We will overcome the economic turbulence

Economic and business news has become part of our daily national diet of new information. In the recent past the media has kept the country informed about both the rapidly rising prices of commodities and precious metals, including crude oil, gold, platinum, copper and so on, and, more recently, the significant fall especially in the price of gold. Similar reports have reflected on the volatility of the international value of the Rand, which tracked the gold and US dollar prices in its upward and downward movements.

Similar news has been communicated concerning the up and down movements affecting the Johannesburg Securities (Stock) Exchange (JSE), as well as the bond market.

There is also the great volume of information the media communicates concerning the global economy, including the daily changes in other Stock Exchanges around the world, as well as changes in the values of many currencies, including the US dollar, the Japanese yen, the Euro and others.

Add to this the fact that, globally, South Africa is treated as one of the Emerging Markets. This means that at least sometimes, when international investors adopt a negative attitude towards these Markets, this will affect us, even when there have been no particularly negative developments in our country. This relates to the phenomenon of “contagion” over which we have no control.

Much of the economic news to which we have referred can of course raise many concerns among the people, even though only a tiny minority among us are experts on, or fully understand matters that concern the domestic and international financial and other markets.

This is because the people know that all these matters, however incomprehensible they may seem, have a direct bearing on the issue of central concern to all of us – our progress towards the achievement of the goal of a better life for all our people.

In the most recent past our media has correctly reported on the volatility that has characterised many of the areas to which we have referred. Most visible among these have been the sharp up and down movements on the JSE, the gold price, the value of the Rand and the bond market.

Naturally, the people must therefore ask the question – what does all this mean in terms of the ability of our economy to grow and develop and generate the resources we need to increase investment, create new jobs and provide the means for the democratic state to meet its obligations to the people!

The central task facing the national democratic revolution is the struggle to reduce poverty and underdevelopment and the related race, gender and geographic disparities that continue to characterise our society. The issues to which we have referred – changes in the JSE, commodity prices, the value of the Rand and so on – are indeed relevant to the task of fighting poverty, on which we must continue to focus.

In this context, we must also point to the fact that the production and export of commodities and precious metals continue to play an important part in our economy. This is despite the relative and absolute growth of other sectors, including manufacturing, services, wholesale and retail trading, and construction. According to StatsSA, in September 2005, agriculture and mining employed 1,336,000 workers. This emphasises the importance of the commodity sector in our economy.

I mention this particular matter because the volatility in commodity prices has been one of the central features of the recent and current period, affecting other economic indices.

What, then, should we make of the great volatility that we have seen during the recent past! Should all of us be greatly worried that the economy is threatened by pressures that will lead to a slowdown in its rate of growth, and therefore its ability to create new jobs, among other things!

Perhaps there are two centrally important points we should make in this regard. One of these is that the fundamentals of our economy, as they are called, remain very sound. This means that nothing has happened or is happening in our economy, which should result in an automatic negative sentiment towards our country on the part of the domestic and global economic actors and ‘movers and shakers’.

It is however also true that, for various reasons, our current account deficit, which concerns our trade relations with the rest of the world, has continued to grow. However, no serious suggestion has been made that this affects or will significantly affect the fundamentals to which we have referred.

The second point we would like to make is that, as ordinary consumers of news and non-professionals with regard to economic analysis, we must focus not so much on the daily and immediate short-term activities in the areas we have indicated, as correctly reported by the mass media.

Rather, we should concentrate on the medium-term, in which the basic economic tendencies will have become clear, giving us the possibility to distinguish the particular from the general. It is at this point that we would be able to draw reasonably correct conclusions about what the volatilities we have mentioned mean, in terms of the pursuit of the goal of a better life for all, relying on a continuously growing and expanding economy.

In this regard, I would like to cite the words of our Minister of Finance, Trevor Manuel, when he presented the current National Budget on 15 February 2006. He said:

“We have indeed already achieved a considerable acceleration in sustainable growth, but we are mindful that the present buoyancy of business and consumer confidence is, in part, a cyclical trend. Commodity prices are at record levels, supported by strong growth internationally. Global productivity growth is robust, while inflation and interest rates have remained at moderate levels...

“The economic outlook is exceedingly favourable – more promising than has been seen in forty years, but we recognise the need for both restraint and redoubled efforts, so that we take full advantage of the opportunities before us. And our policy stance, unlike that of forty years ago, emphasises development opportunities for all South Africans, built on a foundation of social solidarity and a shared economic destiny, a partnership in which citizens and the state face shared challenges, to meet shared joys.”

These comments reflect the fundamental strength of our economy and the possibility this has given us to make further advances with regard to our movement’s fundamental objectives of “social solidarity and a shared economic destiny”. We must place the recent volatility discussed above within this longer-term context.

Since early May, the rand has lost eight or nine percent of its value and the JSE has lost a similar amount. The question therefore arises whether we should, accordingly, be concerned that the economy will not deliver on the promise mentioned by Trevor Manuel at the beginning of the year? Our answer to that question is “no”! This is why:

For the last three years or so the world economy has grown strongly. Africa and South Africa have grown strongly too. One reason for this strong performance has been unusually low levels of inflation and interest rates in many countries, which encouraged businesses and consumers to spend and to invest. Another reason is the very rapid and continuing growth of the two biggest countries in the world measured in terms of population, China and India.

The contribution of China and India to world growth in the medium term is expected to remain strong. This will keep commodity suppliers busy as the sister peoples of China and India invest in roads and railways, harbours and airports, telecommunications, houses and urban development, bridges, energy, water, sewerage, factories, farms, mines, health facilities, education and human resource development, and all manner of other human activity.

The improvement of living standards in these important countries, and others, such as Russia, Brazil, Indonesia, Nigeria, and others, will also fuel world consumption as these, including the Chinese and Indian peoples consume more. Consumption levels on average in China and India are considerably below average consumption levels in South Africa today. Thus, even catching up with our level of consumption, assuming true global economic integration, would make a truly massive impact on the world economy.

