Will the measures put in place by the IMF ensure that the loan it recently gave South Africa be used as it should? asks Howard Feldman.
The news that the International Monetary Fund will grant South Africa a R70 billion loan was met with mixed reactions.
Whilst some received the news with skepticism, there were others who no-doubt, rubbed their expectant hands with glee.
Luxury car salespeople all over the country sat up a little straighter, and Louis Vuitton managers dusted their already tidy shelves in anticipation for the flurry that is likely to follow the clearing of the formidable cheque.
Although there is never a bad time to receive $4.3billion, there is a less optimal one if one is concerned about the public relations optics.
If that is a factor, then the announcement could not have been made at a worse juncture.
It occurred within a week of President Cyril Ramaphosa announcing that the Special Investigation Unit was elbow deep in the uncovering of corruption around Covid-19 tenders.
The President’s announcement last Thursday evening was clearly in anticipation of a Sunday Independent report that would follow in days and that would uncover that R125 million PPE contract had allegedly been awarded to AmaBhaca King, Madzikane II Thandisizwe Diko, who is the husband of Presidency spokesperson, Khusela Diko.
According to News24, Diko also sits on the ANC’s provincial executive committee. The Sunday publication also linked Gauteng Health MEC Bandile Masuku’s wife, Loyiso Masuku, to Diko, and alleged their close relationship played a role in the awarding of the tender to the Royal Bhaca Project.
If that didn’t devastate South African citizens, the comments of Black Business Council President Sandile Zungua, should.
“South Africa is becoming a nation of thieves, with the most unscrupulous enablers in official positions all too ready to feast on the relief meant for the most vulnerable in our society,” he said.
All this came around 24 hours before the announcement of the IMF funding.
That’s the bad news. The good news is that the IMF loan will accrue only 1.1% interest and is payable over 3.25 to five years.
The first payment, according the Bloomberg, is only due in 2023.
Talk about buy now, pay later.
A significant risk is that the loan will need to be paid back in US dollars which, given that the exchange rate reached R20 to $1 earlier this year, is not something that should be dismissed out of hand.
The further good news is that there will be focus and scrutiny by the IMF on South Africa and its capital markets. We have proven that we are not able or willing to do it ourselves and now we will have the IMF’s assistance in keeping us honest.
Perhaps we are looking at this completely wrong.
Instead of focusing on the mortifyingly embarrassing aspect of our government allegedly stealing from the most vulnerable in our society, we should try and see it from another perspective.
Perhaps South Africans need to reframe their negative, and frankly unhelpful look at government integrity.
What if we adopt the following outlook: If at least 10% of the $4.3 billion will go to the poor in the country, then surely that is something to celebrate?
Why are we so focused on the looted 90% when there is a good chance that a generous 10% might actually reach those who need it?
Perhaps we should rather view it as we would, when dining at a restaurant and leaving a tip for the waiter. The more we eat (and spend), the greater the benefit to the person serving the table.
In essence, private (unauthorised) government spending is good for us! Besides, those Mercedes’ are not going to purchase themselves.
Another advantage is that Members of Parliament will be more focused, show up for work and might stay awake during some of the sittings.
No one, after all, wants to risk not being present when dollars are being distributed. I predict that in the coming months we will see productivity, the likes of which we have never seen.
It is further, conceivable that the funds will be used to contribute to GDP, increase spending, improve consumer confidence and that the money will enter the economy in a manner that although not anticipated, will at least have some positive impact.
The proviso that it needs to spent locally and that they are not used to pay for lavish weddings somewhere to the East of us. Because then no one wins.
Whereas I write tongue-in-cheek, there is, in reality, little to laugh at when it comes to depravity.
There is no doubt that President Cyril Ramaphosa detests corruption and had to have been enormously embarrassed to stand in front of the nation last Thursday in order to confront it.
The fact that he is prepared to do so is better than the alternative of keeping quiet and allowing it to continue. That said, it is unclear if he has the power to change what has sadly become part of the ANC identity.
I don’t believe that we are a “nation of thieves”. I believe in the goodness and integrity of South Africans. I also believe that the IMF loan is needed. I offer a silent prayer that those who need it most will get to see it.
– Howard Feldman is a keynote speaker and analyst. He is the author of three books and is the morning talk show host on ChaiFM.
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