Riyaz Patel
At the end of his historic presidential term in the 90s, Nelson Mandela, against his own judgment, bowed to internal ANC pressure and anointed Thabo Mbeki as his successor rather than Cyril Ramaphosa, who withdrew from active political life and began carving out his business empire.
Ramaphosa made a stunning comeback into the political arena in December 2012 when he was elected ANC Deputy President in Mangaung, garnering more votes for the position of deputy president than Zuma mustered for president. In 2014, he was appointed Deputy President of South Africa.
His detractors were quick to point out his deafening silence while the country was being plundered. Supporters argue he was biding his time before moving against Zuma at the ANC’s conference in 2017, and was vintage Ramaphosa: Persuasive, patient, ruthless when necessary.
In February 2018, after a bruising internal ANC battle, Ramaphosa took the reins from his rival, signaling an end to Zuma’s disastrous nine-year tenure at the helm of the ruling ANC and the country.
It’s useful to note that analysis by Standard Bank suggests that, relative to the trajectory the country was on before Zuma became president, his regime lost South Africa R1.1trillion ($78bn) in GDP, R300 billion in taxes, and more than 1million jobs because this is the wreck which Ramaphosa inherited.
Ramaphosa has slowly begun to repair the economic tsunami unleashed by the Zuma administration. Some analysts even believe that Ramaphosa is the only person who can pull South Africa from the morass. “He is the last hope for democracy,” says Colin Coleman, the chief executive of Goldman Sachs in sub-Saharan Africa.
A welcome endorsement, but it would be naive to put too much hope in one person and heave such huge responsibilities on one pair of shoulders.
And though the silver-tongued Ramaphosa is a distinguishable improvement on his predecessor, he faces huge challenges, has little time to maneuver and deliver, and is desperate for all of his foot soldiers to sing from the same hymn sheet.
On the eve of his third State of the Nation Address ( SONA) and if Ramaphosa’s ‘New Dawn’ is to be realized, he needs to restore faith in South Africa’s battered institutions, and of course, his own party the ANC, while embracing radical reforms to grow the economy, create jobs and stamp out corruption.
Ramaphosa may be a persuasive man, a patient man, but South Africa is running out of time, and the ruthless streak his backers talked about, will have to come to the fore, and soon.
RAMAPHOSA’S “NEW DAWN”
The most significant outcome of South Africa’s May 8 election was the lowest ever voter turnout in a South African election – 65 percent. Strikingly, and perhaps more worrying, is the fact that more than 6 million youth—around half of those in the 18-30 age bracket—did not even bother to register to vote.
This voter disenchantment was in the main, a reaction to government’s failure to tackle the crisis at state power utility Eskom, stimulate economic growth; and as a consequence, failing to create jobs.
To be fair, Ramaphosa inherited a nation tarnished by a decade of corruption, low growth, and a diminishing international role—one that only 25 years ago was lauded as Africa’s undisputed beacon of hope under Mandela. The world has less appetite for South Africa today than it did a generation ago. Mandela’s release from prison and subsequent victory in the country’s first democratic elections in 1994, truly captured the global imagination.
Though interest has waned, the country still matters. South Africa remains the most industrialized economy in Africa, is still the continent’s business hub and its most influential actor on the global stage. Just as important, though, is its symbolism. If it were to overcome its history of repression and racism, that would offer hope to all countries, in Africa and beyond.
Ramaphosa’s credentials are impeccable in many respects. It is not so much whether he has the skills and will to fix South Africa’s malaise, but if he can overcome the many hurdles to deliver on his promises and meet the demands of an increasingly frustrated nation.
Governance effectiveness and accountability
South Africa’s image as the epitome of African democracy is waning, as rampant corruption, violence, and distrust of domestic security forces and the judicial system eat away at the very core of an accountable, effective state.
Despite the establishment of the Commission of Inquiry into State Capture, which has held over 100 days of hearings on allegations of government fraud and corruption, NO ONE has yet been held accountable. Along with Nugent Commission of Inquiry into Tax Administration and Governance by SARS; the commission of inquiry into the Public Investment Corporation (PIC) to investigate “the veracity of alleged improprieties” with the aim of restoring confidence in the state-owned asset manager and the ANC’s own integrity commission has been welcomed as Ramaphosa asserts his authority.
The jury is still out, however, on whether these interventions have restored trust in overall government structures and entities. Steps towards transparency alone are not enough; Ramaphosa must also ensure that his ministers, deputies, and senior officials are accountable and lead by example.
