As the country gears up for Zuma’s exit, we reveal what changes consumers can expect in the country, if Zuma falls on his sword and finally gives in to the National Executive Committee’s (NEC’s) call for his resignation.
Will South Africa enjoy victory?
According to Chief Economist at Investec, Annabel Bishop, South Africa has already enjoyed a victory of R30.2 billion foreign investment since Cyril Ramaphosa succeeded Zuma as President of the African National Congress (ANC) at the end of 2017.
This strengthened the rand by close to R2 against the dollar.
Bishop says that financial markets favour Ramaphosa as it is perceived that he will deliver good governance.
Zuma’s damaging leadership
Meanwhile, Zuma’s leadership has been severely damaging to the country, suppressing investment and economic growth. Bishop notes that business confidence has been depressed since 2009, averaging at 41%. This is significantly lower than the neutral 50% level.
During Zuma’s leadership, there has been credit rating downgrades and higher cost of borrowing.
Changes we can expect
Given South Africa’s Constitution, whether Zuma is removed from office through recall or a no confidence motion, the Deputy President, Ramaphosa will then occupy office and complete the term of the removed President.
The new President will then also be allowed to fill two of his own terms as President afterwards.
Bishop says that based on financial markets and the business sector’s favour toward Ramaphosa as President of the ANC, it is considered that he will follow economic policies that support economic growth and lean towards the free market approach.
She adds that this may also improve business confidence in the first quarter of 2018.
This can have a direct impact on investment and job creation.
“A marked rise above the neutral 50 level in business confidence would likely spur some fixed investment and job creation, but sustained faster economic growth for SA of the magnitude of 5% plus, will take time, as significant deterioration has occurred in SA’s previous key fundamental strengths, but for this repair to take place requires many more urgent interventions now”, says Bishop.
Bishop says that overall, South Africa could see a “better than expected economic growth outcome” this year and the next.
“South Africa can eventually regain it’s A grade credit ratings, see unemployment drop below 22% and have sustained economic growth above 5.0% y/y again, and repair both its public and SOE finances as it has the capacity to do so, butmust now reduce the size of the state substantially, and allow conditions that see the private corporate sector triple in size”.