27 January 2016
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South African Economy under Distress:
What Lays Ahead for 2016, as Confidence in Zuma Keeps
Eroding?
South Africa overcame the dark episode of apartheid, to
become a democratic nation, thus bringing a ray of hope
for the victims of the old system. Yet, 22 years on, the ruling
African National Congress (ANC) — the main blackdominated movement which fought apartheid — seems far
from fulfilling its promises (among them economic equality
and better service delivery), which it made to black South
Africans when it came to power in 1994.
South Africa is currently undergoing a turbulent economic
situation, which has seen its currency (the Rand) plummet
to its record low early this year. President Zuma received
much of the criticism, when his decision to fire then
Finance Minister Nhlanhla Nene drove the country’s
economy at the brink of a recession. The country’s
economic woes have coincided with countrywide student
protests against high tuition fees, and could plunge the
country into civil unrest should the situation not improve in
a reasonable time frame.
This report seeks to analyse the ongoing economic issues in South Africa, their sociopolitical aspect, including
Zuma’s political survival.
1. A crumbling economy
The South African economy has undergone months of turbulence, with its currency reaching an all-time low early
this year. The Rand was sold for 17. 996 a US$ on 11th January, 2016 compared to 12.6222 on 29th July 20151 -a nearly 30% devaluation in a period of about 6 months.
The country’s economic instability may be due to factors beyond the control of the executive, including global
market fluctuations, and possibly overreliance on China for trade. Prices of commodities such as coal, platinum,
and gold — which constitute the backbone of South Africa’s economy — continue to fall on the global market, as
a result of low demand, including lately by China.2
Yet much of South Africa’s economic woes may also be tied to the country’s poor governance, with much of the
criticism going directly in the way of President Zuma. Currently serving his second term, Zuma ascended to the
presidency immediately after charges of corruption, fraud, money laundering, and tax evasion against him were
dropped in April 2009. The polygamous3 Head of State was on the receiving end in December last year, when he
replaced his experienced Finance Minister Nhlanhla Nene with a lesser known ANC Member of Parliament. Zuma
1
Eye Witness, ‘Rand Drops to New Record Low’ Available online at http://ewn.co.za/2016/01/11/Rand-drops-to-new-recordlow (Accessed 20 January 2016) See also http://www.exchangerates.org.uk/USD-ZAR-exchange-rate-history.html.
2 The Wall Street Journal, ‘Falling Chinese Coal Consumption and Output Undermine Global Market’ Available online at
http://www.wsj.com/articles/chinas-coal-consumption-and-output-fell-last-year-1424956878 (Accessed 18 January 2016).
3 He has married six times, and currently has four wives.
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quickly backtracked on his decision — owing mainly to pressure from the business community and opposition
groups — by reappointing Former Finance Minister Pravin Gordhan to the same position.
Prior to his dismissal, Nene had refused to approve a US$100 billion nuclear power station programme, which he
deemed too expensive; and questioned a dubious bailout arrangement for the national carrier — the South African
Airways4. He may thus have paid the price for standing in the way of Zuma’s enrichment and that of his close
friends or business associates through both deals.5
South Africa’s declining economic conditions, which could worsen as the country faces serious droughts, could
set the nation on a shaky path, as millions of poor citizens — the majority of whom are black — may vent their
anger on the ruling ANC elite. It may further bring back the ghosts of the apartheid system, by fanning feelings of
resentment by a relatively deprived black populace towards minorities — mainly whites —, who have relatively
retained their financial stability in South Africa’s post-apartheid dispensation.
Failure to reverse the current economic downturn, including the devaluation of the Rand, may lead to a recession.
This could scare away potential investors, and drive away those already operating in the country, thus depriving
the latter of cash inflow, and eventually lead to a total economic collapse.
2. The “Fees Must Fall” movement: the beginning of more social unrest?
The current economic situation has impacted on the cost of living, which has become unbearable for the majority
of ordinary South Africans, and could potentially lead to civil unrest.
