Health check for SA: Can we get through this?

By Nedgroup Investments

In July, the world and South Africa watched in disbelief as socio-economic and political tensions boiled over and violence, looting and riots continued unabated. The events have been labelled ‘Democratic South Africa’s darkest hour’.

Was the looting and violence a series of spontaneous events or was this something a lot more carefully orchestrated? And what does this mean for ordinary South Africans and for SA Inc. from a social, economic and political perspective?

In a discussion with Editor at Large and columnist, Peter Bruce we explored these questions.

Perhaps the question of whether this was spontaneous or planned lies somewhere in between. Its very difficult to say if this was a planned insurrection. What we had was a match dropping onto a very dry field of problems of poverty, hunger and inequality - and it exploded.

The thing to worry about now is less who caused it, but what do we do now? There are a lot of issue that need to be fixed and require structural reform which won’t happen overnight.

How likely is it that we could see something like this happen again?

We are in a moment of great danger because the government is clearly not in control of events. There are things happening that rely on the common sense of ordinary South African’s to be resolved, and thankfully at the moment we are seeing that common sense prevail.

Close up, yes, this does look like a mess that could happen again, but if you stand back and look at this in 10- or 15-years’ time it will probably look less dramatic. It will still likely be recognisable as an inflection point on the road to wherever we will get to by then.

Will CR recover from this?

Unfortunately, it does not look likely that Cyril Ramaphosa’ s government will easily recover from this, without doing enormous damage to the fragile unity that he needed to hold the ANC together. He is going to have to reshuffle his cabinet dramatically - even if he doesn’t want to. He might even need to scrap the intelligence services that have so badly let him down.

Leadership involves reassuring people and making them believe that if you listen to them you will be ok. The problem with that first address is that he did not have the full information – he was not being given the full information and so his tone fell flat in his immediate response to the crisis, and that did major damage.

What happens through these events is that somehow South Africans get it together again. South Africans have an incredible way of pulling themselves together after incredibly difficult situations. We are probably not on the brink of collapse, but neither are the green shoots of recovery still showing. Those green shoots have been trampled by the riots and that will have severely shaken investor confidence. This must be the priority to fix, and urgently.

How do we restore confidence?

The only way we can recover is for the government to step back and let the private sector take the lead for a while. The private sector companies need to produce profits which can be taxed. And then Tito Mboweni can figure out where the money will come form for the welfare that has been promised. Only business can make this money. The private sector needs to be able to tell government what they need to be able to make the most money in a short period of time.

We also want to see major arrests of the key figures in the period of unrest.

Acknowledge the progress that has been made

Some progress has been made and we must recognise this. We forget that Cyril Ramaphosa has cleaned out the revenue service, there is new leadership at the NPA, and the SIU seems to be able to act much more efficiently as well.

Institutionally, there have been some very clear successes. What has failed, is that institutionally he is still not at the point where he can wash his hands of it all because it will be looked after by the constitutional court. The constitutional court left Zuma with a full week to hand himself in after sentencing him, which turned out to be quite a dangerous thing to do. All that time allowed the people who were planning the recent raids to prepare. This shows that institutions won’t always make the sensible decisions.

Where are we now politically?

Cyril Ramaphosa looks incredibly weak and a second term suddenly looks unlikely. We don’t want the current government to fail but this time would have to be considered a failure. While Jacob Zuma is not likely to be apolitical force in the future – he is due to come out of prison sometime in September and he will likely try to make life as difficult as possible for Ramaphosa leading up to the next ANC electoral conference. He will be a worrying force for Ramaphosa but not a decisive one.

South Africa is at a cross roads – another one. The next few months will be crucial in terms of deciding which direction we take as a country.