Wise words are not enough to fix South Africa’s economy

A reformist finance minister bumps up against political reality

27.2.2020

Tito Mboweni and Cyril Ramaphosa face the task of saving South Africa from an economic downgrade this year

A reformist finance minister bumps up against political reality

On February 26th political gravity brought Mr Mboweni down to earth. South Africa’s public finances are in a sorry state, a result of sluggish growth and lavish state spending, especially on public-sector wages. Debt was just 27% of GDP in 2008. A decade later it was 57%, and is set to rise to 66% over the next year, warned the finance minister. But it is unlikely that his comrades were paying attention.

Then there was Eskom, a state-owned electricity utility that epitomises South Africa’s struggles. Decades of mismanagement, outright theft, and contracts and jobs for pals have left it broke and unable to keep the lights on. About a third of its capacity is out of action because of breakdowns. Rolling blackouts that regularly shut factories, shops and mines are pushing the economy towards recession. Mr Mboweni promised to make it easier for independent firms to sell power into the national grid. Many have heard that before.

The hope for Mr Mboweni and President Cyril Ramaphosa is that these steps will be enough for South Africa to avoid a downgrade this year by Moody’s, the only one of the three main credit-rating agencies not to rate the country’s debt as “junk”.Mr Ramaphosa is reluctant to pick a fight with the opponents of reform, partly because he fetishises consensus, but also because he has an eye on the ANC’s National General Council meeting in June. Two of his predecessors, Thabo Mbeki and Jacob Zuma, were “recalled” from office by the party before they had concluded their terms. Party insiders believe that the ANC’s rules would not allow opponents of the president to oust him at this year’s gathering. But they may try nonetheless.



Read more: The Economist

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