Has anyone in Pretoria or Luthuli house noticed that the rand is at 19.50 vs the dollar?
It is amazing how things suddenly shift the zeitgeist. Suddenly everyone is outraged by SA foreign policy and shocked by stage 8 load-shedding to come in the winter peak. But none of this is new foreign policy and the winter peak was forecastable at least a year out.
Instead, the implications of pathways we are on become apparent, and so markets shift, as do investor and business sentiment. This is all leading to a new low in gloom — who knew it could get worse?
Poor communications do not help certainly. A (rather large) investor last week practically screamed at me, “Where is the president?” as markets were slumping.
The leaderless SA narrative has now taken hold in markets and among investors. It is a useful meme but is not especially insightful, nor would it be accurate to say that anything new is (not) happening now that was (not) happening before.
All this is painfully obvious when the reforms that are successfully proceeding — for electricity, visas, and soon logistics — all have such long payoff timelines to implementation. There is simply nothing that can be done in the interim.
The electricity minister (still powerless) is damaging the credibility of ongoing energy reforms with his PR shots and unfortunate PR forays. The important, successful work that the national energy crisis committee is undertaking is mixed up in photo -ops and endless rhetoric.
Markets spooked
We are increasingly hearing from various parts of the government and the ANC odd lines about load-shedding not being uniquely South African and occurring elsewhere. I am still unclear about the conclusions I am meant to draw from this as an investor. Should I appreciate the higher quality of load-shedding? Should I just ignore it? This just adds to the surreal feeling at the moment.
Similarly, markets were spooked last week by finance minister Enoch Godongwana stating bluntly that there had been “significant deterioration” in the fiscal position exactly as the bond market was not only selling off, but liquidity was also becoming ropy. It was a useful message for him to send into parliament and to colleagues as the next round of expenditure negotiations starts — but the market didn’t get this nuance.
The foreign policy optics and communications have been a similar car crash. Again — none of this is especially new — but Russia is clearly playing a “bearhug” strategy with SA with its statements and informing the press an SA general was in Moscow, to (just as the US did) test SA’s stance.
The department of international relations & co-operation similarly does not seem to get it that no-one believes the claim to nonaligned status any more and the pretence is exhausting. You might well not be “pro”-Russia and only neutral, but the love of the foreign policy ecosystem to give the West a good kicking at every opportunity means at least in relative terms Russia is favoured over the West. This optics dynamic is creating further problems.
My highlight of last week was reading the speech of basic education minister Angie Motshekga. The Progress in International Reading Literacy Study (Pirls) educational attainment rankings had just come out the day before. Budget votes are meant to outline forward-looking plans for the current year with the money that a budget vote unlocks.
I had to read the speech repeatedly, but am still unsure what it is meant to be saying on what the government is doing to address the crisis — that is reading attainment in SA vs peers in absolute standards of reading and relative in the past cycle through Covid-19 vs peers.
Similar losses
My conclusion is the government has no plan at all to address the reading crisis.
The speech refers to similar losses in learning ability in other countries, which is simply not what the data shows. It also highlights existing policy plans pre-Covid for reading — then, like with the load-shedding comments of others — seems to rest on the fact that learning deteriorated worldwide largely over the Covid period. It furthermore bizarrely reads that the longer learners are learning the better their reading is (that is not the issue here), and finally promises further research and “report back and engagements sessions with our critical stakeholders”.
As with foreign policy, there is a complete lack of comprehension of the scale of the crisis, the importance of communications and the easy solutions. After all the minister should be well aware of the huge, rich research and advice available from the likes of Nic Spaull and the three books on education interventions published recently, as well as the huge volume of research already on the department’s own website — more than 100 papers saying exactly what does and does not work.
National government seems content to move in circles consulting and not acting to what should have been obvious since the moment lockdowns of education started — that serious catch-up would be required. There has been three years to plan this! The planning should not happen after Pirls — it already knows what to do.
The Western Cape had already started implementing remedial action since the production of its 2021 systemic results for basic education a year ago and has scaled it up with dedicated funding since the start of this year with the emergence of its 2022 systemic results. The department of basic education, by contrast, had buried a gazette only this month about shifting timetables to offer more lessons with no campaign, support or funding required. The Western Cape appears to have read the departement’s own research on its website and listened to the education experts. A total 20,000 young learners are now receiving dedicated catch-up.
Education doesn’t get enough airtime in markets and among investors (nor the media) and for all our energy and logistics crises, it is basic education reform — particularly recovering from Covid-19’s impacts now all too apparent — that will lead to properly higher productivity and potential growth in the long term.
I am often asked why with structural economic reforms I can’t see growth getting much above 2.5%. It is due to education.
Equally I am often asked what keeps me awake at night — it is not the national energy crisis committee doing this or that or not, it is education.
