people
Talk about a double whammy – a stock-market crash on top of El Nio. Just what South Africa didn’t need right now. As money flowed out of the country’s stock and bond markets this week, the currency came under fire, hitting new lows against the dollar and sterling.
In itself, the weakened currency would be good for exports but with the world economy slowing down, in particular the South-East Asian countries, demand will falter. Since 20% to 25% of South Africa’s exports go to the Asia Pacific region, and the bulk of those are commodities, that particular avenue has limited growth opportunities.
Nor have we seen the end of the currency crunch. Chris Stals, the Reserve Bank governor, has assured the markets he is not considering reversing the recent one- percentage point drop in interest rates – good news indeed. But as this week’s debacle proved yet again, foreign capital is fickle and investors bailed out with alacrity, leaving the rand floundering. So we can’t expect any help from that quarter.
Stals learnt during last year’s currency crisis that there’s no point in fighting the markets. While further falls are likely, the worst is supposedly over. There must be a residual fear, however, that another crisis will leave Stals with no option but to raise rates to prop up the rand; hopefully, the relatively healthy current-account numbers will mitigate against such action. At the very least, the next cut in interest rates will come later rather than sooner.
The point is that, no matter how irrational the worldwide stock-market selling frenzy is in terms of the economic fundamentals, its effects are only too real. People and companies are poorer, which feeds into slower spending and growth, and fewer jobs. Not for the first time this year, economists are hastily reassessing South Africa’s growth expectations – and the prognosis is not good.
The growth, employment and redistribution (Gear) strategy has been dealt another severe blow, with growth projections for this year and next cut to 2% and 2,5% respectively.
The timing could not have been worse for the African National Congress and its president- to-be, Thabo Mbeki. As the chief architect of the government’s conservative economic policies, Mbeki will have to account to an increasingly anxious grassroots membership at the ANC’s national conference in December for the apparently dismal failure of Gear to accelerate growth or deliver more jobs.
This could provide fertile ground for a populist challenge.
Mbeki will, of course, have to point out that we are all subject to large international forces beyound our control. In this era of globalisation, a hiccup in the Hong Kong property market undermines the job prospects of a youth in the rural Easstern Cape.
But it might be expecting too much of the patient South African public that this argument – as well as the defence that the “fundamentals” are really not that bad at all – will be easily understood by the jobless millions whose relative economic deprivation has not improved, and has in some cases worsened, since a black president came to power three-and-a-half years ago.
Judge the judges
Human rights activist Paula McBride did South Africa a considerable service this week with her outburst against the judiciary in front of the truth commission (see Page 6). Whether or not she succeeds in persuading Desmond Tutu to drag their lordships before the commission, she has brought home the need for philosophical reform on the Bench.
It has long been an axiom of our society that judges need be treated with respect. If they are not respected as individuals, goes the argument, neither will their judgments – which will undermine the justice system and lead to the collapse of society. The judges, as a result, have been allowed to develop an image of themselves as the embodiment of the awful majesty of the law.
But this aloofness is now out of date. Like the royal family in Britain, the time is long overdue for the judiciary to modernise itself, to come down from its remote pedestal in recognition that it is part of that collective organism which is society, a community of citizens.
In the new South Africa the law is a friend of our own making, not a system of commandments blasted on a mountainside, a remote authority handed down through the divine right of kings, or the edicts of a power-elite. Judges are as answerable to the community as the community is answerable to the judges.
That duty of answerability also demands a closer involvement of the judiciary with the prisons system. The judges have been allowed to be too remote from the consequences of their decisions. Again as McBride argued, if the judges had witnessed executions, they would doubtless have been less ready to impose the death sentence.
If Judge Beyers had taken more of an interest in the fate of Hendrik Verwoerd’s assassin, we would not now be confronted by the scandal of the treatment of Demitrio Tsafendas. If more judges had concerned themselves, our jails would today be more institutions for rehabilitation and less cages for wild animals.
We would suggest that, at the very least, Chief Justice Ismail Mahomed and his predecessor, Judge Michael Corbett, should volunteer to appear before the truth commission at the earliest opportunity to signal the willingness of the Bench to embrace the new South Africa. It would be a first step in earning a new respect for the judiciary. And it will surely lead to the discovery that respect which is earned is best kept.