Country Profile: SOUTH AFRICA

Southern Africa

Monday, 23 November 2009 01:42

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

April 2010 will mark a fairly successful first year for Jacob Zuma’s presidency. But serious challenges loom. With South Africa in the grip of a savage recession and economic contraction in every quarter since late 2008 costing around half a million jobs, the government needs to implement a coherent economic policy. One reason Zuma’s predecessor, Thabo Mbeki, was toppled was his apparently neo-liberal  economic stance which angered the  ruling ANC’s alliance partners, the Congress of South African Trade Unions (Cosatu) and the South  African Communist Party (SACP).  

Zuma replaced Trevor Manuel, who as finance minister drove economic policy under Mbeki, with the former head of the South African Revenue Services, Pravin Gordhan. Gordhan has adopted a conservative stance thus far, sticking with inflation targeting (hated by the left) and relaxing exchange controls in a bid to weaken the rand. Manuel now heads the National Planning Commission, a new body situated in the presidency. Cosatu and the ANC left wing accuse Manuel of using this position to  prevent Ebrahim Patel, a former union boss who now heads another new ministry, Economic Development, from moving economic policy leftward. The government denies any rift, but such allegations will persist until the direction of economic policy becomes clearer.  

South Africa In his mid-term budget  report, Gordhan warned that the 2009 fiscal deficit would be 7.6% of GDP and that government spending would be tightly scrutinised in 2010. The key issue is the need for substantial job creation, but there was no early consensus on how this might be achieved.

 After contracting an estimated 1.9% in 2009, real GDP is expected to grow by a modest 1.5% in 2010, with a recovery in manufacturing and services and improved commodity prices, especially for platinum and gold. The renewal of economic growth could revive private-sector employment, but Cosatu and the SACP are calling for more public-sector jobs too. This will require higher public expenditure, on top of that needed to fund above-inflation public-sector wage settlements in 2009, which saw many workers scooping increases of 11% or more.  

Manuel’s instinct, and probably Gordhan’s too, is to try to stimulate a private-sector recovery and reduce unemployment that way, but that would entail tax cuts, making higher public expenditure impossible without a bigger rise in the fiscal deficit. The government cannot have it both ways and at some point Zuma, who has so far avoided committing himself on economic policy, will have to choose which path to tread.  Another issue where greater clarity will be demanded is Zimbabwe. So far, the government has given different signals to different audiences. In September, Zuma signed up to a Southern African Development Community (SADC) resolution calling for the unconditional lifting of sanctions, as demanded by Zimbabwe’s President Robert Mugabe.

Fingers crossed for World Cup preparations

The South African Football Association is in a parlous state, following a bruising power struggle in 2009 for ascendancy between Irvin Khoza and Danny Jordaan, the chair and CEO of the World Cup Local Organising Committee respectively. So far, indications are that 2010 World Cup preparations have not been unduly affected.  

All the football stadiums are either ready or nearly ready, and the main missing links are public transport and accommodation. Compounding likely problems with inadequate public transport, the country’s entire vehicle rental fleet will be in use too, and visitors hoping to hire a car on arrival may be be disappointed.  

The international football governing body, FIFA, has battled to sign up the number of rooms it wanted to rent out to visitors, partly because accommodation owners do not want to pay FIFA the generous cut it is demanding. Rooms should be available in the major cities but will be nigh-impossible to find at short notice in smaller towns.  

After a promising Confederations Cup in June, the South African football team has performed dismally,  raising fears that it will crash out early from the World Cup. Yet hope springs eternal in a football lover’s heart, and there are still plenty of Bafana Bafana fans who dare to expect glory.

On the same day, however, South African deputy president Kgalema Motlanthe told parliament in Cape Town that there could still be a special SADC extraordinary summit pressuring Mugabe to honour his commitments to the unity accord, as called for by Zimbabwean Prime Minister Morgan Tsvangirai’s Movement for Democratic Change (MDC). 

Assuming Mugabe’s hostility to the MDC continues, the South African government will find it increasingly tricky to remain ambiguous. Zuma talked tough on Zimbabwe before becoming president, but he has not yet shown the nerve to go against SADC’s  perceived protection of Mugabe.  

Much clearer is where relations are heading with oil-rich Angola: up and up. Relations were strained between the South African and Angolan  governments under Mbeki’s presidency, and Mbeki never went there on a state visit. Yet the country was the first Zuma visited as head of state, together with a 170-strong business delegation, which was warmly welcomed in August. Improved political, economic and possibly military relations between the countries seem certain to follow.  

The government has said it intends to introduce a national health-insurance scheme in 2010, though it will take longer to pass it. All South Africans are entitled to state health care, which is free for the very poor and charged on a means-tested basis for the rest. Resources are stretched thinly and 7m people, roughly constituting the middle class, have bought health insurance which gives them access to private hospital networks. Health-insurance costs are spiralling, leaving many under-insured. The government’s idea is to create a national health fund using 3-5% of the nation’s payroll, which would apparently cover everyone’s basic medical needs. Private hospitals and medical schemes do not see where they will fit in, making them – and their clients – increasingly nervous. 

Another big domestic issue in 2010 will be public transport, which is currently inadequate for the nation’s needs. Spurred by the 2010 World Cup infrastructure build-out, the government is piloting a new bus service in Johannesburg, intended to reduce the need for taxis, which it hopes to roll out in other cities. Taxi operators have resisted strongly, even shooting at travellers on the new buses. The government has pressed on with implementation of the new system in the hope that taxi operators will eventually realise they have no choice but to accept the changed reality. The strategy might just work but is likely to lead, in the short term at least, to more violence when the bus scheme extends to other cities such as Durban, Port Elizabeth and Cape Town.  

Police statistics show that violent crime fell 3% year-on-year in 2008/09, while house robberies rose 27% and business robberies jumped by 41.5%. As the recession bites, the fear is that the figures will be worse in 2010. Police minister Nathi Mthethwa and police commissioner Bheki Cele, both Zuma appointees, like to talk tough, urging police to shoot to kill when under threat. Criminologists, meanwhile, want the return of the police’s specialised crime units disbanded by Cele’s predecessor, Jackie Selebi.  

SA Graph There is also need for a measure of calm in the country’s much agitated judiciary, which was divided by the saga of Zuma’s own court case and by a series of acrimonious and racialised debates among its members. Since becoming president, Zuma has stayed out of the fray, but he must soon select four replacements for retiring members of the Constitutional Court, requiring him to show his hand.  

Opposition parties will hound the government on crime and much else during the year, but the ANC has little to fear from them in 2010. The Congress of the People, formed largely of disgruntled ex-ANC members, is performing feebly, dissipating its energies in internal bickering and making no impact in parliament. The Democratic Alliance, the largest opposition party, is also finding it hard to make any headway against Zuma, though it may be consolidating its grip on the Western Cape, the only province it controls. Meanwhile, the Inkatha Freedom Party’s ageing leader, Mangosuthu Buthelezi, is fast losing his grip, and party supporters in its heartland of KwaZulu-Natal are switching to the ANC in droves.  

With opposition parties ineffective, Zuma’s main task will be to preserve the ruling party’s uneasy unity without resorting to the unpopular authoritarianism that helped bring about Mbeki’s downfall