South Africa’s Next Big Challenge

(Bloomberg Opinion) -- Having helped carry the African National Congress across the finish line in elections earlier this month, despite South Africans’ impatience with the party’s persistent corruption, President Cyril Ramaphosa will now need to lead his party toward greater reform. It’s the essential first step toward reviving a moribund economy and restoring South Africans’ faith in their future.

The ANC’s seemingly robust 57.5% win was its slimmest margin of victory in a national election since the end of apartheid. Without Ramaphosa’s personal popularity — as a negotiator, organizer and businessman — the party would surely have done worse.

Low voter turnout this time around points to the public disaffection engendered by former President Jacob Zuma’s nine years of patronage politics, bribery and looting of state resources. South Africa’s economy has yet to recover, too: Since 2014, it has failed to grow by more than 2% — a rate well below what is needed to shrink unemployment, which recently hit a crippling 27.6%. Almost half the population of 55 million lives in chronic poverty. And South Africa has become what the World Bank calls the most unequal country on earth.

Ramaphosa, who took over the presidency from Zuma 15 months ago, has already taken aim at corruption by sacking some compromised ministers and officials and empowering investigations. But much of his party still hasn’t gotten the message. Several high-profile malefactors have been returned to parliament by the ANC. Ramaphosa needs to keep them out of his cabinet.

He also needs to make sure that those responsible for engaging in past acts of corruption are held to account. To that end, the president must ensure that the National Prosecuting Authority, badly damaged by Zuma but now under stronger leadership, has the resources it needs. Equally necessary and even more bold would be a move to replace South Africa’s Public Protector — in effect a national ombudsman — who has not lived up to the high standards set by her predecessor.

To jump-start South Africa’s economy, Ramaphosa has promised to attract $100 billion in foreign investment within five years. He might begin by finalizing long-delayed legislation that regulates the country’s mineral and petroleum industries, sub-Saharan Africa’s biggest destination for foreign direct investment. He should also respond to investors’ concerns about plans to change the country’s regulations on the protection of intellectual property, and fix cumbersome visa and work permit regulations that retard tourism and starve local companies of foreign talent.

Most productive of all would be to carry out plans to split up the money-losing state-owned power company Eskom Holdings SOC Ltd., a nexus of inefficiency and graft that now carries more than $30 billion in debt. Its frequent outages inflict huge costs on the economy. Ramaphosa must convince unions, staunch ANC backers, that there is more to be gained by expanding opportunity and competition than by maintaining the bloated payrolls of Eskom and other state-owned enterprises.

For too long, the ANC has corralled votes by effectively ring-fencing the privileges of the minority of South African workers with formal jobs. The toxic national consequences of that are glaringly evident in South Africa’s notoriously weak educational system. The country spends more than 6% of GDP on it, a share as large as that of more developed nations. But while access to education has expanded, South African students perform dismally in international rankings — not least because teachers’ unions embedded with the ANC have long resisted reform and accountability.

For South Africa’s sake, such insider bargains need to stop. To provide the ANC’s promised “better life for all,” Ramaphosa should put his country before his party. If he does so, both may come out on top.

Editorials are written by the Bloomberg Opinion editorial board.

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