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South Africa: Economic And Political Stagnation As President Zuma Clings To Power

President Jacob Zuma, the 4th President of South Africa, in office since 2009.

Earlier this month, South African President Jacob Zuma survived the eighth attempt by the National Assembly to remove him from power. As head of the African National Congress (ANC), the party that led the country away from apartheid, Zuma was able to win election in both 2009 and 2014. His tenure has been increasingly afflicted with allegations of corruption and criminal investigations.

The motion of no confidence in President Zuma, was defeated in the National Assembly of South Africa by 198 votes to 177. The opposition failed to convince enough members of the ANC to abandon their leader. In the end, his power of patronage and party loyalty saved him, at least for now.

That this was the most provocative effort yet, to remove him from power, cannot be disputed. It is telling that the vote in the legislature, would for the first time, be held in secret. This was done due to the decision made by the Constitutional Court. It ruled that it was the only way ANC members could oppose the President, without fear of reprisals.

As head of the ANC, President Zuma can dismiss members of his party from the National Assembly, if they fail to support him in major votes. The reach of his political and economic power has become well known.

President Zuma’s approval rating is a dismal 20% among urban South Africans, although it is somewhat higher among rural voters. A number of key advocates at long last, have felt compelled to urge his resignation.

This is in stark contrast, to the 62% approval the ANC received, in the last presidential election held in 2014. Last year, ANC popular support was already down to 54%, ahead of all the recent turmoil in 2017. The dipping party popularity, is a harbinger of political trouble for 2019.

Mmusi Maimane

The erosion of support for Zuma even within his own party, is quite evident. Only 198 ANC ministers out of 249, came to his defense in the Assembly of 400 seats.

The latest attempt to oust the President was organized by the Democratic Alliance Party. Their leader Mmusi Maimane, focused his efforts on the nepotism of the Zuma administration, towards a number of key supporters. He refers to Zuma as a corrupt and broken president.

Telling, two political parties the Congress of South African Trade Unions and the South African Communist Party, both former allies, have called on the President to resign months ago.

Democratic Alliance Party

Doris Dlakude, the deputy chief whip of the ANC, considered the entire effort by the opposition, as insurrectionist and a simple attempt to grab power. She has refused to acknowledge, the growing scandals surrounding President Zuma.

For his part, President Zuma, continues to deny all the allegations of corruption against himself and his close allies. This rejection of wrongdoing, provides the basis for his refusal, to step down from power voluntarily. Zuma insists he will remain in office, until the end of his term in 2019. He is unable by the Constitution, to seek the presidency for a third time.

In the meantime, the street protests, and actions by the opposition to oust him from office, has created virtual gridlock in the legislature.

Pravin Gordhan. former
South African Minister of Finance

There have been notable defections from his camp, including the former Finance Minister Pravin Gordhan, fired by President Zuma earlier in March of this year. His departure was seen as a major setback, for the agenda to reform, the stagnating economy of South Africa.

The Treasury Department was one of the few areas of government, that was deemed to be free of corruption and still effective.

Mr. Gordhan is credited with preventing the Zuma administration from spending a whopping 1 trillion rand, the equivalent of $73 billion USD (United States Dollar) on a ill advised and unaffordable nuclear energy investment, that the country does not need.

The dismissal of Gordhan also caused the South African rand to plunge immediately 7% and led to a downgrade in governmental debt, soon after. He was replaced of course, by a far less competent political loyalist.

Derek Hanekom

Derek Hanekom, a former minster of tourism under Zuma, spoke for many dissatisfied ANC members, when he said the Zuma era has tolerated massive looting and corruption.

The major presidential cabinet reshuffle, that was achieved earlier this spring, has further damaged the country at large. However, it has achieved the goal of a further tightening of personal power by Zuma in executive authority.

Zuma at 75, looks increasingly beleaguered, despite his defiance. He has been mired in controversy for years. His personal life, is in disarray as well. He is a known polygamist and has fathered more than 20 children.

More importantly for his political survival, he is facing at least 783 allegations of corruption, relating to a 1990’s arms deal.

Despite the growing cacophony of discontent, President Zuma continues to ignore court orders. His reshuffling of his cabinet earlier this year, thereby sacking his most able ministers, was in an effort to shut down opposition, within his own administration.

Last year, the Constitutional Court of South Africa ordered President Zuma to repay millions of dollars in public funds,illegally spent on the renovation of his private residence. Zuma has already stated he would not comply with the court order.

In addition,his mismanagement of governmental money, has been difficult to defend, even by members of his own party.

ANC members are fully aware of the eroding public support for their leadership. The party will gather in December, to decide on a successor to Zuma, after his term ends. The damage he has done to the ANC political brand, is still not fully known.

It also not clear if the party conference, will lead the ruling party to a better future. President Zuma is determined to make his ex-wife, Nkosanzana Dlamini-Zuma, the next leader of the ANC.

If he is successful, she will likely be the next ANC presidential candidate. Zuma hopes his former spouse will thus be able to shield him, from likely prosecution in a number of cases, once he leaves office.

The crucial role of the ANC in ending apartheid in 1994, is becoming increasingly part of the political past. The gratitude of the electorate for this feat towards the ANC and the resulting tolerance for the shortcomings of the party, are beginning to wear thin.

Neither can the supporters of President Zuma and the ANC, claim their years in power, have been good for the South African economy.

