Russian tourists in South Africa usually go home lost in admiration, at least they did before the pandemic. Palm trees, beaches, exotic African animals and folk dances to the beat of the drums, stunning natural reserves, wonderful roads, marvelous restaurants, luxury hotels, amazing wine. South Africa produces the ultimate impression of a prosperous and stable country—both economically developed and politically stable. Indeed, South Africa is rich in mineral resources that are constantly going up in price, and it has a relatively developed industry. It regularly holds quite democratic elections, whose results have never been contested so far.
However, the prosperous façade is hiding a host of grave problems. Economy-wise, the principal issue lies in the public sector. Virtually every state corporation is billions in debt accrued owing to corruption, embezzlements, inefficiency, inept management. Eskom alone, a state corporation that controls power generation and distribution, owes the state about ZAR 400 bn. (USD 26 bn.). This is a tremendous amount for South Africa. Eskom cannot even pay interest on it. Its power plants are in such a state that shutting the power down for several hours a day for another round of repairs is a rule rather than an exception. This is not at all conducive to normal functioning of businesses and industry. Eskom’s predicament is one of the main reasons why South Africa has lost its once high investment rating.
And here we arrive at politics. Technically, South Africa can generate far more energy than it does now. Large enterprises, mines, and many farmers have long since installed solar panels and other devices to make sure they have electric power. Many offer to supply their extra power to Eskom, but the government turns them down. This also limits amounts of energy private businesses can generate. Privatization is out of the question, while it is the only thing that could save the power grid from collapse. The government is quite content with its role of a monopoly that generates power from coal and has no competition. The reasons for that are pure politics.
The African National Congress (ANC), South Africa’s ruling party, sees itself as the party of workers and the poor, and although it does not assume the name of a socialist party, it clearly prefers a government-controlled economy. Additionally, there are more practical reasons: trade unions are the ANC’s core voters, and they are opposed to privatizing Eskom and other state corporations. Additionally, they are fundamentally opposed to bringing private businesses into the power generating industry, since such a move may result in competition and lower wages that are far higher in South Africa than in countries with comparable GDP despite its 45% unemployment rate, which is an abnormal combination.
Today, the ANC is facing a choice: either in-depth structural reforms that are unpopular, or stagnation and possible collapse. The party arrives at this choice in a state of internal crisis. The ANC’s leaders and local functionaries are locked into a struggle between corrupt and political groups, clans, and factions. In the upcoming December, the ANC’s party conference is to choose a new leader or re-elect the current president Cyril Ramaphosa. At the next national elections, the elected leader will inevitably become the country’s president. Even though the ANC is losing its popularity, Mr. Ramaphosa will remain the leader of the majority party since there is no real electoral alternative. Ramaphosa’s main rivals are supporters of former president Jacob Zuma, who advances a populist agenda (for instance, expropriation, primarily of land, and introducing universal healthcare, which the country has no money or infrastructure for).
Contradictions within the party are running so high that political assassinations have happened locally. Membership in provincial delegations that will be attending the December elections is bought and sold along with votes of individual delegates and entire delegations. The delegation of the province of KwaZulu-Natal (Zuma’s province) is the largest, since the ANC has the largest membership here. Zuma’s supporters have good chances. A split in the party and anarchy cannot be ruled out in the event of one of their candidates being elected. Even if the party subsists as a united organization, a change in its course will result in expropriation or takeover of farms, enterprises, or maybe even banks. That will plunge South Africa in utter economic collapse.
If the current president’s faction remains in power, he will have to implement unpopular market reforms and attempt to fight corruption: he simply has no other agenda. His opponents will be destabilizing the situation up to inciting riots. Such riots were already organized in June last year allegedly in support of Zuma who had been charged with corruption and contempt of court. In reality, it was an attempt to show the party and the people that Ramaphosa was unable to control the situation, or maybe even to remove him from the office of the president of the party and the country. Back then, crowds numbering in thousands looted and burned down thousands of stores and warehouses, including the huge warehouses in the port of Durban; they houses commodities for the entire country. South Africa’s economy lost billions, and over 400 people died. A replay of these events amid unemployment and poverty already exacerbated by the pandemic cannot be ruled out.
From our partner RIAC