Because the foregoing is true, and taking into account other factors, we must understand that the volatility we have seen represents a correction in the commodity and equity markets, rather than a response to long-term negative changes in the global economic fundamentals.

This reality has been underlined by the fact that for countries where the macroeconomic conditions (‘the fundamentals’) are sound, the impact of the current global downward volatility has been limited, and seems likely to stay that way. In fact, several Emerging Markets seem to be growing faster than expected, and some growth forecasts have been raised.

It is not surprising that conditions are somewhat volatile. The world is experiencing a very strong growth cycle. Prices of assets like property and company shares are high. If we go back only a few years, the All-Share Index on the JSE in 2003 was just over 7,000. By April 2006 it had risen to 22,000. All of us have also experienced the sharp price increases in the housing market, including the emerging housing market in the urban African township areas.

Our readers do not have to be economists to see that the value of shares traded at the JSE trebled in three years. As the Minister of Finance said recently, some of this exuberance has been irrational. But this not been enormously so. If we look at the ratio between the price of South African shares and their earnings yield, even at recent prices they have not been hugely overpriced.

In addition, it is important for all of us to understand that the recent falls in value affecting the Rand and the JSE are pretty much in line with other comparable Emerging Markets. Such countries as Brazil, Russia, Poland, Indonesia, Hungary and Mexico have all, like South Africa, lost between 8% and 12% of value in the same categories, over recent weeks. Some countries have done a little worse. South Africa has therefore not negatively been singled out among the Emerging Markets. There is no reason to expect that it will be.

This means that South Africa’s current experience with regard to the slight weakening of the Rand and the JSE is shared by several other medium or large Emerging Economies. This applies especially to those which, like South Africa, are open, trading economies, and those which have considerable exposure to commodity price movements. The issue therefore turns not so much on our policies, as on our objective circumstances as part of the universally recognised Group of Emerging Markets.

The underlying and decisive reason for the sensitivity of markets is that, globally, there is a considerable volume of savings chasing good investments. The pension funds, the unit trusts, the hedge funds, and other financial institutions in Western Europe and North America and other rich parts of the world, representing huge volumes of highly mobile financial capital, have been searching for markets that are growing faster and are well managed.

South Africa has been a major beneficiary of this global phenomenon, thanks to our strong economic fundamentals, the stability and credibility of our macro and micro-economic policies, and our transparency and predictability with regard to our entire system of economic and political governance.

Net capital inflows into the JSE since the beginning of 2005 rose to over R100 billion by May 2006. Such an inflow of capital is quite without precedent in South Africa’s history. And this is without including several huge direct investments in companies like Absa, Vodacom, and now possibly Illovo Sugar. Our policies and perspectives have won credibility in the international markets, and South African companies are doing well.

Those among us who believe that they represent the left, must seriously study and understand this phenomenon, relating to the global movements of capital, with regard to its impact, for instance, on the economic development of the People’s Republic of China in the period since the adoption of the “open door policy” under the leadership of Deng Xiaoping. In this regard, they must listen to what the Chinese say, with both ears, and see emergent China with both eyes!

In the context of the volatility we have been discussing, we must also consider the impact of these current economic developments on inflation, which, at high levels, can reduce the real value of the earnings, and therefore the standard of living, of workers and those living on fixed incomes, such as pensioners and others, who survive principally on the social grants provided by our democratic state.

Figures released this week indicated that the rate of inflation, CPIX, rose by an annualised 3.7% in April. This was below some expectations, and considerably below the 4.5% halfway mark in the Reserve Bank’s target range of 3-6%. Even though imported inflation – caused especially by the persisting high oil prices ­– is having an effect on the production price index (PPI), this is not flowing through strongly into consumer prices.

The key point with regard to the foregoing is that there is no obvious policy weakness in our country that will contribute to any expectation of greater vulnerability of South Africa, compared to our Emerging Market peers.

As we have already indicated, it is true that our international trade deficit is a little higher than we would like it to be. However, we know that, objectively, this deficit tends to be high in South Africa during periods of rapid growth. In part this is caused by the need to import the equipment and machinery needed to start new production or expand existing production activities, without which it is not possible to achieve higher economic growth rates and the expansion of the economy.

If the international trade deficit is a little higher that we would wish, then the slight softening of the Rand should do some good, as it will encourage exports and the use of locally produced goods. In this way, the correction, affecting the international value of the Rand, may contribute in a positive way to reducing the national economic vulnerability represented by the trade deficit. In any event, strengthened domestic productive capacity, caused by the import of capital goods, should result in higher export growth, and therefore, absolutely and proportionally, a reduction in imports.

At the same time, we would not be well served by a major weakening of the Rand. Among other things, this would push the Rand price of such necessary imports as liquid fuels and means of production to levels that would destroy our possibility to push our rate of growth and development to the vitally necessary higher levels which the Accelerated and Shared Growth Initiative for South Africa (ASGISA) is intended to help us achieve. In addition, such significant inflation this would lead to higher interest rates, which would suffocate the consumer and investor ability and confidence we need to inspire these high rates of growth and development.

In this context, relating to our international economic relations, an 18 May 2006 “SA Strategy Spotlight” paper issued by the prestigious financial institution, JP Morgan, said: “The extent of the ZAR (Rand) sell-off in the past week does not illustrate a fundamental inability in South Africa to finance the current account deficit as much as it reflects the irrational fear of being exposed to risk assets, that has grasped the market. We forecast a healthy Foreign Direct Investment pipeline in SA of at least the same order as last year’s net FDI inflow of (around) $6.5 billion..., which should cover a large part of the current account deficit...Superior earnings growth prospects...should ensure easy portfolio financing of the uncovered portion of the current account deficit, in our opinion.”

