Should Venezuela's 32 714% inflation rate serve as a warning to SA?

Should Venezuela's 32 714% inflation rate serve as a warning to SA?

Editor's Note: - Expropriation without compensation pushed Venezuela into a financial disaster after Hugo Chávez incorporated the method in almost every sector in the country. Today, this once brilliantly thriving country is suffering and almost 10% of its population has fled. Is what happened to Venezuela a lesson to South Africans? Briefly.co.za took a look at The South African's opinion on the matter.

The South American country of Venezuela is facing a complete financial meltdown, with inflation expected to top 1 000 000% by year-end. Where did it all go wrong, and what does this have to do with South Africa?

The current crisis facing Venezuela cannot be understated. It’s regarded as the worst economic catastrophe ever recorded in Latin America, and can be compared to Zimbabwe’s Mugabe-era meltdown within the global context.

While Zimbabwe was plunged further down the rabbit hole of financial doom, it was never regarded as on the wealthiest nations in the world. This is what makes the Venezuelan saga so much worse: it used to be the richest country in South America.

Hugo Chávez

Hugo Chávez was elected president of Venezuela in 1998. He won his presidential crown by leading a fierce populist campaign with a penchant for socialist propaganda and promised nationalisation of major local industries and made good on his vows right up until his death in 2013.

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Expropriation without compensation

First, Chávez nationalised Venezuela’s lucrative oil fields – kicking global corporations out of the country.

Secondly, the leader extended his expropriation plans to sectors including aluminium, cement, gold, iron, steel, farming, transportation, electricity, food production, banking, paper and the media.

Julius Malema, inspired by Hugo Chávez

Obviously, there are parallels between Chávez and other South African leaders. Land expropriation without compensation is a page straight out of Chávez’s populist handbook.

Malema shared his opinion on Chávez:

The wealth of Venezuela, particularly oil, was returned to the ownership of the people as a whole… The standard of education and health in Venezuela has radically improved and stabilised with guaranteed access for all people of Venezuela to quality free education and healthcare.”

Malema, mourned deeply the day Chávez died:

I join millions of progressive individuals… in sending my heartfelt condolences to the people of Venezuela for losing a fearless, politically determined and ideologically steadfast leader in President Hugo Chavez.

Populist rhetoric

The term ‘white monopoly capital’, introduced by former president Jacob Zuma, has set a dangerous precedent of public deflection. Just like Chávez’s anti-capitalist rhetoric, it has been used to further a personal political agenda.

Ignoring foreign pleas

Chávez, just like Mugabe, made the mistake of ignoring global markets. Both laughed in the face of global sanctions and declining foreign investor confidence. Their short-sightedness would cripple their respective nations.

As the ANC makes further moves towards large-scale nationalisation of land and industries, one has to wonder whether they’ve taken note of Venezuela’s peril.

What’s especially worrying is the probable coalition between the ANC and the EFF, especially on the issue of expropriation of land without compensation.

South Africa should heed the warning demonstrated by Venezuela’s socioeconomic nightmare – the populist path of nationalisation is fraught with financial landmines, and should be navigated with the utmost care and foresight, lest it blows off the limbs of an uneasy nation.

Read the rest of The South African’s views on this matter on The South African's news site.

Disclaimer: The views and opinions expressed here are those of Thuli Madonsela and do not necessarily reflect the official policy or position of Briefly.co.za.

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Source: Briefly.co.za

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