The embattled President of South Africa, Jacob Zuma is negotiating for a soft-landing after he was given a red card by the ruling African National Congress, ANC.
President Zuma has been confirmed to be negotiating for a minimum period of three months and a maximum period of six months to tender his resignation.
While the National Executive Committee of the ANC has not agreed to his terms, the committee through its spokesperson said its discussions with the president has been cordial and ongoing.
However, the implication of Zuma’s hold on power portends dire consequences for South Africa’s fragile economy. While Vice President Cyril Ramaphosa has been tipped to take over from Zuma, there are no guarantees that Zuma will tender his letter any moment from now.
Credit rating agency, Moody’s has already placed the country’s sovereign debt for further downgrades.
Economist Thabi Leoka told Fin24 that even though ratings agencies like Moody’s which have placed South Africa on a review for a downgrade, they are keeping watch for policy certainty. “They want policy certainty right now, we don’t even know what our policy is as South Africans. We are just in limbo currently,” she said.
“When someone is reviewing you for a downgrade, you have to excel in order for them to reconsider the review for downgrade.” Remaining the same will result in a downgrade, as will deteriorating. “I do not think we have improved to such an extent that we will go up one notch, as in not be considered for a downgrade.”
Leoka is of the view that Ramaphosa should tackle poverty first by uplifting the lives of the poor. This would probably involve making transport cheaper or free for the poor, who spend most of their income on transport. Government could also prioritise providing quality education to those in poor areas.
“He should also ensure a smaller component of people are reliant on social grants, as it will relieve the pressure of the social grant pool on the fiscus.”
South Africa’s is Africa’s second largest economy but the most developed. However, the poor management of public enterprises such as the power company, Eskom, South African Airways and many other ventures has led to a pile-up of debt and low productivity.