Rand tracks the country’s sorry decline under a Zuma presidency

The easiest gauge of the performance of a South African leader is the rand, that bellwether of all things risky in the global sphere, and also of the political and economic climate in the country. On December 18 2007, when Jacob Zuma took over the presidency of the ANC, the rand traded at R6.90 to the dollar. Today, as delegates decide on the party’s leader for the next five to 10 years, it trades about 94% weaker, at R13.41, not far off its weakest level on record. Now it’s only fair that I compare Zuma’s performance with that of his predecessor Thabo Mbeki, who over his decade in power saw the rand weaken 42%, a record muddied by the collapse of US investment bank Lehman Bros, which triggered a global recession.

It was a recession that inaugurated the presidency of Zuma. I’m sure that Zuma’s defenders will this weekend be arguing that the economic gloom that has clouded the country for more than half his term has not been of his doing. Global factors have all converged to depress the country’s health, and there’ll even be the “mad hatters” who will point to it as a conspiracy by Western powers to destabilise the ANC.

Here’s a wrap of global conditions during the Zuma era. The first half was marked by a US and European growth slowdown, for the latter exacerbated by a sovereign debt crisis. Slack demand for our exports was certainly a feature of the early years. In response, and yes, there was a response, under the then Pravin Gordhan-led Treasury spending on infrastructure increased, especially in the run-up to the 2010 Soccer World Cup. There was also a significant uptick in public sector employment, in the police and at state-owned enterprises such as Eskom. (The feel-good factor of this period hid the fact that much of this spend was apparently dedicated to an ever-shrinking number of people, namely the presidency’s inner circle.)

But there were always limits to this wave of spending. The warning light was delayed only by the dollars being printed by the US Federal

Reserve and meant to stimulate that economy. Those lights were flashing by the end of Zuma’s first term as state president, just when his nuclear ambitions burnt brightest.

Over the last few years of his presidency, commodity-strong nations were hit by China’s shift to a consumption-led rather than investmentled economy. It’s proved challenging as the world’s second-biggest economy reduced its focus on building bridges, roads and other infrastructure. China’s shift and its decline to single-digit growth pulled the rug from under emerging-market countries, exposing their structural flaws, especially as growth returned to the West and it became evident the Fed would slow its printing presses.

There simply has been no response by the Zuma-led government to this cold front. A government hamstrung by its own balance sheet has been unable to lead. For a party that has long professed to lead society at large, including business, they’ve actually been on a warpath with big business, and in the latter years the president has sent his Versace-adorned leaders to take on “white monopoly capital”. The noise reached its highest decibel levels when one particular family found banking a bit more difficult.

All a Zuma government has done has been to grow public spend to the point where ratings agencies have started watching SA’s balance sheets like vultures circling an ailing buffalo.

Business, and indeed black business, has floundered under this presidency. When was the last major empowerment deal, even as some major resource houses sought to let go of some wares? Without any form of certainty, with three mineral resources ministers in a decade, miners have folded their arms in frustration.

Spending by state-owned firms hasn’t benefited black business either. When Eskom strong-armed Glencore, who proved to be the greatest beneficiary but the Gupta family?

Since agreeing to National Health Insurance as far back as Polokwane in 2007, what has actually been done? Has anything been done to find a final solution for free education debate, another resolution from that conference?

These are just a few examples of economic issues the Zuma-led ANC has been unable to tackle. His has been a presidency of uncertainty, if we ignore the obvious enrichment of his family and associates.

Whoever is the victor at this ANC conference, he or she needs to bring certainty to all things economic. Lay down the law of the land, let society decide whether it is the path they want to follow.

The party will only have 18 months or less to convince the country of this change. Judgment day isn’t far off, 2019 is around the corner.

And the rand will be the final arbiter once again.

Business, and indeed black business, has floundered under Zuma