In the latest attempt to remove Zuma from power, a number of his legislative allies even refused to use his name. They instead focused on the shortcomings of the opposition, making accusations of misrepresentation and of course, the old standby of racism.

It does not help the defenders of Zuma, that two former Presidents, both members of the ANC, have somewhat suggested, that it might be time to cut ties with the current President.

A protest placard depicting Atul Gupta carried by two EFF members on either side of it at a Zuma Must Fall protest in Cape Town. It links him to the President.

Mr. Zuma and a family of Indian business people, principally the Guptas, have been accused of state capture. That is using the organs of governmental control for personal gain.

Duduzane, a son of the Zuma, is likely to be called to answer questions in a legislative hearing, that is investigating allegations of graft. These charges of bribery, stem from activities that took place at state-owned firms, involving some important allies of President Zuma.

As President Zuma and his key allies have accumulated wealth, in some cases on a massive scale, the economy of South Africa at large, continues to stagnate.

The cronyism and mismanagement of the economy has led the country into recession, as the rest of the developed world and most emerging markets, are actually experiencing more rapid growth.

The GDP (Gross Domestic Product) of South Africa dipped by -0.7% in the first quarter of 2017. The economy had shrunk by 0.3% already, in the last quarter of 2016. There has now been at least two successive quarters, of negative economic growth. This is the second recession, in just eights years.

Location of South Africa (dark blue)
in the African Union (light blue)

South Africa has been struggling for a number of years with low commodity prices, a vital part of the overall economy. The sector has also experienced extensive labor unrest. The export of minerals, is a major foreign exchange earner for the country.

South African unemployment is a staggering 28%. It is already, at a 13 year high. If one includes individuals who have given up looking for work, the number is closer to 36%. If economic growth remains sluggish, unemployment is likely to rise even higher.

There will undoubtedly be efforts by unions to protect jobs, by calling for regional and national strikes. This in turn, will negatively impact domestic productivity and continue to exacerbate, the divisive national problem with inequality.

In late July, the South African Reserve Bank cut its benchmark interest rate by 25 basis points to 6.75%, in an effort to stimulate the economy. The Central Bank now estimates full year growth will be a mere 0.5%, down from an earlier estimate of 1.0%. The governor of the bank attributes low underlining demand, for the present sluggish economy.

More worrisome, is the fact that South African debt has been downgraded to junk status by international creditors earlier this year. It is the first time this has happened in 17 years.

The GDP to debt ratio has been rising steadily. The year before the Zuma inauguration in 2008, it was only 27.8%. In 2016, that rate had skyrocketed to 51.7%. Still low, when compared with many Western nations, that have already exceeded 100% of GDP, but the long term trend is still somewhat worrisome.

The mishandling of the economy for political purposes is quite staggering. For example, the Zuma administration directed the electricity monopoly to buy coal, only from black owned firms. The decree was so bungled, that it contributed to major power shortages.

This practice alone, it is estimated, has reduced economic growth by at least 1% of GDP.

Houses of Parliament in Cape Town, seat of the legislature.

On the positive side, the power shortage at present, has been mostly alleviated. However, this is partly attributable to the declining demand. The state utility is selling less energy now, than it did a decade ago.

The return to sustainable economic growth, is only possible through structural reforms, that the Zuma administration is either politically unable or unwilling to make. The numerous state owned enterprises have produced a distortion in the economy, but are an important part of the the system of political and economic patronage.

Ongoing political instability, will further reduce foreign investment. The leftist march of the ANC, is making South Africa far less hospitable, towards business and private sector growth. The consistent threats to licenses and ownership, have caused private investment to contract heavily.

Union Buildings in Pretoria, seat of the executive.

In addition, the recent and ongoing governmental efforts to ban foreign ownership of land and state expropriation of property, has impacted the long term investment plans, of both corporations and individuals alike.

Still, South Africa remains the second largest economy in Africa, after Nigeria. It is one of the world’s largest exporters of gold and platinum. Despite an abundance of natural resources and a tradition of private enterprise, as well as technical expertise, poverty is still rampant.

Trade is very important, to the overall economy. The value of imports and exports together, make up 63% of the GDP.

Thabo Mbeki

Short of a parliamentary vote to remove him from office, President Zuma will be difficult to dislodge. He has installed numerous loyalists in many key positions, throughout the government and bureaucracy.

The only other option for his removal, would be if the 104 member ANC national executive committee, would demand he step down. Although this political maneuver, did bring down President Thabo Mbeki in 2008, it seems unlikely this will happen now. The committee seems deadlocked for now, on what actions to take, with the growing political liability of the Zuma Presidency.

President Zuma has taken the further step, of having political allies placed in offices, throughout law enforcement and state security.

Pretoria, the administrative
capital of South Africa.

His influence on the prosecuting authority apparatus, will make any criminal case against him, far more challenging. Zuma was already found guilty last year, of violating the Constitution by South Africa’s highest court. A legal ruling he simply ignored.

The opposition headed by the Democratic Alliance, did well in local elections in 2016. The Alliance was able to capture 3 big cities last year alone. They are more than content, to deal with Zuma’s former wife, as the next ANC presidential candidate. The belief is her political family name and connections will be so tainted by 2019, that she will be a flawed nominee right from the start.

The ANC may want to reconsider, their current allegiance to President Zuma. His administration has damaged the economy and caused foreign investment, to plummet dramatically. His intransigence will likely cost the party millions of votes, in the next election and their majority in the legislature. It may also well end, the ANC 23 year grip on political power.

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