To return to the matter of the totality of the issues we have been discussing, which have seen asset price declines affecting the Emerging Markets, we would like to refer to the observation made by one of the biggest and most vibrant global financial institutions, Citigroup, in a 24 May 2006 paper entitled “Reflections of Emerging Markets”. The paper says:

“This is an important correction, not a market meltdown. We do not see a meltdown in the offing for several reasons. First, the underlying economic backdrop and fundamentals remain strong and worldwide growth remains vibrant. Second, we do not see inflation in the United States as the central risk, and we expect the inflation scare to fade...Third, we do not think US economic growth will collapse. Fourth, we think that we are still in the midst of the correction and not at the end. Fifth, we think that, overall, a weaker dollar can be a plus for Emerging Markets...”

To all this we must add that our economic future will be decided by our own fundamentally strong economic fundamentals. That future will also be decided by the interventions we are making, as represented by ASGISA and other initiatives to address the challenges of the Second Economy. It will also be influenced, critically, by the extant private sector investment programmes.

We are confident the market corrections we have been experiencing will not deny us the possibility successfully to pursue the noble goal of “social solidarity and a shared economic destiny”, of which Trevor Manuel spoke as this year of our Age of Hope began.

What the media says...

Not the sharp surgical instrument it seeks to be

A recent edition of The Lancet, one of the world’s most respected medical journals, contains an editorial which reproduces some of the most common fictions both about South Africa’s response to the AIDS epidemic and about aspects of the recent rape trial of ANC Deputy President Jacob Zuma. On both counts, a response is called for.

According to its website, The Lancet is guided by the philosophy of its founder, Thomas Wakley, who in 1823 announced: “A lancet can be an arched window to let in the light or it can be a sharp surgical instrument to cut out the dross and I intend to use it in both senses.”

Unfortunately, and contrary to the approach that has earned it its global reputation, The Lancet editorial of 20 May 2006 neither sheds light on, nor cuts away the rubbish that has long been spoken about, South Africa’s response to HIV and AIDS.

Entitled, ‘South Africa needs an HIV truth and reconciliation commission’, the editorial uses the trial of ANC Deputy President Jacob Zuma as a launching pad for an ill-informed attack on the policies and programmes of the ANC-led government. In doing so, it joins the ranks of many commentators who have made and repeated claims that bear little or no resemblance to reality.

The editorial claims that when Zuma was acquitted on a rape charge on 8 May, “many felt that his extraordinary statements during the trial had set back by years the half-hearted attempts of the South African Government to combat its raging AIDS epidemic”. It asserts that damage has “undoubtedly” been done to HIV education and prevention.

Without indicating who the “many” are, or what evidence they have to support their contention, The Lancet nevertheless accepts it as fact that efforts to combat AIDS have been dealt a significant set back. Like many other media institutions, it commits the error of equating testimony in a trial with policy statements – a practice which the trial judge, Judge Willem van der Merwe, criticised in handing down judgement.

In accepting the judgement, the ANC and its Alliance partners said it noted the comments made by the judge “around the need of all sections of society, including the media and other commentators, to respect the court and due process of law, not to proceed from a position of ignorance, and to understand that evidence led in a trial should not be taken as policy statements, particularly regarding the issue of HIV and AIDS”.

Speaking after his acquittal, Zuma further said: “It is unfortunate that my honest responses given under oath to a court of law, as an accused person, were taken out of context and presented in a distorted form to the court of public opinion, as policy statements to burning issues that confront our society.”

Then, to ensure that whatever inaccurate impressions had been created through media coverage and commentary of the trial were corrected, Zuma restated his views and the views of the ANC on these “burning issues” including violence against women and HIV and AIDS. This was supported by messages from the ANC and its Alliance partners, from government and other sectors. Throughout the trial and in its aftermath, government’s message on HIV prevention has remained consistent.

The Lancet editorial also reports that: “Zuma’s supporters had threatened and derided the complainant women and she has now reportedly fled the country”. What they do no report is that those who insulted and threatened the complainant in the case were a small minority among those who chose to demonstrate their support for the ANC Deputy President, and an even smaller minority among broader South African society. Their actions were roundly condemned by many across society.

The ANC National Executive Committee, for one, condemned “without reservation those statements and actions, particularly by members of the movement, which demonstrate a lack of respect for the rights and dignity of the complainant, the rights and dignity of the accused and the basic values of a progressive democratic society”.

In his statement on the matter, Zuma said: “I wish to stress that the complainant in my erstwhile case should in no way be vilified or condemned. She deserves to lead a fruitful and harmonious life as a citizen of this country, protected by our Constitution, regardless of what we think could have been the motives for her actions.

“We also need to extend our hand of friendship to the women and organisations that demonstrated against me, for they are our partners in a common struggle. I hope that they will accept the ruling of the court, as they continue in our collective and correct struggle against the abuse of women and children.”

If the editorial is deficient in its depiction of the impact of this trial on the fight against HIV and AIDS, it moves even further from the light in its presentation of the government’s response to HIV and AIDS.

This response, it says, is “half-hearted”, “pitifully poor” and “complacent”. South Africa continues to “drag its feet” on the roll-out of antiretroviral treatment, and lacks “a strong leadership that delivers clear messages”.

The reality, however, is very different. The ANC-led government’s programme to address the challenges posed by HIV and AIDS is one of the most comprehensive and largest in the world

Government expenditure on HIV and AIDS has increased substantially since the ANC was elected into office. It grew from R30 million in 1994 to over R3 billion in 2005/06. This hundred-fold increase over just more than a decade would not have been possible without political leadership.

In the report to the previous UN General Assembly Special Session on AIDS (UNGASS), the UN Secretary General commended South Africa for tripling its resource allocation for HIV and AIDS programmes since the adoption of the UN Declaration in 2001. The World Health Organisation’s progress report on the expansion of AIDS treatment, released in June 2005, noted that: “South Africa has committed US$1 billion over the next three years to scaling up antiretroviral (ARV) treatment, by far the largest budget allocation of any low- or middle-income country.”

