New South African Leader's Challenge: Boost Opportunity -- Update

02/15/18 08:07 AM EST
By Gabriele Steinhauser 

CAPE TOWN--The departure of South African President Jacob Zuma leaves his successor a year to convince voters the ruling African National Congress can shed the corruption scandals that have battered the party and change the sense among many poor and black people that--a quarter-century after the end of apartheid--it has failed on its promise to deliver racial equality.

Once Nelson Mandela's heir apparent before becoming one of South Africa's richest black men, Cyril Ramaphosa succeeded Mr. Zuma as president on Thursday, following Mr. Zuma's announcement on Wednesday that he was stepping down after nine years at the helm of Africa's most developed economy.

Mr. Zuma--who spent 10 years in prison alongside Mr. Mandela--had been stalked by allegations of corruption since before he took office in 2009. He has denied any wrongdoing.

The events that led to his departure following an order from his own party to relinquish power were set in motion in December, when Mr. Ramaphosa became head of the ANC after promising to restore financial discipline and boost economic growth.

South Africa's currency, the rand, has rallied since Mr. Ramaphosa's ascent to the party leadership and many lenders and the South African Reserve Bank have increased their growth forecasts for the coming years. Some business leaders say they are already seeing some positive signs, such as engagement with industry on a controversial new mining law.

"That hasn't happened in the last 10 years," said Neal Froneman, chief executive of Sibanye Gold Ltd., South Africa's biggest gold producer.

Others question whether Mr. Ramaphosa, who has been serving as Mr. Zuma's deputy, will be able to push through unpopular overhauls demanded by the business community, including making it easier to fire workers.

Mr. Ramaphosa is expected to seek a full term in national elections in 2019, when the party risks losing its absolute majority in parliament for the first time since Mr. Mandela was elected in 1994.

"In order to win the vote again he has to work very hard to show that he is going to bring some changes," said Yonela Dyonta, who said she was ready to throw her support behind the opposition after years of faithfully voting for the ANC. "I'm very disappointed by them. Those people, we thought they were going to fight for us. What are they doing?"

Her job cleaning bathrooms in Cape Town's luxurious waterfront shopping and dining complex earns Ms. Dyonta around $300 a month, in a country where white-collar salaries can approach those of Western Europe or the U.S. While the incomes of black South Africans have increased at a higher rate over the past decade, they on average still make less than a fourth of what white South Africans earn.

After graduating from high school a decade ago, Ms. Dyonta wanted to study to be a social worker, but didn't have enough money to pay the registration fees for university, which can be as much as her monthly salary, let alone tuition. While the number of black high-school graduates has increased sharply since the end of apartheid, the percentage going on to earn bachelor's degrees dropped from 14% in 1994 to 4.9% in 2015.

Now, Ms. Dyonta puts aside $25 a month to pay for her baby son's schooling. She hopes he will one day benefit from one of the ANC's new signature policies--free university tuition and housing for students from poor or middle-class households.

That policy--announced by Mr. Zuma just days before Mr. Ramaphosa won the party leadership in December-- poses the new president's first significant test. On Feb. 21, the government has to present a new budget and explain to ratings firms how it will cut its deficit, currently targeted for 4.3% of gross domestic product, and stop its debt from breaking past 60% of GDP.

Moody's Investors Service, the one such firm that still rates South Africa's debt as "investment grade," estimates that the higher-education plan will cost around 1% of GDP and potentially much more in the future.

Mr. Ramaphosa, a former union leader who headed the ANC team negotiating the end of apartheid and helped write South Africa's first democratic constitution, won December's party leadership contest with the promise of a "new deal" for the country's hamstrung economy. He narrowly beat Mr. Zuma's ex-wife, who based her campaign on a promise of "radical economic transformation" and attacks on "white monopoly capitalism."

Mr. Zuma survived eight no-confidence votes in parliament during his nine years in office. Over the past year, thousands of leaked emails and other documents have buttressed suspicions among many South Africans that Mr. Zuma handed outsize influence to a controversial business family, the Guptas, who had partnered with his son, Duduzane. Mr. Zuma, his son and the Gupta family have all denied wrongdoing.

Mr. Ramaphosa is widely seen as more economically liberal than Mr. Zuma, yet the 65-year-old's policy agenda remains vague. He has pledged to create a million new jobs, to ease 26.7% unemployment, and lift economic growth to 3% this year, from an estimated 0.9% in 2017, and to 5% by 2023.

He is also under pressure from his own party to redistribute wealth from the white minority to the black majority. In addition to free higher education, the ANC is calling for the expropriation of land without compensation--a practice that many South Africans associate with the brutal land invasions that displaced white farmers in neighboring Zimbabwe.

After moderate gains in the first decade of democratic government, poverty has been inching up again in recent years.

A system of social grants for poor pensioners, children and disabled people has alleviated some of the most abject poverty, but around a quarter of the nation's 55 million people still don't earn enough money to afford sufficient food, according to the national statistics agency. While 90% of households now have electricity, up from 58% 20 years ago, 39% still don't have flushing toilets in their homes.

Write to Gabriele Steinhauser at


(END) Dow Jones Newswires

February 15, 2018 08:07 ET (13:07 GMT)

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