anxiously awaits the outcome of the

governing party’s elective conference in December, questions arise about the cost and implications of

state capture. Shaun Smillie investigates what it will

take and how much it will cost to fix the country in a world after Zuma.

Named rather pessimistically as South Africa’s ‘Teflon President’, Zuma has over the past couple of years been exposed as having caused massive damage to the country, with allegations of state capture, corruption and cronyism with the Gupta family plaguing his presidency.

It is only after he leaves office that the nation will start the process of sorting out the tangled mess and damage from state capture.

“It will be a massive task to turn that around,” says Professor Susan Booysen from the Wits School of Governance. “We need an immense strengthening of our oversight organisations like the Auditor General’s Office and the Public Protector.”

Other government executive structures such as muni– cipal and provincial executives also need an overhaul.

“We need meticulous and consistent enforcement,” she says.

For many, a post-Zuma world will also be a time to reflect on just how a country, with some of the strongest democratic institutions in the world, was sold for the private gain of a small political elite.

Massive damage has been done to state institutions like the National Prosecuting Authority (NPA) and the South African Police Service, who have been considered toothless in the pursuit to bring those responsible for state capture to book.

NPA boss Shaun Abrahams has been so quiet on the subject that he has his own twitter hashtag, #whereisshaun.

Not too long ago, South Africa prided itself on being rated by the World Economic Forum as having the best audit quality for any country. This year, that rating slid to 30.

This on the back of KPMG’s questionable auditing of the Gupta family companies and KPMG’s handling of the controversial South African Revenue Services report.

By early October Wits University had joined a host of other institutions and companies, which included Parliament and Sasfin, to ditch the auditing firm.

Just how much money has been syphoned off to crooked businessmen is hard to quantify, says Vishnu Padayachee, a Professor in the School of Economic and Business Sciences at Wits and a leading economist in South Africa. However, the impact of the leakage in state expenditure on the average South African is the erosion of the quality of social services.

“It is hard to think of anyone serving on the board of a state institution appointed after 2009 that is not captured or compromised,” says Padayachee. “That factor alone, and not their qualifications, or skills or integrity, accounts fully for their appointment. I would be most surprised if there were any exceptions; there is not a single person on any of these boards in the state that is not on the take.”

In reality, South Africa is no stranger to crooked individuals that use cash and favours to steer the state on a path that benefits them and their cronies.

“Capture is truly fused into the fibre of the South African state,” explains Booysen. “In apartheid, it was ‘capture’ by different people and a different regime. Capture was the name of the game. People were getting millions of rands for printing contracts, building statues, houses and big theatres.”

While the Guptas and their large, crude interface with the president is the one form of state capture that everyone in South Africa is aware of, Booysen says that this is just “one peak in the mountain range”.

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BETRAYAL OF THE PROMISE 1

The Public Affairs Research Institute Report, published in May 2017, argues that the African National Congress lost its place as the primary force for transformation in South African society. The research highlighted seven broad areas of State Capture. The report also argued that the country was taken over by what it called a “shadow state” in a silent coup, and highlighted four public moments that

Securing control over state owned enterprises by chronically weakening their governance and operational structures

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Securing control over strategic procurement opportunities by intentionally weakening key technical institutions and formal executive processes.

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Securing the loyalty of the security and intelligence services by appointing loyalists.

Securing parallel government and decision-making structures that undermine the executive. This includes strengthening of the ‘Premier League’.

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Securing control over the public service via, for example, the National Macro Organisation of State project.

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Securing access to rent-seeking opportunities by shaking down regulations.

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Securing control over the country’s fiscal sovereignty.

Betrayal of the Promise: How South Africa is Being Stolen was published by the Public Affairs Research Institute. Read the full report at: pari.org.za/betrayal-promise-report

FOUR MOMENTS OF A SILENT COUP 16 AUGUST 2012

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APRIL 2013 A private plane with guests for a Gupta family wedding lands on Waterkloof, the South African Air Force Base.

2015

President Zuma’s reshuffling of his cabinet, firing Finance Minister Pravin Gordhan, without consulting the ANC.

Former Deputy Minister Mcebisi Jonas refuses to sell out Treasury for a R600 million bribe.

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The Marikana Massacre led to the deaths of 34 miners and 10 people in the runup to the massacre.

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Across South Africa, business men and women are being awarded tenders on the strength of bribes to politicians within municipalities.

“The aspect that has shocked me is the crude nature of the Zuma Gupta adventures,” continues Booysen.

However, it is not just a South African phenomenon – this type of corruption comes in many forms and guises. “My guess in truth is that this is happening everywhere,” says Professor David Everatt, Head of the Wits School of Governance.

“Take, for example, in Tanzania. Donor money there comprises 50% of GDP, so the donors can tell you what your policies are. That is just state capture with a different name.”

The strengths in South Africa’s favour are its citizens; a strong and independent justice system; media; and a strengthening civil society.

“I think that there is a lot of resistance, anger and organising, and if this [corruption] carries on, people won’t put up with it,” says Professor Imraan Valodia, the Dean of the Faculty of Commerce, Law and Management at Wits.

South Africans have been taking to the streets, both locally and abroad, crying out against the misdeeds of state capture. They have even gone cyber, launching an information war against the global public relations giant Bell Pottinger, which brought the firm to its knees. There were also protests at the funeral of ANC stalwart, Ahmed Kathrada and a march on the Gupta family compound.

“What I would like to think is that ordinary citizens and civil society organisations have noticed that there are more than a few rotten apples, which has angered them, and they have now come out onto the streets,” says Everatt. “They have been able to mobilise in a way that political parties have been unable or unwilling to do.”

Helping fan this anger is a strong press that for months has been releasing the so-called Gupta leaks, and actions by civil society, including the likes of Corruption Watch and the Public Affairs Research Institute. Speaking at the Democracy Defenders Dialogue at Wits, former public protector Thuli Madonsela in July had called on activists to make it easier for people to understand how state capture is unlawful.

“Someone should make sure that the Gupta leaks are accessible to the person on the street. Once you delete people from democracy, democracy falls apart,” Madonsela warned.

state capture report titled Betrayal of the Promise: How South Africa is Being Stolen published by the Public Affairs Research Institute (PARI) in association with Wits, recommended that the Zuma-Gupta network of 12 companies and 15 individuals be broken up and that this would require political action from both within and outside of the tripartite alliance.

“I do think that it is really important for the future of our society that those who have abused the system, and stolen public resources, should be made to pay for it,” Valodia says. “This is something you don’t want to turn a blind eye to, because then you entrench that sort of practice.”

Everatt shares this sentiment: “They should be in jail, every last one of them, for public confidence to return.”

The PARI report also called for those who replace the Zumacentred power elite to commit to a new economic consensus that falls within the constitutional framework. Naturally, the future of state capture depends on who wins at the ANC elective conference in December and whether or not a less corrupt version of the ANC takes the helm.

In a post-Zuma world, it is the ANC that will have to lead this charge, says Booysen. At stake is the possibility of the ruling party losing its majority in the 2019 national general election.

“We are getting the sense among voters that there are seismic shifts happening. That doesn’t mean that the DA is going to get a majority,” says Everatt. “But it does mean that the ANC may lose its majority because its supporters will be people who will just sit at home. Then it means coalitions and deal breaking and a whole range of possible king-makers.”

Booysen feels that for the ANC to come back, it needs great sacrifices from its leaders. The party would benefit from a martyr president.

“If somebody wants to revive the image of the ANC government they would have to be prepared in the shorter term to even act in ways that could be seen as against the ANC’s immediate interests,” she says.

“You need an incredibly strong leader who is prepared to say, ‘I don’t care if I don’t get re-elected. I will do what is in the best interests of my country and longer term, my party’.”

If this is not done Booysen believes that the ANC will be in trouble.

There is no clear indication who this leader might be.

“Cyril Ramaphosa has not been as outspoken on serious issues like this [state capture], but at least he has said more and has indicated a clearer direction,” says Booysen.

Besides civil society holding strong against state capture, some of South Africa’s institutions have also remained steadfast.

Everatt believes Zuma’s favoured candidate to replace him, his ex-wife Nkosazana Dlamini-Zuma, will have a hard time just becoming president. Her biggest challenge will be winning support in her ex-husband’s traditional stronghold of KwaZulu-Natal.

“What we are learning through the process is the strength of our institutions,” says Valodia. “The courts – they function pretty well. There is a serious check in the judicial system.”

What the ANC has going for it and what might help the political party in the near future is its legacy. South Africans tend to be forgiving and the ruling party is still seen as “their liberation movement”.

But South Africans need to do more and be more vigilant.

“They tend to think that after Zuma it will be a new dispensation and there will be a new ANC,” says Booysen.

“What we are seeing is the extent to which we have allowed things to slide,” says Everatt. “When Pravin Gordhan stands up in the Great Hall at Wits and says, ‘Why aren’t you protesting against the Spanish locomotives?’, he is right. Why weren’t we?”

In other countries, such allegations of corruption and collusion would have caused governments to fall. Instead, South Africans have been rather mute, although recently this appears to be changing.

To wrestle power away from corrupt politicians and businessmen, the

To dismantle state capture, Padayachee believes the right people with integrity need to be put in the right positions.

“You need good people, good systems and those systems must be about efficiency and transparency. It mustn’t be systems that allow for graft and corruption.”

It goes beyond just politics. In the “post -Zupta” world, the nation needs “truck loads” of extra vigilance and honesty.

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Q&A

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WITH PALESA MADI

Bringing crooks to book In a democracy, the cronies responsible for a

captured state are accountable to citizens, the Constitution, and the rule of law. Schalk Mouton

asked attorney Palesa Madi about the legal ramifications of corruption.

do we legally deal with such a pervasive problem? Whom Q How do we prosecute, and whom not?

