Tag Archives: South Africa

Davos insights for Africa

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Africa’s representation at the 2018 World Economic Forum (WEF), themed “Creating a Shared Future in a Fractured World”, was small. The forum has always been primarily focused on America and Europe anyway. Last year, China stole the spotlight. And a few years ago, Africa got its chance. With regional forums now, the Davos meeting is increasingly focused on global themes and issues. And the major attraction this year was none other than Donald Trump, the American president. Once he arrived (thank goodness, it was on the last day), everything became about him. India’s prime minister Narendra Modi was probably delighted he gave the forum’s keynote speech on the first day (23 January); long before “The Donald” arrived. Mr Modi made some deep points. But the part that resonated with me was that about data. He posited that in today’s world and in fact the future one, data is the biggest asset. And he who controls data controls the world. He is ahead of the curve. It was also a veiled boast, I think. India is firing ahead on the technological front. Like China, it is racing ahead to ensure that it would be an active participant in what would entirely soon become a digital world economy. China has a date for when that time might be upon us: 2025. That is the target year for its ambitious technological plan, which if realised, would put it at the forefront of technological leadership globally. There is the pertinent question, of course, about whether that digital future would not be exclusionary. Ever-evolving tech skillsets would be required by anyone who desires to be an active participant in the digital economy. So steps need to be urgently taken by African countries to ensure their citizens are able to compete in that future world. The mastery of basic technologies has to be the least qualification for anyone who passes through the education system. Technology has to be seen in the same way as English (or French and Arabic in other countries) is regarded as a foundation subject for basic education.

Technology as language
Technology is a language. If you do not know how to speak a language, you cannot participate in a conversation in that language. If the language of the future world is technology, what then would be your fate if you cannot speak it? You hear talk about up-skilling and re-skilling. What I think the focus should be on is what I call “dynamic skilling.” It is not entirely novel; you may have heard of “continous learning.” It is similar. But my concept of dynamic skilling is premised on how if the world of work would likely continue to change as technology evolves, then the individual that desires not to be changed (i.e., replaced) must also ensure that his skills are similarly dynamic. The foundation for any such eventuality is basic knowledge about technology. Thus, vocational skills of the future are not likely to be how to be a good plumber, carpenter, or electrician. Instead, it would be “simple” things like being able to code an app, use a digital currency, and so on. Any country which is not thinking in this manner, right now, would again be left behind. Fortunately (for African countries, at least), the extraordinary thing about emerging technologies like artificial intelligence, big data, and so on, is that they are equalizers; up to a point. Vintage is an advantage. One who starts early may remain ahead because of the advantages of experience and ownership of data acquired in the process. Even so, African governments could, for instance, momentarily start to insist on the ownership and control of the data of their citizens and all digital activities in their domain. That way, they would be able to ensure that their citizens benefit from whatever technological progress happens on the back of their data assets.

New paradigm
Benedikt Sobotka of the Eurasian Resources Group, in an interview with CNBC Africa during the WEF, made a point that all African governments need to muse on. Electric vehicles (EVs) rely on cobalt-based batteries. Where is cobalt found in abundance? The Democratic Republic of Congo (DRC) and Zambia. In the next decade or so, EVs would probably replace all fossil-fuel vehicles. That future can be Africa-led if the relevant governments put in place policies that ensure the cobalt mined in their jurisdictions would be used to build an African EV industry; as opposed to a mining one just for the taxes. By insisting on the batteries being built on the continent, or adding some meaningful value to the cobalt at least, before it is shipped to China and elsewhere, the DRC and Zambia would be able to participate in what is likely going to be a very lucrative global value chain (GVC). What is happening now? China is buying up the precious mineral. Cobalt is being mined and shipped abroad to build batteries that would power EVs the future world would use to wean itself of oil and gas that some key African countries rely on and failed to build industries around. African countries can be part of the new world right now. By the way, did I travel to Davos to arrive at these insights? Go figure.

