To my mind, there is a very unexamined but extremely important field of study: how does your normal average shitshow become an absolute clusterfuck?
Think back on history. Big disasters often began as small disasters which, in the desperate effort to remedy, became very large disasters. There is some kind of concatenation effect that happens. Bad ideas aren’t resolved into their opposite, they are taken to the extreme because, the argument goes, the only reason they didn’t work was that the participants didn’t try hard enough. The bad idea ought to have resulted in a change in direction. Instead, the bad idea became an even larger bad idea. It’s illogical but kind of logical at the same time.
There are zillions of examples, but let me just cite two very big ones. I think we can all agree that World War 1 was a bad idea. About 20-million people died.
Bad idea, right? Actually, no. Instead, the Axis powers came to the conclusion that the problem was not war as such, but that it hadn’t been fought with sufficient conviction. Hence the essentially Nazi idea of totaler Krieg, or “total war”, which would involve the full mobilisation of a nation’s entire society and economy for a struggle of racial and political annihilation. So, then, as we know, roughly 80-million people died.
Another example is communism in China. By the time of the Great Leap Forward in the early 1960s, it was clear communism was failing. But the Communist Party doubled down on rapid collectivisation into enormous communes, compulsory state grain procurement, politically determined production targets and the suppression of private farming and market signals. The result was a famine in which, we think, 30-million people died.
I’m simplifying here, obviously, but these are just the outstanding examples of an unhealthy trend in “doubling down” in circumstances of poor outcomes. How does this happen? First, I think the constructors blame implementation, not concept, which usefully exonerates them. And then there is the second-wave effect. This is where, to demonstrate to the first wave that they are truly and absolutely committed, the second wave prove their fealty to the first wave by proposing the doubling down on the issue. That’s music to the ears of the first wave. It’s a combination of a loyalty-signalling process, radical-flank competition and group polarisation.
In South Africa, we have our own example. I think there is emerging agreement that the BEE effort has resulted in broadly poor outcomes — even the ANC part of the government acknowledges that. The disagreement is over why: is it implementation or concept?
GDP growth has been subdued for 15 years, much lower than countries of similar economic development and even smaller than Namibia, which also suffered under an apartheid system. South Africa’s compound annual growth over the past 15 years has been 1.28%; Namibia has averaged 2.62%. Namibia considered a BEE package like South Africa’s and decided against it, even though Swapo had a massive parliamentary majority at the time. There are some BEE requirements in Namibia, notably over land, but they are designed to be lightweight. Some great new enterprises have resulted from BEE efforts, I know, and large numbers of black South Africans have become shareholders, and politically it might have helped stabilise South Africa in the post-apartheid period.
But now, to my mind, BEE has become a large-scale corruption-enhancement mechanism at worst and a cost enhancer with dubious outcomes at best. Never mind white South Africans; independent-minded black South Africans like Moeletsi Mbeki, William Gumede and Prince Mashele have long ago come to this conclusion.
Logically, you would expect that as the evil that BEE is supposed to be remedying recedes into history, the need for BEE would also diminish. But instead, the government passed the Public Procurement Act in the dying days of the previous parliament. The legislation notionally creates a new efficient framework, but actually the draft public procurement regulations are crucial, and — guess what — the “doubling down” syndrome is unequivocally in evidence.
Just to take one example: in contracts between R20m and R100m it’s not good enough to actually be a BEE company; just to pre-qualify you have to demonstrate that at least 40% of your previous procurement was spent with enterprises at least 51% black-owned and managed. Or you can give away 30% of the prospective contract to participating ANC cadres. Even for contracts under R20m, there is now no such thing as a “majority owned” black company, it has to be 100% black owned. Not 98%, not 99%, 100%.
So obviously the government is aware that with such super-stringent regulations, a whole bunch of government contracts just won’t have bidders. So there is an opt-out if no potential bidders can be found, and you can apply for an exemption. But it’s unclear who gives that exemption and in what circumstances.
There is also a raft of new compliance requirements, because in the mind of the ANC, corruption is a problem of implementation, not concept. So audited financial statements, solvency, tax status, technical capability and relevant experience, professional accreditation, misconduct and debarment history and anticorruption compliance are all now part of the system. But just imagine the paperwork here.
The Centre for Development & Enterprise has done a very useful analysis of the regulations and called on the National Treasury to reconsider and withdraw the preferential procurement provisions.
But generally, I’m astounded at the lack of interest in this crucial subject. Procurement by the government is worth around R1-trillion a year. Do government departments know that their ability to procure is going to be massively constricted? Has the government factored in the likely cost increases from the new regulations? Has it even tried to calculate them? No. “The legislation says: ”No substantial financial implications for the state are envisaged.” I am not making this up. Are they nuts?
And most of all, why is it not following the first rule of disasters: if you find yourself in a hole, stop digging?