For South Africa’s New President, ‘Black Economic Empowerment’ Is All About Personal Enrichment

For South Africa’s New President, ‘Black Economic Empowerment’ Is All About Personal Enrichment

For South Africa’s New President, ‘Black Economic Empowerment’ Is All About Personal Enrichment

A courageous labor leader during the anti-apartheid struggle, Cyril Ramaphosa is now the face of neoliberal extractivism and worker exploitation.


JohannesburgNotwithstanding vast differences in their self-interest, political styles, and constituencies, outgoing and incoming South African presidents Jacob Zuma and Cyril Ramaphosa appear to be exactly the characters Frantz Fanon had in mind when lamenting the continent’s postcolonial politics in 1961. The Wretched of the Earth’s prescient chapter on “Pitfalls of National Consciousness” named Africa’s comprador elites as “the transmission line between the nation and a capitalism, rampant though camouflaged, which today puts on the mask of neo-­colonialism.”

Ramaphosa-types appear, in Fanon’s text, “quite content with the role of the Western bourgeoisie’s business agent, play[ing their] part without any complexes in a most dignified manner.” (Even Ramaphosa’s speaking style exudes neocolonial dignity.) As for the Trumpish buffoon Zuma, Fanon might have aimed these words in his direction: “This same lucrative role, this cheap-jack’s function, this meanness of outlook and this absence of all ambition sym­bolize the incapability of the national middle class to fulfill its historic role of bourgeoisie. Here, the dynamic, pioneer aspect, the characteristics of the inventor and of the discoverer of new worlds which are found in all national bourgeoisies are lamentably absent.”

Zuma zigzags to ignominy

It was not always like this, for both Zuma and Ramaphosa were true pioneers of anti-apartheid liberation. Zuma’s fall was particularly tragic, given how far he had risen from peasant in rural KwaZulu’s fields to proletarian in the nearest big city, Durban, to freedom fighter jailed on Robben Island, to head of the exiled African National Congress intelligence wing. After the ANC’s unbanning in 1990, Zuma negotiated a crucial truce between the ANC and the Zulu-ethnicist leader Gatsha Buthelezi (Ronald Reagan’s great mate), whose traditionalist Inkatha movement fought the much more modern, urban nationalists of the ANC. Prior to Zuma’s intervention, thousands of the often-divided Zulu people were killed.

But then, after the early 1990s, Zuma went from being “a simple man”—as his ANC intelligence comrade Ronnie Kasrils put it in an evocative book last year—to a greedy pol dependent upon corrupt fixers who managed his complex family finances. With 22 children and four current wives (one of whom was banished from his rural homestead for allegedly poisoning him just before a meeting with Barack Obama in mid-2014), Zuma turned first for relief to Durban anti-apartheid activist Schabir Shaik. But Shaik was caught with a revealing encrypted fax and in 2005 was prosecuted for facilitating bribes by the French arms firm Thales. For that, Zuma is likely to be prosecuted on 783 counts of corruption in the coming months. Shaik was jailed for 28 months of his 15-year sentence, but was released thanks to an apparently fabricated medical discharge.

After surviving a 2006 rape trial—in which even Ramaphosa has recently pronounced in favor of the victim—Zuma then shifted patronage machinery to the Gupta brothers, three Indian immigrants whose extreme corruption of state officials finally resulted in arrest warrants the very day Zuma was forced to resign. Remarkably, in spite of a constant flow of sleazy political revelations (enhanced by a massive WikiLeaks-style hack of the Guptas), Zuma’s legal team and political supporters kept him out of the courthouse and he survived eight no-confidence votes in Parliament before his undoing last week.

Before that, Zuma only really stumbled once, when the country’s highest court compelled him to repay some $500,000 in non-security components of upgrades costing $20 million at his rural hometown mansion, Nkandla. Yet his oafish presidency was curtailed, 15 months earlier than he would have liked, on Valentine’s Day. Notwithstanding desperate appeals to stay at least another six months in the job so he could host the Brazil-Russia-India-China-South Africa summit in Johannesburg, this charmer has lost the presidency to Ramaphosa in a manner even more pitiful than when Zuma forced Mbeki out nine months early, back in the tumultuous month of September 2008.

The buffalo politician

Ramaphosa, meanwhile, had learned take-no-prisoners politics as the son of an apartheid policeman who became a radical student activist before being expelled from university during the 1970s. As leader of the National Union of Mineworkers in 1987, Ramaphosa was crucial in organizing a heroic national strike against the apartheid regime. He was the organizational manager of the ANC during the turbulent transition to democracy. With that momentum, he would have been made deputy president in 1994 and president in 1999—if Nelson Mandela had had his way. But under pressure from exiles and Ramaphosa critics, Mandela appointed Thabo Mbeki, an ex-communist Third Way politician who became responsible—as president from 1999 to 2008—for hundreds of thousands of unnecessary deaths when he refused millions of people access to AIDS medicines.

