Peaceful poll gives SA's tourism industry a boost

THE polls on August 3 represented on the most hotly contested local government elections in South Africa. The majority of South Africans stay in urban areas, and the ANC is increasingly losing power in the metropolitan areas.

Most municipal councils have no outright majority and this means that coalitions are the order of the day. The elections have largely been peaceful, with the exception being the violence around the announcement that Thoko Didiza would be the mayoral candidate of the ANC in Tshwane.

This outbreak of violence was regrettable as it basically destroyed investor confidence in the City of Tshwane. Generally South Africa has an abysmal record in policing insurgency, in the form of service delivery strikes, labour union strikes and marches. This inability I fear is a warning sign that South Africa is showing increasing signs of state failure, which must be aggressively arrested.

I question the ability of the state to effectively manage the perennial threat of home-grown terrorism and transnational terrorism if it fails to manage local insurgency.Tshwane, which houses the seat of the executive at the Union Buildings, has been a net recipient of a plethora of marches that seek to gain the attention of the presidency, the most volatile in recent history being the #FeesMustFall in 2015.

The local government elections occurred in a country facing a plethora of challenges that seem to blossom at the same time, creating the perfect storm. The South African Chamber of Commerce and Industry’s  Business Confidence Index fell to 79.3 in May 2016, the worst level since June 1993. The social gap between government and business, which is responsible for creating jobs, has resulted in companies on the JSE sitting on more than R400bn which is languishing in bank accounts, instead of being investing in the local economy.

The decision by companies on the JSE not to invest in the economy means that they don’t create the jobs necessary to mitigate the more than 27% unemployment rate. It remains an "unknown unknown" why government has not addressed this social gap with big business urgently to find a win-win.

The South African Reserve Bank (Sarb) has been challenged by a jobs bloodbath in mining and the effects of the drought on agriculture, which dampened economic growth. The South African Reserve Bank Annual Report 2015/16 noted that "the rand has been depreciating since 2011 providing a steady source of inflationary pressure. The extent of depreciation in 2015, however, has been larger than in any of the previous four years".

This means that the Sarb not only had to manage inflation primarily though interest rates, but the depreciation of the rand has inflationary pressures, leading to a decline in the standard of living for many households.

South Africans are experiencing tough times, compounded by more bad news, best reflected by Anton van Wouw’s Bad News sculpture at the Rupert Museum in Stellenbosch. The International Monetary Fund is clear that the economy will grow by 0% in 2016, and rating agencies have been closely watching developments in the country, which is hoping to avoid a downgrade to junk status.

The peaceful conclusion of the elections has seen the rand rise to a nine-month high. In addition, the initial loss of rand's value against the pound sterling after the UK's decision to leave the European Union has seen the currency strengthen.

This will bring welcome relief as inflationary pressures will cease - albeit temporarily - and give Sarb some space to keep the interest rate unchanged, a reprieve the economy needs as interest rate hikes lead to money being withdrawn from the economy.

With the United Kingdom producing the bulk of international inbound tourists to South Africa, the depreciation of the pound against the rand must be mitigated by increased marketing in the UK generally and important source markets specifically.

Tourism has become an economic sector that creates immediate labour intensive jobs and can save the South African economy from junk status and a possible recession. To ensure that the growth trajectory of tourism is sustained, South Africa needs among others to ensure more aviation traffic to the country, increase the number of international airports in Gauteng, boost safety and security and improve how we sell the country.

Peaceful local government elections did much to restore the country's image and support the tourism industry, which is image conscious. (Kenya’s election violence destroyed its tourism industry in 2007).

In spite of challenges in KwaZulu-Natal, South Africa managed to have peaceful elections that did not produce more Bad News.

* Unathi Sonwabile Henama teaches tourism at the Tshwane University of Technology and writes in his personal capacity. Views expressed are his own.