South Africa has been hit by months of protests by university students reacting to a plan by the government to
increase tuition fees. The “Fees Must Fall” movement started in 2015, and is still active this year, as students are
demanding that tuition and registration fees be scrapped, among other things. 6 This is despite Zuma’s
announcement that his government was abandoning the plan to increase fees, and could be a sign of turbulent
months ahead, as Zuma continues to be the subject of much controversies on the political and economic fronts.
Meeting the students’ demand [of scrapping tuition fees] may be an impossible task for the ANC government to
accomplish, especially if the country aspires to maintain a competitive standard of education on the continent and
global levels. It is costly and could be unaffordable, considering the current economic woes. Yet failure to meet
such demands may lead to more civil unrest as the students are now considering quality, free education a right,
as the ANC had promised at the dawn of democracy.7
The students’ concerns are only a microcosm of the plague that is rapidly engulfing South Africa, as 22 years after
the end of apartheid, “free, quality education” has not been the ANC’s only empty promise. The majority of blacks
— apartheid’s main victims — still languish in extreme poverty. If declining living conditions persist, and no
The proposed bailout was in the form of a purchase of 10 A320 airbus for South African Airways — a deal Nene deemed
too costly, and which he threatened to reverse. His successor, Pravin Gordhan, has since swapped the said deal for a lease
of five A330-300 aircrafts. See Mail & Guardian, ‘SAA pulled back from the brink’ Available online at
http://mg.co.za/article/2015-12-22-saa-pulled-back-from-the-brink (Accessed 18 January 2016).
5 Zuma is linked to the Gupta family, which has investments in the uranium trade. If approved, the nuclear plant deal would
have allowed the later to amass millions through tenders. See IOL, ‘The Gupta family plans R800m uranium mine’ Available
online at http://www.iol.co.za/business/companies/the-gupta-family-plans-r800m-uranium-mine-1.1785026 (Accessed 18
January 2016).
Zuma is accused of having had an affair with South African Airways chairwoman Dudu Myeni, although he has denied the
allegations. See REUTERS, ‘South Africa's Zuma denies affair with airline boss’ Available online at
http://www.reuters.com/article/us-safrica-president-idUSKBN0TV0H620151212 (Accessed 18 January 2016).
6 SOWETAN, ‘#FeesMustFall leaders present list of demands’ Available online at
http://www.sowetanlive.co.za/news/2016/01/14/feesmustfall-leaders-present-list-of-demands (Accessed 14 January 2016).
7 Women 24, ‘Can the South African government afford free education?’
http://www.women24.com/Wellness/BodyAndSpirit/Education-is-for-the-privileged-FeesMustFall-20151023 (Accessed 19
January 2016).
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agreement is reached between the students and the government, South Africa could see a surge in protests
movements — a situation which will further destabilize the country.
With the 2016 municipal elections drawing closer, the ANC may face a difficult task to convince voters, as
opposition candidates, especially those of the newly-formed Economic Freedom Fighters (EFF) are more likely to
campaign on socioeconomic issues.
Racial tensions, although not imminent, may come to the surface in the country many refer to as “the rainbow
nation”, as various political and civil society groups seem to be playing the apartheid card to strengthen their
positions in connection to the ongoing socioeconomic challenges. Referring to the ongoing student protests, an
EFF leader has declared on a radio station that his party intends to “decolonize the university” and not “to treat the
symptoms”.8 Freedom Front Plus, a political party which identify more with white people’s interests, has recently
lodged a complaint against President Zuma for hate speech. The complaint came after Jacob Zuma declared
during the ANC’s 104th anniversary celebrations that “poverty, inequality and unemployment” are the result of land
having been stolen.9
3. How far can the ANC’s support for Zuma go?
The ruling ANC party has so far refused to succumb to
pressure from various groups, demanding the recalling
of President Zuma. Even in the face of the countrywide
outrage which resulted from Nene’s dismissal, Zuma has
refused to yield to calls for his resignation.