There is no single legal remedy that can deal with state capture as a whole, simultaneously. State capture is a result of various acts and/or inaction by the state and other private parties. Each of these actions (or inactions) should undergo legal scrutiny. For example, where it is alleged that the conduct of a parastatal board benefits a particular private body or family, such conduct has to be checked against the provisions of the Public Finance Management Act. Where it is found that the conduct of the board violates the Act, or that an offence has been committed, then the relevant people ought to be prosecuted.

In another instance, the conduct of state officials may amount to a violation of the right to administrative action that is lawful, reasonable, and procedurally fair, as is required by the Promotion of Administrative Justice Act. In such a case, such conduct may be reviewable and set aside by a court of law.

Regardless of the applicable legislation, the conduct of state officials and private bodies must be in line with the Constitution. In every instance where there is sufficient prospect of a successful prosecution, there ought to be prosecution and no one should be exempt.

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How important is it that we deal with this issue legally and what are the repercussions if we don’t?

It is imperative that those who are guilty of conduct related to state capture (or any other unlawful conduct) be held accountable for their actions to ensure that justice is served. If state capture-related conduct continues, the following will happen: • State resources will be taken away from those that need them the most, i.e., people living in poverty. As a result, the inequa– lity in the country will continue to grow.

• There will be no respect for, or adherence to, the rule of law.

• State institutions will deteriorate.

• The economy will weaken and there will be fewer investors.

have proposed an amnesty of sorts for all involved. Is this Q Some a good idea?

There should be no amnesty or exemptions for people for unlawful conduct where there is no justified or lawful reason to do so.

Amnesty would not be a good idea because it would undermine the rule of law and would result in the repercussions mentioned previously.

Q Is our criminal justice system up to the task?

Our criminal justice system consists of the South African Police Service (SAPS), the National Prosecuting Authority (NPA), and the Judiciary. When a crime has allegedly been committed, all these institutions have to perform their functions swiftly and without any influence. There are a number of cases where state officials or state departments were subject to litigation for unlawful conduct, and prosecutions were unsuccessful due to improper political interference.

There are, however, some successful prosecutions.

Considering the complexity and nature of state capture-related conduct (some of which is not unlawful if there is strict interpretation of some legislation), it may take long periods of time for successful prosecutions to take place.

Considering that it is alleged that the heads of some of the criminal justice system institutions (SAPS and NPA) are involved in state capture-related conduct, it is difficult to believe that our criminal justice system is strong enough. That, however, should not deter the public and interested parties from laying charges where there is a need. Even where there may be political interference in prosecutions, such interference itself is subject to legal scrutiny. have we not seen legal action against those involved, Q Why despite apparent public evidence?

There has been some legal action taken, particularly by opposition parties. Arguably, there has not been enough legal action taken against those involved. This is probably the case because of the following reasons: • Political interference in the criminal justice system institutions.

• Although, on the face of it, the conduct of officials and private bodies may amount to state capture, the nature in which some of the conduct plays out does not amount to an offence in the strict interpretation of legislation. For example, the president of the Republic of South Africa, according to the Constitution, has powers to re-shuffle his cabinet. However, the president may decide to reshuffle his cabinet to suit his needs. In the strict interpretation of the Constitution, he would not have violated the Constitution.

• Separation of powers – litigants are sceptical about approaching the courts because our laws provide that the courts should not dictate to the executive how they should run the state.

State capture cannot only be dealt with using the law. The public at large should hold their government accountable in other ways – through protest, voting, lobbying for change, making use of forums available at local government, etc. There is a strong need for civic education.

Palesa Madi is an attorney at the Centre for Applied Legal Studies at Wits University

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Guardians

OF THE DEMOCRACY Public-private sector relationships need to serve society broadly, but limiting our focus of state capture undermines the hard-won democracy South Africans are increasingly defending.

Few would argue that we, as a country, are going through a very difficult phase, politically and economically. But I believe that times like these compel us to reflect on where we are and where we are going as a nation. Each one of us has a responsibility to work ourselves out of this quagmire.

\\\ The big picture I say this not only as a member of the African National Congress (ANC) and a former government minister, but also as an ordinary South African. It is not only the ANC that is taking strain, but the whole country. I argue that we need to guard against taking a narrow view – by which I mean targeting one organisation, family, or individual.

My view is that a captured state is linked to a weak relationship between the private and public sectors. It is deeply worrying when that relationship reaches a point where the state is being taken hostage and resources are being misappropriated. The public-private sector relationship should serve society. However, 12

when it ends up serving the interests of a narrow group of individuals, I believe that it is a very sad state of affairs, because it is ultimately the poor who suffer.

This situation requires us to broaden our investigation beyond just one family or group, otherwise we, too, are trapped in serving the narrow interests of a particular group instead of serving South Africa and its citizens. I welcome a full investigation to expose state capture; I believe the nation deserves to know what has transpired.

\\\ The public private affair If the public and private sectors cooperated as partners and focused on good leadership and sound operating models, our state-owned enterprises (SOEs) would be in an entirely different situation. My view is that when the government bails out South African Airways, it should only do so in conjunction with putting in place the right leadership, and ensuring that the airline is operationally sustainable in the long term. I believe that one of the reasons for the

NHLANHLA NENE

challenges facing our SOEs is the lack of requisite high level skills.

Universities and business schools have the capabilities to produce high level skills in adequate measure, to produce ethical leaders of the future and to assume the responsibility for addressing the country’s skills deficit.

I have the privilege of serving on the board of Arise, a development finance institution headquartered in the Netherlands, which envi– sages building a stronger African economy. I believe this company is a working example of a strong public-private sector relationship that benefits society.

Working with the Netherlands’ largest co-operative bank and a Norwegian government investment fund for developing countries, this strategic public-private partnership works to grow emerging market economies, whilst simultaneously ensuring a sound return on investment for shareholders. There is much we can learn from such a strategic partnership. In South Africa, mistrust between the private and public sectors is costing us dearly.

\\\ Guarding democracy As we move towards the ANC’s elective conference in December, we need to realise that the ANC of today is very different to the ANC of 1994. The party is attracting a different kind of membership, and

stalwarts who served the ANC selflessly have left to establish their own external structures, as a voice of reason. Today’s challenges are very different to the challenges of the past and the instability in our political structures is breeding uncertainty.

South Africans need to be vigilant and I have seen increased vigilance in our country recently and in certain of our institutions.

Importantly, we view institutions like the Treasury, the Constitutional Court, and the Public Protector, as strengths of our democracy.

They are guardians of our democracy and we need to protect them.

We have seen vigilance in organisations that have taken a stand against state capture and corruption, for example, the banks and others who are drawing a line in the sand, saying: If your company is tainted, we will not do business with you until your name is cleared.

If we are to pass on a country to our children and grandchildren that is in better shape than the one we inherited, we need to guard the legacies of our institutions and establish strong public-private sector relationships that serve the best interests of the country as a whole. A narrow, self-serving focus threatens the next generation.

Nhlanhla Nene is the Interim Director of the Wits Business School and the former Minister of Finance.

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RADICAL ECONOMIC TRANSF RMATION The Zumafication of economic transformation LUMKILE MONDI South Africans want an economic model that challenges poverty and addresses equality, inclusiveness and income distribution. President Jacob Zuma argues that radical economic transformation will address these challenges. This refers to fundamental changes in structure, systems, institutions, and patterns of ownership, and management and control of the economy in favour of all South Africans, particularly the poor – whom are mostly black women.

The economy’s racial character and concentration of ownership are undisputed, but what has the ANC done about it in 23 years?

When President Zuma assumed office in 2009, the macroeconomic policy environment was sound and reinforced by a consistent, transparent framework, despite the 2007/2008 global financial crisis. An infusion of communist, trade unionist and grassroots supporters helped the President construct the biggest cabinet in the emerging democracy, populated with sympathetic cadres.

President Zuma has been instrumental in repurposing state institutions.

He tightly managed and controlled central policy making and streamlined administration. This enabled him to influence rent flows by reconfiguring the way a state institution is structured, managed and funded.

The Public Protector’s Report (October 2016) shows how state institutions have been captured for looting, consolidation of political power for long term survival, maintenance of a political coalition, and validation of an ideology that masks private enrichment by reference to public benefit. This is President Zuma’s and the ANC’s version of radical economic transformation.

Under his leadership, unemployment increased almost six percent in 2017.

In 2017, Gross Domestic Product has dropped by an estimated 1.5 percent since 2009. Statistics South Africa’s Poverty Trends in South Africa Report indicates that the proportion of people living in poverty increased by 2.3 percent between 2011 and 2015. This is 30.4 million people.

Under white rule, white poverty was a call to action. Under Zuma’s ANC, radical economic transformation is about political power and looting while 13 million (mostly black) children grow up impoverished, developmentally compromised, with their opportunities thwarted.

An economic plan for inclusive economic growth is required. This calls for a new political settlement and compromise at a national convention where politicos, churches, business, civil society, labour and students thrash out an inclusive and redistributive solution.

Lumkile Mondi is a Senior Lecturer in the School of Economic and Business Sciences in the Faculty of Commerce, Law and Management at Wits.

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In the run-up to the ANC elective conference in December, radical economic transformation is a campaigning catch-phrase. While there is no doubt that radical economic transformation is needed, there is no clear vision of what it means and how it should be implemented. Professor Chris Malikane and Lumkile Mondi from the Wits School of Economic and Business Sciences have two very different views.

