One way Kenyans can think about sanctions

The thing about Koffi Annan’s recent statement on Kenya was the sense one got of his “finger wagging”. Being a career diplomat he obviously did not do it literally but you got the clear meaning of it from the tone of his remarks. In an interview with the BBC, Annan remarked that Kenya’s “external relations could be damaged”. Evidently, he did not divulge to what extent this might be possible but he was unambiguous about this being a certain occurrence if Kenyans choose a leadership of International Criminal Court (ICC) suspects. Annan hinted at travel restrictions and the fact that many governments around the world will simply not deal directly with a leadership that will comprise of suspects. Of course a round of rebuttals, phrasing and campaign messaging about how Kenyans should be left to make their own choice was the expected reaction. However, my only wish is that out of this political gamesmanship an explanation on how we could survive any form of sanctions can be given. So, what do Kenyans need to know about sanctions? Of course a simple understanding of our political economy would suffice. The four major elements of the Kenyan economy are its land, its free market orientation, its need for foreign investments and its propensity to trade. Its production is highly driven by informal labour and varied skill levels of employment; the presence of Multi National Corporations (MNCs) in the country; and access to regional markets. The Kenyan economy is one that is highly dependent and responsive to world prices due to our production of primary products. It has a relatively vibrant manufacturing sector while it still relies on a massive agricultural base that is said to be shrinking due to growth in the service industry that has experienced an expansion in the communication and tourism sectors. An elaborate power infrastructure is being developed; the country has a proud constellation of profitable public; and private enterprises some of which have a regional presence. The country has experienced relatively...

read more

SA needs a national airline

Oct 17, 12 SA needs a national airline

Posted by in Economics, Featured, Politics

SAA needs another bail-out. The market-oriented commentators are livid. How, they ask, can it be reasonable for a country like South Africa to continue to pay for an unprofitable airline. A country like South Africa, is exactly the point. Because South Africa is a country with means and opportunity. An awful lot of commentators seem to be drinking the “poor-us” koolaid. South Africa is not a poor, destitute country that can barely afford to send children to school. In fact, South Africa’s education budget is obscenely large when compared to some of our poor neighbours. Money exists in the South African budget to pay for things. Tax revenue allows the country to invest in the things we need. More importantly, tax revenue is available to be invested in the things that will increase the tax base and grow the economy. A significantly redistributive tax system is a necessity in a post-Apartheid, horribly unequal society. But the aim must be to use the tax system to stimulate growth in those areas and for those people previously excluded. One of the ways to do this – and a pretty solid way to achieve measurable results (if almost every other country in the world is anything to go by) – is investing in transport infrastructure. Nothing slows the growth of a market or sector like not being able to move people and goods. South Africa, having realised this, is investing heavily in transport infrastructure. Trains and automobiles, or at least roads, are high on the priority list. As are ports. Why is it that commentators seem to be under the impression that planes should somehow be excluded? Planes, trains and automobiles. And boats. This a massive and fundamental part of the puzzle of how to fix South Africa’s economy. Made more fundamental by the size of the country and spatial disparities created by Apartheid. Of course, the particular set-up of South Africa’s national carrier makes this a little tricky. SAA needs to be flying to places no-one...

read more

Youth want more than education

Jun 18, 12 Youth want more than education

Posted by in Economics, Featured, Politics

Youth Day 2012 in South Africa was thoroughly hijacked by the education activists. June 16th was about more than education access. Sure, education was, and still is, an important issue but the contribution of youth to the liberation of South Africa had to do with a whole lot more than just schools – it had to do with the bigger goal of a free country where opportunities exist equally for all. To reduce the challenges facing the youth to “education” is disingenuous. It is also a misrepresentation of the youth. Not least because education has so far failed the youth of South Africa. In the past 18 years, South Africa has invested an inordinate amount of money in education. Beyond the millions government invests, private sector dishes out CSI money to education projects at an alarming rate. Private citizens spend disproportionately on school books, uniforms, transport and fees. Parents and all too often grandparents sacrifice health and wellbeing to pay for tertiary education, often paying exorbitant prices to fly-by-night colleges. Even those attending reputable higher educational institutions, put significant resorces into an extremely high risk investment. There are stories of whole villages pooling their funds to send the one top performing child, sometimes one in four or five years, to university. Of course, given the inequalities of the system, a poor child from a rural, under-resourced school with no support system, often no proper accommodation and poor school-level preparation has an extremely limited chance of success. Especially in a tertiary education system where even those who could afford good schools don’t make it. The return on investment in educational opportunities in South Africa is far from guaranteed. I’m not talking here about the whining whites who think the only reason they don’t get offered a senior management position straight out of varsity is because of their race. Getting a matric or a diploma in South Africa does not translate into any job. An awful lot of people won’t get a job until they’re over...

