June started disastrously and only got worse as the days passed.
The month began with some unbearable passing of the political buck over who was to blame for the inhumane demolition of some 80 homes in Alexandra, north of Johannesburg. This dreadful, yet far from isolated, incident again highlighted the miserable reality that constitutional protection is not yet a guarantee a full quarter century into South Africa’s hard-won democracy.
The demolitions were also an ugly reminder, however, of the negative social consequences that inevitably flow when an economy underperforms for a sustained period on the back of policy drift, administrative neglect, governance breakdowns and corruption.
As if taking a lead from Alex, the economic news was as dismal and depressing. The Absa Purchasing Managers Index for May slumped to a seven-month low and the South African Chamber of Commerce and Industry’s business confidence index dipped, notwithstanding what appeared to be a relatively business-friendly election outcome. Then came that wretched gross domestic product print, showing that the South African economy had contracted by an astonishing 3.2% in the first quarter amid a perfect storm of election malaise, power cuts and a few external headwinds.
Not to be outdone, the governing African National Congress (ANC) contrived to make matters even worse by allowing its on- going civil war – in which control over the party’s economic-policy direction has emerged as a key battle – to spill over into the markets. For many, general secretary Ace Magashule’s unauthorised utterances on the South African Reserve Bank’s mandate and quantitative easing provided incontrovertible evidence that President Cyril Ramaphosa’s reform agenda was failing. Instead of the anticipated postelection revival of ‘Ramaphoria’, the prospect of yet another ‘lost decade’ loomed large.
Is it too late for a reset, though?
By overplaying his hand as he did, Magashule weakened his position considerably. He will now be forced to walk a very narrow corridor before making any future statements on behalf of the party. It is even possible that he will be disallowed from making any further pronouncements on economic policy altogether. His apparent ill-discipline will not go down well within the ANC itself, while his attempt to use the Reserve Bank issue to win friends and influence people within the broader Tripartite Alliance seems to have mostly fallen flat.
Nevertheless, any reset will only be perceived as credible if Ramaphosa’s authority is consolidated not only within government but also within the ANC itself. This editorial was written well before his June 20 State of the Nation address, but it’s more than likely that the speech will have lifted the mood somewhat. For that uptick in confidence to be sustained and Ramaphosa’s reform message to be taken seriously, however, contradictory statements from Luthuli House will have to be eliminated entirely and over a significant period of time.
Should the President succeed in that mission, ‘Ramaphoria 2.0’ is indeed still a distinct possibility.