Also published in my Premium Times Nigeria column. See link viz. https://opinion.premiumtimesng.com/2018/01/26/davos-insights-for-africa-by-rafiq-raji/

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Rise of the peoples’ assembly

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

We the people…”; that is how most constitutions start. Of course, the politicians who tend to refer to those words the most are usually the ones who also hold them in contempt the most. It used to be the case that they could actually get away with the disgust they often have for the very people that voted them into office. Aloof and conveniently tone-deaf for most of their tenures initially, their amnesia is miraculously cured at the near-end of their typical four to five-year first term in office, when it dawns on them that should they not now grovel to the same people they cared little about hitherto, they may soon lose the office that has been the source of their ostentation. In other words, as much as they dislike the very people they are supposed to serve, they know they are ultimately vulnerable to their whim. Power truly belongs to the people. Shrewd politicians realise this very early on. And the successful ones are able to hold sway over the affairs of their fellow men and women for as long as the Heavens allow irrespective of whether they hold office or not because they stay close to the people and go with their ever-changing tide of opinion. Inevitably, they are populists. Politicians, even the supposedly altruistic ones, do not like to admit it. But ultimately, it is the desire to rule that really drives them. Power is the end, not the means.

All about power
A person has to have a certain level of hubris to think himself qualified to rule over a multitude. Some do not realise this until they lose an election. Otherwise what would motivate some men to seek political office repeatedly even as they lose with the same frequency. Take Kenyan opposition figure Raila Odinga, for instance, who has been aspiring to be president for almost all of his political life. He probably made his last futile attempt last year. Probably realising he no longer stands a chance, he now seeks to be president of a so-called “peoples’ assembly”. If what has happened since the idea was first mooted is anything to go by, it has not been as successful as he might have hoped. An earlier botched swearing-in as the “peoples’ president” is now supposed to happen anytime soon or never. Perhaps taking a cue from his older fellow opposition politician, longsuffering Ugandan presidential contender Kizza Besigye also called for the establishment of a peoples’ assembly in early January. What instigated his call was the recent enactment of a law that removed presidential age limits, enabling longtime president Yoweri Museveni to run for office again. In both cases, the opposition politician’s frustration made them resort to the people. Had they been more successful, it is hardly likely their reckoning would ever sway towards them. Their evolution lays bare what they wanted all along: power. They are not any different from their supposed antagonists in office. And were they to secure power themselves, they may behave similarly as the politicians they oust or worse.

Yours to wield
This new trend of African opposition politicians drifting towards alternative and mostly informal platforms to wield power after failing to secure it via state institutions is not entirely novel. They are simply latching on to something that already started without their urging. What is a peoples’ assembly? What is it supposed to achieve? Is there somewhere they are supposed to gather? Are they voted for? How long do the members serve in office? The peoples’ assembly is you and I. When Nigerians finally lost their patience with an effective but wayward police commando unit, they raised their voices. Were they heard? You bet they were. Nigerian authorities were finally forced to go after marauding Fulani herdsmen, long maiming and killing innocent farmers with impunity, after the people said enough! South Africans have been unrelenting in their insistence that the “capture” of their state by private persons – who have, in collusion with the very people they elected, been pilfering their commonwealth – must stop and the culprits punished. Did their voices matter? Yes. Now a judicial commission of inquiry is slated to get to the bottom of the matter. But for pressure by Ghanaians on their government during the infamous “dumsor” period of power load-shedding and cuts, they may have suffered a little while longer. Opposition politicians are clearly being opportunistic. A peoples’ assembly is not something you organise per se. It is leader-less. Put another way, all of its members are leaders. Before the advent of social media, people power manifested itself in African countries only on occasion. Now, it can be as immediate as the time it takes to type a hashtag. We all have the power to make a change.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/rise-peoples-assembly/

South Africa: Free higher education is complicated

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

If you asked university officials whether they desired free education for the poor, they would probably answer in the affirmative. Ask them if it is sustainable under the government’s recently announced plan, they are not likely to be so sunny. What is probably feasible is a system whereby an obviously brilliant and promising student is not prevented from higher education because he or she is poor. If South Africa were abundantly wealthy, free education might not be potentially problematic. Sadly, the country is not. Not at the moment, at least. And if the palpable absence of the finance minister or his representative at a media briefing on the new policy in early January is anything to go by, the fiscal authorities are likely at their wits’ end to fund what was clearly a unilateral pronouncement by President Jacob Zuma.

