An alternative look at how to expedite the governments R.E.T. “Radical Economic Transformation” plans, by viewing it via a different paradigm?
Instead of viewing the economic transformation of South Africa as a moral imperative, let’s rather view it for its obvious praxis as an economic one?
Let’s start by saying that we are looking at the urgent problems of land repatriation, and financial restitution for the formerly oppressed black majority, and other discriminated groups, incorrectly? We should be applying Cognitive Assonance, and apply simple business principles to the problem?
Let’s start by determining that our collective goal is financial restitution and land repatriation for black people because of the systemic institutionalised larceny of both colonialism and Apartheid and that we wish to fulfil the task with no losers and minimal disruption to an already fragile South African economy? So it requires a change management approach and I’ll personally provide all the players with copies of Kurt Lewin’s Change Management Theory, lol.
Definition: Cognitive Assonance can best be described as a process, allowing several ideas to come together in a harmonious, melodious way. Cognitive assonance is required to move from the zero-sum game of compromise to the positive-sum triumph of consensus-building where every stakeholder comes away with a solution to fit their implementation needs.
Instead of seeing the government as this immovable, unfeeling brutish bureaucracy, we should be seeing it simply as a business entity. So let’s “game plan or scenario plan?”
In 1990 ANC (Pty) Ltd, a wholly-owned, black managed and operated company, offered to purchase National Party (Pty) Ltd. Due diligence to establish the net value of the company National Party (Pty) Ltd was conducted. After extensive negotiations between the boards, both arrived at a “fair value” price, and the new company, ANC (Pty) Ltd, started trading on the 27th April 1994?
In its first year of operations, ANC (Pty) Ltd quickly sought to establish the full extent of its assets and liabilities base. It prepared asset registers for the following:
- SOE’s, State-Owned Enterprises
- Land owned abroad
- Land owned locally
- Farms and farmland
- Land within the borders
- Leased properties abroad
- Leased properties local
- Redeemable Treasury bonds
- Reserve Bank debtors book
- Redeemable government bonds
- Redeemable SOE bonds
- Government bank accounts local
- Government bank accounts abroad
- Secret accounts i.e. intelligence and the military
Its findings determined the following:
- Properties and buildings (local & abroad); 18 000 items, market value not yet determined
- Land within our borders; 21 million acres, with an additional 4 million in dispute, market value not yet determined
- State owned-enterprises (various); 12 with an estimated market value north of R 1.5 Trillion
- Outstanding creditors both local and overseas (including penalties and interest; upwards of R trillion South African rand, retrospectively
- Loss of human (black) life due to genocide (including pain and suffering); liability cost unknown
- Outstanding theft of land and properties from the black majority; liability cost unknown
- Loss of economic opportunities from the black majority; liability cost unknown
- Loss of quality of life of the black majority: liability cost unknown
By the start of its third year of operations, the new company (ANC (Pty Ltd), put in place a bold strategy to meet its debt covenants with its creditors, to restructure the debts over a ten-year period, meaning that it expects to break-even in five years, and be trading in the black in ten. So it immediately actioned its strategy by promulgating shelf-life legislation, meant to facilitate the following state-owned entities:
- It created an SPPB, Special Purpose Peoples Bank Ltd. It funded the bank by selling off half of its SOE’s and transferred roughly R 250 billion to the bank.
- It created an SPLB, Special Purpose Land Bank Ltd, and transferred 25%, roughly 8 million acres of its land to the bank.
- It created a SPPET, Special Purpose Peoples Education Trust, (operating along the lines of the current P.I.C.). R 50 billion is transferred into this entity, together with the current annual budget on education. This guarantees free education for all South Africans (regardless of race), for at least three generations (adjusted for inflation), loosely calculated as 99 years.
It doubled the capacity of its three departments, the SARB (South Africa Reserve Bank), National Treasury, to accommodate the complex future financial configurations and transactions, and its department of Home Affairs. The purpose was to compile an exhaustive population registry of all black South African residents, dating back 150 years, or three generations. The database would inform the scaled financial pay-outs and land transfers to all the black people and previously discriminated against ethnic minorities groups, without prejudice or special conditions.
- It transferred 50% of the funds in the Peoples Bank, in cash, to the black majority, and other discriminated against ethnic minority groups immediately, using a predetermined scaled payment formula, and holding the rest as future collateral.
- It transferred Land Bank shares and lands to the black the majority, and other discriminated against ethnic minority groups immediately, using a predetermined scaled transfer formula.
It created an Educational National Trust Fund, to finance free education for all South Africans, up to university level.
- In order to fund this, it dissolved three existing government departments deemed surplus to the requirements. It provided the fund with a start-up of R 50 billion.
- It enacted legislation, for the 1% taxation of the total capitalisation of the shares, stocks and bonds on the JSE, calculated at north of R 150 billion as at today’s price.
- It started, through the same legislation, to recoup dividends earned by South African companies listed on foreign bourses. These monies are then warehoused in the educational trust, which then operates similar to the P.I.C, that is to say, it has a legal commitment to invest part of its funds into the ALSI Index, for sustained growth i.e. the monies recouped are automatically round-tripped.
These measures had the net effect of a restitutional and compensatory pay-out for the horrors of colonialism and Apartheid, unfairly inflicted on the black majority, and importantly, had none or very little negative economic disruption of the South African economy. Instead, based on the fact, that all economies are consumer-driven, it contributed massively to an immediate economic boom, boosting sales of essentials, like purchases of extra land, houses, cars, clothing items, computer equipment, household consumables and luxury items for the previously disadvantaged black majority, and the other ethnic groups mentioned above. The positive effects will be felt in the economy for years to come and speaks to the nature of “self-funding” a country, much like what the Soviet Union achieved between 1917 and 1950. It will immediately turn South Africa into a 1st world country and bring full circle the “miracle” that is South Africa and usher in the rainbow nation, because put simply, a political solution without a matching economic one is no solution at all, and enjoys absolutely no precedent in the 20th century.
The added value proposition of this paradigm is its “restorative” dynamic. This is to say that no past, nor any present white-owned assets are seized nor confiscated. Most white people in South Africa are working, middle-class people “one punch away from a knockout,” law-abiding citizens that just want to get on with their lives. Additionally, it removes the international investment community’s anxiety i.e. it settles market fears because it will be seen as a “soft revolution,” albeit an economic one? It squares the books of the lopsided, shell game of the “negotiated settlement” of the Mandela era. And it finally provides the previously oppressed groupings with a clean, simple, but necessary all-important kick-starts. Psychologically, it also importantly acts a release valve for pent-up black frustrations and meets their long overdue, increased quality of life and standard of living aspirations and expectations in a country that for all intents and purposes belongs to them.
Anything less than the above or similar may very well be recorded by historians of the future as akin to Apartheid, or worse…