Incessant power cuts. Fruit produce left to rot in dysfunctional ports. Would-be exports of coal and iron-ore stranded by a broken rail system. Africa’s biggest economy has arguably been throttled by a decade of mismanagement. Now, increasing voter disgust may finally force a sea-change in attitudes in South Africa’s capital. The ruling party’s long insistence on the state providing services and operating infrastructure appears to be shifting, as it weighs political principles against a new-found fear of losing power for the first time since apartheid’s end in 1994. Along with private-sector actors moving to provide electricity they cannot rely on public utilities to get, there’s enough evidence of change underway for one longtime observer of Pretoria to declare that South Africa has reached its nadir, with the economic outlook now on the rise. “It’s a bold statement. But we think we’ve turned the corner,” says Goolam Ballim, chief economist at Standard Bank, the continent’s largest lender. This Week in the New Economy |
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Ballim, who’s been in his post for almost two decades, made his declaration while laying out the bank’s annual forecast for the economy this week. He says he draws confidence from three key factors. First, the power cuts that have plagued the economy since 2008 and steadily worsened over the past several years are finally set to ease. That’s not thanks to the state, however. Large industrial and commercial consumers are now building their own plants, while in the residential market, affluent South Africans are putting solar panels on their roofs. Second, the government has at last recognized it needs a new blueprint to fix the broken port and rail network. The ruling party has thrown in the towel on its ideology of state dominance, and is inviting in the private sector—a key shift. Laws are being passed and plans are being drawn up to end not just the state’s logistics monopolies, but those in electrical power, too. Further reforms include easing the entry of skilled foreign workers to the country.  The Union Buildings, home to the South African government and the offices of the president, in Pretoria Photographer: Guillem Sartorio/Bloomberg Finally, Ballim cites the potential outcome of this year’s election—a date for which is yet to be set. “The policy prognosis will remain unchanged,” he said. “We don’t suspect the election will derail those initiatives.” An outside scenario would have the African National Congress, which has dominated the country since democracy arrived in 1994, needing to lean on a populist party to maintain power, an outcome that would undermine the new outlook. But the most likely result is a loss of the ANC’s majority, with the party allying with forces that would keep the current policy shift intact. The reaction to President Cyril Ramaphosa’s state-of-the-nation address on Thursday may be instructive. He conjured up a fictional figure—Tintswalo, a 30-year-old woman born at the dawn of democracy whose name translates as gratitude and peace. Ramaphosa described her as growing up in a state-built house, connected to a free supply of electricity and running water, with her college education financed by the state. All due, of course, to the efforts of the ANC.  Cyril Ramaphosa, South Africa's president, center, ahead of the annual state of the nation ceremony in Cape Town on Feb. 8 Photographer: Dwayne Senior/Bloomberg The public reaction was immediate. Social media users and opposition politicians remarked that Tintswalo has, at best, erratic access to electricity, that the water tap in her house is dry and that she’s unemployed. Perhaps worst of all: the prototypical young South African is afraid to go out at night because of rampant crime. But Ramaphosa’s address also showcased the ANC’s recognition of the new reality. He alluded to the private sector in stating that “we have come together with social partners.” And he highlighted that this “will be the key to building a new society in the years to come.” It’s not just South Africa that will be counting on a new economic dawn. The nation’s travails have limited power supply to its poorer neighbors and disrupted the import and export of goods and commodities as far north as the Democratic Republic of Congo. And domestic woes have limited South Africa’s scope to show leadership in resolving the continent’s many crises. Improvement, if it comes, is likely to be slow. But the direction seems to be encouraging. —Antony Sguazzin | 
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