Decolonise the economy CHRIS MALIKANE History shows that all postcolonial societies experience upheavals after independence, caused by the worsening socioeconomic conditions of the masses. Anti-colonial revolutionary, Amílcar Cabral, contextualises these upheavals as “the aggravation of class contradictions, the objective continuance of agents and signs of foreign domination (settlers who retain their privileges, armed forces, racial discrimination), growing impoverishment of the peasantry and the more or less flagrant influence of external factors.”

In Asia such upheavals occurred in South Korea (1960), India (1969) and Malaysia (1969). Examples of upheavals in Africa include Tanzania (1967), Zambia (1968), Uganda (1969), and Zimbabwe (1998). In South Africa, progressive forces assert that changes since 1994 have not altered the colonial power relations that underpin society. White monopoly power continues and white privilege is retained, which perpetuates racial discrimination.

Increasing poverty is papered-over by an unsustainable social grants system.

“Foreign direct investment” and ratings agencies flagrantly exert external influence. These phenomena demonstrate that South Africa is on a neo-colonial path and is ripe for social upheaval. The call for radical economic transformation (RET) is a response to continual colonial power relations.

The Freedom Charter remains the programme for RET and its socioeconomic clauses provide the platform to unite all progressive traditions. The ANC has articulated that RET requires fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans and poor African women specifically. A popular understanding of these elements suggests that economic ownership should reflect the country’s demographics.

Equally, however, collective and private forms of ownership and control of the economy need to be calibrated. For example, ownership and control of natural resources should not be in private hands – black or white. Private land ownership should be abolished and private land users should pay rent to the national treasury. The financial sector should be regulated and there should be extensive state and co-operative ownership. The Reserve Bank has to be state-owned, transformed, and fulfil a developmental and interventionist role.

Private ownership and control of the economy has largely escaped mainstream discussions of RET but this, along with demographics, is fundamental to transformation. Without these wide-ranging radical changes – similar to other postcolonial and advanced economies – there is little scope for the masses to benefit from their country’s resources.

Christopher Malikane is Associate Professor in the School of Economic and Business Sciences at Wits, Director of the Macro-Finance Analysis Group, and a member of the National Planning Commission.

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HOW SOUTH AFRICA GOT ITS ECONOMIC SPOTS Vishnu Padayachee argues that the apartheid regime

and conglomerate capital out-manoeuvred the ANC during the negotiated settlement.

There are various theories advanced for perceived shifts in the ANC’s social and economic policy during the democratic transition. These include conspiracy theories, secret late-night meetings among elites from all sides, the role of Bretton Woods institutions and conglomerate capital (the Oppenheimers and Ruperts), accusations of ANC leadership betrayal and that they reverted to a petty, bourgeois black nationalist organisation.

The ANC’s economic and social policy choices from 1943 to 1996 are the research focus for a book. The assessment begins with the Africans’ Claims in South Africa, a document produced under ANC leader Dr AB Xuma in 1943, and ends with the Growth, Employment and Redistribution document produced under Nelson Mandela in 1996. The research reveals a social democratic tradition in the ANC and an agenda for a post-apartheid “good society”.

A social democratic tradition Chief Albert Luthuli (ANC President 1952) described this “good society” as a “democratic social welfare state” – similar to the model advanced by Clement Attlee, British Labour Prime Minister (1945 to 1951). This is characterised by state-provided education, social welfare, national health services, trade union rights, and employment. Thus, Xuma’s ANC in the 1940s, maintained by Luthuli in the 1950s, located South Africa in progressive social policy globally within the context of South Africa’s unresolved ‘national question’.

However, the ANC failed to muster economic policy-making capacity prior to negotiations. Such capacity-building could have catalysed the social democratic vision of the Freedom Charter.

The ANC also eschewed opportunities to develop capacity, despite the findings of its own Macro Economic Research Group Report. Instead, the ANC opted for a market friendly trajectory contrary to the deracialised “good society” envisaged during the “first stage” of the “national democratic revolution”.

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How the good society became market friendly In the 1990s the ANC enjoyed enormous support from the South African majority and internationally. But despite its pariah status, power lay in the hands of white business and apartheid state institutions, which disproportionately influenced negotiating constituencies. Martin Plaut, Senior Research Fellow at the Institute of Commonwealth Studies, argues: “The men who had run South Africa for decades also embarked on a process designed to incorporate senior members of the ANC. Radical economic policies were dropped in favour of more conventional macroeconomic prescriptions.”

Economic incapacity The current malaise can be partly explained by neglect of economic and social policy thinking in ANC political strategy since its formation in 1912. This adversely affected the quality and creati– vity of economic policy during the transition. The ANC economics team lacked comprehensive economics training and too eagerly participated in a ‘crash course’ provided by the World Bank, J.P. Morgan and other corporate ideologues with a pro-market agenda.

Economics professor, Ben Turok wrote in February 2017: “There was no plan of how an ANC government would actually take over the administration of the country, nor did it have trained personnel to run the country. Consequently it took over most of the personnel from the apartheid regime and only replaced them incrementally in the following years. Hence the actual arrangements of transition were carried out by apartheid officials, especially in the Treasury.”

in short...

The research reveals a social democratic tradition in the ANC and an agenda for a post-apartheid “good society”.

Checkmate In the 1990s the ANC’s economics team was over-stretched trying to satisfy multiple demands and failed for many reasons to engage sufficiently with their own mass democratic base. The apartheid regime and its institutions – which had been shifting towards market-friendly economic policy since the 1980s – ultimately out-manoeuvred the ANC, whose economic policy choices in the 1990s stem from this uneven balance of power.

Vishnu Padayachee is Distinguished Professor and Derek Schrier and Cecily Cameron Chair in Development Economics in the School of Economic and Business Sciences at Wits.

Instead the ANC opted for a market friendly trajectory contrary to the deracialised “good society” envisaged during the “first stage” of the “national democratic revolution”.

“The men who had run South Africa for decades also embarked on a process designed to incorporate senior members of the ANC.” “There was no plan of how an ANC government would actually take over the administration of the country, nor did it have trained personnel to run the country.”

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The unfinished business of apartheid ERNA VAN WYK

Are South Africans finally ready to deal honestly with the past? Can we eventually see beyond the hashtags, clever memes, and witty commentary that #StateCapture, the #Guptas and #EdwardsFather elicit?

State capture should come as no surprise to us. Its blueprint has been lurking in plain sight in apartheid state records that survived shredding in the early ‘90s, and which have been gathering dust ever since in countless public archives all over the country and abroad.

As Hennie van Vuuren’s book Apartheid, Guns and Money – A tale of profit clearly showed this year, public record-keeping and archives are vital for transparency, accountability and openness in a democracy. An exposé of how white monopoly capital profiteered from the apartheid state and kept the regime in power, the book is also a tale of how those old and new roots of corruption found fertile ground in our new dispensation.

By systematically working through 40 000 documents – some two million pages – from 25 public archives, Van Vuuren and his researchers connected the dots to show how those networks of state capture and the looting of state coffers were firmly cemented during apartheid and have continued to flourish in South Africa today.

Relationships of capital Why did it take us so long to connect the dots? Was it because we needed the warm glow of the mid-‘90s new South Africa and the strong get-on-with-life-injunction in the 2000s to suppress our pain, hide our complicities, and ignore our democracy’s fragility?

“This urgency in the first two decades of post-apartheid South Africa to move beyond our past did not take into account the unfinished business of transformation between people and groups, as well as the ongoing effects of all those old relationships of capital that still exist today,” says Garth Stevens, Deputy Dean in the Faculty of Humanities, Professor in the Department of Psychology, and a primary researcher in the Apartheid Archives Research Project.

“While the Truth and Reconciliation Commission (TRC) focused on gross human rights violations, the sanctions-busting business practices of the time were left untouched. Crafted in the imagination of large parts of South African society today is this notion that these practices were not necessarily criminal but merely a response to an extremely hostile global climate at the time that slapped South Africa with sanctions.”

He says that parastatals that still exist today, such as Transnet, Eskom and Denel (Armscor), were really forms of capital that were developed during apartheid and crafted in parts of the collective memory as ‘necessary’ in order for South Africa to be self-sufficient and self-sustaining. “But of course this belies the real consequences and knock-on effects (of their origins in criminality) that we still see today,” says Stevens.

“Archives help us address the transgressions of our history in a more open and transparent way, whether it is through the grand documentation of apartheid that continues to gather dust in the National Archives, government departments that need to be declassified, or the ‘everydayness of apartheid’ that needs to be narrated,” he says.

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To fully understand our past and ensure future accountability in a democracy, academics from Wits University and their civil society partners are leading the call for apartheid state records to be declassified, and to promote open and transparent record-keeping of state records in South Africa today.

The currency of knowledge Archives are a form of currency, and in particular, the ‘archive of knowledge’ is a central currency for a young democracy still reeling from centuries of oppressive colonial rule.

“Those who control the ‘archive of knowledge’ control what is taught, what people come to believe about the world, and how it is that we come to understand ourselves in the world,” Stevens explains.

Calls for decolonisation, decoloniality, and decolonial theory and thought lie on a continuum of how students and citizens in general are trying to rethink the political, economic and social systems that have intensified in the aftermath of the 2008 global economic meltdown.

“It is very clear that even though capitalism had an elasticity that expanded beyond what the Marxists of the 20th Century could have imagined, many people feel that the system is broken,” says Stevens.

Rethinking and liberating the ‘archive of knowledge’ gives us, as people in the Global South and on the African continent, a different currency that makes us less reliant solely on the knowledge of the West, and helps us to consider a different way to be in the world, to think about the world, and to imagine what a different world would look like.

