A chance meeting at a snowy Swiss resort inspired a sudden shift in South Africa’s economic policy. As always, life’s unexpected paths open up when we least expect them. By Alec Hogg
The game of life has many forks in the road. Sometimes, we get opportunities to make conscious choices. But often things just happen. Things that end up having a massive impact.
At 17, one such event over which I had no influence pushed my life onto a different road. The expected path in lawyering was diverted through a shove into journalism, steering my future into an unexpected direction. One, as it turned out, ideally suited to my skill-set and temperament.
Unknown to many of its citizens, South Africa was the beneficiary of similar good fortune.
It happened in the beginning of 1992 when then President-in-waiting Nelson Mandela was invited along with FW de Klerk and Mangosuthu Buthelezi, to share the podium at the World Economic Forum in Davos, Switzerland.
Mandela arrived at the Alpine resort a devotee of socialism; a believer in economic policies applied so disastrously in the past couple of decades by Venezuela’s Chavez and Argentina’s Kirchners.
Mandela wasn’t shy to tell anyone prepared to listen, that nationalisation topped his economic agenda. If it was South African and moved, he said, the State was going to own it.
Western leaders agued vociferously with Mandela, trying their best to turn him away from that ruinous path. But their logic fell on deaf ears. Even though these policies had caused the economic collapse of the Soviet Union, Mandela – and the ANC – remained steadfast.
Yet when he returned after that week in Switzerland, Mandela had done a complete turnaround. The socialist dogma was replaced by a pragmatic, market-driven approach which served the nation well through the late 1990s and noughties.
His economic transformation came from one of those unexpected forks in the road.
Also on his first visit to Davos that year was one of Mandela’s own heroes, Vietnamese general turned politician Vo Van Kiet. Although he remained a staunch communist, the general was among the first in his nation to realise what worked in politics didn’t translate well economically.
We’ve tried what you are preaching, the Vietnamese Prime Minister told Mandela, and it leads to poverty and pain. Much better to keep political control, but free up the economy, encourage people to build businesses, create wealth and pay taxes. That’s the way to transform our society and uplift the poor.
Van Kiet is remembered as much in Vietnam nowadays for his approach to the economy as he is for soldiering. He is revered as the genius who inspired a system which has led to Vietnamese per capita wealth rising at an incredible compound growth rate of 12.8% a year for the past 22 years.
Sadly, for all the good initial intentions, South African leaders failed to follow through on the sound Vietnamese advice, allowing ideology to divert them somewhat.
As a result, South Africa’s GDP per capita has posted compound growth of just 2.7%. The relative impact has been dramatic. In 1992, the average earnings of a Vietnamese citizen was one 25th of a South African. Today it is one third.
But that would have been so much worse had Vo Van Kiet not been among the lower profile visitors to the 1992 World Economic Forum. Or had the former prisoner’s hero been unable to grab a few invaluable minutes to change the path for Nelson Mandela – and South Africa.
Another new road has opened up for South Africa. This one involves its battle against corruption, that insidious cancer which has been the root of such hardship and poverty in many developing countries.
During his first spell as Finance Minister, from 2009 to 2014, Pravin Gordhan tagged Government procurement as the key area where taxpayer money was being wasted or misappropriated. From inflated contracts for cronies and payments for services not provided through to simple mis-management, State resources were being diverted into the wrong pockets.
Gordhan worked hard at creating a central office to oversee the State’s purchases, but when he was demoted in 2014, his initiative lost momentum. Not as well known is that after his reappointment in the wake of the dramatic developments of December last year, this stalled plan was one of the first things Gordhan focused on.
His appointment of Kenneth Brown as head of the Office of the Chief Procurement Officer (OCPO) is one of those quiet moves that is starting to reverberate loudly. Such is Gordhan’s confidence in Brown, that in the February Budget the reinstated Finance Minister could announce that the nation would avoid a VAT increase Brown’s team would lick in the required R25-billion a year from savings on what the State spends.
A recent update from the OCPO suggests Gordhan’s confidence is well founded. For instance, national and provincial Government spends R10-billion a year on travel and subsistence. But despite pocketing R1-billion in commission, travel agents always charge the State top dollar and never pass on any negotiated discounts.
Another example is phones, where national and provincial Government spends R3.2-billion a year. Brown says a simple consolidation of the account is saving an immediate R400-million a year. Similarly, with the building of new schools, pretty much anything used to go – but now there’s a cap of R35-million on a 4 000 square metre school. And so it continues.
After his demotion in 2014, 66-year-old Pravin Gordhan must have been sorely tempted to swap his suits for a rocking chair. But he hung in there. And Nenegate, over which he had zero influence, threw him onto a different path. That opened the way for a renewed attack on corruption through championing the efforts of a rejuvenated Kenneth Brown.
Life has a funny way of doing that. New avenues open up in the most unexpected ways . Sometimes, as with Pravin Gordhan, it’s a case of simply hanging in there, just showing up. Because we never do know what tomorrow might bring.