Increased expenditure, however, is not in itself sufficient to tackle a challenge as substantial and complex as HIV and AIDS. A lot depends on how it is used. It is for this reason that South Africa has a broad and comprehensive response to HIV and AIDS which remains the focus of ongoing monitoring, evaluation and review.

Contrary to the suggestion made by The Lancet that the South African population is largely ignorant of the basic facts of HIV and AIDS and easily misguided, awareness has grown significantly over the years.

This is reflected, among other things, in very high levels of awareness; stabilisation in recent years of the level of prevalence which had been rising fast and the creation of infrastructure to support and sustain counselling, testing, care and treatment across the country.

Behaviour change is reflected in that secondary abstinence among females rose from 13,9% in 2002 to 20% in 2005 and the use of condoms among those with multiple partners increased from 48,6% in 2002 to 79,1% in 2005. Government is scaling up its communication and social mobilisation campaign. The budget for the campaign over a two-year period has been increased from R160 million to R200 million.

The condom distribution programme cannot be compared with any in the world. Public health sector male condom distribution has increased from 270 million in 2003 to 346 million in 2004 while female condom distribution rose from 1.3 to 2.6 million during the same period. The Human Sciences Research Council's HIV-Prevalence, Incidence, Behaviour and Communication Survey of 2005 shows that there is nearly universal access (97%) to condoms, with government hospitals and clinics being the main sources of availability.

There are now 231 accredited public health facilities providing HIV and AIDS-related services, including ARV treatment. These facilities are spread across the country’s 53 districts and cover at least two thirds of local municipalities. By the end of March 2006, over 130,000 people had been initiated on ARV treatment in these facilities. Combined with an estimated 80,000 people initiated for private-sector ARV treatment, South Africa has the largest ARV treatment programme in the world. More than R3.4 billion has been allocated for procurement of ARV drugs for the period up to the end of 2007. Government is involved in ongoing initiatives to reduce the prices of relevant medication.

Health facilities providing voluntary counselling and testing (VCT) have doubled from 1,500 in 2002/03 to 3,700 in 2004/05. The number of people counselled for testing in the public sector rose from 413,000 in 2002/03 to 691,000 in 2003/04 and 1,3 million in 2004/05. The total number of people tested during 2003/04 was 511,843 compared with 247,287 in the previous year.

The prevention progamme includes prevention of mother-to-child transmission, with 2,500 facilities in operation. Almost all hospitals and trauma centres provide post-exposure prophylaxis for sexual assault survivors.

In April, the Minister of Health launched the Accelerated Prevention of HIV and AIDS Initiative as part of an extensive initiative regarding prevention by the member states of the Africa Region of the World Health Organisation (WHO). As part of this, government will intensify its interventions targeted at particular risk groups including people between the ages of 25-29 years. It will also intensify efforts aimed at improving the socio-economic status of women, people living in informal settlements and other vulnerable groups. More than 1,060 health professionals have been recruited to support the programme. Some 7,600 health professionals have been trained in the management, care and treatment of HIV and AIDS.

Government is also improving working conditions so that it can recruit and retain more health professionals. This includes providing scarce skills allowances for certain categories of health professionals (doctors, pharmacists and specialist nurses) and a rural allowance for health professionals working in less developed parts of the country. This is in addition to the steadily improving salary packages.

Nutritional supplements are provided to those who need them, as part of the comprehensive response to HIV and AIDS, as a complement to the appropriate forms of treatment. Some 90,000 people have accessed this service since April 2004. An amount of R7 million was made available for purchasing nutrition supplements in the 2003/04 financial year.

Support and care for those affected by HIV and AIDS is expanding, through growing programmes such as home- and community-based care.

Despite the progress made, there remain substantial challenges in the struggle against HIV and AIDS. These challenges include the lack of capacity and resources in many centres; deficiencies in the monitoring and evaluation of programmes; the severe impact of poverty, underdevelopment and malnutrition; gender inequality; and the vulnerability of certain sectors of society.

Critical to overcoming these challenges is an active partnership of all of society with government. The partnership is embodied in the South Africa National AIDS Council and expressed in action, which sees government, communities and non-governmental organisations (NGOs) working together to implement all aspects of the comprehensive plan.

In this partnership, there is appreciation that the role-players may disagree on all or some of the elements of the comprehensive programme. What we need to ensure is for the partners to work together on those issues on which they are in agreement.

While there may be significant and substantial challenges still to be overcome, there is no way of sustaining the claim in The Lancet editorial that South Africa is a nation that “now threatens to be destabilised by gender inequality, violence and disease”. Such hysteria and hyperbole is ill-suited to a publication of the calibre of The Lancet. It does a disservice not only to the journal’s many readers, but also to the people and government of South Africa who are together engaged in a determined partnership to tackle the scourge of HIV and AIDS.

Crossing the floor

On the Constitutional Court decision on “floor crossing” legislation

Editor’s Comment: During October 2002, ANC TODAY received the contribution we reproduce below. As indicated above, in the nomenclature in which we received it, this contribution sought to comment on the 4 October 2002 decision of the Constitutional Court on legislation relating to “crossing the floor”. Reluctantly, then, we took the decision not to publish this important article. This was because we did not want to communicate any suggestion whatsoever that the ANC would not respect the decisions of our courts. As our readers will remember, at the time, after the Constitutional Court judgement, Parliament, with a large ANC majority, had still to take the necessary measures to correct the deficiencies in the legislative measures enabling the national and provincial representatives to “cross the floor”, as identified by the Constitutional Court. Last week, our weekly ‘Letter from the President’ discussed the issue of “floor crossing”. This followed the short discussion that took place in the National Assembly on 18 May, when the President of the Republic answered a question on “floor crossing” posed to him by Democratic Alliance leader Tony Leon. Given these circumstances, and taking into account the time that has elapsed since the 2002 decision of the Constitutional Court on this matter, we thought it appropriate that we should now publish the article that follows below, three-and-a-half years after we received it. It is important to note that we maintain the numbering of the paragraphs of the article, which the authors – who collectively identified themselves as ‘Amicus populi’(The friend of the people) – insisted would facilitate critical comment on their observations. The text also uses the paragraph numbers used by the Constitutional Court in its published Judgement. ‘Amicus populi’ wrote:

Re: The decision of the Constitutional Court on the legislation relating to “crossing the floor”. October 2002.

