In yet another brilliant analysis, former Oxford University don RW Johnson has applied his mind to 2016 and, specifically, South Africa after Nenegate. It promises to be an unpredictable year, punctuated by municipal elections where the penny should finally drop that the ANC is actually a party in decline. The ruling party is losing, to primarily the EFF but also the DA, and “is not equipped to understand this.” Liberation parties rarely are. Johnson is concerned at the possible reaction from an organisation which has internalised a belief that it will rule until the Second Coming. He wonders whether SA could be in for a repeat of Zimbabwe’s ZANU-PF approach of branding the opposition as the puppets of the West. Fearless as ever, Johnson asks the difficult questions about how far “unfire-able” Pravin Gordhan will push the envelope, urging him to show intent by acting decisively against SAA chairman Dudu Myeni. Another must read. Like all RW Johnson’s contributions. – Alec Hogg
By RW Johnson
2015 was an eventful year for South Africa, culminating in two further credit downgrades and the pantomime of three finance ministers in a week which saw a further downward spiral in the currency. This latter development seems to have awoken at least a few members of the ANC leadership to the fact that they are shuffling to the edge of a precipice, though most of the party continues to sleepwalk on.
The prospects for 2016 are particularly difficult to assess because we have yet to see the aftershocks of this last crisis. With many commentators now believing that a final downgrade to junk bond status is all but inevitable, one must expect continuing outflows of both capital and skills. Immediately, of course, we may see interest rate hikes in order to stabilize the Rand and then, presumably, a tough budget. But how tough?
Pravin Gordhan was a fairly complaisant figure in his first iteration as finance minister and allowed the downward slide in the Rand and the country’s credit ratings to continue unabated. No doubt he does not wish to see a further credit downgrade on his watch as minister but it remains to be seen whether he will really be willing to take the sort of actions required to stop it.