As the new academic session begins, university authorities have announced they would not allow walk-in registrations. Ultranationalist Economic Freedom Fighters (EFF) party leader, Julius Malema, had urged prospective students to simply turn up at any university of their choice for admission. It is not difficult to see the potential complications that this would cause. The authorities have disabused any such action by learners who just passed their qualifying exams (“matric”) – results for the class of 2017 were released in early January. Hitherto, those who could not afford varsity would have simply sought employment in jobs where a matric certificate suffices. With higher education now “free”, they are now able to pursue their dreams. Because Mr Zuma’s proclamation was impromptu, those who hitherto did not apply to universities due to financial constraints would have ordinarily needed to wait a year if disruptions are to be avoided. Unsurprisingly, the EFF, and understandably, the affected prospective students, would have none of it. To manage the situation, the authorities have instead advised that those who qualify should follow the normal application process; an online portal has been designated for the task.

China works
Free education, whether at the basic or higher level, is not novel. It has been tried in many jurisdictions. Swedes attend university for free, for instance. And their degrees are very competitive. So the policy does work. But Sweden is rich, South Africa is not. In their heyday, communist regimes also provided free higher education to their comrade citizens. They succeeded to some extent. The times were a signifcant motivation, though. There was a cold war between a mostly democratic west and a mostly communist east. To the extent that they were able to compete quite well with the west on many technological fronts suggest free education is not only feasible but does not necessarily stifle innovation. In other words, poor countries can successfully educate their citizens for free. To some extent. Because when you look at how the west and east have evolved, there is a strong case for the clearly more developed west’s capitalist model. What about China then? Well, it realised free higher education was sub-optimal after a while: it abolished the policy in 1985. Instead, poor Chinese who desire a university education compete for scholarships. And those with ample means began to have a choice in the early 1980s, when Chinese authorities allowed the establishment of private universities.

My heart, my head
To be clear, one is not in anyway suggesting that the majority of black South Africans be left out in the cold without the prospect of prosperity that higher education is supposed to provide, eventually; ideally. I recall quite well during my doctoral studies at a top South African university how frustrated, and in fact angry, some black South African students were at the very high fees their sponsors had to scrape to pay. But the success of western universities can be directly traced to students paying the economic cost of their education. And the means through which they acquire the funding are in part responsible for the high value placed on it. A loans system means a student upon graduation is incentivized to find employment or engage in some entrepreneurial venture to clear his or her indebtedness. It also means that employers must pay an economically viable wage. Market forces that have been found to engender optimal pricing for goods and services have also been found to serve the education system quite well. So as a practicing economist, I see how fraught with risks for the economy the new free education policy is. As an African who has witnessed the pains of many black South Africans, however, I desire that they are able to achieve their wildest dreams. I am conflicted.

Also published in my Premium Times Nigeria column. See link viz. https://opinion.premiumtimesng.com/2018/01/05/south-africa-the-complications-of-free-higher-education-by-rafiq-raji/

South Africa: Zuma goes legacy shopping

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

After much anticipation, the ruling African National Congress (ANC) party’s leadership race started during the weekend (15-20 December). It got off to a slow start. Ahead of the elective conference, I sought the views of fellow Africa economists for an article for African Business magazine on what the implications for the South African economy could be depending on who emerges victorious. (See link viz. http://africanbusinessmagazine.com/region/southern-africa/south-africa-markets-weigh-ancs-next-leader/). I also published my preliminary personal views. (See link viz. https://macroafricaintel.com/2017/12/15/macroafricaintel-south-africa-a-race-of-three/). Although deputy president Cyril Ramaphosa was leading with nominations and expected to win, the race still had an element of uncertainty. There were a few twists and turns, for sure. The national executive committee (NEC) decided in an emergency meeting before the start of the conference – which was actually the reason for the lengthy delay in the first place – that nullified structures of the Kwazulu-Natal and Free State provinces by the courts would not vote, for instance. Incidentally, these were the strongholds of one of the leading presidential contenders, Nkosazana Dlamini-Zuma, ex-wife to outgoing party president, Jacob Zuma; who incidentally gave his own shocker just before the start of proceedings. He announced a free education policy; much to the dismay of market participants. It did reveal one thing, though. President Zuma does not want all that is remembered about his presidency to be the scandals that plagued it. He wants a good legacy. This late in the game, you probably wonder. I actually did think Mr Zuma would do something desperate to secure his postion in the aftermath of the conference. But considering the negative reaction of market participants to finance minister Malusi Gigaba’s mid-term budget and the sharp reaction of the rand to rumours before the conference that Mr Zuma might announce a free education policy and his denial afterwards, whatever potential outrageous move Mr Zuma was going to make, I did not think free education would be it. That said, it was the perfect populist move. Free education is such a popular issue with the masses that no matter the wrongs Mr Zuma may have committed, they could be overlooked on the back of it. That said, it is a negative for the fiscus and the authorities’ oft-touted fiscal consolidation drift. The move also raises fears that earlier denials about potentially negative policies like the declaration of a state of emergency might actually just be another ruse.

