South Africa Teetering on the Edge of Political and Economic Precipice

Keep South Africa Safe: the slogan is stamped on President Cyril Ramaphosa’s favourite facemask, and could refer to more than just the pandemic.

The country is embroiled in an epic struggle to save the rule of law from falling prey to the caprices of political factions apparently more interested in lining their pockets.

The struggle has economic and financial implications. After he took office in 2018 with a promise to wipe out corruption and patronage, Ramaphosa sparked a brief renaissance of sorts. Overseas investors returned, business picked up, and consumers regained a modicum of confidence which has since proved remarkably resilient. However, the South African president has also gained the reputation for painting vast and attractive vistas that fail to materialise, or get bogged down in arcane political disputes.

Ramaphosa’s intention to ease regulation, cut red tape and improve the business climate has largely stalled. A cautious man, who prefers consensus over confrontation, the South African president has repeatedly run up against some ruthless adversaries – often not susceptible to reason or the powers of persuasion – within the governing African National Congress (ANC).

The former ANC chief negotiator at the constitutional talks in the 1990s, and reportedly Nelson Mandela’s preferred successor, Ramaphosa is failing to display the conciliatory skills that earlier helped to shape the nation. With only two years left as ANC president, time is running out. In fact, crunch time seems to have arrived.

Captured State

The State Capture Commission investigating allegations of widespread corruption and abuse of power under former president Jacob Zuma is entering its final weeks. The commission has certainly captured the attention of a nation disgusted by reports of the systematic looting of the country. If there is one uniting factor, it must be public anger at thieving politicians and their collaborators. Videos showing shady businessmen and officials counting stacks of banknotes have been broadcast countless times, sparking revulsion each time.

Some 250 people have been ordered to testify before the State Capture Commission. Zuma showed up only once – in 2019 – to deny any wrongdoing and to walk from the proceedings accusing “lawless judges” of abdicating their constitutional post for political expediency. About 40 witnesses, including a former cabinet member, gave sworn statements directly implicating Zuma in unlawful dealings, auctioning off executive authority to, among others, members of the Gupta family, who allegedly became the de facto rulers of South Africa during Zuma’s nine-year tenure.

Ordered to testify and respond to the accusations, Zuma refused – twice. The commission has now asked the Constitutional Court to arrest him for defying the summons in what is widely considered a litmus test of the rule of law. Zuma remains barricaded in his sprawling Nkandla estate where some 250 members of the Military Veterans Association, in full battle dress, prevent the arrest of their patron. Edward Zuma, the former president’s son, said authorities would have to kill him should they come for his father.

Politicised Judges

Zuma junior explained that his father was unwilling to co-operate with the State Capture Commission because the judges have been “politicised”. The ensuing stalemate has left the government, and the judiciary, alarmed. Deputy Chief Justice Raymond Zondo, who presides over the commission, said that if Jacob Zuma’s contempt of court were left unaddressed, there would be “lawlessness and chaos”. According to Nicole Fritz, of the legal NGO Freedom Under Law, South Africa’s constitutional project is under siege: “If action isn’t taken against Zuma, you cannot ask the average South African to respect the law and adhere to it,” she said.

The nation is following these events in the hope of discovering where the real power lies. Ramaphosa has managed to rally his supporters to reiterate his party’s unwavering support for the commission and its investigation. The party’s top six leaders have appealed to Zuma to rethink his attitude and co-operate with the judges. In late February, during a meeting of the ANC national executive committee called the celebrate the party’s 109^th anniversary, Ramaphosa said again that the ANC had been weakened by corruption. “The constitution and the rule of law are sacrosanct components of our democracy,” he said, “and all people in the country must respect these principles.”

The ANC leadership realises that Zuma’s arrest could split the party, causing it to lose power. Brinkmanship is, however, not one of Ramaphosa’s strong suits. His entire career was forged by consensus-building and avoiding conflict. That seems to have run its course. In a sign that the ANC fears an electoral backlash, the party has promised to vet its candidates for local and national polls. Candidates for public office who have even minor blemishes are to be excluded from the running.

That will prove a rather tough job, as there are few people of any prominence in the ANC who are blameless. Even Ramaphosa’s name has popped up in relation to alleged improprieties. Initially praised for his handling of the Corona pandemic, he landed in hot water after it transpired that numerous PPE contracts had been allocated to his friends, some of whom apparently became overnight billionaires.

Economy Reeling but Resilient

While the stalemate continues, South Africa’s economy is reeling under the impact of the pandemic. Finance Minister Tito Mboweni faces the near impossible task of reining-in spending while preserving whatever economic impetus is left. The fiscal strain is taking a heavy toll. National debt is expected to equal the country’s GDP by 2026. In the absence of meaningful economic growth, and with declining tax revenues, the deficit will this year rise to 11 percent of GDP.

The Treasury Department’s own forecast had been darker still (-15 percent), with better-than-expected tax collections providing a windfall which the government now hopes to use for the acquisition of tens of millions of covid-19 vaccines. Mboweni is expected to raise additional revenue by increasing excise duties on the sale of alcohol and tobacco, leaving corporate and income tax schedules unchanged.

Mboweni has stated that he will not raise taxes on high income earners to stem to outflow of professionals and entrepreneurs. The finance minister is also acutely aware that a failure to demonstrate resolve may yet provoke a sovereign debt crisis.

South Africa has, in fact, weathered the pandemic better than expected. Though GDP retracted by about seven percent last year, consumer spending has proved resilient. A timely boom in mining and agriculture has spared the country from the worst. Ultra-low interest rates have helped as well. Employment levels have remained fairly stable, with most of the jobs lost at the beginning of the pandemic reappearing late last year.

The metaphorical ball lies in Ramaphosa’s court. Should he fail to make his predecessor comply with the constitutional court’s arrest order, South Africa may yet face a meltdown of its political order and its economy. That is unlikely to withstand a breakdown in the rule of law, with the attendant risk of spooking investors and creditors.

The president must win the current game of chicken being played, lest he lose the last vestiges of credibility – and the power to steer his country through the remainder of the pandemic.

Much depends on proving that Zuma is not a law unto himself.