President Cyril Ramaphosa is riding on a wave of goodwill across the political divide as the country looks to him to steer the recovery of an ailing economy widely attributed to his predecessor Jacob Zuma.
But failure by Ramaphosa to quickly get the economy back on track and clean out the corruption critics say has infiltrated the government and state entities could see the country lose further standing with investors and ratings agencies, and lose the ANC support in 2019 elections.
The rand currency has rallied about 20 percent against the U.S. dollar since the ANC elected former businessman Ramaphosa as its new leader in December, giving investors hope that the governing party could get its focus back on economic policy which had taken a backseat to both external and internal political squabbles.
This week, the rand climbed to its strongest level in nearly 3 years after Zuma, who denies using his political influence for personal gain since coming to power in 2009, caved in to pressure to step down as the country’s president before expiry of his term, paving the way for Ramaphosa’s swearing in on Thursday.
The rand was trading at 11.61/dollar on Friday, close to highs last seen in 2015.
The new president has been inundated with messages of support, including from opposition parties who have however demanded that he swiftly rid the government and state firms of cabinet ministers and executives implicated in corruption.
Even as it welcomed Ramaphosa’s election, lobby group Business Leadership South Africa (BLSA) said there was no time for euphoria and that the ANC, which has ruled since the fall of apartheid in 1994, should work quickly to undo the damage wrought on the economy.
There is no time to celebrate,” BLSA CEO Bonang Mohale said.
“Some public services are worse now than they were in 1994. The South African Revenue Service and the National Prosecuting Authority used to be our pride and joy, but now they are captured.”
“Our State-Owned Enterprises are bankrupt. We need to address the leadership, capital structure and governance issues gripping these SOEs.”
The economy has struggled to grow over the past decade, with growth languishing below 1 percent since coming out of a 2009 recession while unemployment has remained stubbornly high at about 27 percent of the labour force.
With revenue stunted, the budget deficit has persisted above five percent of gross domestic product, a major source of concern for ratings agencies, two of which have downgraded South Africa’s sovereign rating to sub-investment grade.
Moody’s, which unlike peers Fitch and S&P Global still rates South Africa above “junk” status, but only just barely, said on Thursday it was closely monitoring developments and was “focused on the policy implications of ongoing changes in leadership”.
“The key point from a credit perspective will be the new leadership’s response to the country’s economic and fiscal challenges and progress in implementing reforms addressing them,” said Zuzana Brixiova, vice president at Moody’s.
Economic analyst Dawie Roodt said he hoped Ramaphosa’s inaugural ‘state of the nation’ address later on Friday would convey a message of “liberty, of service delivery, of competence and of a total dedication to the well-being of South Africans”.
“But then we need specifics on the way the state-owned enterprises will be managed in future, the role of the state, black economic empowerment, protection of private property rights, labour issues, and the list goes on and on,” said Roodt, chief economist of the Efficient Group.
“The Zuma administration has caused immense damage to the South African economy and it will literally take years to repair the damage. I have full confidence in our new president,” he added.
“You now have the power to do what is right, Mr President. Please don’t squander it.”
– African News Agency (ANA)