Worry about money later
Mr Gigaba, who was delivering a speech at a business breakfast event at the ANC conference when Mr Zuma announced his free education policy, says whatever is done would be done in a fiscally sustainable way. He left the details to the 2018 budget in February. Did he even know about it, though? Because it is highly unlikely he would have known about it without at least mentioning it during his speech. His remarks were made afterwards, when reporters accosted him on his way out of the breakfast venue. Besides, it made naught of the many right things he said in his speech. In any case, S&P Global Ratings’ decision in November to downgrade the country’s rating further into junk territory has clearly now been vindicated. And Moody’s? Well, if this does not move the rating agency, nothing else will. Free education is desirable. But a sustainable model is what is needed, not a populist, financially constraining and unsustainable move like the one Mr Zuma just made.

Factions for nothing and something
One key thing palpable from the conference proceedings are the deep divisions within the ANC. Most are just for mundane reasons. But some are ideological. Take the issue of land expropriation. The party’s youth wing wants it done without compensation. The older cadres reason some compensation would be appropriate. How the party should be structured is also an issue. It was proposed at the conference that there should be two deputy presidents, for instance. The argument proffered in support of this was that it would help unify the party. It was really Mr Zuma’s idea. He had earlier opined that the second position presidential candidate should automatically get a deputy presidency; a development that would have required having two slots available. The proposal did not enjoy majority support and was thus turned down. Take another example. The ANC women’s league’s official position was to support the leading female candidate for president; that is, Ms Dlamini-Zuma. Instead, outgoing party chairperson, Baleka Mbete, a woman and hitherto a presidential contender, chose to support the male frontrunner; Mr Ramaphosa. Her reasons made sense: Mr Ramaphasa was a better candidate to beat whoever the opposition might present for the 2019 elections. But you get the dynamics, at least. As I submit this column, no one could confidently say who would win. In fact, rumours surfaced South Africa might have its first female president this week.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz. http://www.businessdayonline.com/south-africa-zuma-goes-legacy-shopping/

African central banks to close year cautiously

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Over the course of this business week (starts 20 November), central banks of the largest regional economies on the African continent would decide on interest rates. They are likely to keep them unchanged. Even as inflation has been slowing gradually in Nigeria, it remains high. And it is primarily driven by food inflation. Improved agricultural production on the back of a good harvest is expected to moderate prices over time. Besides the authorities are currently marketing a Eurobond that could be as much as $5.5 billion if everything goes well. It is not likely the Central Bank of Nigeria (CBN) would like to be seen making decisions other than ones that are data-dependent. In any case, CBN governor Godwin Emefiele has signalled the benchmark rate would stay pat at 14 percent for the remainder of 2017, with potential cuts next year when inflation would have slowed considerably.