Mandela instead gave Ramaphosa leadership of the Constitution’s drafting in 1996, following which he was “deployed” by the ANC into big business. But there Ramaphosa had a disastrous start at the helm of two local firms: the industrial-sector wing (“Johnnic”) of the gigantic Anglo American Corporation’s Johannesburg Consolidated Investments (a mining house founded in 1889 by a rival of Cecil Rhodes), and the Molope Group (an indigenous bakery). Both failed spectacularly, featuring ugly internecine battles between the lead investors, including Ramaphosa. Personality conflicts aside, he miscalculated in adopting a fatally flawed accumulation strategy.

Debt-driven purchases of white-owned firms by ambitious Black Economic Empowerment (BEE) entrepreneurs were based on volatile collateral: stock-market share values. Ramaphosa and a few other leading BEE beneficiaries expected they would perpetually rise. In mid-1998, however, the East Asian and Russian economic crises proved contagious to the Johannesburg Stock Exchange, whose “black chip” company shares melted by 50 percent within a few weeks, at the same time the country’s interest rate soared by 7 percent (so the Reserve Bank could prevent uncontrollable capital flight while still liberalizing exchange controls). Ramaphosa’s first BEE strategy was exposed, leaving many investors bitter and bankrupt.

But Ramaphosa bounced back, and after running a state BEE Commission, he helped make the second stage of BEE synonymous with cronyism: enforced gifts of white-owned corporate shares to assimilationist black business partners (usually 25 percent), and so-called “tenderpreneurship.” The latter strategy is based on the neoliberal state’s outsourcing—typically with a 35–40 percent artificial mark-up—of activities that were once conducted in-house by its own agencies. Together, these proved a rich source of patronage-based profits. Again, Ramaphosa was among a half-dozen tycoons within the BEE royalty.

During the 2000s, he was further enriched by his ownership of the South African franchises of McDonald’s and Coca-Cola, as well as through privileged investment and board positions at Standard Bank and the continent’s largest cellphone service provider, MTN. Both companies are accused of extremely corrupt behavior, with the former potentially owing $4.5 billion for illegal currency manipulation. The latter was fined nearly $1 billion by Nigerian authorities, was caught shifting more than $1 billion to offshore tax havens, and was accused of bribery in Iran. After quietly condoning such gambits, Ramaphosa was recently valued at $550 million (but is probably worth much more).

Aside from his cheeky “Buffalo” nickname, earned when he bid $1.5 million for a prize bull to add to his exceptional stock of cattle, Ramaphosa’s greatest notoriety came while building the Shanduka mining empire. Through the firm, he played a once-lucrative role as the main local investor in London-based Lonmin. That mining house was the world’s third-largest platinum firm until it was purchased by a local entrepreneur at a fire-sale price last December: $383 million, a tiny fraction of its peak capitalization on the London Stock Exchange. All platinum firms crashed during the 2015 commodities meltdown (in part due to the adverse impact of Volkswagen’s bogus diesel-engine emissions testing), but Lonmin was hardest hit, and now anticipates firing 40 percent of its 33,000-strong workforce.

At Lonmin, no matter how sophisticated and intimidating Ramaphosa had grown within Johannesburg’s shark-filled business tank, he soon made a mistake that at the time was considered politically fatal: failing to consult workers engaged in a wildcat strike. Their $1,000-per-month wage demand (a more than 100 percent increase for many) was rejected by management, and Ramaphosa insisted to the police minister on urgent intervention against the “dastardly criminals.” This call immediately preceded the infamous Marikana Massacre of August 2012: within a few minutes of police gunfire, 34 lay dead and 78 were seriously injured. Recent revelations confirm that nearly a third were killed execution style.

By 2010, when Ramaphosa bought (on credit) a 9 percent share of Lonmin—whose former chief executive “Tiny” Rowland was termed “the unacceptable face of capitalism” by British Prime Minister Edward Heath in 1973, thanks to his manipulation of corruptible African leaders—the World Bank had (quite bizarrely) endorsed the firm’s Marikana community-investment operations with the highest poster-child status and $50 million in equity investments. The Bank also made available a $100 million loan to build 5,500 houses for workers—a 2007 legal requirement in exchange for the state granting Lonmin access to the region’s platinum (South Africa has 85 percent of the world’s reserves). After falling behind the construction schedule, Lonmin leaders asked Ramaphosa to chair the board’s Transformation Committee, ostensibly to meet labor and social needs in late 2010. Ultimately, only three show houses were built, another stain on Ramaphosa’s record.