Human capital and job creation
South Africa has the second-highest level of income inequality in the world, and more than half of South Africans still live below the national poverty line. Furthermore, the low quality of education in the country and a significant skills mismatch has led to considerable skills shortages in both low and high-skilled professions.
Facing an official unemployment rate of 27.5 percent, Ramaphosa convened the Presidential Jobs Summit last year after which he announced that 275,000 jobs a year will be created due to the initiatives and agreements negotiated at the gathering.
The obvious question: Where are those jobs? Journalist Jacques Pauw took to Twitter to pose some tough questions.
Youth unemployment rates are now considered to be chronic, with the latest figures showing that about 55.20% of South Africans between 15 and 34 were unemployed in the first quarter of 2019.
During his second SONA in February, Ramaphosa announced the introduction of the national minimum wage. Although widely welcomed, “little is known about what its impact might be on youth employment and unemployment,” said Leila Patel Professor of Social Development Studies at the University of Johannesburg.
The DA voted against the bill saying it was rushed through parliament and would lead to 750,000 job losses. The EFF also rejected the bill saying the minimum of R3,500 a month was too low. The SA Federation of Trade Unions (Saftu) has blasted it a “slave wage.” But Cosatu said 6.4 million workers would benefit and hailed it as “a major cash injection into workers’ pockets.”
Patel said their research suggests that the vast majority of unemployed young people probably won’t benefit from a national minimum wage. “This is because disadvantaged young people face a range of challenges that prevent them from finding work.”
South Africa has 0.8% of the world’s population and 3.2% of the unemployed. Nearly 40% of those aged 15-34 are not in work, training or education. The inability of so many people to find work exacerbates South Africa’s levels of inequality – among the highest in the world. The highest-earning 10% receive 55-60% of all income, while the richest 10% own 90-95% of all wealth, according to research by Anna Orthofer of Stellenbosch University.
Energy
But it is Eskom – which accounts for over 90 percent of the country’s power-generating capacity – which hangs like the proverbial albatross around South Africa’s neck with solutions, like electricity at times, in short supply.
Ramaphosa met with Eskom’s board in Cape Town this week to discuss actions to be taken to stabilise the energy utility in the wake of its financial and operational woes.
During a recent discussion between Public Enterprises Minister Pravin Gordhan and Eskom management, Eskom board chairman Jabu Mabuza offered this frank assessment: “We have tried to do what we call a clean-up. What is clear now is that there is money stolen. This is clear. It’s clear looking at the financials that there has been no maintenance. The expenditure on maintenance was getting less and less until 2018. The question is how was money being spent? That is a matter for law enforcement.”
Eskom’s inability to supply sufficient electricity and the government’s failure to turn around the utility poses a major constraint to economic growth, and is the current number one concern of investors, and could have political ramifications if no solution is found. A fact surely not lost on Ramaphosa as he prepares to deliver his SONA.
The DA’s finance spokesperson, Geordin Hill-Lewis said poor investor confidence along with a precarious power supply and the high cost of electricity were some of the biggest impediments to growth.
“Literally, the R100 billion question for Thursday evening is what President Ramaphosa and this government are going to do about Eskom. It is very clear there are no further cards to play, and any further financial support, which is going to have to be enormous. If it does come it’s going to have to be contingent on real progress in the fundamental restructuring of our energy sector to make it competitive.”
The budget announced in February allocated Eskom R23bn over each of the three fiscal years through March 2022, but that won’t be nearly enough to save it. Its debt, 62% of which is government-guaranteed, grew by R21bn to R440bn in the six months through March, the utility’s latest data show.
Ramaphosa’s other plans for Eskom, announced in February, include splitting it into generation, distribution and transmission units under a state holding company – a move he says will make it easier to manage and raise funding.
Those plans have run into opposition from labour unions, which they say will lead to privatisation and job losses. No further details have emerged on how it will be implemented and we are on the eve of another Ramaphosa SONA!
Dennis Dykes, chief economist at Nedbank, says Eskom may have to rethink its entire strategy, including plans to complete the construction of two new coal-fired power plants that are running years behind schedule and are way over budget.
“The big risk is that it blows another 100 billion with, again, very little to show for it… Eskom needs just to be given enough money to keep it as a going concern while it gets to grips with its problems in a very realistic and sensible manner,” Dykes added.