0.0. The decision of the Constitutional Court on this matter raised important questions about the role of the law on one hand, and the process of social and political transformation in our country, on the other. This matter, as it related to law-making, was correctly referred to our national legislature. However, the broader issues raised by the determination of the Constitutional Court still require further discussion by our country as a whole. This discussion must include those among us who do not belong to the community of the legal mandarins usually identified in terms of court protocol as ‘learned friends’. The comments that follow were contributed by a group of non-professional (non-legal) members of the ANC. These comments may, therefore, in the eyes of the lawyers, the professionals, lack the intellectual rigour of logic, knowledge of the art and science of jurisprudence, the appropriate language, and the cold-blooded precision that, we are told, necessarily defines what lawyers do, as they discharge their professional obligations. We may indeed readily plead guilty to such a charge, without agreeing that our judiciary has a right to refuse openly to participate in public discussions that bear on the Birth of the Nation, relying on the response that serves all public figures so well – no comment! Apart from any other consideration, we are convinced that our judiciary can only earn its respect in the eyes of the masses of our people by convincing them that it does not operate at so elevated a level that it cannot, and dare not, stoop to engage these masses in discussion over matters that relate to the understanding of these masses of what is meant when it is said – let justice be done and be seen to be done! In this context, we do indeed understand that we cannot demand of our judges that they engage us, the public and possible actors in our courts as plaintiffs and defendants, about any specific judgements they may make. Obviously, this includes the matter we seek to address in this document, the decision of the Constitutional Court on the issue of the legislation dealing with “crossing of the floor”. This constraint should not apply to others better educated than we are about matters that relate to “the law”.