According to the official Farlam Commission, which Zuma appointed to investigate the Marikana Massacre, Lonmin “created an environment conducive to the creation of tension and labour unrest by failing to comply with the housing obligations.” Lonmin even acknowledged in its internal risk assessments that one result of not building the houses could be “withdrawal of our Mining Licences resulting from failure to deliver commitments made.”

As is repeatedly stated by Ramaphosa and his supporters, the Farlam Commission let the new president off the hook regarding e-mails he sent on August 15, 2012, which to many strongly implied his catalytic role in the infamous August 16 massacre. Last year Ramaphosa apologized for the callous wording of his e-mails. But though he was never formally penalized, many agreed with political journalist Ranjeni Munusamy, who at the time concluded, “Ramaphosa has forgotten his roots and invited deadly state force to spill the blood of his own people for his and the company’s financial benefit.… Betrayal does not get more poignant than that.”

Post-betrayal atonement?

In Ramaphosa’s February 16 State of the Nation speech, delivered just a day after assuming the presidency, he didn’t mention Marikana. But by the time of his February 20 response to parliamentary critics, he had read the mood of dissent across the country: “The Marikana tragedy was the darkest moment in our young democracy. Notwithstanding the findings of the Farlam Commission on my responsibility for the events that unfolded, I am determined to play whatever role I can in the process of healing and atonement for what happened at Marikana.”

To reiterate, Farlam found Ramaphosa innocent of sparking the massacre with those e-mails, for which the president has apologized. But what society should also focus on, in terms of “atonement,” is not just state payment of the long-overdue $92 million in damages Zuma has offered to the families of the massacre victims. The other tough questions, which will probably not be asked or atoned for, are:

  • Did the failure to build 5,500 houses epitomize the South African mining industry’s utter disregard for its workers and communities?
  • Did the $100 million in Lonmin’s tax-avoidance “marketing” expenses to a bogus Bermuda subsidiary—exacerbated by Ramaphosa, according to Lonmin testimony—epitomize the illicit financial flows leaving South Africa (which the Washington NGO Global Financial Integrity estimates at an annual $21 billion)?

In short, does Ramaphosa have a problem explaining both his class and patriotic instincts? The February 21 national budget proposed by Ramaphosa’s Gupta-associated finance minister is one indication, for it keeps corporate taxes at half the level they were in 1994, while cutting social programs and raising the main sales tax that disproportionately hits the poorest in society, while also generously liberalizing exchange controls for the country’s largest financiers.

In his February 26 cabinet reshuffle, Ramaphosa replaced that finance minister with Nhlanhla Nene, whom Zuma had fired from the same job in 2015 apparently because he refused to finance Zuma-Gupta—often nicknamed “Zupta”—parastatal corruption and eight proposed nuclear energy reactors, to Nene’s lasting credit. However, in his only full budget, in 2015, Nene’s grants to the poorest did not even keep up with inflation, and the amount of cash-rich (mainly white) South Africans are permitted to permanently remove offshore generously increased by 250 percent, to nearly $1 million per year.

The many other disreputable cabinet members just appointed outweigh the honest neoliberals, and include a new deputy president, David Mabuza, whose voting bloc was critical to Ramaphosa’s election last December. Mabuza’s multiple corruption—and the unsolved political assassinations in the province he chairs—have not yet led to successful prosecution, but his top posting reflects Ramaphosa’s desperation to win and retain power at any cost.

Thus, to return to Fanon’s canon, it might be fair to judge Ramaphosa the way the world viewed African elites’ relations with Lonmin’s notorious chief executive, “Tiny” Rowland: “The national bourgeoisie of the colonial countries identifies itself with the decadence of the bourgeoisie of the West. We need not think that it is jumping ahead; it is in fact beginning at the end. It is already senile before it has come to know the petu­lance, the fearlessness or the will to succeed of youth.”

As utterly distinct as the two presidents appear at first blush, the Zuma legacy of corrupt neoliberal nationalism is now fusing with Ramaphosa’s unpatriotic neoliberal extractivism. Zuma’s former henchmen and the Gupta brothers’ allies remain for Ramaphosa to excise: in cabinet posts (where several may face the axe in coming weeks, including those leading the finance, energy, mining, social development, cooperative governance, and public-service ministries) as well as deep within the South African state and parastatal agencies. Between these Zupta elements and Ramaphosa’s extreme capitalist tendencies, the worst of both worlds may characterize the next period of South African politics: an even more dangerous Ramazupta regime.

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