For South Africa, the rand went into a tailspin lately, rising above the psychological 14.0 level for much of the past two weeks, as rumours persist about the desire of the Jacob Zuma-led government to make higher education free, amid well-known financial constraints. With a pliable finance minister at the helm, it is also now widely believed President Zuma has successfully ‘captured’ the Treasury. So even, as annual consumer inflation likely slowed to 4.8 percent in October, from 5.1 percent earlier, it may accelerate in November and December on the back of rand weakness and volatility. The headline would probably be no more than 5 percent by year-end, though; within the 3-6 percent inflation target band of the South African Reserve Bank (SARB). Over a 12-18 month horizon, consumer inflation would probably slow to 3-4 percent, however. Under different circumstances, this could justify a rate cut. However, the November monetary policy committee (MPC) meeting, the last this year and one just weeks before a tense leadership contest in the ruling African National Congress (ANC) party, require the SARB to exercise the utmost restraint. And even as the SARB pretends not to be perturbed by market moves, it does pay attention to the inflationary impact of rand weakness and volatility; and indeed the political noise that tends to be the trigger lately. A balanced outcome would thus be for the benchamark rate to remain unchanged at 6.75 percent.

And for Kenya, ongoing troubles related to a controversial presidential election rerun boycotted by the opposition, mean the Central Bank of Kenya (CBK) would need to continue exercising caution. It has shown much dexterity throughout the impasse thus far, though, as the shilling has remained largely stable. And inflation has been slowing; came out at 5.7 percent in October from 7.1 percent in the prior month. More importantly, inflation expectations suggest the headline would likely come out much lower in coming months; about 4.5 percent in December, say, and plausibly less than zero percent in Q2-2018 due to base effects. Even so, it would be better if it kept its benchmark rate unchanged at 10 percent at this meeting with a view to easing policy when the political situation improves.

Politics, politics, politics
The elective conference of South Africa’s ruling ANC party in December is on everyone’s minds. Mr Zuma’s rhetoric about the preferred candidate by the business community has not been comforting. The president has all but mentioned his deputy, Cyril Ramaphosa, in name when making accusations about the presence of western-backed traitors in the ANC. Judging from his countenance and body language, Mr Zuma is likely to do everything in his power to block Mr Ramaphosa from replacing him. Turns out, though, Mr Ramaphosa is leading in support from the party’s branches, whose delegates to the conference would elect the next party president. Many reckon if Mr Ramaphosa wins, he would move swiftly against Mr Zuma in a bid to replace him as head of state much sooner. Should his rival and Mr Zuma’s ex-wife, Nkosazana Dlamini-Zuma win, however, it is highly probable Mr Zuma would retain his position till it expires in 2019. To further this goal, it is believed Mr Zuma might fire Mr Ramaphosa as deputy president in the coming weeks. Ironically, this could actually boost Mr Ramaphosa’s chances.

In the Nigerian case, all indications suggest President Muhammadu Buhari would be seeking a second term in office; after ill-health hitherto increasingly made it unlikely he would do so. His recent activities point to a full campaign mode. He visited the southeastern part of the country recently; albeit to campaign for his party’s candidate at elections in one of the states there. But that only provided cover for his visit; he seemed reluctant to embrace the region hitherto. He and his aides vehemently deny this, of course. His defence rings hollow in the face of his actions, however. His inner circle is very exclusive. A recently announced ambitious N8.6 trillion budget for next year also has political coloration. Put simply, the political cycle is in full steam. There are thus risks of fiscal slippages as the administration rushes to show it has been doing well. Recently announced plans to appoint more ministers are not necessarily borne out of a desire for efficiency as they are about dishing out patronage. Such behaviour tends to cascade down to lower levels of government, with negative effects for the fiscus.

Leading opposition figure in Kenya, Raila Odinga, who recently returned from an American trip amidst police-induced chaos, has been leading the charge for secession in the western and coastal areas. Political motivations inform the recent ratcheting up of tensions in this regard. Besides, Mr Odinga is advocating the estalishment of a Peoples’ Assembly via a proclamation of parliament, where the ruling Jubilee party, which is averse to the proposal, has a majority. Continued protests and tight security measures have been stifling business activities and would definitely weigh on economic growth in the fourth quarter of this year. A ruling by the Supreme Court on 20 November on petitions about the conduct of the presidential election rerun could either ease or heighten tensions. In the past, the outcome would have been expectedly one that would not cause much disruptions. After a bold landmark ruling cancelling the first poll in August, the court’s judgement could go either way. With such political dynamics about in these key African countries, it makes sense for their central banks to be on guard.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/african-central-banks-close-year-cautiously/