– Professor Garth Stevens/The Apartheid Archive Project

An

ti-

NGOs

eid

m

ov

Trade Unions

em

en

t

Commissions of inquiry

NPA Universities

security

National Library Courts Banks

Research Library of Parliament entities

National Treasury Auditor-General

Private sector State-owned enterprises Family collections Eskom Civil society Hospitals

Boards

th

National government departments

Multinational companies

SAA

ar

Denel

Records pertaining to apartheid can be found scattered in many archives in South Africa and abroad.

State

ap

In t ins ern tit atio ut n io al ns

‘Archives are contested spaces.

Whoever controls the archive, controls the narrative and thus controls official histories.’

Political parties Private collections

Department of Justice

JSE

TRC

Centres of memory

Provincial government departments

SARS

Libraries

National Archives and Records Service

Environmental organisations

Citizens

Industries Mining houses National Transnet

Department of Defence Archives

Intelligence Service Rural communities Police stations

South African Reserve Bank

Museums

SABC

Histories from below AT WITS Three research projects/archives at Wits develop “histories from below” to document the “histories of the everyday” that have been neglected by formal historical accounts of SA’s past.

The Historical Papers Research Archive, situated in the William Cullen Library, was established in 1966. It is one of the largest and most comprehensive independent archives in southern Africa and houses over 3400 collections of historical, political and cultural importance.

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The Apartheid Archive Project in the School of Human and Community Development is an international research initiative that aims to examine the nature of the experiences of racism of particularly ordinary South Africans under apartheid, and its continuing effects on individual and group functioning in contemporary South Africa.

The History Workshop celebrates 40 years of interdisciplinary research by academics mainly drawn from within the Social Sciences at Wits who have been promoting research into the lives, experiences and social worlds of people and communities in SA who have been neglected by scholarly investigation, in order to address the erasures of apartheid and colonial scholarship.

Gabriele Mohale

Lack of political will keeps apartheid archive in shackles ERNA VAN WYK “Public recordkeeping is about accountability,” says Gabriele Mohale, Archivist at the Wits Historical Papers Research Archive.

Mohale convened the first Archives and Democracy Colloquium held at Wits University in September that brought together academics, civil society, activists, archivists, lawyers and others to create public awareness about the urgent need for open and transparent regulation of the apartheid era records, to declassify these records, and to promote initiatives for sound recordkeeping in a democratic South Africa.

“The idea for the colloquium was this thread between archives and the level of democracy. Wherever one has accountability collapsing, you have democracy collapsing.

And the question is: Why is it that, now that we have a new, democratic state, it still does not work for the citizen in the way it should in terms of public recordkeeping and transparency?” says Mohale.

The problem with apartheid era records is that they are spread across many institutions in South Africa; in national and provincial government departments, state security agencies, courts, police stations, businesses and corporations, among private citizens, and many other places.

“As much as there is a lot of secrecy and conspiracies around what these remaining records might unveil, the reasons why declassification has not happened 25 years after apartheid is because of inefficiency in our government departments, a huge backlog in getting these records to the National Archive and processing them, and a lack of money and manpower. Mostly it’s a lack of political will,” says Mohale.

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The next step in Mohale’s work to free the apartheid archive is an oral history project to get a comprehensive understanding of the problems with the apartheid era records. This would consist of interviews with, amongst others, people in state archives; those involved in research and investigations for the Truth and Reconciliation Commission; civil society activists who have been wor– king with archives; and researchers.

Following this, there would have to be a full audit detai– ling the issues with access regulations, the governance of these state records, who is responsible for overseeing them, and then to make substantial recommendations in terms of administration.

“Because public recordkeeping is about accountability, the South African National Archive is currently placed in the wrong department. It should be moved from the Department of Arts and Culture, the department of which the budget is always the first to be slashed, to the Department of Public Service and Administration, because administrative justice and accountability is reliant on proper public recordkeeping,” says Mohale.

This project is a massive research undertaking that requires an extremely knowledgeable and dedicated researcher or research group. “We have the funding, but we now need to find the right person or group to take on this project,” she says. * The Archives and Democracy Colloquium was jointly hosted by the History Workshop and Historical Pa– pers Research Archive at Wits University, together with SECTION 27 and the Public Affairs Research Institute.

TACKLING GLOBAL CRIME NETWORKS A UK VIEW

PETER HAIN

Lord Peter Hain tabled a series of allegations in the UK’s House of Lords relating to the possible role of British banks in alleged money laundering and illicit financial transactions centred around South Africa’s President Jacob Zuma and the Gupta family.

In the House of Lords you said the illicit transactions were “part of a flagrant robbery of South African taxpayers”. What do you mean by this?

The Guptas, a family from India that relocated to South Africa have, with the connivance of the South African Presidency been getting government contracts and allegedly thereby robbing taxpayers of billions.

On regular visits to South Africa, I have been stunned by the systemic transnational financial network facilitated by the Guptas and the presidential family, the Zumas.

If there had been more proactive and genuine cooperation between the multi-jurisdictional law enforcement agencies – and within and between the banks, which have been moving money for the alleged Gupta/Zuma laundering network – the devastation wrought on South Africa could have been significantly reduced. And perhaps, the financial institutions involved would have been better able to mitigate their exposure.

So does it point to South Africans benefiting from the illicit transactions?

I had delivered by hand to Philip Hammond, the Chancellor of the Exchequer, printouts of transactions, and named a British bank concerned. I asked that he again refers these to the UK’s Serious Fraud Office, the National Crime Agency and the Financial Conduct Authority for investigation.

Was there a specific event that triggered your request to the Chancellor?

I was asked by senior African National Congress figures and stalwarts to do this. My relationships with them go back more than half a century when we stood shoulder to shoulder fighting apartheid. As before, my latest information has been supplied by South African whistleblowers deep inside the system who are disgusted by the corruption at the heart of the state.

As someone who fought against apartheid, how do you feel about having to take up a campaign against the country’s democratically elected government?

Having been active along with my brave parents in the anti-apartheid struggle it’s painful for me to witness corruption within a monopoly capital elite around Zuma’s family and their close associates, the Gupta brothers.

But we should look closer to home, here in the UK. The complicity of our financial institutions in this, as well as the responsibility of law enforcers and regulators in all the concerned jurisdictions, should make government ministers and parliamentarians hang their heads in shame. Just as they were complicit in sustaining apartheid, so today they are complicit in sustaining the corrupt power elite in South Africa which is now betraying the legacy of Nelson Mandela and the anti-apartheid struggle.

This information allegedly shows illegal transfers of funds from South Africa made by the Gupta family over the last few years from their South African accounts to accounts held in Dubai and Hong Kong.

Many of the transactions are legitimate. But many certainly are not.

Winning the war against financial crime will require coordination, influence, action and accountability between multi-jurisdictional law enforcement agencies. The success of criminal networks also relies on the action or inaction – and cooperation or non-cooperation – of the relevant law enforcement authorities.

The illicit transactions were flagged internally in the bank concerned as suspicious. But I am reliably informed that the bank was told by the UK headquarters to ignore it. That is an iniquitous breach of legal banking practice in the UK, which I trust ministers would never countenance.

It is also an incitement to money laundering. This has self-evidently occurred in this case, sanctioned by a British bank, as part of the flagrant robbery of South African taxpayers. They have lost millions of pounds and many billions of their local currency, the rand.

Lord Peter Hain was a vocal anti-apartheid activist born in South Africa who grew up in the UK. He is a Visiting Adjunct Professor at the Wits Business School. This article was first published in The Conversation Africa – www.theconversation.com

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LESSONS FROM

MUCKRAKERS While we celebrate the work of investigative reporters in exposing state capture and corruption, we also need to interrogate where journalists got it wrong, and how damaging this has been.

We hail the work of those who – with doggedness, skill and bravery – are calling to account our president, his friends, family and allies, and exposing the extent to which they have destroyed individuals and institutions while they loot the public fiscus. Where most other institutions of accountability – such as the new Public Protector, the National Prosecuting Authority, the Hawks and the SA Revenue Services – have fallen short, a coterie of journalists have filled the gap.

Jacques Pauw is, deservedly, the man of the moment, having uncovered some incredible dirt to add to the pile that is already out, and written it with maximum impact and consummate timing. But he is building on the work of others, such as the amaBhungane/ Daily Maverick Scorpio team of Stefaans Brummer, Sam Sole, Susan Comrie and others; Sikonathi Mantshansha at the Financial Mail, and Adriaan Basson and Pieter-Louis Myburgh at News24.

But Pauw also highlights in his book instances where journalists allowed themselves to be used by those out to capture institutions like SARS and the Hawks, with devastating results.

Sadly, the name of the country’s biggest newspaper, the Sunday Times, and some of its most senior journalists, pops up frequently in these stories.

The best-known case is that of the Sunday Times’ reporting two years ago on an alleged “rogue unit” in SARS. The story began with a legitimate tale of sex and power: SARS official Johann van Loggerenberg had an affair with a Pretoria lawyer, Belinda Walters, who was acting for someone Van Loggerenberg was investigating. She turned out to be a double-crossing triple agent, and when their relationship went sour, both the Sunday Times and City Press exposed an apparently legitimate story, though each favoured a different side in the dispute, depending on who their main source was.

But the Sunday Times went on to report that Van Loggerenberg’s unit had gone rogue, even bugging the presidency and running a brothel. They ran a total of 35 stories over a two-year period. These stories were used to attack, harass, humiliate, dismiss and prosecute Van Loggerenberg and others who were among the tax authority’s best people, allowing a free hand to those, under SARS head Tom Moyane, who wanted them out of the way so that he could protect the president and his allies.