1. In its October 4, 2002 decision on this matter, the Constitutional Court (hereafter referred to as the Court), decided that: “The Loss or Retention of Membership of National and Provincial Legislatures Act 22 of 2002, is declared to be inconsistent with the Constitution and invalid.”
2. The decision of the Court turned on the matter of the effect of the provision in the Constitution, that what is contained in Act 22 of 2002 should have been done by the legislature “within a reasonable period after the new Constitution took effect”. Admittedly, this wording was itself directly drawn from the 1996 Constitution, and was therefore not expressive of a sovereign opinion of the Court.
3. The Court argued, (para.101 of the Court Judgement), that this particular wording “placed a constraint upon the power of Parliament to act in terms of that (constitutional) provision.”
4. The Court decided that this constraint is contained in the words in the Constitution, “within a reasonable period etc”.
5. The Court therefore argues that the year 2002, when Act 22, 2002 was passed, falls outside the timeframe that the Court considers to be “a reasonable period etc”.
6. Logically, this assertion placed an obligation on the Court to set criteria according to which, in the context of the matter before it, it would have to determine what constitutes “a reasonable period etc”.
7. In this regard, the Court stated that (para.105): “In determining what is a reasonable period within which such legislation could be passed, it is necessary to have regard to all relevant facts and circumstances. The relevant considerations depend in the first instance upon the nature of the task that has to be performed, and in the second instance upon the object for which the time is given. Here the task to be performed was the passing of legislation to modify transitional provisions that had a limited life...Having regard to all circumstances, we are unable to conclude that an amendment passed more than five years after the Constitution came into force, to change a provision which had only another two years to run, was passed within a reasonable period.”
8. It went on to state, (para.112) that: “The reasonable period had expired, and the precise status of item 23A (of the Constitution), during the period when it could be amended by an Act of Parliament, is no longer relevant.”
9. The Court also said, (para.113): “We are concerned here with the interpretation of a provision of the Constitution. In doing so we should avoid legal formalism and strive to give effect to its purposes.”
10. In essence, the Court decided that the only criteria it would use to determine what constitutes “a reasonable period” in the context of the matter under discussion are:
    • the time when the Constitution came into effect; and,
    • the possibility presented by the presentation to parliament of a report of a parliamentary ad-hoc committee on the matter under discussion. (See below).
11. With regard to these matters, the Court said: “It seems clear to us that if Parliament had wished to modify the anti-defection provisions, it could reasonably have done so at the time the ad-hoc committee reported (in June 1998) and recommended against any change. (Our emphases). Allowing for the time required for drafting of legislation and for public debate, the legislation could reasonably have been passed during 1999. The fact that it was only passed some three years later was due to the change in the political climate, rather than to constraints of time.”
12. In (para.105), the Court states that: “regard must be had to the difficulties confronting a young Parliament faced with the need to transform many laws of the country and bring them into line with the political changes which have taken place since 1994...”
13. Before we proceed further, let us declare our position unequivocally. We firmly disagree with, and are deeply disturbed by the decision of the Constitutional Court (the Court).
14. We are truly amazed and surprised that the Court could take the decision it adopted.
15. We are convinced that, by its decision on the matter of the national and provincial legislatures, the Court has created the extremely dangerous situation of blocking the evolution of our country away from its apartheid past. This is despite the fact that the Constitution obliges all of us, including the judiciary, to move in this direction.
16. What follows is a substantiation of the positions we have just stated.
17. It may be necessary that, at this stage, we also make the point that we make no assumption whatsoever that we have a monopoly of wisdom which makes what we will say to be necessarily correct.
18. 18. We may very well be entirely wrong because we do not have any of the attributes that attach to a supernatural Creator who is omniscient.
19. At the same time, we are convinced that no other South African individual, or national institution of any kind, including the Constitutional Court, has the attributes that attach to a supernatural Creator who is omniscient.
20. As cited in our Paragraph 11 above, the Court made the observation that: “The fact that (Act 22 of 2002) was only passed some three years later was due to the change in the political climate, rather than to constraints of time.”
21. This is entirely correct!
22. The Court statement quoted in Paragraph 20 above contains within it the essence of what is radically wrong with the decision of the Court.
23. When it had to pronounce itself on what constitutes “a reasonable period”, the Court decided that this should be determined on the basis of calendar time, rather than the national political process.
24. And yet, the matter of electoral systems, the nature of representative government, the accountability of elected representatives to the electorate, individual freedom of thought and mandated obligations as they relate to elected representatives, and so on, are all eminently political matters.
25. Knowing all this, the Court nevertheless decided that the obviously political matter of “crossing the floor” would be determined on the basis of calendar time, without regard to the political circumstances that would define each moment of this calendar period.
26. To put the matter crudely, the Court treated the expression in the Constitution “within a reasonable period etc”, as though it were an expiry date stamped on a food item bought at a supermarket.
27. As with all forms of expression of natural and social life, it is fundamentally incorrect to transpose the regularities that inform one form of existence to another. For example, the regularities that govern economic behaviour cannot be transposed to apply to political behaviour.
28. With regard to the matter at issue, to seek to govern the political evolution of a society according to calendar dates, as though such evolution was equivalent to the development of a plant, which thrives and wanes according to the natural seasons, will produce results that are both wrong and absurd.
29. This kind of absurdity is stated within the decision of the Court, as represented, for instance, by the statement of the Court cited in our Paragraph 11 above.
30. In this statement the Court makes the factually correct observation that, at this time, in 1998, Parliament decided that it would be incorrect to alter the anti-defection clause.
31. Strangely and completely illogically, the Court argues that this is exactly the moment when Parliament and/or the Executive should have embarked on steps to alter the anti-defection clause, despite the fact that Parliament had specifically expressed its opposition to such alteration.
32. The Court even determines that by 1999, Parliament could have concluded the legislative processes that would have enabled it to keep within the bounds of “a reasonable period”, if, in 1998, it took steps to give legal force to an outcome to which it was opposed. This means that the Court would not have struck down a putative “Act 22, 1999”, because it would not have been Act 22, 2002.
33. This emphasises the view of the Court that, in the context of the matter at issue, the sacred and decisive principle with regard to political processes is calendar time.
34. According to this determination, the inherent regularities of the political process are irrelevant and have no effect on the constitutional conduct of politics.
35. The Court thus decided that Parliament both had a political and democratic right to decide not to alter the relevant constitutional clause, as it did in 1998, and the Constitutional duty to alter it to meet the calendar requirement of “a reasonable period, etc”.
36. The outcome of this, as prescribed by the Court, is that Parliament can be, simultaneously, both right and wrong. To resolve this conundrum, the Court would presumably then sit with all due solemnity to exercise its absolute power to decide which option, between the right and the wrong, is constitutionally protected.
37. The logical challenge that faced the Court was to decide what criteria to apply to a political process, to determine what the Constitution meant when it referred to “a reasonable period, etc.”
38. Necessarily and logically, such criteria had to be relevant to:
    • our overall national political process;
    • the stage of the evolution of the democratic system in our country; and,
    • the obligation to respect both the separation of powers and the rule of law.
