Pressure is mounting on South African President Cyril Ramaphosa to stabilize the government’s shaky finances and rescue an economy teetering on the brink of recession.
Since taking office in February last year, Ramaphosa has repeatedly pledged to ignite growth and reverse nine years of misrule by his predecessor Jacob Zuma. His ability to undertake reforms has been constrained by a ruling party faction that wants the government to play a greater role in the economy and by powerful labor unions opposed to state-spending and job cuts.
Warnings that South Africa is on a precipice have come from the International Monetary Fund, the World Bank, business executives and economists from Absa Bank Ltd. and other lenders. Even Tito Mboweni, Ramaphosa’s finance minister, has taken to Twitter to vent his frustration at the slow pace of reform.
Here are samples of the growing drumbeat:
The IMF
When Ramaphosa took office, “market expectations for growth-enhancing reforms were high,” the fund said in a Jan. 30 statement. “However, sluggish implementation and persistent policy uncertainty did not validate those expectations, and business confidence is now close to all-time lows.”
The World Bank
“Weak growth momentum has reflected an array of overlapping constraints,” the lender said Jan. 8. “These include persistent policy uncertainty, constrained fiscal space, subdued business confidence, infrastructure bottlenecks — especially in electricity supply — and weakening external demand, particularly from the euro area and China.”
Absa Economists Peter Worthington, Miyelani Maluleke
“In addition to clean governance, South Africa needs better economic policies in the form of structural reforms across a broad set of activities and sectors,” the economists said Jan. 20. “Frustrations continue to mount about a perceived slow pace of change.”
Sibanye Gold Chief Executive Officer Neal Froneman
“I know that our president inherited a very difficult situation, but to be clear and blunt he also hasn’t made some of the difficult decisions that need to be made,” Froneman said in an interview Jan. 28. “It’s time government acted in the national interest and not in the interest of the one party.”
Finance Minister Tito Mboweni
“If you cannot effect deep structural economic reforms, then game over!” Mboweni said on his Twitter account Jan. 10. “Structural economic reforms inertia is frustrating. Let’s get on with it. Movement!! Many steps at a time!!”
Ramaphosa says he’s committed to getting the economy on track, clamping down on graft and making the government more efficient. He can point to some progress since taking office, including appointing a new chief prosecutor and head of the national tax agency, and replacing the boards and management of several state companies. He’s also embarked on a drive to attract $100 billion in new investment over five years, with a substantial portion of that already committed.
Political analyst Ralph Mathekga cautions that Ramaphosa hasn’t gone far enough, largely because he is pandering to competing interests within the African National Congress, which has ruled South Africa for 25 years.
“Unfortunately, the president is going to fail everyone equitably if he doesn’t take a position. He is seen as not to be willing to pick a fight,” Mathekga said. “I think we are having a presidency here that is resigning itself to being a crisis manager instead of a reformer.”
Ramaphosa’s office didn’t respond to a request for comment. The government is committed to fostering economic growth, creating jobs, turning state companies around and ensuring it appoints suitably qualified people, he told leaders of the ruling party in Pretoria on Jan. 20.
“We have been frank about the extent of the difficulties in our country,” Ramaphosa said. “We acknowledged where we have fallen short in the implementation of our policies and have devised realistic measures to address these.”
.Bloomberg
