Cyril: Cool heads on economy

2018-09-09 10:01
President Cyril Ramaphosa. PHOTO: Lintao Zhang / pool photo via AP

President Cyril Ramaphosa. PHOTO: Lintao Zhang / pool photo via AP

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President Cyril Ramaphosa has asked South Africans to keep cool heads and hold on to the promise that he is the man to turn around the economy, even as it is collapsing around him.

Speaking to journalists in Hangzhou in China on Wednesday night, on his return from the triennial Forum on China-Africa Cooperation in Beijing, Ramaphosa appeared vulnerable as he asked for more time, saying his administration should be judged on the results of its long-term plans rather than the short-term challenges in its transition phase.

He added that the current crisis was not all about him as the rise and fall in economic performance was normal for any emerging market like South Africa, and “whoever is president will find that they have to ride these waves”.

But there was serious pressure on him to live up to expectations – and that pressure went up a notch in Beijing, where potential investors complained about safety and security in South Africa, flagging it among the key reasons for their scepticism.

Ramaphosa brought a sense of optimism to the country when he took office seven months ago in February, after toppling the scandal-ridden administration of former president Jacob Zuma. The move sparked positive sentiment in the markets and strengthened the rand.

But the elation about the new presidency, dubbed Ramaphoria, took a sudden nosedive as the 1% increase in value-added tax was introduced; the fuel price rose over successive months, bringing with it increased unemployment and pressure on consumer spend; mines spoke of looming mass retrenchments; and international ratings agencies expressed concern.

The latest blow to the economy has been this week’s announcement that South Africa is officially in recession, following two consecutive quarters of decline in our gross domestic product.

This is drawing the country ever closer to a full-blown recession if the situation is not turned around soon.

From the Beijing summit, Finance Minister Nhlanhla Nene pleaded with South Africans to be more patient with government, saying some of the problems could not be solved overnight, while later in the week the ANC was more blunt and blamed this latest crisis on nine years of corruption under Zuma’s watch.

Ramaphosa said on Wednesday night that it was too early to panic as the country would be sidetracked if we did not “keep our cool heads and carry on with the work that we have been doing”.

“All we need to do is focus on the medium and long term because sometimes [focusing on] the short term would make us miss our step,” said the president, adding that the challenges were “transitional and will pass as everything gets consolidated and we see further growth in our economy”.

He said the economy would bounce back as the necessary stimulus funds became available. However, investors have been holding back and keeping the money in reserve, saying they want policy certainty and consistency, especially regarding mining regulation and land expropriation.

Ramaphosa emphasised: “This is the time when we should be pulling together.”

The security headache

Following his visit to the headquarters of Chinese technology giant Huawei in Shenzhen earlier on Wednesday, Ramaphosa said the security cluster ministers would have to come up with a comprehensive response to the issues of safety in South Africa, and introduce new ways to ensure the wellbeing of citizens as well as foreign investors.

Indications were that the country would have to pay top dollar if it wanted to acquire modern technology to improve security and boost investments, as evidenced by his Huawei visit. There, Ramaphosa, Police Minister Bheki Cele and other Cabinet ministers were shown innovative, tech-smart solutions that could enhance safety and security in South Africa.

According to officials at Huawei, similar technology has been installed in the Kenyan cities of Nairobi and Mombasa, and has resulted in a 47% drop in crime. Experts said that two years from now, an estimated 2 000 cameras will be operating in that country at a cost of up to $160 million (R2.4 billion).

Ramaphosa told the media ahead of his return trip to South Africa that security deserved “a sharper focus since it is one of those constraints that impedes the flow of investment into South Africa”.

“People want to invest, but the concern they have about security is quite serious. In their own countries they have security and if we do not offer security in South Africa, they will pull back.”

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Read more on:    cyril rama­phosa  |  china  |  economy

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