Cape Town – South Africa’s annus horribilis in 2016 was far more worrying to global stakeholders for the impact it could have on Africa’s fragile future than whatever domestic issues locals might imagine.
That’s one of the reasons why Eurasia Group president and founder Ian Bremmer ranked South Africa number 10 on his geopolitical risks of 2017 list in Time magazine in January.
“If it was purely about South African domestic economics and politics, South Africa would probably not have made the list,” he said.
Bremmer bases his annual Time magazine geopolitical risk ranking on Eurasia’s annual risk report. His organisation, headquartered a few blocks from Wall Street in New York, plays an important role as a political science think tank that feeds insights to hedge funds and investors that help them manage their risks and opportunities.
This year’s report revealed that 2017 will see a world with no real leader, plunging it into a “g-zero world” or geopolitical recession. South Africa’s story plays into that scenario.
The Time entry at number 10 read: “The deeply unpopular President Jacob Zuma, beset by corruption allegations, is afraid to pass power to someone he doesn’t trust. The resulting infighting over succession stalls any momentum toward crucial economic reform in the country and limits South Africa’s ability to offer leadership needed to stabilise conflicts inside neighbouring countries.”
Speaking exclusively to Fin24 from New York, Bremmer explained how Eurasia almost didn’t put the country on the list – and why it eventually decided to do so.
The events following Zuma’s shock decision to fire Nhlanhla Nene as finance minister in December 2015 set the scene for a year in which the rand was one of the most volatile currency in the world (see graph below).
Reflecting on his harsh criticism on Zuma, he said: “Whether or not we offend a politicians’ sensibilities is sort of irrelevant as to what we do as an organisation.”
MUST READ: Understanding why Time put SA on risk list
Source: Eurasia's risk report
SA's impact in Africa is what counts
While South Africans squirm every time their rand weakens, it is the impact South Africa has on Africa that is truly worrying global investors.
The inauguration of Donald Trump as the 45th US president on Friday will make South Africa’s role in Africa even more critical, Bremmer explained.
“More is going to be on its shoulders going forward,” he said.
That’s because America’s role as global leader on trade and security has “been eroding for some time, but with Trump’s election it really falls off the map”.
“While the Chinese are doing a lot to invest in infrastructure across Africa, their influence is almost purely economic,” he said. “We don’t yet have a big Chinese peacekeeping role. They are just starting that. Their multi-lateral institutions are pretty weak.”
“If you are going to have the ability to deal with bigger challenges in Africa, you are going to have to look for global leaders to do that.
“South Africa, while it is no longer the largest economy, certainly has the strongest institutional capability through its corporations, through its governance and foreign policy mechanisms, and through its Brics connections they can make more impact.”
“The willingness of the US to say ‘that’s my problem’ is going down,” he said. “I am not sure who else does it. So, clearly its (Africa’s) regional peacekeeping that are going to become far more important and spotlighted.”
The droughts, the floods, the forced migrations, the human rights abuses, the massacres, the tribalism
Bremmer said South Africa could easily have just been in the “no reform bucket” as the fourth biggest geopolitical risk. Here, Bremmer writes in Time that “South Africa’s Zuma” is “fully occupied at the moment with domestic political challenges”.
“We thought about that, because clearly it’s about a global story,” he told Fin24. “Most people don’t spend much time thinking about Africa, to Africa’s misfortune.
“But when they do, they think first and foremost about South Africa,” he said.
“If suddenly the news coming out of South Africa is not only that reforms are not moving (so you don’t want to invest as much) or that this is a government that is not interested or capable of playing a regional leadership role – that is going to make everyone think that we are losing all of the stories about how this is Africa’s decade and time to shine.
“Instead, you start focusing on all the negative stories: the droughts, the floods, the forced migrations, the human rights abuses, the massacres, the tribalism.
“There are clearly two completely different stories and narratives that you can tell about Africa.
“There is the Gates Foundation story and the telecom story and the consumption story and the entrepreneur story – I love that story.
“But there is another story too. That other story is one that unfortunately becomes more likely because of the news that is going to continue coming out of South Africa.”
You won't see better political leadership anytime soon
Bremmer sees light at the end of the South Africa’s tunnel, but said: “It depends whether it comes from government or other parts of South African society. The country has a lot of very talented entrepreneurs in both business and the financial sector.
“We are living in a world now where non-state actors have the ability to make a fundamental influence in their country and globally."
However, he said that “2017 is all about a year where social contracts between political leaders and their citizens are eroding to historic levels".
Entering a geopolitical recession is not the time when you see better political leadership, he said.
“You will see a lot worse leadership from governments, because they are under much more pressure, but the hope is going to come from very resilient societies who are prepared to find solutions that are complementary with government work outside the public sector, or who work in partnership with the public sector.
“South Africa, Europe and the US structurally are going through very similar things right now,” he said. “In terms of hollowing out of the middle class, in terms of the feeling that the establishment of all walks of life are not necessarily useful, so you want to go with someone who is going to tell it like it is. You don’t really care, and that’s a real problem.”
Regarding the rise of terrorism in the Middle East and northern and western Africa, he said that in a world of geopolitical recession, rogue states and rogue actors matter a lot more. “They have more flexibility to act in ways that they want to.”
“Rogue players … see this as a real opportunity,” he said. “This is definitely a year where your stronger leaders – the people you look to historically to create norms, security, rules of the road – look besieged.
“South Africa is part of that story.”
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