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Many are calling Jacob Zuma’s sacking of Nhlanhla Nene his greatest blunder, while others see it as a “Rubicon” moment. But if we look beyond the implications of the decision from his personal point of view and focus on the implications for everyday citizens, it doesn’t get any better.
Biznews community member George Vine does just this, saying while the appointment of Pravin Gordhan may have prevented a complete melt-down, the damage has already been done. Here’s his list of 10 things we should be worried about. – Stuart Lowman
By George Vine*
1. Food will cost more: The price of imported maize – and other foods as the drought takes hold – will go up as a result of the Rand buying less than it would have two weeks ago. All imports, including ironically the Airbuses and the nuclear power stations thought to be behind Zuma’s decision, will now cost more.
2. Travelling costs will go up: Only the low oil price has staved off what would already have been a disaster for workers. Transport costs – already crippling for those lucky enough to have jobs – will rocket when the oil price recovers.
3. Inflation is set to increase and will result in price increases across the board, hitting all consumers hard but again hitting the poor hardest.
4. A drop in the share market does not only affect those who have a share portfolio; everyone who is a member of a pension/provident fund or has an endowment policy is a shareholder in the sense that his/her pension/provident/endowment policy fund is invested largely in the share market.
Pension/provident fund members are likely to see lower-than-inflation increases in the value of their fund and lower-than-inflation monthly pension payments to those already retired. Those with endowment policies are likely to see a reduction in their estimated pay-out.
5. It will cost more to borrow: Interest rates will rise more than they would otherwise have, making it more expensive for an individual to borrow (if able to qualify for credit at all). Companies will have the same difficulty; this will limit their growth and thus their opportunities to create jobs.
6. Unemployment will increase: South Africa’s credibility has taken a further knock – on top of recent down-gradings – which means that fewer foreign companies will invest in South Africa. This will impact negatively on job creation. And, in tough times the job you have is not safe either.
7. Crime is likely to increase.
8. Emigration is likely to increase, impacting further on the ever-decreasing pool of skills in the country, widening the wage gap between skilled and unskilled workers.
9. Faced with increasing costs, municipalities will have to raise rates and taxes, and water.
10. The cost of servicing the country’s debt obligations will soar.
Final thought: We should be grateful for wealthy people – they maintain and create jobs when they spend their money. But, we have to make sure they live in an environment that encourages them to spend freely.
* "Retired businessman George Vine is concerned that the majority of South Africans have no idea of just how much Zuma’s insane decision to remove Nhlanhla Nene from his position will impact on the well-being of every South African citizen, and especially the poor. He believes that there is a perception that only wealthy people who have a share portfolio and buy expensive imported cars will be affected and the rest have nothing to worry about. He compiled a few points to indicate how the ordinary person is going to be badly affected (while the wealthy will see assets decline and expenses increase but not face any real hardship). He also makes the point that while the later appointment of Pravin Gordhan may have prevented a complete melt-down, the damage had already been done".
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