Six SA Presidents - how did they fare for SA Inc?

2014-06-30 11:34

How does one measure the success of a Presidential term? Is it results the incumbent managed to garner at the ballot box or is it through metrics that represent the "share price" of "SA Inc?" Chances are most people use the former whilst we would like to examine the latter. We focus on the last six presidents of SA starting with PW Botha in 1984.

First up is the JSE real after-inflation performance during each presidential term. Had you invested R1.00 in each presidential term, how would you have fared? The chart below shows that the JSE performed the 3rd best under PW Botha's term of rule - which probably comes as a surprise to many. One notes that the JSE crashed horribly just after his infamous "Rubicon" speech and yet clawed back much of  its losses.  However this is probably more a function of the economy gearing up for self-sufficiency in the wake of sanctions than anything else. Clearly, Thabo Mbeki's 2nd term is the clear winner here. Interestingly enough, despite all the criticism leveled at the Zuma administration, the JSE performance during his tenure is notable as second highest.

The fact that the JSE during PW Botha's tenure performed 3rd best is surely a sign that the stock market alone cannot be used to measure the success of a presidential term. So where else can we look to measure the performance of "SA Inc"? It is often said that the Rand exchange rate to the Dollar behaves like a "share price" for SA Inc since it measures the demand appetite for our currency (and hence exposure to our economy and assets) as well as our productivity and competitiveness. This is shown below:

Every SA president has overseen a drop in the Rand, and this is likely to continue into the future due to the uncompetitiveness of our labour force and economy. However it will come as somewhat of a surprise to those that regularly bash the Zuma administration for overseeing the collapse of the Rand that the Rand strengthened the most at some point under his administration (by some 28%) before finally sucumbing to a depreciation of around 22% at the final point of his term. This performance was better than under Mandela and FW de Klerk and certainly better than under PW Botha. Thabo Mbeki's first term takes first prize here for around a 9% depreciation during his 5 year term, which is most notable given that halfway through this term the Rand had depreciated by a staggering  55%.

Our next metric is, we believe, the most important and that is the performance of SA economic growth itself. For this comparison we used the South African Reserve Banks' monthly co-incident economic index. Mbeki's 2nd term is a clear winner here but again, detractors of the Zuma administration will be dismayed to learn that the economy experienced its 2nd fastest growth compared to all other presidential terms during the Zuma years. Granted, Zuma had the benefit of timing, having started his term just as the great 2008 recession was ending (with Motlanthe having to take one for the team during his interim presidency)  and a luxury only Mandela had the fortune to experience when he picked the economy up after the horrible slide it had under FW de Klerks' term.

The above 3 metrics together are probably the best representation of the overall performance of a Presidential term with regards to "SA Inc's share price" (ignoring items such as  political dispensation, democratic rights etc.) and looking at the three it is clear that Thabo Mbeki's 2nd term was the overall winner on rankings. Ironic then that this tenure was cut short with his recall by the ANC.

However we wish to focus now on something close to the hearts and minds of many of us, namely employment. The chart below shows the growth in private sector employment during each presidential term and this is clearly one area of dismal failure under the Zuma administration, particularly given that its election campaign to secure the term was based heavily on the promise of creation of 5 million jobs. Clearly, private sector employment shrank under Zuma's term. Sure, Government sector employment ballooned during Zuma's term but this is not sustainable for any economy as our current account deficit is painfully showing.

What is even more of an indictment is that private sector employment under PW Botha out-performed all but the 2nd Mbeki term. How is this possible under sanctions? If you think carefully about this it just shows how employment can be boosted if we put our minds to it. In Botha's case, SA Inc. had no choice - having crossed the Rubicon and cutting itself off from the rest of the world through its policies that invoked worldwide sanctions, the SA economy and employment actually grew because it HAD TO. Necessities we could no longer import had to be MANUFACTURED LOCALLY. Just like the World Cup put pressure on the government to pull out the stops on infrastructure development, sanctions forced SA to become independent from the rest of the world and manufacture what it could not import. Of course, Apartheid and sanctions-busting (just like public sector employment) is never going to be a long term solution but the point to be made is if we could somehow ignite manufacturing and infrastructure development to half the extent SA was forced to ignite it under sanctions, everyone would be better off.

Finally, regarding Zuma's great fortune at picking up his tenure just after the Great 2008 Recession, it should be noted that NONE of the prior presidents have ever managed to skirt a recession - something that should sober the current administration greatly upon reflection. Given the current  lacklustre state of the SA economy, their time for recession may be upon them sooner than they think.

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