South Africa: Gigaba’s first test

By Rafiq Raji, PhD

Malusi Gigaba, the sometimes colourfully dapper – his unique wardrobe include suits with such ‘interesting’ colours like green and purple – South African finance minister, presents his first budget statement on 25 October. It is not the big one; that won’t be due until next year. But the mid-term budget would be a good first test of his 7-month stewardship thus far. Economists polled by Reuters put the likely revenue shortfall in the current fiscal year to be announced by Mr Gigaba at R40 billion (US$3 billion). (It could be up to R55 billion, some suggest.) I did not provide a shortfall forecast but the fiscal deficit projections I expect the finance minister to announce are as follows: 3.3 percent of GDP for the 2017/18 fiscal year, 3.1 percent for 2018/19, 2.8 percent for 2019/20 and 2.6 percent for 2020/21. Of course, if growth were to improve, they would be a little lower. However, there is not much to suggest that the needed structural reforms to spur growth would be implemented anytime soon.

Show me the money
Ahead of Mr Gigaba’s speech, several allegations have emerged he might be following a meticulous script written by his controversial principal, Jacob Zuma, the president of South Africa. Lately, he has made some moves that deserve commendation, though. Dudu Myeni, a Zuma acolyte and perhaps much more, would finally leave her post as chairperson of loss-making and highly indebted national airline, South African Airways (SAA), in early November. Even this supposedly laudable move is being viewed with suspicion. There have been suggestions that the R5 billion (US$374 million) that is needed by end-October to ensure SAA remains solvent could be funded from the coffers of the Public Investment Corporation (PIC), the manager of public workers’ retirement funds. Additionally, as much as US$7 billion in total might be drained from the PIC to sustain ailing state-owned enterprises (SOEs). These suggestions have been met with vehement opposition by labour unions and others. To allay such fears, Mr Gigaba has provided assurances that the PIC’s funds would not be put to such use and has ordered an investigation into alleged irregularities at the PIC. Such moves might still not be enough. Earlier, Julius Malema, the firebrand opposition Economic Freedom Fighters (EFF) party “commander-in-chief”, accused Mr Gigaba of being the architect of the now infamous phrase: “state capture”; which implies the domineering influence of a few private actors in collusion with public officials over state resources. Mr Malema analogizes the finance minister’s assurances to a rat saying one’s cheese is safe with it. Curiously, PIC chief, Daniel Matjila, who earlier asserted machinations were afoot to see his back at the investment firm because he won’t let go off “the keys to the big safe”, somehow got a clean bill of health from the PIC board in late September; after an internal audit about whether he allocated funds improperly. Interestingly, Mr Matjila now says he has not entirely ruled out providing some funds for SAA. But should public workers’ hard-earned pensions be used to revive something so intractably failing? Surely not.

Game of thrones
Hitherto loud political noise have recently become even louder, after President Zuma lost a court case that if he had won, would have enabled him escape his day in court for myriad corruption charges. Regardless of recent directives by the prosecution authorities that he make representations to them before end-November, it is not likely he would be prosecuted (if at all) before he secures a deal to leave office relatively unscathed (see my earlier column on 17 October 2017: “What next after Zuma fails to shake off corruption charges?” for broader views on this). More pertinent is that plans are likely at an advanced stage to remove Mr Ramaphosa as deputy president. The speculations have been fuelled even more by frantic denials from the president’s office. But in Mr Zuma’s case, when there have been speculations in the past, they tend to happen eventually; that is, even after many denials. Besides, a recent surprise cabinet reshuffle that saw the exit of Blade Nzimande, an ardent Zuma critic and leader of the South African Communist Party (one of the ruling African National Congress (ANC) tripartite alliance partners) suggests Mr Ramaphosa’s axing is only a matter of time. Turns out the wait may not be too long. Just this past weekend, reports emerged that Mr Ramaphosa might be arrested and charged with treason as early as November. The reason the president would want Mr Ramaphosa out of his government is not too difficult to discern. Should his deputy win the elective ANC presidential elections in December, Mr Zuma’s likely premature retirement may be very cold indeed.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/south-africa-gigabas-first-test/

What next after Zuma fails to shake off corruption charges?

