Business Day
*H**igh-powered intervention to revive the SA mining industry* *Ray Hartley, Business Day, Johannesburg, 3 June 2013*On Thursday last week, President Jacob Zuma convened a briefing to announce a series of initiatives to restore the confidence of investors in the country's economy.
His intention was simple: He wanted to send a strong signal that the state took the issues bedevilling the mining industry seriously and that it had a plan.
After pointing out that it was a "cornerstone" of the economy, he reeled off the statistics. Mining accounted for 6% of gross domestic product --- 18% "if one includes links from other sectors". The sector generated 60% of the country's export revenues and was a "valuable contributor" to corporate taxes. It provided jobs for a million people.
Mining was in trouble because of a decline in global commodity prices. And then there were the wildcat strikes last year, including the tragedy of Marikana where 44 people lost their lives.
The president then announced details of how the government was intervening. Deputy President Kgalema Motlanthe and Finance Minister Pravin Gordhan would join Labour Minister Mildred Oliphant and Mineral Resources Minister Susan Shabangu in a government intervention aimed at bringing the mining industry back from the precipice.
What was needed, said Mr Zuma, was "the expeditious settlement of wage negotiations" to save jobs and promote growth. This would be achieved by "business, organised labour and the government engaging constructively".
By Friday, the verdict in the court of public opinion was out: Mr Zuma's intervention had made things worse. The rand had weakened further after his announcement and that was all the evidence that you needed.
I think the court of public opinion got this one wrong. While Mr Zuma could have used more fireworks, there is not much more he could have said. If there is a more effective way of dealing with the problem than assigning his deputy and his finance minister to try to bridge the gap between labour and mine owners? I cannot see it.
The truth is that it is conceit to exaggerate the rand part of the rand-dollar exchange rate. The fact is the dog wags the tail. The rather large dog is the dollar.
The suggestion by the US Federal Reserve that it is going to take its foot off the quantitative easing pedal overwhelms the currency market.
This is compounded for countries that are experiencing the effects of a decline in commodity prices and weak growth.
Just this week, the Wall Street Journal reported on the travails of Brazil: "Like other big commodities producers in Latin America, Brazil's economy grew less than expected in the first quarter, hit by falling commodities prices amid lacklustre global growth."
Sound familiar?Here's more: "Brazil's economy grew just 1.9% in the first quarter from the year before, less than the consensus forecast of about 2.4%. It rose a meagre 0.6% seasonally adjusted from the fourth quarter."
Brazil's currency has, incidentally, fallen about 5% against the dollar over the past month.
Mr Zuma does not run Brazil, so we can rule that out as the cause of their problems.
While we have no control over these global dynamics, we do control the environment in which business, in this case mining, is done. What Mr Zuma announced is about as far as the government can go while keeping the balance between public and private initiative.
It could ban strikes and trade unionism, but that would require the suspension of the constitution and I am sure that even the most ardent Thatcherite would demur.
Mining executives I have spoken to since then are baffled.The government has, in their view, finally delivered --- after a tardy start --- what they have been asking for: a high-powered intervention to head off potentially disastrous labour conflict.
They are pleased that Mr Zuma has appointed Mr Motlanthe --- someone that they know from his days as head of the National Union of Mineworkers --- and Mr Gordhan, who has their respect.
If the substance was acceptable, what was the cause of the great rejection? There are two reasons for this. The first is that Mr Zuma is damaged goods.
He has burnt up his credibility in a series of scandals involving R200m spent on his private compound and the business partners of his close relatives, the name-dropping Guptas.
Just last week Mr Zuma announced that he was dropping R60m in lawsuits against journalists and, laughably, cartoonists.
The price the country pays for having a compromised president is that he lacks the credibility to make big interventions.
The second lies in the poverty of our public discourse, which loves to play the man and has long forgotten about the ball.
It is not axiomatic that because Mr Zuma has questionable ethics, South Africa does not require his government to provide leadership when the chips are down.
In South Africa, the makers and consumers of opinion inhabit the same bubble of privilege.
They share the assumption that the country is somehow doomed to failure.This needs to change if we are to build a rational environment in which we accept and deal with our challenges in the national interest.
* /Hartley is Times Media Group's editor at large./*From: http://www.bdlive.co.za/opinion/2013/06/03/damaged-zuma-doing-the-best-he-can-to-revive-sas-mining-industry*
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