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CAPE TOWN — Pessimists keen to write off the ANC, regardless of new leadership, are the most avid users of the term “Ramaphoria,” to describe the heady enthusiasm and ongoing excitement at the replacement of the Zuptoid kleptoculture. They consistently point out that one man alone cannot complete the immense task of rebooting the economy, reducing joblessness and overhauling the monolith of government and its previously-captured enterprises. Not to mention clearing out endemic corruption from cabinet all the way down to municipalities and tribal fiefdoms. Hence the moniker purposely evokes images of dizzy-headed, overly idealistic, navel-gazing flower children who’re probably smoking something narcotic. Nothing could be further from the truth. While unrealistic expectations are worth guarding against, have a read of what the captains of industry are saying, what the rand is doing and some expert economic predictions. These are hardened pragmatists, in touch with global trends and local markets. There’s no debating the value of what Cyril Ramaphosa has already done – and what he’s signalled his cabinet will do. With all our challenges, it’s becoming harder for the prophets of doom to ply their trade. Nobody’s going to pull the plug, cut the power or grab the land, Zimbabwe-style. Not anymore. – Chris Bateman
by Amogelang Mbatha and Mike Cohen
(Bloomberg) – South African President Cyril Ramaphosa has been a hit with business leaders and investors during his first three weeks in office.
Since succeeding Jacob Zuma, who was immersed in scandal during his nine-year tenure, Ramaphosa has fired several ineffective ministers, taken a stand against graft and ordered a review of draft rules that deterred investment in the mining industry. Improved confidence may boost weak economic growth and investment and could help stave off a downgrade to junk by Moody’s Investors Service later this month.
“If you take the South Africa we have today and compare it to the South Africa we were sitting with at in the middle of December, we have come a long way,” Stephen Koseff, the chief executive officer of Investec Plc, said at a Bloomberg conference in Cape Town on Wednesday. “A great leadership in South Africa is a start.”
The rand has gained the most of any currency against the dollar since Ramaphosa won control of the ruling party in December, and business confidence is close to its highest level in more than two years.
Despite the improved sentiment, Ramaphosa will have his work cut out for him. Economic growth averaged just 1.8 percent while Zuma was in office, and S&P Global Ratings and Fitch Ratings Ltd. cut the country’s debt to junk. Moody’s is due to give an assessment on March 23 and another junk rating for the local-currency rating would exclude South Africa from Citigroup Inc.’s World Government Bond Index, triggering capital outflows.
A delegation of chief executives held a “very good” meeting with officials from Moody’s on Tuesday and emphasized the strength of South African institutions and improvement to the economic outlook, Colin Coleman, head of sub-Saharan Africa at Goldman Sachs Group Inc., told the conference.
Goldman Sachs expects the economy to expand 2.4 percent this year, 0.9 percentage points more than the National Treasury forecast in the February budget, rising to 2.8 percent in 2019. It sees the rand strengthening to 11 to the dollar in 12 months’ time, from about 11.89 on Wednesday.
The government’s decision to review proposals requiring mining companies to maintain at least 30 percent black ownership should help revive the industry, and talks between the Chamber of Mines and new Mineral Resources Minister Gwede Mantashe on Tuesday were very positive, according to Mark Cutifani, the chief executive of of Anglo American Plc.
“The industry should be twice the size that it is today,” Cutifani said. “If you look back at the opportunity lost in the past 10 years, that’s one of the great tragedies. We can turn that around. We are in a very new place and very excited about the future.”
Land reform and the precarious finances of Eskom Holdings SOC Ltd., the state power company, remain concerns for investors. Eskom’s debt has climbed as construction of new plants miss deadlines and run over budget.
“We have to deal with the injustices of the past,” he said in Cape Town. “The president has made it clear that we will deal with this matter in a manner that does not disrupt the economy, does not disrupt production.”
Pravin Gordhan, who was appointed the minister in charge of state companies including Eskom last month, said the government is targeting graft and would bring in new boards to improve governance as it seeks to renew sentiment.
“We have a new leadership in the country which has exciting ideas,” he told delegates. “It is very clear that we need to work with a greater sense of urgency on issues such as jobs for the young people, getting a greater deal of confidence in our economy, more trust from our citizens and above all getting more investment.”
Resolution seen to impasse over South African mining rules
by Amogelang Mbatha and Mike Cohen
(Bloomberg) – South Africa’s mining industry and the government are moving closer to resolving a dispute over levels of black ownership that’s deterred investment and dragged down growth in the continent’s most industrialized economy.
The government last year revised its mining charter to require companies to maintain at least 30 percent black ownership, a move rejected by the Chamber of Mines, which sued to stop it from being implemented. The lawsuit was dropped after Cyril Ramaphosa replaced Jacob Zuma as president in February, and his new Mineral Resources Minister Gwede Mantashe has committed to reviewing and finalizing the charter within three months.
“We are in a very new place and very excited about the future,” Mark Cutifani, the chief executive officer of Anglo American Plc, said at a Bloomberg conference in Cape Town on Wednesday. “Yesterday Gwede Mantashe met with some of the members of the Chamber of Mines and certainly, from our representative, it was a great interaction. A relationship has been established with the new ministry and that’s very exciting.”
South Africa has the world’s biggest reserves of platinum and manganese as well as gold, iron ore, coal, chrome and zinc deposits. Anglo American, Glencore Plc, South32 Ltd. and Sibanye Gold Ltd. are among companies operating in the country. Ramaphosa, who founded the main mineworkers’ union, is seen as more business-friendly than Zuma and has said he wants a charter that both accelerates transformation and contributes to economic growth.
“We expect to see a renewed mining sector,” Pravin Gordhan, who was appointed public enterprises minister last month, told the conference. “The new minister of mineral resources will create the right kind of platform, I hope, for the mining sector to also begin to make a lot more contribution to the GDP than the 7 or 8 percent that it actually does at the moment.”
South Africa’s mining industry should be twice the size it is today, and has been held back by a lack of policy certainty, according to Cutifani.
“We spent two years developing an approach to the mining charter that no one wanted to hear,” he said. “Today, we’ve got someone to talk to. That’s a start.”
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.