39. Had the Court proceeded in this manner, setting itself these criteria, it would have understood that the length of “a reasonable period” could only be determined on the basis of the political lessons that could reasonably be drawn after a politically reasonable period of time, by the legal person described in common law as “a reasonable man”.
40. It would have been very good and appropriate if the Court had respected its own observation, as noted in our Paragraph 9 above, that it “should avoid legal formalism”.
41. Had this been done, the Court would have understood that, in part, “a reasonable period” referred to the accumulation of the necessary political experience that would enable Parliament to determine whether there was need to revise the approach to the matter of crossing the floor.
42. It is neither logically nor legally possible to determine the length of this “reasonable period” exclusively on the basis of calendar time. The most important factor in this regard is the “political climate” cited in our Paragraph 20 above, which the Court considered to be without merit, when it is precisely this “political climate” that is the decisive and determining factor with regard to the matter at issue.
43. The reference to “reasonable time” in this context seeks to limit the possibility to insist too early, that the constitutionally permitted legislation should be enacted.
44. In this context, we use the phrase “too early” to mean - before sufficient political experience had been accumulated by Parliament to judge whether floor crossing should be permitted.
45. This limitation is important because crossing the floor, in the context of the electoral system prescribed in our Constitution, inherently violates the principle of the proportional representation of the voice of the people in our legislatures, as reflected in the numbers of elected representatives who sit in these legislatures, determined on the basis of the number of votes cast for the political parties represented in these legislatures.
46. Clearly, no circumscription of the voice of the people should take place, unless there is clear evidence that, even without the force of a democratic electoral outcome, opinion among the people, evident between regular and constitutionally prescribed elections, had changed in a manner that should alter the proportional representation of their voice in our legislatures, as had been determined by an earlier election.
47. Necessarily, reasonably sufficient time had to be allowed, to ensure that the legislature was not stampeded into taking decisions that might compromise the principles in our electoral law, of party lists and proportional representation, simply because it had to meet a calendar date deadline.
48. Contrary to these considerations, the Court interpreted the concept of “a reasonable period” on the basis of a restrictive rather than an expansive period of time. In this sense and on this basis, the Court deemed two years, (1997/8), to be constitutionally better than the five years 1997/02. It paid no regard whatsoever to the fact that, politically, five years might actually be better than two.
49. We will now illustrate the correctness of our proposition with information about the actual political evolution of our country, and not a theoretical model or proposition.
50. In this regard, the Court would have been well advised to take seriously the impulse that drove it to speak of “the difficulties confronting a young Parliament faced with the need to transform many laws of the country and bring them into line with the political changes which have taken place since 1994...”
51. This point relates to the fact that our democracy is less than a decade old. In the Court statement repeated in the preceding Paragraph, the Court seemed to recognise that this should be a material factor in the decisions it takes. However, and regrettably, the Court decision under discussion did not take this reality into account.
52. In the 1994 elections, white South Africans largely voted for the (New) National Party (NNP). This was because their pre-1994 “knowledge” of the ANC and the African South Africans, told them that, more than ever before, they were threatened by the “swart gevaar” (black danger). Accordingly, they decided to vote for the political party, the NP, which had an established track record in terms of the defence of white interests.
53. Five years later, in the 1999 elections, white South Africans largely voted for the Democratic Party (DP), because their post-1994 “knowledge” of the ANC and the African South Africans, still told them that they were, more than ever before, threatened by the swart gevaar.
54. In the period since 1994, the NNP had sought to position and redefine itself as a party of non-racialism.
55. To the contrary, the DP, the successor to the white liberal tendency that had opposed the NP to one degree or another, opted to worship the unprincipled and so-called pragmatic practice of ‘real politik’. Accordingly, it adopted as one of its principal instruments to achieve success, the swart gevaar scarecrows of the old apartheid NP. It presented itself to white South Africa as the true and exclusive defender of white interests. Because of this, it emerged out of the 1999 elections as the premier political party for the defence of white interests, having won a larger number of essentially white votes than the NNP, and therefore a larger number of seats in our national and provincial parliaments.
56. This demonstrated, practically, that even in 1999, after the 1998 submission to Parliament of the report of its ad-hoc committee on the issue of floor crossing, white South Africa had still not outgrown the political “knowledge” it had accumulated in the period up to 1994.
57. Nevertheless, in the view of this white section of our population, the political situation had indeed changed with regard to one important factor. The NNP had abandoned or betrayed these whites by seeking a genuine accommodation with the African majority.
58. In contrast, the DP had abandoned or betrayed its search for a genuine accommodation with the African majority and positioned itself as a defender of white privilege. Accordingly, these whites voted for the DP. In this way, they confirmed that they had not moved away from the positions they had held before the historic moment of transition in 1994, when they considered the NP as their unique and trusted protector.
59. Nevertheless, arising out of the results of the 1999 elections, as the Court acknowledged in its judgement, the DP and the NNP decided that their immediate partisan purposes would be better served if they united against a common enemy, rather than compete against each other. Accordingly, they merged into what they called the Democratic Alliance (DA).
60. However, not long after, the NNP realised that it had made a mistake when it sought to regress, reincarnate itself as the old NP, and thus stand in a comparable and competitive position to the “new” DP, which now wore some of the clothing of the old NP. It therefore sought to break away from the DA, re-establish itself as a non-racial NNP, and ally itself with the ANC, which is a tried and tested political formation of non-racialism.
61. These recent developments, centred on the formation and the collapse of the DA, communicated an important message about the political evolution of our country, and therefore the “reasonable period” that Parliament required to determine what it needed to do with the constitutional possibility it had, to vary the anti-defection regime.
62. That message, expressed in 2000 in the context of the local government elections, was that South Africans were beginning to break out of the political paradigm formed in the years before 1994. This placed an obligation on many of these South Africans to realign themselves politically. This included people who served as elected public representatives.
63. The then existing constitutional and legal order prohibiting crossing of the floor, mergers of existing parties, formation of new parties, etc, became a fetter on the evolution of our politics beyond the pre-1994 period of racial division and antagonism, which was represented in specific ways in particular political formations and the composition of our elected legislatures.
64. Thus, the objective political situation demanded that our country should not allow the result that the constitutional and legal status decided in 1993, should act as an obstacle prohibiting the people freely to act according to the developments defined by a changing political situation.
65. The foregoing represents the “relevant facts and circumstances”, mentioned by the Court, that bear on the issue of the reasonable period that would provide the legislature with sufficient experience and information, the “reasonable time”, to enable it to take a rational decision, informed by the real political situation in our country.
66. To these “relevant facts and circumstances”, we should add the important and relevant fact that it was because of pressure from the DA, before it broke up, that the majority party in parliament, the ANC, agreed to the process that led to the adoption of Act 22 of 2002.
67. We must also make the point that the 1998 parliamentary ad-hoc committee referred to in Paragraph 11 above, decided against the introduction of legislation to permit crossing of the floor, because of opposition by the majority party, the ANC. The ANC positions were based on the arguments reflected in Paragraphs 45, 46 & 47 above. Even then, the DP argued in favour of such legislation.