By Rafiq Raji, PhD

A court ruled in mid-October that earlier dropped corruption charges against South African president, Jacob Zuma, in relation to an arms deal almost twenty years ago, could be reinstated. It did not order that they should, though, leaving that to the discretion of the prosecution authorities. Considering how weighty and numerous the charges are, it would be quite bizarre if President Zuma is not subsequently charged to face trial. That would be in an ideal world, however. Only a year ago, a lower court decided that the same charges be reinstated; which Mr Zuma then challenged in the court that recently ruled against him. In some climes, Mr Zuma would have long honourably or dishonourably resigned. After this latest setback, calls have for the umpteenth time been made for him to leave office. It would be out of character for Mr Zuma to yield to those calls, though. There have been at least twelve attempts in court by the opposition Democratic Alliance (DA) party to get the same charges reinstated. After this latest rare defeat for the embattled South African president, the DA has wasted no time in piling on the pressure. If history is a guide, what is more likely is that Mr Zuma would buy as much as time as possible, while he negotiates a soft landing with whoever replaces him as ruling African National Congress (ANC) president in December.

Teflon don
Until the charges were first dropped against Mr Zuma in 2009, after evidence of political interference was found, they represented a major obstacle to his lifelong dream of ruling his country. Having secured the ANC presidency in defiance of the incumbent, Thabo Mbeki, who sacked him as deputy president only four years earlier, the charges of fraud and corruption did not seem to have much utility any longer. But now, 8 years into his 10-year two-term presidency, a court has ruled that “the reasons for discontinuing the prosecution [back then]…do not bear scrutiny”. But would state prosecutor Shaun Abrahams, who is well known for his deference to Mr Zuma, now proceed to charge him? Especially as the DA has given him a 10-day ultimatum? This remains to be seen. In the past, however, Mr Abrahams had been more than willing to do Mr Zuma’s bidding: he brought frivolous charges against former finance minister Pravin Gordhan in 2016, who was feuding with Mr Zuma at the time. Should Mr Abrahams prove to be ballsy, however, Mr Zuma would no doubt stall any potential prosecution for as long as possible. He would also likely be seeking some sort of furtive amnesty deal from any of his potential successors; who except deputy president Cyril Ramaphosa are believed to be mostly his proxies. Incidentally, even those lackeys of his might desire that he leaves the scene after the elective ANC conference in December. Thus, they may use his potential prosecution as leverage. So, the probability that Mr Zuma might leave office in January at the latest is quite high. Even so, it would be short-sighted to think he could not pull some rabbit out of a hat. And if he were perturbed by the unfavourable court judgement, he did not show it: on the day of the verdict, Mr Zuma jetted out to Owerri, a city in southeastern Nigeria to receive a chieftancy title.

More than legal costs
It is believed Mr Zuma’s numerous legal battles have cost taxpayers about R30 million. The broader costs to the economy have been much much more. I recall a conversation with a senior market participant some months ago about how investors might decide to move their money elsewhere should a Zuma lackey succeed to the ANC presidency in December. And if you think about it, why wouldn’t they? They see a president who despite overwhelming evidence of malfeasance against him remains securely in office, a central bank under attack, and a once independent finance ministry now under Mr Zuma’s overbearing influence. But above everything else, it is the political uncertainty on the back of Mr Zuma’s troubles that has been most devastating. A central bank official recently acknowledged the risk of further credit rating downgrades due to the associated policy uncertainty. State-owned South African Airways is a good example of how Mr Zuma’s influence is proving to be costly. The national carrier, which the treasury is perennially bailing out, may have been put in better shape had a harder stance been successfully taken earlier by treasury. With a close associate of Mr Zuma at the helm of the airline, despite repeated calls for her ouster, good money continues to be put to waste instead. To provide a sense of the scale, it was recently suggested Emirati airline, Emirates, which estimated its brand value to be worth US$7.7 billion in 2016, could have easily been acquired with the funds used to bail out the South African national carrier thus far. Little wonder, there is suggestion that should Mr Zuma leave, there could be an incremental pickup in output.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz. http://www.businessdayonline.com/next-zuma-fails-shake-off-corruption-charges/