The biggest headaches facing Ramaphosa, SA's incoming president

Cape Town - South Africa’s next president faces a tough road in rebuilding investor confidence and reviving the economy in the wake of Jacob Zuma’s nine-year tenure that was marred by scandal, misrule and policy missteps.

Zuma resigned Wednesday night, almost two months after he was replaced as head of the African National Congress by Deputy President Cyril Ramaphosa, who’ll likely became the nation’s leader when parliament elects a new president on Thursday.

These are some of the biggest challenges that will confront Zuma’s successor:

1. Tackling corruption

Investigations by the Public Protector and Auditor-General found that corruption is endemic in the state, with tens of billions of rand stolen or squandered each year. Zuma appointees head almost all the law-enforcement agencies, which have been slow or loathe to act against some of his closest allies who’ve been implicated in the free-for-all.

The new president will need to replace several key officials, reassert confidence in the independence and integrity of the criminal prosecution system and show that the government is intent on ensuring all those found guilty of corruption are held accountable.

2. State-owned companies in chaos

The looting spree largely targeted state companies, especially power utility Eskom, which is at risk of running out of cash. While Ramaphosa has already overseen the appointment of a new board at Eskom, it still needs to appoint a permanent chief executive officer, fill several other top management posts and urgently raise new funding.

South African Airways and oil and gas company PetroSA are among the other entities that have been been hobbled by a lack of leadership and oversight.

3. Reigniting growth

While the government’s National Development Plan says a average 5.4% economic growth rate is needed to meet its goal of slashing a 27% unemployment rate, the SA Reserve Bank anticipates an expansion of just 1.4% this year and 1.6% in 2019.

Greater policy certainty would go a long way toward boosting business confidence and investment in the economy. That is especially true for the mining industry, which accounts for half of South Africa’s exports and has been at loggerheads with the government for years over black ownership laws.

4. Warding off further credit rating downgrades

S&P Global Ratings and Fitch Ratings cut the country’s debt to junk in 2017 after Zuma fired the respected Pravin Gordhan as his finance minister. Moody’s Investors Service put the nation on review for a downgrade in November, and is due to deliver its assessment in March.

Another reduction of the local-currency bond rating to junk would trigger an exclusion of South Africa’s rand debt from Citigroup Inc.’s World Government Bond Index and spark a selloff by investors tracking the gauge. Avoiding that prospect will require the new administration to show its commitment to tackling corruption, bolstering growth and sticking to its expenditure ceiling and budget deficit-reduction plans.

5. Finding money to fund free tertiary education

Shortly before he was replaced as ANC leader, Zuma announced that tertiary education for students from homes where the combined annual income is less than R350 000 would be fully subsidised.

While the ruling party endorsed the plan, there’s no budget for it, and his successor will have to come up with ways to find the cash, which may mean unpopular spending cuts and tax increases.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.55
(+0.78)
ZAR/GBP
20.92
(+0.37)
ZAR/EUR
18.93
(+0.67)
ZAR/AUD
11.62
(+0.40)
ZAR/JPY
0.16
(+0.47)
Gold
1807.86
(-0.06)
Silver
19.25
(-0.03)
Platinum
830.00
(+0.18)
Brent Crude
43.06
(+0.42)
Palladium
1963.00
(+0.31)
All Share
56374.05
(+1.52)
Top 40
52048.69
(+1.59)
Financial 15
10697.88
(+1.61)
Industrial 25
76413.30
(+1.19)
Resource 10
54358.32
(+2.14)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 2134 votes
I am taking a hit, but should be able to recover in the next year
23% - 2732 votes
My finances have been devastated
35% - 4142 votes
It's still too early to know what the full effect will be
25% - 2966 votes
Vote