The critical choices Cyril Ramaphosa will have to make to save SA's economy | IOL News

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OPINION: The critical choices President Cyril Ramaphosa will have to make to save SA's economy. It is apparent that Ramaphosa must make a choice between saving the ANC alliance or saving the country

South Africa’s economy is in dire straits. Unemployment has reached a 15-year high of 27.6%. And in the first quarter of this year GDP growth dropped by 3.2%. That’s the biggest quarterly drop in a decade.

However, the recent elections provide two interesting pointers. The first was the extremely low voter turnout of just 49%. The second was a near doubling of the Economic Freedom Fighters’ share of the vote, from 6.4% in the 2014 poll to 10.8% in 2019. Taken together, these factors suggest that South Africa’s vulnerable citizens are frustrated with the established political parties. However, they are not as yet widely attracted to the potential re-distributive policies of populists.

Over the next decade, state capture and crony capitalism, coupled with economic decline, weakened the middle class and entrenched meritocracy. In turn this raised pressure for greater re-distributive policies, both among factions of the ANC and eventually with the emergence of the EFF. The dire state of private sector investment and growth meant that the increased redistributive pressure was initially alleviated by public sector employment creation. This grew from 2.2 million in 2008 to 2.

As a result, the African National Congress has increasingly turned to desperate policy debates such as expropriation of land without compensation, prescribed assets, off-shore income taxes, and changing the mandate of the South African Reserve Bank to print more money.

Source: Financial Digest (financialdigest.net)

 

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