After the Bell: The depressing illogic of the EFF election manifesto

Reading the EFF election manifesto, I was struck by many aspects of it which might take a little unpacking. We know the general thrust of it: it’s a slightly modernised version of leftist creeds like the hyper-statist policies of Cuba and Venezuela. We know it would be an economic disaster of gargantuan proportions; that’s completely obvious. But there are some things we didn’t know. 

Here are some thoughts: 

The level of sheer factual inaccuracy is gobsmacking. For example, it says the “financial sector is the most untransformed sector of the economy” and “the only black participation in this sector is the PIC [Public Investment Corporation], which owns less than 10% of these entities on behalf of the 80% black population. The other 90% of capital is held by the minority 7.3% white population of South Africa.” I am not making this up.

First, the banking sector is probably the single most transformed sector in the entire economy, if not a close second, and was one of the first sectors to embrace the imperative more than 20 years ago. Walk into any commercial bank in SA: the bank’s staff are reflective of SA’s racial make-up; most of the largest banks have or have had black CEOs and managers; all of the banks have long-standing BEE programmes at all levels and have substantial BEE equity ownership programmes. It’s not a total transformation at all levels, but it’s pretty close. 

The PIC’s ownership of SA’s banks is much larger than 10%, not smaller. The PIC owns 13.62% of Nedbank, 14.71% of Standard Bank and 16.16% of FirstRand. And even the notion that the PIC somehow represents “black participation” is factually flawed because the PIC does not represent black South Africans or even necessarily the state. It invests the pension savings of all government employees, past and present. 

My guess is that if you looked closely at the beneficial interests of most investment houses, the PIC’s ultimate beneficiaries are less racially representative than, say, Allan Gray — but I could be wrong. Nobody has done this analysis because investors generally don’t care about race; they care about preserving and growing their savings. The point is that with the growing black middle class, now easily equal in size to the other races combined, the beneficiaries of pension fund investments in SA are changing rapidly, as you would expect. 

For the EFF not to know any of this, and to put this benightedness in their manifesto, implies an astounding level of — there is no other way to say it — wilful ignorance. But it’s not just about banking that there are straight factual errors. In the land section — which you would imagine the EFF would pay the most attention to — the party says that after 1994, the government has cumulatively bought less than 7% of the targeted 30% of land meant for redistribution over the 30 years.

However, according to Wandile Sihlobo, academic and chief economist at the Agricultural Business Chamber of SA, the government is pretty close to the 30% target. The figure is somewhat assisted by the fact that large numbers of black farmers have independently bought self-financed farms. 

It should be noted that this doesn’t mean large-scale, commercial farming isn’t still dominated by white farmers; it is. But overall, there are numerically now many more black farmers than white farmers and ignoring the facts to justify calls for a large-scale farm nationalisation programme is not only economically dangerous but also transparently duplicitous. 



The nationalise-the-mines section was interesting because it’s such a confused and confusing mess. The manifesto says, “The EFF government will return the ownership of the mineral wealth of the country to the hands of all the people of South Africa by nationalising the mines by 2028.” Without compensation. Obvs. But then it says an EFF government will, in the run-up to the nationalisation process, “conduct a robust consultation process involving all existing stakeholders in the mining sector, including the current foreign and local owners, mineworkers, affected communities, and traditional leaders”. 

The EFF will then “propose various mechanisms to forge strategic partnerships and agreements with the above-mentioned stakeholders including public-private partnerships, long leases, employee ownership program[me]s, and other structures aimed at enhancing the capacity of the state to operate mining operations”. What? The mines will be nationalised but there will be “public-private partnerships”?!  

The section miraculously recognises that if you nationalise the mines, you simultaneously lose all your mining expertise. That’s going to be bad news for the state mining company which now owns all the mines. So for the state mining company to work, some accommodation will have to be reached with mine owners, otherwise the state mining company will be defunct from day one. 

Shoot me if you think this is idiotic, but by the EFF’s Grade 8 levels of economic understanding, this is actually a step forward. It’s sweet that they think the people whose property they have just stolen will happily sit down and sign a long lease, because, you know, the trust will be there. But at least the EFF is now conscious that mining requires some level of expertise. Baby steps, people, baby steps.

The manifesto also has a proscribed minimum wage for different segments, which, bizarrely, is specified down to the cent. For mineworkers, it’s set at R15,872.52c per month. Once again, on what planet, people? The average wage of an entry-level mine worker in the PGM sector is now R25,500 a month, a little less in the gold sector, and a little higher in the coal sector. Is the EFF really recommending miners’ salaries should get cut? Not specifically, but if you set a minimum wage like that, somebody is going to suffer. 

What intrigues me about all of this is where these idiotic economic ideas come from. How is it possible that the EFF’s economic platform can be so impervious to systems now widely accepted by almost every country on planet Earth, including countries with avowedly communist governments like China and Vietnam? Why has the light of modern economic history shone so dimly on the EFF’s economic moronism?

I think there are four reasons. 

1. History

2. Education

3. Racism

4. Logic & romance