read more

Swaziland’s Mystery Bailout

Nov 28, 11 Swaziland’s Mystery Bailout

Posted by in Economics, Featured, Politics

A few weeks ago, Swaziland was reaching the point of collapse. The country has been firmly heading for collapse for a while, with pensions cancelled, HIV/AIDS medication running out and schools closing due to lack of funds. But a few weeks ago it seemed they were hovering over the edge after the state announced that it could not pay civil service salaries in November. And then, miraculously Swaziland was saved by a bailout. Swaziland’s attempts to extricate itself from financial crisis have left a trail of failed bailout deals over the past few months. The IMF stopped giving the country money after they failed to make reforms – a large part of which would have involved reducing the size of what the IMF considers to be a bloated civil service. When the IMF announced its decision, other international finance institutions and aid donors followed suite. The Swazi government turned to neighbouring South Africa. It was a drop in SACU revenues thanks to a contraction of the South African economy, possibly on top of years of economic mismanagement and extravagant spending, that landed Swaziland in economic trouble in the first place. In the face of vocal condemnation from civil society (who the government doesn’t care that much about) and trade unions (who the government normally cares a lot about), South Africa agreed to provide a R2.4 billion loan. As part of the agreement, South Africa insisted on certain conditions. The conditions were too vague for most activists but would nudge the country towards more open political dialogue and some of the fiscal discipline measures the IMF has been pushing for. Swaziland objected to the conditions, but was not exactly in a strong negotiating position. All seemed to be on track until the King demanded a R400 million commission for brokering the deal. As absolute monarch, King Mswati II is head of his country, its representative. Pretoria, already out on a limb over this loan with alliance partners, civil society and the media, was not going...

read more

Best Shore: Johannesburg

Aug 22, 11 Best Shore: Johannesburg

Posted by in Economics

When last were you, when addressing a problem with your printer or shiny new Apple junk-Mac, patched through to a call-centre in Alexandra? Numerous of those dreaded service-related calls have resulted in me being patched through to scripted Indians, incomprehensible Filipinos, and angry Glaswegians, but never to a cheerful Durbanite or chatty Bloemfonteinian. While outsourcing services to remote, low-wage economies has become industry standard for many large companies, South Africa, despite appearing to be an ideal offshoring location, has lagged behind other developing nations in raking in foreign capital. The Indian model has been held up as an offshore example for over a decade. Booming in the late 90s, the IT sector in India has risen, to date, from below 1% to over 5% of GDP, in a country where only 7% of the population have access to the internet. The industry, which has created thousands of new jobs and drawn millions in foreign investment, contributes substantially to the sustained growth of this emerging market. Of the $30+ billion dollars of revenue generated by the services industry, about 75% is comprised of service “exports” to western-based multi-nationals. Both government and the private sector have made large investment in colleges, which take some of the brightest students from a mediocre schooling system and turn them into professionals who are able to communicate effectively in English, follow well-defined processes and convert designs into deliverables. Though not necessarily delivering a full spectrum of business services, these centres excel in delivering the core bulk of IT requirements, from maintenance to development. This allows large technology companies to pay below-the-market prices for human resources and provide cheaper IT solutions to newly budget-conscious foreign institutions. Part of the revenue generated from the vast amount of work offshored to India is ploughed back into the education system and used to strengthen infrastructure – investment which supports business and benefits the economy as a whole. South Africa, largely, has missed the wagon and hardly heard the band. While South Africa has established...

read more

A Poor Problem

Jun 01, 11 A Poor Problem

Posted by in Economics

When considering the previous post on South Africa’s problem with poverty, it is important to bear in mind that this war not only manifests in the form of police brutality, but in other, more ‘passive aggressive’ ways as well. It seems that in South Africa a poor person, by virtue of being poor- gives up many rights that most of us take for granted. Drive along any major road in Gauteng, and you’re bound to come across the poor souls in various stages of decomposition, with hands outstretched. In many cases a baby will be strapped to Mommy’s back. One might be forgiven for thinking ‘what possessed her to have children?’ Regardless of the circumstances surrounding conception, and if we’re all honest with ourselves, many a ‘knee-jerk-thought’ has centred on this very theme. Being poor, excludes one from having the right to bear children. On a more official and less subjective level though, the use of what’s known as the “Means Test” is a popular way for the government to decide which lucky poor person gets to live off their various Social Grants. In order for poor people to access these grants, they must be deemed deserving. Enter the “Means Test”. To prove that they are indeed as pathetically poor as they claim to be, applicants are subject to invasive interrogation and investigation. Thus, the poor are also not afforded the right to privacy or dignity for that matter. I’m sure this does wonders for their self esteem. The catch phrase “poor services for poor people’, is indicative of South Africa’s attitude to the poor. Pop in to any government institution involved with providing for the poor and you’ll find that they are generally inefficient and lacking basic infrastructure. People wait for hours, sometimes in heat or pouring rain to collect grants. Fetching chronic medicine from a government clinic or hospital can take an entire work day- if you’re lucky. Being poor means you are at the mercy of others. If you’re not paying...

read more