South Africa has moved forward with investments in renewable energy power producers, which indicates the country’s commitment to implement its 2015 Renewable Energy Independent Power Producer Procurement Program. Last year, the government signed contracts with 27 independent power producers for a total of $4.5 billion to add energy capacity to the national grid within the next five years.
Professor Anton Eberhard of the UCT Graduate School of Business who is also a member of the National Planning Commission, says Ramaphosa should be wary of South Africa’s energy future being a pawn in a larger political game. “It is clear that some are frustrated and angry that they will no longer have access to special deals with Eskom or the coal and nuclear industries. Others may feel marginalized and alienated from president Ramaphosa’s new political dispensation – but their false narratives around IPPs and the IRP should not cloud our policy and investment choices,” he said.
“President Ramaphosa and his Ministers now need to take the lead, and embrace the global tide of innovation in energy markets which can provide competitively priced, reliable and clean energy services for economic growth and prosperity for all,” he added.
Investment
About a year ago, four months into his presidency, Ramaphosa announced a $100-billion investment drive as part of his “new dawn” policy to bolster growth for the country. This ambitious goal underscores South Africa’s willingness to compete globally to attract investment, and in October 2018 at the inaugural South Africa Investment Conference, Ramaphosa announced nearly R290 billion worth of investment announcements for the country.
“This R290 billion is what we have now in our hands and these are in addition to the R400 billion which were received during the investment drive which we still need to button down,” he told delegates. But, he added, “the proof is in the pudding,” and that government would track the impact of the investments and their ability to maximise on job creation. Ramaphosa emphasized that such investment is critical “if we are to make meaningful progress in reducing poverty, unemployment, and inequality in a society that still bears the scars of apartheid.”
“To get infrastructure to suitable standards, our South African Financial and Fiscal Commission (FFC) estimated that an additional R4 billion per sector would be required yearly for five years in the case of water and sanitation, and for just under seven years in the case of electricity,” former Deputy Minister of Cooperative Governance and Traditional Affairs Andries Nel told a BRICS forum in East London last year.
Nel added that the infrastructure investments needed in South Africa far exceed the available fiscal resources.
New Dawn Rising?
If the political machinations persist and are not stamped out, many South Africans believe that the potentially explosive mix of corruption, incompetence, economic stagnation, high unemployment, and extreme inequality could threaten the country’s future.
Frans Cronje of the Institute of Race Relations says “A really dangerous cocktail is developing.”
It would indeed be harsh to accuse Ramaphosa of inaction. “President Cyril Ramaphosa has taken more swift, concrete decisions within the Western system’s “magical” 100-day period of assuming office than any one of us could have done under the same prevailing political conditions,” wrote Mahlodi Sam Muofhe, an advocate in private practice.
Ramaphosa and South Africa’s new government clearly has a difficult path to negotiate – attracting investment, creating jobs, and achieving growth targets, balanced with voter demands to improve government accountability and service provision.
Sidestepping the myriad of minefields to forge an agenda of shared objectives between the government, labor, and the private sector will be critical to advancing Ramaphosa’s presidential agenda, and to propel the country to the forefront of African politics, economics, and social reforms.
A proven negotiator, Ramaphosa will have to add steel to his diplomacy if he is to kickstart South Africa’s stagnant economy.
Thuma Mina! Addressing the Bread & Butter with Fish & Chips
As an expectant, impatient nation readies to hear the president deliver his third State of the Nation Address ( SONA), a relaxed Ramaphosa took a break from his busy schedule, visiting the humble Palace Fisheries in Salt River and promptly announced: “I am told you are the best fish and chips shop in town.”
Patric Tariq Mellet said Ramaphosa’s visit touched him. “This is how it should be…. a President in constant communion with his people. The days of politicians becoming an elite class of untouchable nobility must be put behind us. CR needs to get all of his ministers doing the same. Most [of] the ministers are strangers to ordinary folks and need to come down from [a] high.”
An honest powerful statement which said to South Africa: I am your president and I am reconnecting with you.
It is exactly this kind of honesty that is required in the Chamber Thursday, and what South Africans are yearning for. A warts and all SONA outlining the rocky road South Africa must navigate to get out of the swamp. Only then will the full force of Ramaphosa’s words resonate with all South Africans and serve as the catalyst for the hard work which lies ahead.
Tshela njengokuthi, President Ramaphosa,Tshela njengokuthi!
