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WILL South Africa suffer a “Mandela crash” now that Nelson Mandela has died?
In my view, it is an insult to South Africans to suggest that the economy will suffer a Mandela crash now that the political icon is no more.
Such a suggestion implies that it took the migh of one person to get South Africa where it is. It also implies that no one else other than Mandela has the capability to keep things from falling apart.
It is that kind of thinking that is being used by other African leaders to hang on to power, because they believe or are made to believe that only they can keep things intact.
There is the belief among some that Mandela’s death will usher in an era of downward spiral of the South African economy. In June when the icon’s health condition worsened, news outlets had screaming headlines like 'Rand hit by Mandela health fears'.
Coincidentally, the JSE was also down by about 9% in that month, giving some justification to the theory that there is a correlation between Mandela and the South African economy.
It is often reported that many investors and economists fear that the death of Mandela - often considered the moral compass of the ruling party - will animate the ANC's radical elements who have been calling for nationalisation of the mining industry.
I, however, believe such suggestions are not fundamentally supported, especially considering we are now two presidents away from the Mandela era. Moreover, he has been unwell for too long to have any significant impact on policy.
Mandela's health had been deteriorating for quite a while so his role had already been diminished. From that view point, I do not believe he has been able to play the advisory role to the ANC government.
There is no denying that Mandela was a moral symbol of hope, but it must be pointed out that his legacy has more to do with reconciliation than economic policy. There is little that suggests the South African economy is relatively strong because of Nelson Mandela.
In any case, South Africa has experienced a long trend of weakness in the economy for quite a while now. Unemployment of around 25%, violent mining strikes, a widening budget deficit and painfully high inflation have all taken a toll on the economy and all this has nothing to do with Mandela being dead or alive.
The rand, has an even longer falling trend, further making the rhetoric around a risk to the currency and the economy due to Madiba largely unfounded.
South Africa was always going to face challenges, whether Mandela had remained alive forever or not. Wasn’t he alive when the majority of South Africans criticised the government for lack of progress in implementing key reforms in an economy which is grappling with power shortages, poor healthcare and high unemployment?
In other words if he had an economic legacy to talk about, then that legacy had already been ruined long ago.
In my opinion, the news of Mandela’s death is just a sentimental factor, while on the fundamental side there are more pressing issues to grapple with.
For example, the weakening rand is likely because of the recent broad-based dollar strength. Domestic risks‚ such as persistent strikes‚ limited electricity supply and the possibility of another credit rating downgrade have nothing to do with Mandela.
The debate about nationalisation, as championed by the ANC Youth League, has been very damaging to South Africa’s image in the eyes of the investor community, as all it did was to plant seeds of uncertainty. And all this happened while Mandela was still alive, so his death will not change anything really.
According to Bloomberg in March 2012, South Africa’s stock markets had underperformed other emerging markets. Since 2009, when Zuma became president, South African foreign-currency bonds had returned 37% less than the 46% average of emerging market dollar bonds.
In terms of labour, South Africa is right at the very bottom of labour flexibility internationally. It was 138th in flexibility in determining wages and 127th in the quality of its primary education system.
The World Economic Forum’s 2011-2012 Global Competitiveness Report ranked South Africa 139 out of 142 countries in terms of the competitiveness of its hiring and firing practices. If nothing is done about this, the implications are social unrest, mass populist movements arising, looting, violence, and who knows?
It is against this background that I believe whatever is happening or not happening in South Africa economically, has nothing to do with Nelson Mandela being dead or alive.
- Fin24
*Malcom Sharara is Fin24’s correspondent in Zimbabwe. Views expressed are his own.
In my view, it is an insult to South Africans to suggest that the economy will suffer a Mandela crash now that the political icon is no more.
Such a suggestion implies that it took the migh of one person to get South Africa where it is. It also implies that no one else other than Mandela has the capability to keep things from falling apart.
It is that kind of thinking that is being used by other African leaders to hang on to power, because they believe or are made to believe that only they can keep things intact.
There is the belief among some that Mandela’s death will usher in an era of downward spiral of the South African economy. In June when the icon’s health condition worsened, news outlets had screaming headlines like 'Rand hit by Mandela health fears'.
Coincidentally, the JSE was also down by about 9% in that month, giving some justification to the theory that there is a correlation between Mandela and the South African economy.
It is often reported that many investors and economists fear that the death of Mandela - often considered the moral compass of the ruling party - will animate the ANC's radical elements who have been calling for nationalisation of the mining industry.
I, however, believe such suggestions are not fundamentally supported, especially considering we are now two presidents away from the Mandela era. Moreover, he has been unwell for too long to have any significant impact on policy.
Mandela's health had been deteriorating for quite a while so his role had already been diminished. From that view point, I do not believe he has been able to play the advisory role to the ANC government.
There is no denying that Mandela was a moral symbol of hope, but it must be pointed out that his legacy has more to do with reconciliation than economic policy. There is little that suggests the South African economy is relatively strong because of Nelson Mandela.
In any case, South Africa has experienced a long trend of weakness in the economy for quite a while now. Unemployment of around 25%, violent mining strikes, a widening budget deficit and painfully high inflation have all taken a toll on the economy and all this has nothing to do with Mandela being dead or alive.
The rand, has an even longer falling trend, further making the rhetoric around a risk to the currency and the economy due to Madiba largely unfounded.
South Africa was always going to face challenges, whether Mandela had remained alive forever or not. Wasn’t he alive when the majority of South Africans criticised the government for lack of progress in implementing key reforms in an economy which is grappling with power shortages, poor healthcare and high unemployment?
In other words if he had an economic legacy to talk about, then that legacy had already been ruined long ago.
In my opinion, the news of Mandela’s death is just a sentimental factor, while on the fundamental side there are more pressing issues to grapple with.
For example, the weakening rand is likely because of the recent broad-based dollar strength. Domestic risks‚ such as persistent strikes‚ limited electricity supply and the possibility of another credit rating downgrade have nothing to do with Mandela.
The debate about nationalisation, as championed by the ANC Youth League, has been very damaging to South Africa’s image in the eyes of the investor community, as all it did was to plant seeds of uncertainty. And all this happened while Mandela was still alive, so his death will not change anything really.
According to Bloomberg in March 2012, South Africa’s stock markets had underperformed other emerging markets. Since 2009, when Zuma became president, South African foreign-currency bonds had returned 37% less than the 46% average of emerging market dollar bonds.
In terms of labour, South Africa is right at the very bottom of labour flexibility internationally. It was 138th in flexibility in determining wages and 127th in the quality of its primary education system.
The World Economic Forum’s 2011-2012 Global Competitiveness Report ranked South Africa 139 out of 142 countries in terms of the competitiveness of its hiring and firing practices. If nothing is done about this, the implications are social unrest, mass populist movements arising, looting, violence, and who knows?
It is against this background that I believe whatever is happening or not happening in South Africa economically, has nothing to do with Nelson Mandela being dead or alive.
- Fin24
*Malcom Sharara is Fin24’s correspondent in Zimbabwe. Views expressed are his own.
