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THE news on the economic front does not augur well for South Africa.
On Wednesday, newspapers reported that our country’s balance of payments had worsened substantially. According to the latest quarterly bulletin of the South African Reserve Bank, the “deficit on the current account of the balance of payments had risen from 3.1% of GDP in the second quarter of 2015 to 4.1% in the third quarter”.
In fact, as the Reserve Bank report says, “Foreign direct investment, widely regarded as essential for the promotion of sustainable growth, recorded a small inflow on a net basis. Non-resident investment in South African equity and debt securities was more than offset by the acquisition of foreign portfolio assets by South African investors over the period.”
An economist of Citi Research, Gina Schoeman, was quoted by Naspers newspapers as saying that the deficit on the current account may increase to 4.5% by 2016.
Basically, this means that more money is flowing out of the country than coming in. We are not attracting enough foreign investors, and too many South Africans are moving their assets to quarters elsewhere in the world.
According to media reports, the rand – once again – started depreciating rapidly after the Reserve Bank report was published.
This report coincided with another one by Statistics South Africa, according to which production figures for October were 2.1% less than a year ago. The production of iron, steel and machinery was down by 10.3% and motor cars and parts by 6.2%.
In addition, the credit rating agency Standard & Poor’s reduced South Africa’s foreign exchange credit rating from stable to negative. In fact, we are a millimetre away from being awarded junk status – the lowest of the low.
READ: SA heading for junk status unless GDP grows
Which means that our current account deficit will worsen, as we have to pay a higher interest rate on our foreign debt.
It is a veritable litany of bad news. And, with even nature apparently conspiring against us in the form of a severe drought which is hitting agriculture hard, there is no prospect of a substantial recovery in the short term.
What is going on with us? And what can be done?
Well, there are some things you simply have to live with. One cannot force the skies to pour water onto the parched earth.
But other things are definitely man-made. And I am not referring to climate change, which is a debate entirely on its own. I am talking about bad political and economic choices.
Dawie Roodt, chief economist of the Efficient Group, this week said something which resonated with me. His solution is so simple, but at the same time so difficult: get rid of President Jacob Zuma!
READ: How the world sees us: Tim Knight – SA’s slide from Madiba to Zuma. Oh Boy.
Nothing happening to South Africa at the moment is, so to speak, written in the stars. Most of it is the result of choices, especially by Zuma and his government.
During the first few years after having taken over, the ANC mainly pursued a wise economic course. They kept state expenditure in check, and encouraged direct foreign investment. With the late Nelson Mandela’s friendly face presiding, the future looked bright.
But even then the foundations for the present bad news were being laid. Corruption – think of the Arms scandal – reared its ugly head.
After Mandela was replaced by president Thabo Mbeki, this process was accelerated. With an African nationalist leader who seemed unable to accept that Africans - who after all were the victims of colonialism and apartheid - could do wrong, corruption, self-enrichment and nepotism ballooned.
Zuma joined in with gusto since becoming head of state. He seems to regard himself as the big chief who is entitled to enrich himself, not as the first servant of the land.
And, following his lead, a whole generation of cadres have ensconced themselves on the cosy gravy train, grabbing what they can when they can while it lasts. The state, they seem to think, is not an instrument for developing and uplifting the poor and downtrodden, but a milk cow for themselves.
The harsh fact is: South Africans cannot afford Zuma and his gang.
READ: Russell Loubser: SAA – only voters can stop the plundering by ANC cronies
But of course, getting rid of him is easier said than done. Only a palace revolution in the ANC can do that, and the chances of that succeeding before the end of his term in 2019 are very remote.
The best we can probably hope for is that he will be succeeded by someone like Deputy President Cyril Ramaphosa, and not by Zuma’s former wife, the hopelessly inefficient Nkosazana Dlamini-Zuma. At least Ramaphosa, we have reason to believe, will not be as bad as President Giggles himself.
Of course, it would be best if the electorate rejected the ANC in the next election. That would indeed be nice. But this is tantamount to hope that there really is a pot of gold at the end of the rainbow.
Still, one can hope...
ALERT: Zuma has fired Finance Minister Nhlanhla Nene since this article was written. It seems like all hope is fading. Get all the news here.
* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.