68. In terms of the political processes in our country, the political events we have described defined and determined the “reasonable time” within which to address the issues enabled by the provisions in the Constitution, to allow for legislation permitting the “crossing of the floor, etc.”
69. In this regard, the criterion to identify the “reasonable period” was not calendar time, but the political considerations that governed the original decisions in 1993 to institute a particular electoral system, as well as the decisions to create the space to enable crossing the floor, etc, in spite of the electoral system sustained during the 1994 and the 1999 elections.
70. The Constitutional Court has now decided that these considerations have no constitutional relevance or validity. Rather, what is important is its determination, which is anchored on a judgement of what constitutes “a reasonable period”, that the central issue is the criterion of calendar time we have already indicated.
71. This decision has a particular effect on our country.
72. At the local government level, it has created the legal possibility for a process of political realignment, which, among other things, will make it possible for the legislative and executive structures, in their mid-term, more adequately to reflect the evolving “will of the people”.
73. At the national and provincial levels, and therefore affecting our older democratic legislatures, about which the nation has more experience, the decision of the Court prohibits such realignment.
74. Practically, with regard to the provincial and national legislatures, the Court directs that the political outcomes conditioned by the pre-1994 situation should be maintained, on the basis that anything else would be unconstitutional.
75. Significantly, this punishes those who decided to cross the floor as soon as the relevant legislation came into force.
76. In terms of this, the Court has made the extraordinary decision that those who acted according to the law, prior to its review by the Constitutional Court, must suffer any consequences deriving from their having acted according to the law as it was when it was signed by the President, which brought it into force, after which it was properly gazetted.
77. Accordingly, what was legal, as lawfully determined by more than four-fifths of the elected people’s tribunes sitting in the national parliament, assented to by the President of the Republic according to law, and gazetted as required by the law, is rendered illegal by the decisions of the Constitutional Court. In the view of the Court, the grave offence that gave birth to the illegality of what would otherwise be perfectly legal, derives from a mere difference in calendar time, figuratively between a Monday and a Wednesday of the same week.
78. Presumably to dull the pain of those who sought to cross the floor, believing that they were acting within their constitutional and legal rights, the Court ruled that for fifteen days only, from October 8, 2002, they would suffer no adverse consequences as a result of their legal actions, (para.121).
79. After this period, which does not even allow for Parliament to rectify whatever constitutional shortcoming might have been identified by the Court, those who dared to cross the floor, legally, will be left to the mercy of the party bosses who have the power to inflict vengeful retribution against their ‘errant’ members. Deliberately, the Court decided that those who crossed the floor legally, ahead of its own ruling, would be left with no legal protection whatsoever. These, who understood and respected the law, would, by virtue of the decision of the Court, condemn themselves to submission to the law of the jungle, as represented by the people the multi-party ad-hoc parliamentary committee described as “the party bosses”. Thus, remarkably, and presumably unintentionally, the Constitutional Court has decreed that the malevolent winds of particular partisan political opinion must be given the space to blow away the injunction fundamental to the rule of law that – fiat justitia! Let justice be done!
80. In its judgement, the Court refers to a “limited transitional period” (e.g. para.110). In addition to the formal legal understanding of this by the Court, such “transitional period” also has a political meaning.
81. In our understanding, it refers to the transition from apartheid to democracy and non-racialism, and not merely the transition from the period of the currency of the “Interim” Constitution to the adoption of the “Final” Constitution. Historically, the length of the transition cannot be determined, limited or extended subjectively and arbitrarily. It can only be determined by life itself, by the processes endogenous to the evolution of our political system. Our actual circumstances tell us that in the eight years since 1994, our country could not have completed this transition.
82. Among others, the process of the formation of our democratic system is continuing. It was to contribute to the enhanced maturity of this system that Parliament approved legislation to enable the crossing of the floor. The assertion is incorrect that this should never have been done now, because some allegedly constitutionally limited transitional period is over.
83. The judiciary constitutes an important part of this transition and our democratic system. It is a co-determinant of what our country will be tomorrow. It cannot be neutral in the matter of the creation of the kind of South Africa visualised in our Constitution. This applies more particularly to our higher courts, especially the Constitutional Court, which set legal precedents and make determinations that bind the lower courts, and thus help to set the legal framework that governs all conduct in our law-governed country.
84. This necessitates and demands the greatest judicial sensitivity to the national societal setting within which the law must be applied and allowed to evolve. At the same time, all state organs, and our people as a whole, must scrupulously respect the principle and the practice of the separation of powers. All of us must, therefore, respect and protect the independence of the judiciary. Simultaneously, it is critically necessary to understand that the three state powers, the legislature, the executive and the judiciary, have to recognise and operate within the context of the fact that they are and must be organically interrelated partners in the common effort to build the new South Africa, ready at all times to respect the constitutional principle of cooperative governance.
85. Nothing but the most negative and dire consequences for our democracy would and will result from an approach that defines these powers as antagonists, with each obliged to defend its exclusive “turf”, putatively and ineluctably threatened by the others, jointly and severally. Neither should we allow the entrenchment of the view that our courts exist for the defence of the unacceptable heritage we all seek to eradicate, for which purpose they have the leeway to rely on, and base their decisions on the “legal formalism” which the Constitutional Court descried.
86. Indeed, correctly, the Court made the important observation that, with regard to the matter of floor crossing, it should “avoid legal formalism”.
87. The famed first Chief Justice of the United States, John Marshall, who held this post from 1801 to 1835, once ruled: “A constitution, to contain an accurate detail of all the sub-divisions of which its great powers will admit, and of all the means by which they may be carried into execution, would partake of the prolixity of a legal code, and could scarcely be embraced by the human mind. It would, probably, never be understood by the public. Its nature, therefore, requires that only its great outlines should be marked, its important objects designated, and the minor ingredients which compose those objects be deduced from the nature of the objects themselves...” (McCulloch vs Maryland).
88. The great outlines of our own Constitution have been marked and its important objects designated. The Constitutional Court is charged with the responsibility to advance these important objects, governed by the great outlines that have been marked. Of necessity, it must contribute to the formation of the legal code, “the prolixity” that cannot be contained in a Constitution.
89. Such legal codes are about the construction and regulation of human societies. They have no meaning as objects in themselves, as petrified legal constructs, separate and apart from the necessarily evolving human societies over which all courts have jurisdiction.
90. Our legal code must help to build the kind of South Africa for which many sacrificed their lives. The unfettered and law-governed evolution of our democracy and political system is an important and integral part of the birth of our new nation. The decision of the Constitutional Court with regard to “floor crossing” did not help this epoch-making and eminently human process. Our people who, for many centuries, fell victim to arbitrary white minority rule, which clothed itself in a peculiar form of legality, should never allow that, again, legality and justice should become irreconcilable social phenomena.

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