DUBLIN — With all the drama of the election, it’s easy to forget that this wasn’t actually the hard part. In fact, the hard part is still to come – the victorious ANC and its leader Cyril Ramaphosa must now overhaul the country’s sagging economy. It’s going to be a stiff challenge. Growth has sputtered to a virtual halt (it’s slower than population growth, meaning that SA isn’t really breaking even) and there are deep problems ranging from the disasters at Eskom and SAA to ongoing tensions over land reform. Ramaphosa has been given a mandate to fix things, but he faces a real job of work, particularly since there are interests within the ANC that would like to see him ousted in favour of a more graft-friendly, pro-Zupta candidate. Ramaphosa is made of stern stuff and that’s a good thing, because the next five years will test his mettle in every imaginable way. – Felicity Duncan
Fight to revive South Africa awaits Ramaphosa after bruising election
By Gabriele Steinhauser
(The Wall Street Journal) JOHANNESBURG – His election secured, the real fight begins for South African President Cyril Ramaphosa to protect his economic-overhaul plans – and his job – from party infighting.
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With nearly 99% of the vote counted, Mr. Ramaphosa’s African National Congress, which has been in power since Nelson Mandela became the nation’s first black president in 1994, had won 58% of the vote in this week’s parliamentary election, South Africa’s Independent Electoral Commission said Friday.
It is the weakest national result on record for the ANC and, many analysts say, could constrain the president’s ability to revive the country’s hamstrung economy and intensify attacks from opponents within his own party.
The ANC was barely holding on to its majority in Gauteng province, home to the business and political capitals Johannesburg and Pretoria and the country’s economic motor.
The reduced vote count – paired with a low voter turnout of about 66% – highlights the ruling party’s failure to improve the everyday lives of many black South Africans and the fallout of a decade of escalating government corruption under Mr. Ramaphosa’s predecessor, Jacob Zuma.
One positive outcome for the president is the relatively weak showing nationally of the hard-left Economic Freedom Fighters led by Julius Malema. The EFF got just under 11% of the national vote, a bump up from the 6% it received in 2014 but at the low end of what had been predicted in polls. That will ease some of the pressure on Ramaphosa to push the ANC further to the left on policies to redistribute wealth from the white minority to the black majority.
Zuma, whom Ramaphosa ousted as president last year, still leads a powerful faction in the ANC. His camp not only aims to shield its members from prosecution for alleged abuses of power but also has a very different vision for the future of Africa’s most developed economy.
The battle between this faction and the president will play out in the implementation of two prominent government policies: Changing the constitution to enshrine the expropriation of land without compensation, and the nationalisation of the Reserve Bank, one of the few central banks in the world that still has private shareholders.
Ramaphosa has worked to moderate both of these initiatives to avoid scaring off foreign investors.
He has set measurable goals for kick-starting the South African economy, which grew a meagre 0.8% last year. He wants to return South Africa to the top 50 nations on the World Bank’s Ease of Doing Business Index – from 82 currently – within three years, rake in R1.2trn (about $83bn) in foreign direct investment by 2023 and boost annual gross domestic product growth to at least 3%.
Getting there will mean undoing a lot of the damage inflicted in the Zuma years, during which South Africa dropped 50 ranks in the World Bank index, as vital institutions, from the national prosecution office, the revenue service to state-owned enterprises, were hollowed out by mismanagement and corruption.
“Part of the to-do list is creating a capable state, as a step toward reform,” said Gina Schoeman, chief economist for South Africa with Citi.
Even then, the pressure to cut government spending and address a slump in the important mining industry don’t leave Mr. Ramaphosa with quick, easy wins.
A first test of the president’s powers will be his cabinet, due to be appointed later this month. Until now, he has failed to remove influential Zuma allies, including some that have been implicated in serious corruption scandals, and many analysts expect some opponents to remain ministers. He has also pledged to cut down the number of ministries, which has more than doubled to 34 since Mr. Mandela was president, to contain costs and allow smoother decision-making.
Some decisions will have to be taken quickly. Chief among them is how to fix the national electricity company Eskom, whose outdated power stations, along with yearslong delays in bringing online new stations, have inflicted debilitating blackouts on citizens and companies. Sustained power cuts, like ones seen in February and March, could wipe out nearly all of the 1.3% GDP growth projected for this year and cost 125,000 jobs, the Reserve Bank has warned.
The state-owned utility, which is 435 billion rand in debt, is effectively bankrupt and has said that, despite a three-year, 69-million-rand bailout it secured in February, it has a 250-billion-rand hole in its balance sheet. Stuffing that hole will likely mean the government taking on a substantial chunk of its liabilities, further increasing its own debt.
Mr. Ramaphosa has said he plans to split Eskom into three parts – generation, transmission and distribution – to improve oversight and attract outside investors. But that plan is opposed by people inside the company and South Africa’s influential unions.
“Across the [state-owned enterprises] there is still elements of the Zuma faction,” said Darias Jonker, Africa director at Eurasia Group. “While they’re there they are going to continue to sabotage and undermine Ramaphosa.”
Other state companies – including flag carrier South African Airlines, port and freight company Transnet and the national post office – face similar financial and capacity problems that weigh on the economy and the budget.
Mr. Ramaphosa will have to address problems while fending off attacks on his position. The ANC has a tradition of turning on its own leaders amid its ideological battles, with both Mr. Zuma and Mr. Mandela’s successor Thabo Mbeki being removed as president before their terms ran out.
The first opportunity to oust Mr. Ramaphosa could come as early as next year when the party is due to hold its national general council. To keep his opponents at bay, the president will have to buy them off with policy compromises and government posts – to the detriment of his own agenda.
“It’s going to take up a lot of his political capital – and a lot of his time and energy,” said Darias Jonker, Africa director at Eurasia Group.
Write to Gabriele Steinhauser at [email protected]
