SA is on the fast track to ruin, reaping the fruits of failed economic policy
With its future looking bleak, SA is burdened with a president who seems oblivious to the urgent need for change, writes Bloomberg in its editorial
The International Monetary Fund (IMF) just pointed out that "SA’s vulnerabilities have become more pronounced". That’s one way of putting it. A potentially prosperous and dynamic economy is on the fast track to ruin. Altering its course will take real political reform.
Unemployment has risen five percentage points since 2008, to a hope-crushing 28%. The population is expanding faster than its economy, which lately has grown at less than half the rate of sub-Saharan Africa as a whole. And inequality is among the highest in the world.
And he’s pushing his programme for "radical economic transformation" — a toxic brew of all-too-radical populist policies.
These are the fruits of failed economic policy. Yet far from grasping the need for change, at a recent conclave of the ANC, President Jacob Zuma championed ideas for entrenching his dominance and enriching his supporters. He’s trying to engineer the succession of his ex-wife, Nkosazana Dlamini-Zuma, as head of the ANC. And he’s pushing his programme for "radical economic transformation" — a toxic brew of all-too-radical populist policies.
Zuma wants, among other things, to change the Constitution to let the government expropriate land without compensation, for the benefit of the black majority. He wants to force beleaguered mining companies to transfer more shares, and the proceeds from a levy on revenues, to black investors. His allies want to change the mandate of the respected Reserve Bank to have it focus on "the socioeconomic well-being of the citizens" rather than on stable prices. That manoeuvre is a traditional precursor to subordinating the central bank to political control — and Zimbabwe shows where that can lead.
Measures of this kind, damaging in themselves, will scare off foreign investors and stoke disorder and corruption. Zuma cannot be unaware of the risk. He’s unlikely to have forgotten the recent debt downgrade, following his firing of respected Finance Minister Pravin Gordhan in March. With investors’ confidence in the economy sinking, his zeal for more economic setbacks seems undimmed.
Public dissatisfaction with the economy and anger over Zuma’s many scandals have already taken a toll on the ANC’s political fortunes. Hardly a day passes without some revelation about the president’s cronyism or new twist in his long-running effort to squelch previous charges of personal corruption.
With investors’ confidence in the economy sinking, his zeal for more economic setbacks seems undimmed.
If party reformers want to restore the ANC’s credibility, they need to defend the independence and integrity of the country’s financial and judicial institutions. If they want to revitalise the economy, they need to expose floundering state enterprises to competition and address the corruption and inefficiency that have caused SA to sink in global business rankings. If they really want to empower black South Africans, they should focus less on creating sweet deals for shareholders and more on fixing a failing educational system and enabling first-time job-seekers to join the workforce.
Calls for Zuma’s resignation are mounting, but have so far gone unheeded. His party has balked at the need for change. Sadly he is better at staying in power than using it for the country’s benefit.