South Africa's reality gap

A SERIOUS REALITY GAP seems to exist between the South African government and many of the problems it has to face. Take Alec Erwin, the minister of trade, denouncing businessmen: "Harm is being done because South African business leaders do not express unequivocal confidence in themselves, this economy and this society." But Erwin also went on to argue that South Africa should not support the removal of President Mugabe - "that would not make us many friends in this neighbourhood" and warned against "rushed privatisation". Or take President Mbeki, emerging from an economics conclave and announcing that "Essentially we're on the right course"; that the labour laws would have to be looked at and that South Africa would have to act to "smooth" the weakening of the Rand against the dollar.

It is quite difficult to know where to begin with such statements for it is no exaggeration to say that South Africa faces an economic crisis. The government's original growth forecast for 2000 was 3.6 per cent; this has been lowered to 2.6 per cent but many fear that even 2 per cent will not be reached. In this case unemployment will mount further while capital and skills continue to ebb away. The currency has fallen a whopping 25 per cent against the dollar this year - which means, even allowing for dollar strength, that every South African has become at least a fifth poorer. At the beginning of the year none of the bank economists forecast any serious fall in the Rand at all for, we were told, the currency was already undervalued on the economic fundamentals and could well appreciate.

There is no reason to believe that these economists were wrong about the economic fundamentals: after all, some upward bounce in the economy was due for cyclical reasons after a long period of restraint. Things have turned out as they have essentially for political reasons. Government insists that the "Zimbabwe factor" is not to blame, that Mugabe's actions are not rubbing off on South Africa.

The reality is in some ways worse. It is the president's and the ANC's decisions to back Mugabe - to offer him economic aid; to fly in to lend support on the eve of both the constitutional referendum and the parliamentary elections; to overlook the murders, torture and rapes; to ignore the abandonment of the rule of law; to look the other way when tens of thousands of black farmworkers suffered mass beatings, and to insist that the election had been free and fair when it transparently was not - that have utterly undermined confidence. Allied to the president's pronouncements on Aids such attitudes have induced a mood of deep pessimism in local business circles. At very best the fundamental judgement of the president and government is in question; at worst it is a matter of queuing for the departure lounge. Either way people don't invest and get their money out, which is why the Rand plunges and why foreign direct investment is at its lowest level for years.

It is no answer for Erwin to berate local businessmen for lacking confidence when he supports the continuation of policies that have destroyed that confidence, any more than it is for the Reserve Bank to put up interest rates or for the president to sound as if he is taking charge of exchange-rate policy. The idea that labour laws merely need to be "looked at" or that there is any danger of privatisation being "rushed" is laughable. The question is whether the government has the nerve to face up to what needs to be done or whether it is doomed to preside over a continuing economic slide. It would be a positive sign if clearly incompetent or corrupt ministers were sacked; if the president got himself some advisers of real substance; if the government publicly made it clear that it wanted Mugabe to go; and if the president's attitudes on Aids could be given a decent burial by an agreement to provide anti-retroviral drugs to HIV-positive pregnant women and rape victims.

But, one senses, this is not the way government sees it. Instead we hear the insistent mantra that "it's all to do with perceptions". This is a fatal - and fateful - error. Once one decides that one is simply involved in a war of perceptions then the game is all about hiring PR firms, setting up international marketing councils and bullying editors and journalists into line. None of which is healthy and none of which will work. It is not a matter of "perception" that unemployment is up, growth slow, Aids soaring, FDI vanishing or that the currency is falling. These are all facts and they proceed from other equally hard facts. The government should not need seminars with the World Bank and IMF to know these things. The fact is that, six years after taking power, it is a long way off course: a "better life for all" is now further away than it was in 1994 and receding all the time. It is time for a real stocktaking - starting with the facts.