South Africa’s Hopes

(Bloomberg) -- When the African National Congress swept to power under Nelson Mandela in South Africa’s first multiracial elections in 1994, its campaign slogan assured “a better life for all.” That vision, already somewhat faded, was tarnished during the almost nine-year presidency of Jacob Zuma, which was characterized by scandal, corruption and economic stagnation. Now a new president, Cyril Ramaphosa, has rekindled hopes by starting to clean house. While it could take years to undo the damage that’s been done to Africa’s largest economy, the downward spiral appears to have been averted.

The Situation

After years of party infighting led to the dramatic ouster of Zuma in February, Ramaphosa took office and began to crack down on corruption. Some of Zuma’s most inept ministers were fired, and the new administration began to revamp the leadership of state companies implicated in graft. Zuma was indicted on multiple charges, including racketeering and money laundering. Ramaphosa is seeking $100 billion in new investment over the next five years — an ambitious goal since total foreign investment was just $1.5 billion in 2017 and the economy shrank in the first quarter of this year. He’s tried to calm investors rattled by the ANC’s moves to change the constitution to allow land expropriation without compensation, which the party says will step up the redistribution of wealth to black citizens. Ramaphosa insists any policy shift won’t be allowed to harm the economy or agricultural production. Voters will judge his performance in national elections in 2019. Disillusionment with Zuma has eroded the ANC’s popular support for years and cost it control of Johannesburg, the economic hub, and Pretoria, the capital, in municipal votes in 2016.

South Africa’s Hopes

The Background

European settlement in South Africa dates from 1652, when the Dutch East India Co. established a supply post in Cape Town; the British occupied it in 1795 to secure the sea route around the southern tip of Africa. Colonialism spread as the Dutch — known as Boers or farmers — migrated to the interior. Discovery of inland gold and diamond deposits spurred the Anglo-Boer Wars, which the British won in 1902. White colonists adopted a constitution in 1910 that disenfranchised black South Africans, whom they viewed primarily as cheap labor. In 1948, the government started implementing a legal system of separation of races known as apartheid, or apartness. It denied black people the vote, stripped them of land and provided only rudimentary education and health-care services. South Africa endured decades of economic sanctions and an armed struggle by the ANC and other groups. Mandela, who’d led calls for the ANC to take up arms, served 27 years in prison before the government agreed to free him in 1990 and hold multiracial elections. Ramaphosa, born in 1952, has played an integral part in South African politics since the early 1980s. He founded the biggest mineworkers’ union and led talks that ended apartheid. After losing the contest to succeed Mandela to Thabo Mbeki, he started his own investment company, which benefitted from requirements that white investors partner with black shareholders. He ended up with stakes in businesses ranging from mining to consumer goods. Ramaphosa returned to full-time politics in 2012, when he was elected as the ANC’s deputy leader; Zuma appointed him deputy president in 2014. He secured control of the ANC in late 2017.

South Africa’s Hopes

The Argument

Over the years, South Africa’s government has been able to point to some successes: The economy has almost trebled in size, and the poverty rate has fallen from 67 percent in 2006 to 56 percent in 2015. Ramaphosa’s political and business experience has raised hopes that he can revive the struggling economy and address the plight of an army of poor. The task of rebuilding will be helped by the fact that the nation has transport links and energy supplies that are the envy of Africa, a trove of untapped minerals and independent courts. Yet racial inequalities persist, and companies remain largely controlled and managed by whites. The 26.7 percent unemployment rate will likely stay elevated, as a poorly managed public-schools system, ranked among the world’s worst, means more than half of the children who start school don’t complete the full 12 years. Efforts to clean up the state are likely to be frustrated by the scores of Zuma allies who occupy key posts. But if Ramaphosa succeeds, South Africa could emerge as an example of good governance and democracy for the rest of the continent.

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