As Pauw put it: “The Sunday Times journalists have contributed greatly to ending the careers of dedicated civil servants and ultimately enabled Tom Moyane to break the tax collector.”

The Press Ombusdman ruled in a series of judgments during December 2015 / January 2016 that these stories were “inaccurate, misleading and unfair” and a “serious breach” of the Code of

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ANTON HARBER Conduct. They were ordered to retract and apologise. It took the Sunday Times a while, and a change of editor, but in April 2016 the paper ran a full-page withdrawal and apology. The damage, though, was done.

Pauw also lambasts the Sunday Times 2011 report that General Johan Booysen was running what was effectively a police hit squad in KwaZulu-Natal. This story is hotly disputed, with the Sunday Times team adamant that their evidence is good, while Pauw and others believe Booysen was a good crime-fighter targeted because he was nailing corruption in his area. This story is potentially embarrassing, as it won the major Taco Kuiper Award for Investigative Journalism (in which I was a judge).

When one tries to wade through these conflicting versions, one finds that the people at the centre of them are seldom clean (Loggerenberg did have the compromising affair which kick-started the story, and Booysen may well have a case to answer on some of the killings attributed to his team).

It becomes almost impossible to discern the truth between radically conflicting versions with some truth in each side. And, once the Sunday Times’ credibility was damaged, everything else after that has to be looked at more closely.

Another was the allegation that drove Anwa Dramat and Shadrack Sibiya out of top positions in the Hawks. They were accused of taking part in the illegal rendition of Zimbabwean nationals.

Pauw cites these as key moments in the push to drive out from these important institutions good people who were acting against corruption, and freeing the hands of those who wanted to get into the till. Some of the journalists were innocent victims of manipulation (though they still need to answer for how they allowed this), while one or two appear to have been seriously negligent, perhaps even knowing participants in the factionalism.

In some ways, it seems harsh to pick out the Sunday Times, especially since some of these stories are old and their team also did many good and important stories. M-Net’s Carte Blanche, on the other hand, aired the “rogue unit” story and have not retracted it.

A few years before this, I was one of a team of outsiders commissioned by the Sunday Times to investigate and report on a series of stories which had gone horribly wrong. Those with a memory for the bizarre might remember one of these, which appeared under the headline, ‘Cape Town sells its sea’.

In general, and ironically for a group of people who do well in holding others to account, we said there was insufficient accountability and much arrogance in the newsroom. The report caused a brief flurry, and the paper moved on. Promises to bring us back to review progress six months later did not materialise.

One of the journalists, Stephan Hofstatter, said a few things on the radio that reminded me of this. He said the allegation that SARS had run a brothel had been found in a SARS memo, but they had not checked it out. This was a good example of a fact being “sexed up” without enough time on deadline to confirm what was a wild claim. He also said he was not the lead writer in some of these stories and the next day “did not recognise my name on the story”. He was implying that the story had been done by a team of which he was just one part, he had lost control of the details once it was in the hands of editors, and it had been “sexed up”.

We interviewed most of the staff and wrote a long report which revealed the structural problems in the Sunday Times newsroom that led to these mistakes. Some of them still seem pertinent: •

Too many people were interceding between the reporters and the end product to rewrite – and “sex up” – stories.

Reporters lost control of their stories, and the search for racy intros and headlines sometimes distorted facts.

•

Fact-checking had become a formality, rather than an embedded culture.

•

The investigations team operated in secrecy as an untouchable elite.

•

Insufficient planning meant that there was too much pressure on a Saturday afternoon to find a great front page, and caution was sometimes thrown to the wind.

Lots of people have been damaged by these practices, inclu– ding journalists.

Anton Harber is Caxton Professor of Journalism at Wits University.

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Curiosity

Monday, 17 November 2017

Friday 1 December 2017

MEDIA MONOPOLIES MARGINALISE THE POOR Access and ownership of media in Africa follows the lines of privilege TAWANA KUPE

Media and communications have been central to exercising power in Africa historically, entrenched as they were in colonialism and apartheid in South Africa. What are the prospects for a free media in a captured state in 21st Century South Africa?

that it was some media outside the control of post-independent African and post-apartheid states that gave voice and editorial space to forces opposing those stifling democracy, clean go– vernance and economic inclusivity.

Different forms of media ownership and control have been central to political-economic control and the dominance of forms of cultural representation. Media freedom was threatened because of censorship, bans, arrests and the incarceration of journalists and editors, multiple restrictions and the monopoly of broadcasting.

South Africa is a beacon of hope only because of its constitutional guarantees, yet it is not immune to other insidious threats to press freedom.

Media that offered a counter-narrative to oppression and an alternative vision of a free society opposed colonialism and apartheid. The cast of characters which owned media supportive of liberation included nationalists, radical activists, churches and emergent media entrepreneurs of all races.

Since colonialism and apartheid, during all of Africa’s political, economic and cultural upheavals, the media have driven, recorded and stymied or facilitated change. Developments in media have been indicative of African ‘progress’.

His master’s voice Of ourse media outside state control contributed to the struggle for independence and freedom despite repression. It follows also 24

Even then, colonial rule and apartheid played out in the media space. Media freedom is still a long walk to freedom in many African countries. Colonial-era restrictive media laws remain embedded in statute books despite the departure of the last colonial governor.

The use of predominantly non-African languages by the print media perpetuates an urban elite orientation. News media struggle to strike the balance between reporting positive deve– lopments without practicing ‘sunshine journalism’, and being critical and confirming the stereotype western media have of Africa as the archetypal home of disasters untold.

Media | Politics | Economics

State monopoly of broadcasting endures in many guises with occasional periods of relative freedom. The South African Broadcasting Corporation – the continent’s great hope since the resurgent democracy in the 1990s and the promise of a model of genuine public broadcasting free from state or commercial interests – has succumbed to his master’s voice.

Advancing African frontiers On the other hand, the emergence of FM radio stations and talk radio has expanded freedom of expression across Africa.

The growth of locally-made television programmes and African music videos demonstrate African cultural creativity and the exploration of new identities and self-expression. A tradition of investigative journalism is strengthening in precarious political environments and demonstrates courage to hold the powerful accountable and for transparency to triumph.

New media and mobile telephony have spawned online and digital media spaces that, despite not reaching a mass audience enable free expression, particularly among the young and educated. Interactive features of online and digital media (and their disruption of the traditional sender and receiver positioning

of media and audiences) has the potential to transcend control and censorship and to deliver real democracy.

However, the media market has exercised its own modes of censorship, at times reinforcing the enduring hand of state and political controls. Ownership and control of media remains in the hands of the historically economically privileged and the newly economically empowered.

Some media, such as the print sector in South Africa, that supported repression during apartheid, are reborn as supporters of editorial independence in relation to state and government power, but are silent on the insidious corporate and commercial control of the media and the power of private interests.

A careful analysis demonstrates that access to the expanding range of media available on the continent follows lines of economic privilege that marginalises the poor and creates new digital and social divides. Inequitable access to communications and media and information asymmetry contributes to the 21st Century phenomenon of increasing unprecedented social inequality that threatens the creation of sustainable democracies.

Tawana Kupe is an Associate Professor of Media Studies and VicePrincipal of Wits. He is also the Chairman of the amaBhungane Board.

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BITTER-SWEET MONOPOLY The impact of sugary drinks on public health has a lot to do with waistlines and even more to do with the

bottom line. Corporations selling sugary drinks advertise relentlessly and capitalise on the consumer’s sweet spot with dangerous implications for public health.

DEBORAH MINORS

diab Research in the Wits School of Public Health explores how multinational corporations selling sugar sweetened beverages (SSBs) undermine health, and proposes fiscal measures to mitigate the impact. SSBs are linked to obesity, type 2 diabetes and dental problems. The Priority Cost Effective Lessons for System Strengthening South Africa (PRICELESS SA) research unit advises on the allocation of resources for national priorities that address public health.

M oney where the mouth is

“Fiscal policies for health involve raising the price of a product to deter its use or decreasing the price to stimulate use, and income transfers to vulnerable populations to make health products and services affordable,” says Karen Hofman, Director of PRICELESS SA, which launched the Fiscal Policies for Population Health in SA report in January 2017. The report shows that introducing a tax on sugary beverages could save thousands of lives and raise revenue for South Africa.

A study by the American Chamber of Commerce showed that by 2030 chronic, non-communicable diseases (NCDs) will cost South Africa 7% of GDP. Most are obesity related.

“The impact of NCDs is not only deaths, but also quality of life from amputations, blindness, and kidney failure caused by diabetes as a result of consuming too much sugar,” says Hofman.

According to the Head of Orthopaedic Surgery at Charlotte Maxeke Johannesburg Academic Hospital, Dr Thifhelimbilu Luvhengo, the wards are overflowing with diabetes patients who have on average five amputations before they die.

Frank Chaloupka, Professor of Economics at the Health Policy Center at the University of Illinois, Chicago, visited

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the Wits School of Public Health in 2016 after presenting research to Treasury on the effects of prices and policies on diet, physical activity, and obesity. Chaloupka’s research shows that a 10% increase in the price of SSBs resulted in a 12.1% reduction in consumption.

“There are just a handful of behaviours that contribute to a lot of these NCDs if you look at the leading causes of death: Tobacco use, unhealthy diets, physical inactivity, and excessive alcohol use. It suggests to me if we can do something to change those behaviours, it will have an impact,” says Chaloupka.

But changing behaviour is difficult – particularly amidst million-dollar advertising onslaughts.

M onopolising mindspace

Rob Moodie is Professor of Public Health at the College of Medicine, University of Malawi, and Professor of Public Health at the University of Melbourne’s School of Population and Global Health. He spoke at the Wits School of Public Health in October 2016 and interrogated strategies used by junk food corporations generally to drive sales and profits.