No court has ever proven him guilty of any wrongdoing,
but Zuma may be wary of the corruption charges being
reinstated or new ones being brought forward, against
him. The prospects for his resignation thus remain very
remote, as it may threaten his liberty after the
presidency.
Zuma ascended to power as a result factionalism within
the ANC, as some influential members rallied behind him
President Jacob Zuma (Photo: Sunday Times)
in an effort to sideline then President Thabo Mbeki. On
the surface there seems to be no opposition to Zuma within the ruling party, as has been evident during his latest
gaffes. The ANC may be trying to save face by standing by its leader, as dismissing him during the current
economic woes — which are probably not his sole responsibility — would amount to conceding defeat.
Yet the possibility of dissenting voices [or at least their emergence] within the party may not be wholly dismissed.
Zuma has three years remaining into his second and last term as President of South Africa. Yet these could prove
to be three long years, as the former anti-apartheid activist may not be able to remain President until his term ends
(in 2019). The ANC has had notable leaders, but it is far from being a one-man party compared to Mugabe’s
ZANU-PF in Zimbabwe or Museveni’s National Resistance Movement in Uganda, to name just a few. Zuma could
thus be ejected by his own party should a strong popular movement demanding his dismissal emerge in the coming
days.
Whether he stays on or not, it is his life after the presidency that may be preoccupying Zuma the most. Depending
on his level of support within the ANC, he may serve another (third) term as the party’s President after 2017, which
could put him in a position of influence in picking the ANC’s candidate [and most likely South Africa’s next
President] to the 2019 presidential elections.
Mail and Guardian, ‘Three reasons why #FeesMustFall protests will continue’ Available online at
http://mg.co.za/article/2016-01-13-three-reasons-why-feesmustfall-protests-will-continue? (Accessed 14
January 2016).
9 IOL, ‘Zuma complaint lodged with SAHRC’ Available online at http://www.iol.co.za/news/politics/zuma-complaint-lodgedwith-sahrc-1972819? (Accessed 19 January 2016).
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Yet, despite all his troubles, Zuma may still be President of South Africa come 2017 and may play a role in electing
the next ANC President should he decide not to seek another term, for whatever reason. African Union
Commission chairwoman Nkosazana Dlamini-Zuma and current South African Vice-President and prominent
businessman Cyril Ramaphosa have been cited as the next possible ANC [and possibly South Africa’s] Presidents.
Zuma’s future looks secure under either of the two potential leaders, the former being his ex-wife and mother of
four of his children. He may also not have anything to fear from Cyril Ramaphosa, as the ANC may not support
the idea of seeing its former leader being dragged in court.
4. Conclusion
The appointment of Pravin Gordhan as Finance Minister may have restored investors’ confidence, and could
eventually lead to economic stabilization, although not in the immediate, given that a recovery will be more likely
to be impacted by the performance of the global economy. Yet economic recovery from the current slump is less
likely to solve South Africa’s immediate, pressing issues — poor service delivery and relative deprivation, to name
just a few.
Should the economic situation not improve and no agreement reached regarding students’ demands, the ongoing
“Fees Must Fall” protests may breed a more intense, countrywide anti-Zuma movement, which could be even
worse if workers’ unions were to join. This would lead to civil unrest, and inevitably Zuma’s demise.
Zuma should thus make sure that the tripartite ruling alliance between the ANC, the Congress of South Africa’s
Trade Union (COSATU) and the South African Communist Party (SACP) remains strong, so as to guarantee his
continued support within it, and ultimately his survival after the presidency.
A Zuma Must Fall banner was erected in the City of Cape Town, South Africa, on 15th January this year. It
has since been teared down by ANC supporters. (Photo: Twitter @clairevdh/eNCA)
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