Workers fund the elite but struggle to get funding for their own homes
IOL - ECONOMY / 07 AUGUST 2019 - 07:30 / SIZWE DLAMINI
CAPE TOWN – It is high time that unions stood up and demanded an affordable housing subsidy programme from the government for public sector workers, who are not poor enough to qualify for the reconstruction and development programme housing but do not earn enough to qualify for funding through the banks.
This call was made by Blade Nzimande, SACP general secretary, who made reference to one businessman who received in excess of R9 billion in funding from the Public Investment Corporation (PIC), which invests government pension funds.
Ndzimande said that he was shocked when he read about a single individual receiving more than R9bn from the PIC, which is the asset management company for Government Employees Pension Fund (GEPF) and invests funds on its behalf.
SACP general secretary Blade Nzimande said that he was shocked when he read about a single individual receiving more than R9bn from the PIC, which is the asset management company for Government Employees Pension Fund (GEPF) and invests funds on its behalf. Photo: @SACP1921/Twitter
Nzimande said the funds from the GEPF were being used to fund the wealthy elite, while ordinary workers such as teachers, nurses, etc, whose money was being used, struggled to get funding for basic housing.
Nzimande said that to build houses was effectively boosting the economy, “because the more houses we build means more windows will be bought, more steel will be bought, more furniture will be bought, which is what actually boosts the economy”.
The PIC is wholly owned by the government and is the only asset manager that serves the country’s public sector.
It takes care of the investment needs of about 35 public sector pension, provident, social security, development and guardian funds.
In 2016, the PIC spent R9.4bn on a black economic empowerment (BEE) deal with Lancaster Group, which benefited just one person, businessman and former trade unionist Jayendra Naidoo.
Naidoo’s Lancaster Group splurged the money on a 3 percent stake in controversial retailer Steinhoff International, whose share price shortly thereafter collapsed amid allegations of fraud and corruption costing the PIC almost R6bn.
In its BEE deal, Lancaster originally submitted a R10.4bn transaction bid to the PIC, but later lowered it to R9.4bn after realising that transactions in excess of R10bn would have to go to the PIC board for approval.
According to PIC official Botsang Morobe, this was because Naidoo’s transaction required the PIC to meet time lines which were set by Steinhoff.
SACP central committee and political bureau member Jeremy Cronin said first-generation BEE was largely played out within the rules of the capitalist system in general.
The BEE shareholdings are typically “leveraged” – that is indebted – with repayment based on the assumption that accruing dividends over a period of five or so years would pay off the debt.
By 2010 BEE specialist, Jenny Cargill, estimated that BEE shareholders had acquired nearly R500bn, “far more… than in other key areas of socio-economic transformation, such as low-income housing and land redistribution”.
Cronin said most of this R500bn was not looted from the state or public entities, but came largely from privately held (corporate) surplus that was diverted into indebted shares, rather than into job-creating productive investment or public assets and services.
“In other words, although it was largely ‘legal’, it represented a clear class choice that was unfavourable to the working class and popular masses, and therefore to the majority,” he added.
The SACP said in the end the economic ruling class displayed no regard to the plight of the workers, whom they do not mind retrenching, as well as their dependants, all in pursuit of profit maximisation.
Sekunjalo Group chairperson Dr Iqbal Survé earlier this year slammed South Africa’s BEE model, saying it was fundamentally flawed and needed to be reviewed urgently. He said the model was designed not to bring about any meaningful economic transformation, but merely as an “artificial” entry point into the capital markets.
Survé called on President Cyril Ramaphosa to recognise that the custodians of transformation and empowerment in South Africa needed to be supported. He said it would not be enough that the president only spoke about his vision for the country.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER