South Africa: Once a Promising Nation Now Mired in Multiple Impending Crises
South Africa, a country of breathe taking views, great hospitality and perfect climate, once hailed as one of the most promising young nations after the fall of the Apartheid regime and the election of Nelson Mandela to the presidency in 1994, is facing multiple impending crises which now cannot be ignored nor understated.
I want to split this weeks analysis into two main points/ crises:
- AT HOME: Eskom (the national power supplier) and corruption.
- AND ABROAD: Foreign Relations with Russia, China and the recent grey listing.
I hope this will make things easier to follow along for readers, especially those not too familiar with the situation.
At Home
During last week the outgoing CEO of South Africa’s national power supplier, Andre De Ruyter, gave an explosive interview on the state of the State Owned Enterprise (SOE) and made allegations of sprawling corruption and mismanagement. This comes a short while after he was poisoned with cyanide after his resignation. Speculation suggests that this was done out of fear that he had information which would compromising to the government and factions within the SOE.
The allegations made were quite damming. Namely the fact that the power supplier is losing billions of rands ($100m’s of dollars) each month to unsavory practices. That there are “organized criminal gangs” which allegedly involve two senior cabinet ministers, still present in President Cyril Ramaphosa’s cabinet, that De Ruyter told minister of public enterprises Pravin Gohrdan about. The four gangs are named as follows the Presidential Cartel, the Mesh-Kings Cartel, the Legendaries Cartel and the Chief Cartel. These cartels are said to plot the destruction of infrastructure with insiders so that a breakdown of power stations and crucial infrastructure can justify repairs or the supply of components via the cartel vendors of which they have the contracts. Using bribes, foot soldiers, henchmen and a “territorial leader” (who would be responsible for the protection of these crimes at the topmost level of government) the whole scheme is no less than a vicious cartel. A criminal organization preying on the tax money of citizens.
Where the story gets interesting is how deeply rooted the corruption is within the state itself.
This is an extract is from a piece done by the Daily Maverick. (which will be linked under the weekend reads)
The date was early December 2022, just days before the ANC’s elective conference at Nasrec.
We knew, from a series of previous conversations with our sources, that the intelligence gathered in the field suggested a direct link between the sabotage, the cartels, and an orchestrated programme of political destabilisation.
Not a day had passed in November without power cuts across the country, and now, in December, we were headed for an extended bout of Stage 6.
It goes on to suggest that the “territorial leader” was a “contender” for the ANC’s top job. Later the article ends off with this adroit quote.
As the political instability increases and President Ramaphosa continues to delay the announcement of his new Cabinet, which is expected to remove South Africa’s deputy president, the country hovers on the edge of the abyss.
It is a poignant yet suggestive point. To highlight the fact that the Deputy President of the Republic of South Africa is to be removed from cabinet? Right after declaring that the territorial leader was a contender for the top job? As the old adage goes, there are no coincidences, only signs of alignment.
2022 was also officially the longest continuous bout of loadshedding the country has ever seen since the inception of the power saving procedure, costing the South African economy 365 billion rands or 20 billion dollars a year. An extraordinary statistic given that this represents about 5% of South African GDP. Businesses that cannot run without power are shut down and left with no productivity for hours on end and those that can are looking for alternative energy sources are spending massive amounts doing so instead of developing their businesses.
This power crisis is slowing an already sluggish South African economy. The Reserve Bank sees the country’s economic growth dwindling to 0.3% this year from 1.1% in 2022. The bank’s governor Lesetja Kganyago said that without power outages, South Africa’s GDP growth could have been at 2.3% this year. This raised the chances of a recession in South Africa to a staggering 45%.
All because of the thuggery of 4 criminal organizations operating within government structures and senior politicians South Africa is tanking domestically.
But this is met by an increasingly unstable foreign relations.
And Abroad
On the 24th of February this year the Financial Action Task Force added South Africa onto its list of ‘grey listed’ countries. this list is for the worst of the worst. It is a list of countries not fully complying with international standards around the prevention of money laundering, terrorist financing and proliferation financing. Which is always exciting news for potential investors.
This will make it even harder for South Africa to receive international loans and funds as they will be paid at a higher interest rate than previously. This will also mean domestic businesses trading abroad will face additional requirements around sources of funding which are likely to increase costs and result in delayed transaction execution. This comes as an extreme blow to South Africa as it has long been praised for its sophisticated and advanced financial sector.
According to a recent report done by PWC Africa the effects of the grey listing could be severe and far reaching as these are the trends that have occurred to the 89 developing countries grey listed between 2000 and 2017:
We have seen diverse impacts on businesses, including, among others:
Foreign investments suspended or deferred
Foreign financial institutions impose tougher checks on transactions to/from the country
Transactional, administration, compliance, and auditing costs associated with enhanced levels of monitoring
Negative impact on the stock market
This could also not come at a more perilous time internationally for South Africa as during that same week Republican Lawmakers proposed a bill to denounce the Military Operations South Africa held with China and Russia and the US said that they would consider the relationship between the two nations quite carefully.
Now I do understand the similarities ideologically within the ANC, Russia and China all hailing from communist, socialist and soviet style rhetoric and tradition. But for a country like South Africa, desperate for international support (and who got that support from the West) finding itself on the fence is not an ideal place to be. Like a child without someone to sit next to at the playground lunch table juggling severe crises both home and abroad.
To Conclude
This does make me wonder how the hell things could get any better for the nation once hailed as a great prospect coming out of Apartheid. It is almost impossible to reconcile the two polar opposite ANC governments of Mbeki and now Ramaphosa that are separated by no more than a decade or two. It is impossible for me, and many South Africans, to have hope in the future of the country. To feel as though this place might be a success. South Africa has gone from being the rainbow nation to a nation in need of a rainbow.
But to that I say. Look towards the effort being done to uncover the corruption. Look towards the truth that is seeping out of the underworking’s of the government. Look towards the next generation of leaders rocking the country to its core. Like a good African thunderstorm that neutralizes the soil, change is upon us.
Thanks for reading In Brief! Subscribe for free to receive new posts and support my work.
Twitter: @TheRealinBrief
Instagram: @therealinbrief
medium: @TheRealinBrief
