Image courtesy Paul Saad
Much of South Africa’s future hinges on its much-anticipated leadership change from Jacob Zuma to Cyril Ramaphosa. Ramaphosa looks to be the man who will be voted into power in spring 2019. Jacob Zuma’s disastrous presidency was mired in corruption, a true travesty for South Africa. Zuma was finally pried from power in 2018 and now deservedly faces prosecution. The Economist called South Africa’s last decade the ‘lost decade’. According to the Economist, under Zuma, GDP gradually declined while gross public debt steeply increased. Despite how Zuma’s mismanagement degraded confidence in the ANC party, most expect ANC’s Ramaphosa to win. In a 2018 poll, 60% of people said they would vote for him. His campaign directly attacks Zuma’s corruption and mismanagement. Craig Botham, Chief Emerging Markets Economist at Schroders, says, “If you’re prepared to bet on Ramaphosa managing that [corruption and mismanagement], South Africa could be a good place to put your money.”
Ramaphosa seems to be a good bet on paper, especially because of the context he would take power within. Ramaphosa was once the supposed man to take over for Nelson Mandela. He has the credentials for the job – he’s a successful manager of his own company and has been helping lead the ANC party for three decades. Additionally, I believe the country will be insulated from risk of further cronyism due to the pressure upon the new president following Zuma’s exit. Ramaphosa’s number one message is rooting out corruption. The level of anger from citizens, not to mentioned investors, from the lost decade, is enough to keep Ramaphosa’s leadership on course over the coming decade.
South Africa can capitalize on the global shift in manufacturing. As wages continue to rise in China, manufacturing is finally moving away from the Guangdong region to the rest of the world. A confluence of factors in South Africa make it likely to see burgeoning manufacturing in the coming years. Beyond a change in leadership, South Africa has an excess of labor. Manufacturing is the country’s opportunity to put the 27.5% of the population that is unemployed to work. As a comparison with other manufacturing peers, the unemployment rate is 3.4% in Mexico and 5.5% in Indonesia. Many in South Africa are desperate to work and to escape from poverty. They live in one of the world’s most unequal societies, but they can’t currently get onto, let alone climb, the economic ladder. Manufacturing is their opportunity.