Preident Cyril Ramaphosa has delivered what analyst have called a ‘cautiously hopeful’ state of the nation address this week, with promises and plans to drag South Africa out of a slow-growth economy, while attending to the many social ills that have persisted since the dawn of democracy in the country.
Ramaphosa’s ‘new dawn’ approach to his presidency is in stark contrast to the administration of his predecessor, Jacob Zuma, who Ramaphosa and finance minister Tito Mboweni have publicly accused of overseeing “nine wasted years” of governance, that brought about economic decline.
For his part, Zuma has tried to counter the narrative that the nine years he spent as president were ‘wasted’.
According to Zuma, his critics within the ANC (alluding to Ramaphosa) who claim he wasted so many years are in fact pointing fingers at themselves, as they were part of the same administration they now criticise.
Beyond that, though, the former president said that to call the past decade a wasted one – particularly in an election year – was taking a defeatist attitude and betraying the trust of the people that elected them.
Zuma countered the notion that the nine years were wasted by pointing out all the good that was achieved – namely:
- Millions of lives have been saved and transformed due to action on HIV and South Africa today has the biggest treatment programme in the world with more than 3.9 million people on treatment.
- Life expectancy increased from 58.8 years in 2007 to 64.3 in 2015, while the death rate fell.
- His administration created the National Development Plan as a central pivot around which to build government programmes.
- Government was made more accessibly through the Presidential Hotline.
- South Africa was number one in the world in 2017 for delivering subsidised housing for the poor, with nearly 4.5 million houses and subsidies delivered.
- The government increased access to electricity. Access to sanitation improved. More households gained access to piped water.
- The social grants programme was broadened to 17 million.
- Government’s expanded school nutrition programmes in both primary and secondary schools reached more than 9 million children every school day, most in no-fee schools.
- Previously neglected provinces such as the Eastern Cape enjoyed investment of hundreds of millions for development.
- More than R1 trillion was invested in national infrastructure projects between 2009 and 2014.
- Two new universities were built
- The ocean economy project became an apex priority and has been a major creator of jobs.
- The Zuma government ushered in free tertiary education, building on the gains in basic education.
- The matric pass rate increased every year.
“These were not nine wasted years,” Zuma said.
What South Africa lost
According to director and investment strategist Magnus Heystek, Zuma’s term brought destruction and carnage to South Africa’s economy, with almost all financial metrics in the country under Zuma’s ANC having experienced a dramatic decline.
The damage in some instances, is irreversible, he said. In most others, “it will take a stupendous effort by government and private sector to reverse the damage to the vital organs of SA Inc”.
“Take your pick of vital signs: economic growth, foreign investment, unemployment, the currency, property values, government debt, budget deficit, performance of the JSE, retirement fund returns – they all show symptoms of a slow-moving financial tsunami gathering speed and spreading to all corners of our beautiful country,” he said.
To underline his point, Heystek listed the things that South Africa lost during Zuma’s time as president:
- SA’s average growth rate since 2009 has barely exceeded 1.5% per annum to end 2017.
- The unemployment rate increased from 22.5% for 2008 to 27.5% for 2017.
- Total Public Debt as a percentage of nominal GDP ballooned from a low point of 26.5% in 2008 to exactly double that (53%) towards the end of 2017.
- SA’s total debt is now close to R3 trillion, depending on the rand/dollar exchange rate. If the contingent liabilities of the State are included, the number rises to about 60%.
- Revenue collections are under considerable pressure. In December 2018 company income taxes were 6,6% lower than a year ago. Expect a grim 2019 Budget with an estimated budget deficit closer to 4.5% than 4%.
- Electricity prices ballooned 350% from 2008 to 2017.
- Per capita GDP declined from 8,066 USD per annum in 2011 to 6,268 USD per annum in 2017.
- Net SA FDI (Foreign Direct Investment) as percentage of GDP in 2010= +22.7%. In 2017 it was a minus 29%.
- Government wages as percent of GDP in 2007=10.5%. In 2018 it was 13.9%.
- Personal income taxes (as percentage of GDP): 2007=7.35%. In 2018 it was 9.81%.
- SA was the only OECD country in a recession during 2018.
- The SA economy is currently in its lowest growth trajectory since 1945.
- S&P Global Ratings and Fitch has reduced SA’s credit rating to below investment grade. Junk status, in other words.
- Residential property market has been in a 10 year bear market. Prices have declined by 22% in real terms over this time. In the 3rd quarter of 2018 new mortgage applications dropped by 16% – and not a single word about this reported in our mainstream media.
- Average retirement funds have now not beaten inflation over 1, 3 and 5 years—soon 7 years.
- Annual average returns on the Johannesburg Stock Exchange have been last or second to last when compared to the S&P 500, MSCI World Index, MSCI Japan and MSCI Europe. Against is peer group –the MSCI Emerging Market—it has been lagging by almost 2% per annum since December 2015 (when Zuma fired finance minister Nhlanhla Nene).
- Since then more than R400 billion has left our equity and bond markets.
“Poverty is increasingly visible on every street-corner, in declining car and retail sales, in empty rugby and soccer stadiums, in dwindling golf and bowling memberships.
“The list is almost endless,” Heystek said.