Ramaphosa doing damage control as Russia, load shedding and other crises leave South Africa shaken
South Africa’s President Cyril Ramaphosa and his cabinet met with business leaders as concern over the country’s energy crisis, logistic constraints and close ties with Russia grow.
Attendees discussed collaborating to obtain inclusive growth, inspire confidence in the economy and create jobs, the Presidency said in a Twitter post.
Five years after Ramaphosa ushered in a wave of business optimism that he’d revive the economy crippled by industrial-scale corruption under his predecessor, executives are running out of patience with the president, who is seeking reelection next year.
Economic stagnation stoked by record daily power cuts, rampant crime, disintegrating infrastructure and foreign policy missteps is leading investors to the exits. Yields on the benchmark 10-year generic government bond have risen 129 basis points this year to 12.1%, foreign buyers have been net sellers of the nation’s stocks and the rand has plunged 11%.
Executives including Daniel Mminele, Nedbank Group Ltd.’s chairman, and MTN Group Ltd.’s Chief Executive Officer Ralph Mupita have called for urgency in resolving domestic hindrances to economic growth and warned the country is at risk of becoming a so-called failed state.
Others such as FirstRand Ltd. Chief Executive Officer Alan Pullinger have criticized the country’s relationship with Russia. The government’s indifference to the war in Ukraine and its friendship with Russia is “foolhardy in the extreme,” he said.
Damage control
Ramaphosa said he is deliberating the Russia question, and will pronounce in due course on whether President Vladimir Putin will be invited to the BRICS summit in August – or whether it will be held in South Africa at all.
Media reports this past week have indicated that South Africa may seek to move the BRICS summit to another country – likely China – to avoid having to fulfil its obligations to the International Criminal Court and arrest Putin should he step foot in the country.
Pretoria has been trying to reverse the impression it has created that South Africa has shifted its “non-aligned” status on Russia’s war in Ukraine, with Ramaphosa launching diplomatic missions to G7 nations to try and convince them that the country remains neutral.
For months, the government has created an impression that it is siding with Russia in its foreign engagements, which has upset Western nations and caused investors to flee the country as the risk of secondary sanctions started appearing in headlines.
Despite South Africa’s stated position of neutrality, the country has hosted Russia and China for war games on the anniversary of the former’s invasion of Ukraine, has allowed sanctioned Russian vessels and aircraft to dock and land at its ports. ANC politicians, within and outside government, have taken very apparent pro-Russia stances.
Ramaphosa is now attempting to do damage control, promoting South Africa’s neutrality and ambitions to broker peace between Russia and Ukraine.
Meanwhile, South Africa’s markets have crashed, business leaders have sounded the alarm over the potential fallout, and economists have flagged over R400 billion worth of trade agreements at risk.
With Bloomberg
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