🔒How world sees SA: Country on brink of salvation – or catastrophe

A long-time dream of mine was fulfilled during a visit to London last month, including hosting BizNews’s first international conference. The highlight of an exceptionally fruitful visit was securing a partnership with The Economist, the world’s most influential publication. Our new partnership kicked off on 1 June. The timing couldn’t be better. Today, the Economist’s Leader is devoted to the results of South Africa’s recently concluded national and provincial elections. Its rational perspective on developments is aligned with that of Dr Frans Cronje, chairman of the Social Research Foundation and long-time former CEO of SA’s leading thinktank, the Institute for Race Relations. The interview with Dr Cronje, outlining a binary decision the ANC faces, has been viewed more than 200,000 times in just over 24 hours since published on the BizNewsTV channel on YouTube. (average view: 11m 28 sec). The message from The Economist to the world’s leaders and the international investment community – and its advice to SA’s political leaders – supports Cronje’s thesis. It’s a must-read. – Alec Hogg

Leader article in The Economist

‘Both Mr Ramaphosa and Mr Steenhuisen need to put country before party to prevent SA following the road to ruin’

South Africa is seeing the biggest shake-up in its politics in the 30 years since the end of apartheid. The African National Congress (ANC), which has governed since 1994, has been rejected by almost 60% of voters.

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Given the ANC’s record of corruption, rotten governance, economic stagnation and rising unemployment, the country should be celebrating. Instead it is anxiously awaiting the results of backroom negotiations that will determine what path South Africa takes. The stakes could not be higher. One fork leads to the certain prospect of reckless populism, venality and economic crisis. The other leads to pragmatism and the hope of renewal.

The ANC, which once commanded the support of almost 70% of the electorate, has been in stunned shock since voting took place on May 29th. Party insiders thought that it might lose its majority for the first time, but even they expected it to do so by just a few percentage points. Current projections on an incomplete count suggest it will limp in with less than 41% of the vote, a humiliating 17-point drop since the national elections in 2019.

The defeat is eroding the authority of Cyril Ramaphosa, who took office as president in 2018 promising renewal and good governance after obscene graft under his predecessor, Jacob Zuma. Already there is talk of a palace revolt by his opponents in the party. If he is ejected his place would most probably be taken by his deputy, Paul Mashatile, who is under investigation by the police on allegations of corruption. (He has denied any wrongdoing.)

Since it will be unable to form a government on its own, to stay in power the ANC will have to enter a coalition with a big opposition party. The biggest danger is that it will do a deal with the Economic Freedom Fighters (EFF), led by Julius Malema. It is a radical socialist and race-baiting party that wants to seize and redistribute farmland and nationalise mines, banks and other big companies without compensation. The EFF is projected to win around 9% of the national vote. It is not yet clear whether this will be enough to make it a kingmaker. Another possible coalition partner is uMkhonto weSizwe (MK), a new party led by Mr Zuma, which is projected to win around 15%. He wants to abolish the “Western”’ judicial system that locked him up for contempt of court, nationalise banks and businesses and rewrite the constitution to give more power to feudal chiefs. A sense of the mayhem MK would bring can be found in KwaZulu-Natal, South Africa’s second-most populous province, where the party seems on track to win about 46% of the votes. Keeping it out of the provincial government could lead to social unrest. Yet if an MK-led coalition were to run KwaZulu-Natal, “the levels of corruption and mismanagement will also lead to the province being uninvestable,” says Peter Attard Montalto of Krutham, a Johannesburg-based consulting company.

Any national coalition deal with either the EFF or MK would probably result in the government dumping many of Mr Ramaphosa’s economic reforms. These have included initiatives that have led to a flood of investment into renewable energy and aim to attract private investors and operators to run jammed ports and broken railways. Mr Ramaphosa is understood to vehemently oppose entering a coalition with either of these parties and would rather resign than do so.

Alas, that might suit others in the party who are in favour of just such a coalition and are thought to include Mr Mashatile. In any case, Mr Zuma and Mr Malema are understood to have said that a condition of any coalition agreement would be the removal of Mr Ramaphosa. That would be ruinous and Mr Ramapahosa’s allies should be rallying around him, urging him to stay. For all of his many failings, Mr Ramaphosa is a pragmatist who has tried to rebuild the justice system and who has respected the constitution and the courts. By contrast, many of his rivals in the party see these as hindrances. Fears that Mr Ramaphosa might be deposed and the country run by a coalition of chaos have seen the currency and stockmarket tumble since the poll.

Yet there is another path open to South Africa: for Mr Ramaphosa to team up with the Democratic Alliance (DA), the official opposition. The DA, which stands for sensible, liberal economics, has a proven record of governing well in places where it has a majority. In Cape Town services largely work, roads are maintained and residents are shielded from the worst of the regular power cuts imposed on the rest of the country. The Western Cape province has a lower unemployment rate than ANC-controlled provinces. Yet because the DA is widely perceived as a “white” party in a country with a black majority, it has struggled to translate good governance into votes. Projections show it winning about 22%, a result almost unchanged since the elections in 2019.

John Steenhuisen, the leader of the DA, has previously indicated that he would be open to entering a coalition with the ANC. Mr Ramaphosa and his allies are also reportedly willing to do such a deal. Informal talks have smoothed over some potential stumbling-blocks, including differences in foreign policy. The DA, which has criticised Mr Ramaphosa’s government for refusing to condemn Russia’s invasion of Ukraine, has indicated that it may compromise on this issue, according to Bloomberg.

Forming a coalition of the sensible would not be without risks to both sides. Mr Ramaphosa would probably face accusations from his own party of selling out. Mr Steenhuisen risks tarnishing the da’s reputation for good governance by tying it to a party that has become synonymous with corruption. Yet many of these risks could be managed.

To ensure that it is still able to act as an opposition and hold the government accountable, the da need not demand seats in cabinet. Instead it could offer its support in the parliamentary vote needed to elect Mr Ramaphosa as president in exchange for other concessions, such as getting a da member elected as the speaker of parliament, and for commitments about legislation.

To broaden the appeal of such a deal and to make it more palatable to the ANC, smaller and equally sensible parties could be brought in to form a wider government of national unity, such as the one that served for a few years in Nelson Mandela’s cabinet. These could include established parties such as the Inkatha Freedom Party as well as upstarts such as Rise Mzansi and Build One South Africa.

This would not be an easy coalition to hold together, and forming it could result in both the ANC and DA losing the support of their more radical wings. Hammering out an agreement on policies and a legislative agenda would require huge compromises. Yet both Mr Ramaphosa and Mr Steenhuisen need to put country before party to prevent South Africa following the road to ruin. ■