The Buzz

Jacob Zuma Is Leading South Africa toward the Edge

South Africa is in the grips of its most serious economic and political crisis since 1994, when the country elected its first post-apartheid government under Nelson Mandela. The African National Congress (ANC), which has ruled the country since its liberation, is on the defensive. Younger South Africans—many born into freedom—are disillusioned by the ANC’s failure to deliver broad-based prosperity in what has become the world’s most unequal nation, in terms of per capita income. Most worrisome, President Jacob Zuma’s government has taken an authoritarian and corrupt turn—at the very moment the country needs bold and honest leadership.

Given its strong institutions—including an independent Constitutional Court, an office of the Public Protector and a free press—South Africa is in no immediate danger of becoming a failed state. But weak governance is preventing it from making critical policy choices and public investments to improve social welfare and realize Mandela’s dream of a multiracial “rainbow nation.” It is also undercutting South Africa’s capacity to lead both in Africa and on the global stage.

South Africa’s economy is in the doldrums. Growth is less than one percent—a fraction of the 6-7 percent the country needs to meet its development goals. Some of this is beyond the government’s control. A historic drought has hit the nation’s agricultural sector hard. More damaging has been the collapse in global commodity prices, driven by China’s slowdown, which has grounded South Africa’s once high-flying economy. The country’s currency, the rand, has lost sixty percent of its value against the dollar since 2011.

But other wounds are self-inflicted. Or, more to the point, Zuma-inflicted. Last December the president rattled financial markets by abruptly firing a competent finance minister and replacing him with a political hack. Investors panicked. The Johannesburg Stock Exchange banking index shed 13.5 percent of its value overnight. Five days later, Zuma shifted again, appointing a third finance minister, the respected Pravin Gordhan. But the damage—both economic and reputational—had been done.

Gordhan has restored some confidence, submitting a credible budget last month. But markets remain jittery, and Zuma’s rent-seeking cronies have their long knives out for the finance minister. In recent days Moody’s, Fitch and other rating agencies have warned that South African bonds may be downgraded to “junk” status. That would force South Africa into the arms of the International Monetary Fund—a humiliating prospect for the sovereignty-proud ANC. This week Gordhan is jetting off to London and New York, in the hopes of allaying investor fears.

The economic crisis—and the belt-tightening it will require—could not come at a worse time. To achieve long-term prosperity and political stability, South Africa must tap the potential of its vast, marginalized and overwhelmingly black underclass. That implies investing in the country’s education, health care and infrastructure. Many of those left behind today blame the previous generation—even Mandela himself—for failing to fundamentally transform the structure of the South African economy, which continues to benefit whites and well-connected mixed-race and black citizens, while masses live in squalor. Officially, the unemployment rate is 25 percent—likely a conservative estimate.

Unsurprisingly, frustration is boiling over. In 2014, massive labor strikes cost the country an estimated $500 million. Students at the nation’s universities are also restless. Last October the United Against Corruption movement launched the “#FeesMustFall” campaign, to protest rising education costs. Two months later, the same group launched a “#ZumaMustFall” hashtag. Other student groups have launched violent, at times racially-tinged protests.