“Transnational corporations are major drivers of non-communicable disease epidemics. These corporations profit from increased consumption of tobacco, alcohol, processed food, etc. The global beverage industry spends billions on product advertising and then blames individuals for not practicing self-control,” says Moodie.

These corporations market aggressively through in-store promotions and on-the-ground activations. These stra– tegies aim to associate the brand with local aspirations and ultimately become synonymous with the culture.

As consumption rates begin to stabilise among SA’s middle class, the SSB industry is targeting the poor.

T aste the feeling…

Moodie says Coca Cola uses massive sponsorship of sport and music as a critical component of its corporate social responsibility strategy. In South Africa advertising spend by Coca Cola increased 33% from 2014 (R193m), to R259m in 2016. Coca Cola was the top township brand in 2016 and 2017.

betes On January 19, 2016 US-based magazine Advertising Age published an article about Coca Cola replacing its ‘open happiness’ tagline with ‘taste the feeling’.

“Setting an enormous brand like Coke on a new marketing course is a massive undertaking and comes as the brand battles category headwinds, most notably declining soda consumption amid growing health concerns,” wrote E.J. Schultz, journalist and Chicago Bureau Chief at Advertising Age.

“Coke would adopt a ‘one-brand’ approach that will unite multiple varieties like Diet Coke and Coke Zero”, wrote Schultz, because “‘there are moments when this consumer wants to reduce their sugar intake’,” accor– ding to Coke’s Global Chief Marketing Officer, Marcos de Quinto.

“The health risk posed by consumption of these drinks is the high caffeine and sugar content, which in excess has dire consequences. The move to introduce a tax – also known as a health promotion levy – is necessary as South Africa faces a tsunami of obesity-related diseases.

A tax will reduce some consumption by increasing price, but other drivers – such as advertising to children – also need attention,” says Hofman.

Preference for food and beverage products is shaped by brand image through tactical marketing and advertising strategies. This is especially true of newer entrants like energy drinks. In 2017, researcher Nicholas Stacey at PRICELESS led a study that shows that energy drinks have achieved the highest recent sales volume growth in SA. This shows that advertising and sales of energy drinks (which have the highest sugar content), targeting adolescents and youngsters, is on the rise.

A caning from sugar giants

The sugar industry has used the threat of exaggerated jobs losses if government imposes a tax on sugary be– verages. Hofman claims, however, that there are already fewer jobs, since small-scale cane growers have stopped planting, while sugar giants Illovo, Tongaat Hulett, and Transvaal Sugar Ltd have diversified to remain profitable.

Research shows that climate change and drought forced this diversification, which has enabled multinationals to capitalise. Tongaat Hulett’s disposal of land is another strategy to remain profitable, as is the merger of Transvaal Sugar with RCL Foods.

“Allegations of job losses have less to do with the proposed sugary drinks tax and more to do with global multinationals dominating the local market. The question is the extent to which South African workers benefit,” says Hofman.

J ust desserts

On 7 November 2017 the Standing Committee on Finance decided that a decision for the Rates and Monetary Amounts and Amendment Revenue Laws Bill could proceed to the National Assembly. The amendment bill provides in general terms for a Health Promotion Levy, and a schedule to the bill specifies that this will take the form of a tax on sugary beverages. Treasury plans to introduce the tax in April 2018.

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PROFILE

The curious economist explores getting hitched “I’m a social scientist who studies human behaviour from the perspective of an economist,” says Dorrit Posel, Distinguished Professor and the Helen Suzman Chair in Political Economy in the School of Economic and Business Sciences at Wits.

Posel is an almost accidental economist - the Johannesburg-born, KZN-raised Durban native originally enrolled for a BSc in applied mathematics at the former University of Natal. But the vibrant campus beyond the maths lab compelled her to seek an alternative specialisation.

“I was so jealous of the campus life and I missed studying people and how they interact, so at the end of first year I went to see a career counsellor, who suggested I take economics in second year,” says Posel.

She had to take an extra year to major in economics but now holds a PhD from the University of Massachusetts (Amherst), a postdoctoral fellowship in economics from Princeton University, is the recipient of the UKZN Vice-Chancellor’s Research Award (2005), and held a South African Research Chair in Economic Development from 2008 to 2015 at UKZN, before moving to Wits in 2016.

Posel seemed destined for academia since she comes from a family of academics. Her father, Karl Posel, taught Electrical Engineering at Wits, her mother, Ros, taught history at the former University of Natal, her sister, Deborah, established the Wits Institute for Social and Economic Research (WiSER), her brother Daniel studied medicine at Wits, and her other brother David, studied medicine at UCT. Posel’s own academic career began in 1988, when she became a junior lecturer at the age of 21. “We didn’t have ‘gap years’ in those days,” says Posel, now 52. After postgraduate studies abroad, she returned to the economics division at UKZN, before moving to the School of Development Studies as a South African Research Chair. Here she continued a productive research career exploring the interface between households and labour markets, to better understand the nature of family formation, labour mobility, the constraints and returns to labour force participation, and the allocation of resources within households.

“I’m curious. I always want to know more, and research is like peeling an onion – exploring one question raises more questions. I’m also motivated by wanting to have input into people’s lives in order to make a contribution,” she says.

A key research area over the past eight years concerns marriage and union formation. Posel’s research revealed that marriage rates were falling while the rate at which women were participating in the labour force was increasing. Significantly, her initial data showed large race differences in marriage rates, and particularly low and falling rates amongst Africans.

“I wanted to understand why marriage rates were so low amongst African women in particular and what the implications were for the economic status of women and children,” says Posel.

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Professor Dorrit (Dori) Posel researched marriage and the labour market to find out why fewer African women were marrying while their participation in the labour force was increasing.

DEBORAH MINORS

Eligible black bachelors The first phase of this research provided two sets of quantitative evidence consistent with economic constraints of marriage, particularly amongst Africans.

The first is the existence of a large marital earning premium amongst African men (and not amongst white men), meaning that married African men earn significantly more than the other African men who are otherwise similar in age and education.

Moreover, this earnings premium appeared to derive from the selection of higher-earning African men into marriage, rather than from the causal effect of marriage on men’s productivity.

“In other words, it’s not that marriage makes men more productive so that they earn more, but that higher-earning men are more able to marry,” says Posel.

The second piece of evidence is the finding that marriage amongst African women is significantly more likely if they live in districts where there are relatively more higher-earning African men.

“One reason why the economic status of African men may be particularly important for marriage concerns the traditional practice of bride wealth (ilobolo)”, says Posel, adding that several qualitative studies had drawn a link between changes in the practice of ilobolo, and a delay in marriage or an increase in non-marriage.

These findings informed phase two of Posel’s research, which explored the practice and importance of ilobolo in the marriage process.

Marriage market iLobolo is historically paid in cattle and negotiated as a cost per cow.

In KwaZulu-Natal, payment was historically codified to 10 cattle plus one beast for the bride’s mother. Persistently curious Posel pondered: If people want to get married, then why doesn’t the price of ilobolo fall to make marriage cheaper?

Posel switched her research methodology from analysing microdata to qualitative data. She needed to understand the nuances of people’s marriage aspirations and the importance they attach to marrying with ilobolo and the amount of ilobolo paid. Together with Stephanie Rudwick at UKZN, Posel interviewed 40 married and 40 unmarried African women and men in KwaZulu-Natal.

Posel found that “ilobolo was highly valued as a Zulu custom – it was viewed as an integral part of the marriage process and as a key marker of Zulu identity”. Amongst the very few interviewees who did not support the custom, “there was the view that people did not have

personal agency in deciding whether or not to practice ilobolo – because of the expectations of parents, the community, and ancestors”.

Posel explains: “Paying ilobolo means showing respect for your culture, your community, your elders and your ancestors, and how much ilobolo you pay or is paid for you, defines you as a man or a woman and demonstrates the magnitude of your respect”.

The research therefore pointed to a “tension between respect for ilobolo as a custom, and the high cost of ilobolo (at least relative to men’s employment opportunities)”.

“The findings helped us understand why a high value of ilobolo is sustained despite high unemployment rates and strong marriage aspirations,” says Posel, who also cautions that the qualitative study sample is small and limited geographically.

Happily ever after Posel herself was not subject to an ilobolo negotiation. She returned from the USA with a PhD in economics and a German husband with a doctorate in linguistics.

“I was a late starter. I only married in 2002 at the age of 37 (although not because of economic constraints),” says Posel, who in 2009 initiated a project with her husband to explore language use in South Africa. Ongoing research by the curious economist now also includes household dynamics and well-being, and migration and labour.

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CAPITAL AND MINING IN THE 21ST CENTURY

FREDERICK CAWOOD

Mining is South Africa and Wits University’s past, and it is our future. But the road between the gold rush in 1886 and 21st Century Marikana may not have been paved with gold, and a reimagined mining sector ignores technology at its own peril.

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Mining is the business of extracting ore and its metals or minerals from the ground. Like any business, mining needs to raise capital. Once capital has been raised, mining activity is restricted to a licenced area and subject to economic, health, safety, and local content requirements – the latter ensuring that benefits are created close to the mining activity. The body of mineral law and policy instruments of South Africa govern all these requirements.

A rocky history Depending with whom one speaks, mining in South Africa is perceived and experienced very differently. This is because mining was the dominant sector for over a century, with regular and significant mineral discoveries that became the foundation upon which South Africa’s economy is built.

Despite a long history of extensive mining, South Africa still has good future mineral potential – the country has unique ore bodies that yield valuable metals and minerals under the right conditions. South Africa also has the skills to find and explore new ore bodies, to build new mines, and to operate existing ones, while maximising the longevity of mines to leverage assets.

