On the 13th of February South Africa’s president, Cyril Ramaphosa, held his yearly speech to the nation. The Minister of Finance, Tito Mbovenis, had not yet held his yearly speech. Ramaphosa seems to be a strategist with long-term plans. His challenge will be whether the people have the patience needed to wait for the realization of these long-term plans.
Critical credit ratings
Over the past five years South Africa has been on the verge of falling into the “junk” category by the credit rating bureau Moody. The credit bureau considers the outlook to be bad. The reasons are many. In South Africa there are around 700 State-Owned Enterprises (SOE). Three of the biggest are Trans-Net, South African Airlines (SAA) and Eskom. These three companies are run very badly and yearly drain the Treasury for considerable sums.
Eskom kan beskrives nærmest som en nasjonal tragedie, gjennomsyret av korrupsjon og ikke i stand til å levere folket den strøm de trenger. “Everything that may go wrong has gone wrong with Eskom” says Jan Oberholtzer, operative leader at Eskom. The reasons for Eskom’s problems are many. Moreover, the company puts the breaks on the development of the country with the numerous power failures, so-called load-sheddings. The industry despairs, the wish to invest disappears, and the people are upset.
South Africa is totally dependent on their coal power plants. Between 70 and 80% of all electricity comes from coal or anthracite. The two newest coal-driven power plants are Pumsile and Medupi. They were supposed to deliver fully from 2015. So far there are still delays and reduced operations and the budget has been exceeded by far. Escom’s debts now amount to NOK 282 billion. Escom is one of the clearest examples in South Africa of how corruption and uneven competence at various levels of society drains the country for economic means.
The fight against corruption
Since 2018 the Zondo commision – named after the judge Raymond Zondo – has revealed and examined the comprehensive corruption that has delveloped in the country, not least during the reign of president Zuma. The Zondo commision reports of staggering estimates of money that has disappeared during the past ten years. This is called “State Capture.”
Batohi’s three major challenges
In his inauguration speech in 2019 Ramaphosa promised to take up the fight against corruption. This work seems to have three big challenges:
- Ramaphosa met a prosecution authority that had neither the capacity nor the competence to enforce the wide and complex culture of corruption that the country is in the middle of. Naturally, it takes time to build a credible and competent prosecution. Shamila Bathoni , who earlier worked for the Criminal Court, was in February 2019 given the difficult task of restoring and rebuilding South Africa’s National Prosecuting Authority (NPA). This is her first challenge.
- Batonhi shall also, hopefully, “clean the stairs” from top to bottom. This implies that people are eagerly awaiting which of the big “corruption fishes” that will be taken first. The processes will be initiated during 2020. When she starts to pursue some of the obviously corrupt people, this will immediately be met with the question: “Why just him / her? Isn’t this a politically motivated process? Isn’t it the ANC people they wish to take first? An old proverb says: “”When you shoot the king, make sure you don’t miss.” In other words, this is Batonhi’s second challenge.
- The fight against time is the third burden and challenge that Bathoni faces. The people are very impatient and resigned. Expectations are probably far greater than what the prosecution authority can deliver. There are potentially hundreds of cases to handle, and it is not obvious how successful she will be with her clean-up operation. One thing is for sure, it will take time!
The way forward for Ramaphosa
Ramaphosa has been promised big financial investments both from China and the Arabic Emirates. However, these sources of investment are awaiting a radical change of course, credible projects and considerable structural changes before they are willing to invest. Ramaphosa will probably have to make changes that will split the ANC as a party to save the economy. The question is whether Ramaposa is willing to take these tough fights, or whether he will do what he always has been clever at – compromise to all sides. If so, it doesn’t look promising for South Africa’s economy.