Self-destructive South Africa its worst economic enemy

Self-destructive South Africa its worst economic enemy

from MTHULISI SIBANDA in Johannesburg, South Africa
JOHANNESBURG, (CAJ News) FOR a country on a desperate crusade to attract investment to resuscitate its ailing economy, South Africa has through the deadly violence sweeping through some parts of the nation thrown the spanners into its works.

The unprecedented destruction of property and infrastructure as well as looting of malls and shops in an economy already searing under record unemployment, rampant corruption and plagued by the worst outbreak of the coronavirus in years, are the latest horrors in a country with a tendency to self-destruct.

More than 45 people had been killed and nearly 1 000 others arrested as of Tuesday as the looting and vandalism continued with no end in sight.

Another tragedy has been the disruption of the coronavirus (COVID-19) vaccination exercise, which even before the violence broke out in KawaZulu-Natal province and spread to Gauteng, was already behind schedule.

The already stressed medical system is feared to suffer the consequences of the protests, including a possible further spike in new COVID-19 infections.

While these are the immediate effects of the violence, analysts warned the prospects of attracting investments were dim, indicating tougher times for an economy that international rating agencies have relegated South Africa to junk status.

Deon Kohlmeyer, a trader at Rand Merchant Bank (RMB), said the looting and violence were a litmus test to the country’s prospects of attracting much needed investment.

“With protests and looting continuing this (Tuesday) morning, it will be a good test of investor confidence that the government will be able to get the situation under control,” Kohlmeyer said.

President Cyril Ramaphosa has been leading South Africa’s drive to attract investors under the aegis of the South Africa Investment Conference.

Government has set a target of R1,2 trillion (US$82 billion). The best the country has attained thus far are pledges, slightly more than half of the target.

Sifiso Mkhize, a socio-economic analyst in Johannesburg, said the latest wave of violence was a deterrent to investors.

He said prospective investors would withhold their investments while those that had already committed were evidently ruing the move.

This amid community members pillaging malls and shops with ease, under the nose of outnumbered law enforcers.

“Prospective investors will simply cancel because this country is further junk because of the looting,” Mkhize said.

“Those that have invested in the malls are now counting the losses. Rating agencies will downgrade South Africa even further,” he added in an interview with CAJ News Africa.

The skirmishes in the economic hub, Gauteng, and KwaZulu-Natal, the second biggest provincial economy and a tourism centre, are linked to the jailing of former president, Jacob Zuma, incarcerated for 15 months for contempt of court for defying orders to appear before a commission probing alleged corruption under his reign (2009-2018).

Criminals and despondent members of the community have hijacked a campaign of resistance by elements opposed to the veteran politician.

“At this point, it is not a case of ‘lives versus livelihoods’ anymore,” said Chris Hattingh, Deputy Director at the Free Market Foundation.

“After a year of destructive lockdowns, the economy – and everyone’s economic wellbeing – is experiencing yet another battering,” he added.

Busisiwe Mavuso, Chief Executive Office of Business Leadership South Africa, was quoted as indicating that by Monday afternoon, more than 200 shopping malls had been looted.

Retailers, the executive estimated, retailers had lost an estimated R2 billion (US$136,67 million).

“Rebuilding businesses, and reinforcing and expanding supply chains, will take a long time,” Hattingh warned.

In its quest to attract investments to the country, South Africa has a tendency to shoot itself in the foot, in the form of violence.

Attacks against foreign nationals of African origin and their properties as well as violent service delivery protests are sporadic.

Brand South Africa, whose objective is to develop and implement proactive marketing and communication strategies for the country, denounced the ongoing loss of lives, destruction of properties and disruption of essential activities.

“This is a watershed moment in our democracy,” Thandi Tobias, Brand South Africa chairperson, said.

She empathised with business owners whose premises were looted and damaged.

“This goes against our values as a nation and as President Ramaphosa said, ‘this is not who we are.’”

Addressing the nation for the second time in as many days on Monday, Ramaphosa said the latest crisis had highlighted that the level of unemployment, poverty and inequality in South Africa was unsustainable.

“We must therefore commit ourselves not only to peace, but to greater economic opportunity for all,” Ramaphosa said as he announced the deployment of the army to quell the anarchy .

Statistics South Africa has indicated the official unemployment rate was 32,6 percent in the first quarter of 2021.

The economy shed 2, 2 million jobs in the second quarter. The International Monetary Fund (IMF) forecast the continent’s most industrialised, technologically advanced and diversified albeit besieged economy to grow by 3,1 percent.

– CAJ News

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