Shafted The negative side of mining is that the sector contributed to South Africa’s migrant labour and apartheid-related legacies, and that mining benefits often bypassed affected communities. Before new mining legislation was passed after democratisation in 1994, “benefit” was narrowly defined and reserved mostly for mine owners, employees who could get jobs, and government (fiscal) revenues.

It is difficult for the mining sector to collaborate in the 21st Century.

In fact, there is a long history of the opposite, given the country’s historical context of sanctions, boycotts, and isolation. This partly explains why the tripartite system (a post-1994 collaborative initiative between mining companies, the state and worker unions) has collapsed.

Tripartite tension The issues are complex but possible reasons may be mistrust, obstinacy and stakeholders not listening to one another, and differing needs that result in (sometimes violent) disagreements. The tripartite

lacks a united mission, which the Mineral and Petroleum Resources Development Act states is to convert resources into reserves so that more mines can be built to create a flow of benefits.

Mining is important for alleviating poverty in South Africa, helping government to deliver basic services, contributing to an overstretched national budget, building infrastructure, and for skills development in a cluster context. This refers to broadening the skills of mine workers so that they are employable in wider economic clusters. Better training will make mine workers less vulnerable during times of low commodity prices, when mining companies retrench workers as an endurance strategy.

For benefits to flow from mining, however, stakeholders must collaborate and advance the sustainability of the sector and the economic development of the country.

Future mining Apart from wars and civil conflicts, humanity has also been disrupted by technology through advances during the agricultural, industrial, and information revolutions.

Now disruptive technologies of the fourth industrial revolution, such as augmented reality, artificial intelligence and robotics for industrial automation, are changing the way we live, work and mine. The result is a digital world of instant data regardless of location, relative to that information.

This technology is now entering into underground mines. Instead of resisting it, mine stakeholders must collaborate and embrace it in a way that benefits the majority, and not the few, as it has in the past. The mine of the future will be different and it will look different. It will be funded and managed in ways that require different skills, as well as new professions and personnel that do not yet even exist.

Mining is a risky business because of the depth, mining conditions, and the long lead times that precede a return on capital investment. The message to mining is clear: The fourth industrial revolution is a global phenomenon; it is unstoppable and adapts quickly to the time it is in. To participate in this digital economy, mining must embrace technology on a grand scale. Failure to do so risks missing the window of opportunity which, if closed, might be for good.

Professor Frederick Cawood is the Director of the Wits Mining Institute.

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ROBERT KRAUSE

The Centre for Applied Legal Studies at Wits researched the social and labour plans of selected South African mines and found that most have failed to deliver on their social contract.

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When a company applies for mining rights, it has to submit documents on its plans to mine, which the Department of Mineral Resources uses to assess whether the potential mine is viable.

One of these documents is a social and labour plan (SLP). This sets out how the company intends to share the benefits that flow from mining. These include, for example, employee skills development initiatives; upgrading local infrastructure; or providing housing, water and sanitation in the area.

Once the company is awarded a mining right, their SLP becomes a binding legal document that government and the public can use to hold the company accountable. However, to date there has been little research on how the system works in South Africa.

The Centre for Applied Legal Studies (CALS) at Wits initiated the Social and Labour Plan project to investigate if the system is able to fulfil its goal of transforming the mining sector and ensuring companies contribute to the development of areas in which they operate.

generally not aware of the social and labour plans at all and do not have a say in developing or monitoring the programmes. From our observations and interviews, the mines in our case studies have failed to meet many of their commitments.

The Social and Labour Plan system has an important role to play in redressing the historical legacy of inequality in the mining sector.

However, after three years of research, it is clear that the system is incapable of achieving these aims in its current form. For this reason, our final report, which will be available in early 2018, will present our recommendations for a more democratic and transformative system.

Robert Krause is an Associate Researcher at the Centre for Applied Legal Studies at Wits University

The data collection to examine the design of SLPs began in 2014.

Almost immediately, the first flaw in the system presented itself - only one plan was readily available on a mining company’s website.

To access others, we embarked on a year-long access to information project, requesting the SLPs under the Promotion of Access to Information Act. Whilst we faced opposition from just under half of the mining companies themselves, the applications to government were more successful and we managed to collect 50 SLPs for analysis.

The SLPs of mines of different sizes, extracting various minerals in South Africa were analysed in 2015. Criteria for analysis included whether the documents were signed and authorised, the potential environmental impacts of the mine, and whether communities were consulted during drafting. This analysis generated over 4 000 data points and allowed us to track the trends in the quality of the SLP designs. These trends were captured in the first report on the project, published in 2016.

Some of the key findings relate to how the plans are developed, their intended targets and beneficiaries, and how the mines can be held accountable. Accountability is a major issue, as was illustrated by the finding that only 12 percent of the SLPs indicated who had written them. In addition, none of the plans mention a mechanism to address community grievances regarding the implementation of the SLPs. The research reveals that the communities the SLPs intend to benefit are not considered important stakeholders – only four percent of SLPs indicated that they were drafted in consultation with community members. SLPs also often neglect to mention the negative social impacts that mining has on local communities, with, for example, only six percent indicating whether there would be agricultural land loss.

They particularly failed to engage with the gendered impacts of mining, patterns of racial and gender inequality and barriers to the participation of women in the sector.

The implementation phase began in 2016. Researchers travelled to five sample mines and interviewed community members, trade union officials, mining company management and government officials. The interviews sought to investigate how the plans had been implemented, whether communities had experienced the benefits promised in the SLPs, and whether these benefits had balanced the negative social and environmental impacts of mining.

Data analysed from over 150 interviews was published in the second project report in 2017. The interviews revealed that SLPs are being designed and implemented without involving the communities that they are intended to benefit. Communities are

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Can a BRICS ratings agency liberate SA’s economy?

SCHALK MOUTON

BRAZIL

RUSSIA

In the last couple of years, many South Africans have become familiar with a number of dreaded terms previously unknown to them – credit ratings agencies, downgrades, and junk status.

For most South Africans, these are little more than headlines, but we all feel their impact on our wallets – with every downgrade, South Africa’s international debt becomes more expensive, which leads to tax increases and higher costs of essential resources like electricity.

Three large ratings agencies currently dominate the industry: Fitch, Standard and Poor’s (S&P), and Moody’s – the latter two which downgraded South Africa’s foreign currency grade to speculative grade or “junk” status.

Subsequently, the establishment of an alternative ratings agency specifically for the BRICS countries is being touted.

“Advocates for an alternative agency argue that the objectivity of these institutions is limited due to industry dominance by the three international agencies, lack of transparency in their local methodology, as well as conflicts of interest through an issuer-pay model,” say Fatima Bhoola and Nimisha Naik, both lecturers in the Wits School of Economic and Business Sciences (SEBS).

Bhoola and Naik, along with the SEBS Head of School, Professor Jannie Rossouw, this year published an article on credit rating agencies in New Agenda: South African Journal of Social and Economic Policy.

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The three large ratings agencies came under scrutiny in the wake of the global financial crisis of 2008. Their credibility was tarnished and they were heavily criticised and subsequently fined for not effectively evaluating the creditworthiness of bonds prior to the crisis.

The worst accusation levelled against them was that they exacerbated the financial crisis by approving extremely risky mortgage-related securities, and offering overly favourable evaluations of insolvent financial institutions. In so doing, they inadvertently defrauded investors.

“The more serious cause of inaccuracies may lie in internal governance arrangements and conflicts of interest involving these agencies and investment banks,” says Bhoola.

Since these credit rating agencies are paid for their services, this might incentivise ratings agencies to provide more favourable outcomes for their clients.

“Equally disconcerting is that the agencies rely on financial information received from the very establishments that they are meant to rate, which may itself be compromised.”

To potential investors, a credit rating signals the ability and willingness of governments, corporations or banks – which need to raise funds by selling bonds – to repay the investment timeously and in full. In other words, a credit rating is a relative measure of the likelihood that the borrower will default on its obligations.

Should Brazil, Russia, India, China and South Africa (BRICS) have their own credit ratings agency given the shortcomings of the existing Big Three?

INDIA

SOUTH AFRICA

CHINA

“A good credit rating of a country signals to investors that their investment in the country is attached to a lower risk of default,” says Naik. “Such a credit rating underpins the borrowing activities of all borrowers in such a country.”

Raising capital is essential for growth and development, especially in emerging countries which cannot acquire investment funds domestically, owing to low savings levels or undeveloped capital markets. They therefore rely on foreign investors to purchase their debt instruments – such as bonds. A higher risk of investment tends to have a higher rate of return. As foreign investors have limited information on the country’s credit quality and likelihood of default, they rely on credit ratings to provide them with a gauge to the risk attached if an investment is made.

“A downgrade of a country’s credit rating increases the cost of raising funds, which places further pressure on the economy,” says Bhoola. “Ratings offer a comprehensive summary to supplement the information contained in macroeconomic indicators and are therefore strongly correlated with market-determined credit spreads.”

Mainly due to the shortcomings of the traditional big three ratings agencies, as well as the large impact they have on developing economies, the BRICS Business Council has proposed the establishment of a BRICS ratings agency.

A case in point was India, which questioned its consistently low ratings from these agencies, despite showing better fundamentals than many Western economies.

The BRICS Business Council has argued that ratings agencies should assign ratings only at the request of the country that issues the bond; that a country’s risk assessment should be based on a thorough analysis of its social and economic state; and that comprehensive benchmarking takes place across all emerging market economies. However, setting up an alternative agency will be a mammoth and challenging task.

