State of the nation / South Africa
Over the rainbow
It’s been more than two decades since South Africa’s first democratic election and, while corruption allegations persist, there is some blue sky peeking through the clouds.
The African National Congress (ANC) was the first democratically elected political party to govern South Africa. But 23 years on, its legacy is decidedly mixed. Though the ANC presided over some remarkable improvements in living standards – today more than 13.4 million households live in formal housing, more than double that at the end of apartheid in 1994 – the party’s elite seems increasingly out of touch and more interested in self-enrichment than good governance. Corruption has become systemic: the auditor-general identified zar46bn (€3bn) in irregular expenditure by government departments between 2015 and 2016 alone. Personal connections are prioritised over competency, and policies intended to enrich the black majority disadvantaged by apartheid have mostly benefited a small network of well-connected businessmen.
In December the ANC will decide its next leader and, after two scandal-plagued terms, president Jacob Zuma is stepping down. His supporters are putting their weight behind his ex-wife, Nkosazana Dlamini-Zuma, the previous chairperson of the African Union Commission.
Whoever wins will have the difficult task of unifying the ANC. There’s also the threat of an electoral challenge in 2019 from the Democratic Alliance, which robbed the ANC of power in three major cities (including the administrative capital Pretoria) in last year’s municipal polls. Meanwhile, students are pressing for a greater say in governance: protests in late 2015 forced the government to abandon tuition-fee increases proposed for the following year.
While corruption dominates South Africa’s headlines, the “rainbow nation” is home to plenty of successes too. Urban renewal is creating jobs and bringing residents and businesses back to neglected downtowns. Johannesburg’s cbd in particular has received billions of rand in private and public investment over the past decade, transforming the former no-go area into a revitalised city core.
South Africa likes to see itself as representing Africa on the international stage – a view reinforced by it being the continent’s only member of the g20. It has a major role in the African Union, participating in peacekeeping missions in the drc and elsewhere. Yet the human rights-centric foreign policy characterised by the Mandela years has largely been abandoned: South Africa failed to arrest Sudanese president Omar al-Bashir for war crimes when he visited in 2015, despite an International Criminal Court arrest warrant. The Zuma government has since said it will leave the court.
President Jacob Zuma has been dogged by controversy since 2005 when, as the country’s deputy president, he was charged with corruption for his role in an arms deal (the charges were dropped). Zuma’s links to the Gupta family have allegedly seen the latter’s business empire make billions from state-owned companies, while the ombudsman has ruled that security upgrades at Zuma’s home should not have been paid for by the state. A wily tactician, Zuma has focused on consolidating his power at the expense of clever leadership.
State of the economy
South Africa is still seen as an attractive investment destination relative to many of its African peers but the volatile rand and the ANC’s investor-unfriendly rhetoric has had a chilling effect. The central bank projects 0.6 per cent growth for 2017. The country’s credit-rating downgrade to junk status earlier this year has made it harder to cover the bloated public sector’s wage bill and support poorly run state-owned companies. While mining languishes (and more job losses loom), agriculture has rebounded following drought.
What needs fixing
Inequality: Social welfare has reduced poverty yet South Africa is still among the world’s most unequal countries. Businesses need support to address a dearth of skilled jobs for young people.
Mining: Beset by low productivity and strikes, the sector has struggled despite rising commodity prices. It needs regulatory certainty and less red tape around ownership.
Crime: Murder rates have dropped but 2015 to 2016 still saw almost 34 murders per 100,000 people. The police service should focus on actual sleuthing rather than mediating ANC in-fighting.
In the past four years, the film industry’s contribution to South Africa’s economy has grown from zar3.5bn (€220m) to zar12.2bn (€770m), creating more than 70,000 jobs. The country has proved a major draw for international television and film productions, including The Crown, Homeland and Mad Max: Fury Road, lured by low production costs thanks to a weak currency and a wide array of stunning landscapes. Highly proficient technical teams and generous tax credits also help. The country’s first large-scale facility, Cape Town Film Studios, underwent an expansion recently and has a list of bookings so long that it has had to turn productions away.
The nefarious business of “state capture” – in which bureaucrats and politicians are controlled by wealthy private individuals – is dominating dinner-table conversations in South Africa. The most notorious example has been the allegations against the Gupta family. Originally from India, they are in business with President Zuma’s son, own a newspaper and a television channel, and also have interests in mining, software and other sectors. In May this year stories began to break based on a trove of between 100,000 and 200,000 leaked emails and documents from the heart of the Gupta business empire. They revealed that London-based PR firm Bell Pottinger had led a campaign to exploit racial division in South Africa in a bid to distract attention from accusations that the Guptas were profiting from dubious deals with state-owned companies. The scandal broke the PR firm, which has declared insolvency and is shutting down.
“The anc is not expected to win the next national election in 2019 but none of the opposition parties will muster a majority. Coalitions will rule.”
Commissioning editor, ‘Business Day’ newspaper
“Mining is a microcosm for the country’s issues, with political and regulatory uncertainty holding back investment.”
Peter Attard Montalto
Head of emerging Europe, Middle East and Africa economics at Nomura International
“The campaign for the anc’s December elective conference has been characterised by violence and corruption. This [could open] the space for genuine competition.”
Lecturer in political sciences at the University of Pretoria
Springbok rugby team: Criticised for its lack of black players – a scarcity exacerbated by lack of sports infrastructure and coaching in disadvantaged communities – the team remains a point of national pride. That said, recent results have been poor.
Wine: The industry has begun to receive widespread acclaim and the country is holding its own against Old World rivals.
Nelson Mandela: South Africa’s first black president is still regarded around the world as the embodiment of peace and reconciliation.
Monocle comment: South Africa has opportunities in abundance but needs a safe pair of hands. Change in the political guard is, perhaps, overdue.