“The most daunting task is to convince investors that the rating it offers is independent of political interference,” says Bhoola.

“Secondly, an alternative agency is going to experience barriers to entry in an industry dominated by three firms, which, despite recent criticism, have built a reputation among international investors and issuers alike.”

Furthermore, an investor-paying model is going to be viewed with extreme scepticism, and the new agency will be judged much more harshly if it falters by offering false ratings.

Read Bhoola and Naik’s article Credit rating agencies: who are they and do we need them? by following this link: https://journals.co.za/content/journal/10520/ EJC-9000b7bfa

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COLUMN

THE BITCOIN HEADACHE.

UNEXPLAINED

SCHALK MOUTON

It was my 13-year-old nephew who asked me if I invested in Bitcoin.

“Well … um, er … you know …,” I said.

And that’s where it stopped.

Within a split second, it all changed. I could see it in his eyes.

Our relationship had changed materially. I was no longer the Cool Uncle. My nephew returned to his advanced calculus homework, and I refocused on my Tetris game. But in the back of my mind, I knew: This was something I needed to fix.

And quickly.

As with many other people above the age of 21, Bitcoin is a complete mystery to which I paid little attention. That is, until I needed to win back my Cool. I am not completely uncool. I know stuff. I am active on Facebook and other social media platforms. So, yes, of course I have heard about Bitcoin. I have seen the posts of my cousin, Klein-Jan from Springs, bragging about the latest growth in his Bitcoin investment. Obviously, I dismissed it – just as I dismissed his previous money-making schemes ranging from collecting sales coupons to selling goods in a street market.

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The first Google results show up: Bitcoin is a cryptocurrency started by some supposedly anonymous dude in Japan. Bitcoin is traded like many other currencies and used as payment in weird dark places on the web. There’s a finite number of just 21 million Bitcoins that will ever exist - didn’t know that. Bitcoin’s value has risen from 75 US cents in 2013 to over US $5 800 today. Hello?

A deeper search presents further facts. Bitcoin’s value surpassed that of gold in 2014, and last month Microsoft announced that it would be accepting Bitcoin as payment. A cover article in the Financial Mail points out that Bitcoin’s value increased over 746% in the last year. It also debated whether Bitcoin is a currency to be taken seriously, or just another bubble. The article left me with a headache, and more confused than ever before.

At my wits’ end, I picked up the phone and searched for Klein-Jan’s number. Never, ever in my life, had I considered getting financial advice from my cousin; Klein-Jan, who dropped out of school after fathering the first of seven children and whose performance in Woodwork was worse than that of even Julius Malema; Klein-Jan, the most recognisable face in the Casseldale Hotel Bar in Springs, but who couldn’t hold down a proper job for more than three weeks; Klein-Jan, who now farms sheep in his free time and lists his occupation on Facebook as a “Cryptocurrency Advisor”.

“Ja-nee, I have made a pretty packet from Bitcoin. I can show you how!” gloats Klein-Jan. “It is safe and easy. You’ll be a millionaire in a year!” he enthuses.

I swear, throw the phone in the corner, and then remember that I work at a university! I have access to the best brains South Africa has to offer to consult on the subject! I pop an email to a number of academics, and eagerly await their reply.

“Sorry, I know too little about the topic”, was the first reply.

“I believe it is a bubble,” says another.

I finally reached a Professor from the Wits School of Accountancy, who sent me an article on accounting on Bitcoin that he had co-authored.

Although very technical, the article explains the basic principles around Bitcoin, and due to the expectation that Bitcoin and other virtual currencies might become mainstream payment methods, the authors

propose a set of accounting principles for virtual currencies.

Another report, written by academics at Cambridge University and funded by Visa, provides a holistic, up-to-date overview of the world of cryptocurrencies. As with so many other aspects of life, the report states that Africa is lagging in its use and, possibly, understanding of Bitcoin and other virtual currencies.

A few weeks later, a 19-year-old first-year student, Aadil Mahomed, walks into my office. He has been investing and using Bitcoin since Grade 9, and has quadrupled the value of his money invested in a range of cryptocurrencies.

“I see it as the most productive way of procrastinating before studying,” he said of his trades in Bitcoin.

2018, he believes, is the year of cryptocurrencies.

“If you want to get in, buy now,” he told a growing crowd of interested middle-aged worker class salary drawers.

Aadil uses Bitcoin to buy into other cryptocurrencies like Ethereum, Ripple and the newly-launched Electronium, which grew five times in value since it was launched early in November.

He also uses it to buy all kinds of goods on the internet, for example, from Pick ‘n Pay, which now accepts Bitcoin.

“The number of people who are getting onto the internet is just growing, and they need a payment method, so Bitcoin is here to stay,” he says.

At last! I breathe a sigh of relief. Although I’m not convinced of whether I would invest my Christmas bonus (if you can call it that) into Bitcoin this year, at least I can win back some cool with my nephew when he next raises the topic.

A week later, I am lying on the couch with a “virtual” library full of knowledge on Bitcoin, gleefully waiting for the little wise-ass to ask me about it.

“So, Uncle…” the little knowitall asks, dragging out the last word, “What do you think of String Theory?”

The South African exchange for Bitcoin is called Luno (www.luno.com).

While one bitcoin trades for around R112, there is no entry barrier for Bitcoin. You can start by investing R1. Bitcoin transactions are validated by regular people through a process called “mining”. Transactions are grouped and stored in a blockchain, which is an incorruptible digital transaction technology that can be programmed to record not just financial transactions but everything of value. Bill Gates, founder of Microsoft is a believer in Bitcoin, saying Bitcoin “can’t be stopped”. You need Bitcoin to trade in other cryptocurrencies, so it is the entry-market into the cryptocurrency world.

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HISTORY

REIMAGINING COLONISATION THROUGH

ART

T’kama-Adamastor is an extraordinary work of art commissioned by the University of the Witwatersrand in 1996, and still tells a story today on the walls of the William Cullen Library on the Braamfontein Campus. A collection of essays in an illustrated catalogue entitled T’kama-Adamastor: Inventions of Africa in a South African Painting accompany the painting. In this catalogue, editor Ivan Vladislavić, Distinguished Professor in Creative Writing at Wits, writes: “The commission presented an unusual opportunity for the artist, Cyril Coetzee, to engage critically with the past. Yet it came about in a period of immense social change in South Africa, when the urgent demands of the present could not be ignored. Coetzee’s creative

struggle to resolve these tensions issued in T’kama-Adamastor, a startling new vision of the ‘Age of Discovery’, in which the colonial view of Africa is questioned and subverted. It is a richly allusive work that speaks both to our troubled past and our challenging present.”

T’kama-Adamastor was no ordinary painting. It was the third and concluding part of an envisaged trilogy that had remained incomplete for more than 60 years. The first image in the trilogy, painted in 1937 by John Henry Amshewitz (1882-1942) depicts Vasco da Gama’s departure from Portugal in 1497. The second painting portrays the arrival of the 1820 Settlers at Algoa Bay. In the third painting, Coetzee paints Da Gama’s arrival in the Cape from the metaphorical perspective of the Khoi, the original inhabitants whom the colonisers encountered.

Coetzee draws on the work of novelist Andre Brink’s The first life of Adamastor, for the metaphor. In Brink’s narrative, Adamastor, the giant spirit of the Cape of Storms, appears in The Lusiads, a poem celebrating the Portuguese voyages of discovery. Brink re-casts Adamastor as T’kama, chieftain of the Khoi, who encounters Da Gama.

Interpreted from left to right, Coetzee’s artistic interpretation of Brink’s literature tells the following story of the arrival of the Portuguese, from the perspective of T’kama, the Khoi chieftain:

The (Portuguese) ships are visible off-shore and some of the ‘aliens’ (colonisers) seem like strange birds.

The Khoi and colonisers engage and provisions and sexual favours are bartered for alcohol. The Khoi women are baptised before the exchange. A Padrao (stone cross inscribed with the Portuguese coat of arms) is erected.

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T’kama, chieftain of the Khoi, and a white woman from the ships feature in the centre of the painting. They become intimate and the focus of the painting (as in Brink’s novel) is their difficult relationship; an allegory of Africa’s painful encounter with Europe. In Brink’s novel, and in the painting, T’kama takes his people – and the white woman – inland away from the colonisers, but the woman’s presence disrupts the Khoi tribe.

The Khoi return to the ships to engage with the colonisers. T’kama offers a bride price to keep the white woman but he is betrayed and murdered. The woman is taken back to the ships. She bears a child, however, presented in the “rebus” (a visual representation of an idea), who represents ultimate unity and peace.

WITS UNIVERSITY HOSTED

1100 MUCKRAKERS FROM AROUND THE WORLD

“Eleven hundred of the world’s most troublesome journalists spent three days giving each other tips on how to call to account the rich and the powerful, swapping tools and techniques, software and hardware, and stories of derring-do. They built networks to assist and support each other in their communal quest to shine light into every dark corner of the world and to make miserable those who depend on secrecy to do the things they shouldn’t be doing. It is enough to keep the Zuptas awake at night – perhaps even during Budget speeches.”

– Professor Anton Harber, Caxton Professor of Journalism, Wits University

The following entities based in Wits Journalism exercise an important role as the fourth estate in a democracy. They are committed to social justice and keeping the powerful (including the University) in check: • • • • •

Wits Journalism The Wits Justice Project The Wits Radio Academy The Citizen Justice Network Africa Check

Wits Journalism also hosts the annual Ruth First Lecture, the annual Carlos Cardoso Lecture and administers the annual Taco Kuiper Awards for Investigative Journalism, the largest award of its kind in South Africa.

www.gijc2017.org | www.journalism.co.za

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