The bogeyman of South Africa s economy

Political decisions in South Africa’s government have sent the economy into freefall

James Vandrau

Jacob Zuma is a politician that served as South African president from 9th May, 2009 to 14th February, 2018 who many claim to be the most controversial South African president since the end of white-minority rule in the early 1990s. His controversy stems mainly from the extensive list of corruptive use of presidential power that in turn were the causes of why corruption and bribery under his presidency cost South Africa over R500 billion, stated the current South African president, Cyril Ramaphosa. During his first year of presidency, Mr Zuma’s Nklanda home-

stead was renovated supposedly for security upgrades. However, rumours and accusations emerged of nonsecurity related advancements to Zuma’s house being paid with taxpayer funds. This lead to an investigation from Public Protector Thuli Madonsela who’s “Secure in Comfort” report found that these upgrades included a swimming pool, amphitheatre, cattle kraal and chicken run which were obviously not security-related. However, The City Press revealed Zuma would only pay 5% of the R203 million cost of the Nklanda Project. If taxpayer money was used for the extra renovations which they most likely were. Then this creates an opportunity cost as the funds could have been spent towards National debt (as in 2009, South Africa has a national debt of $89,530 million which would continue to increase), Health programmes (such as HIV/AIDS treatment as

around 5.6 million citizens were infected in 2009) or Education programs (as in 2009, around 60.6% of students passed their matriculation exams). Jacob Zuma’s destruction of the economy continued when he fired Finance Minister Nhlanhla Nene in December of 2015 for no apparent reason and replaced him with David Van Rooyen, who at the time was immensely unknown in the world of finance. This out of the blue decision by Zuma after Mr Nene had only been in his position for 18 months had some major side effects on the economy. For example, investor and business confidence began to de-

crease as Nene was well respected as a finance minister and people were afraid of losing their money if they invested with Van Rooyen. This led to a slower economic growth overall and the Standard & Poor’s Financial Services lowered South Africa’s credit rating to just above junk status. What’s more, is that after Nene’s removal, the rand decreased lowest value in four years’ when compared to the dollar. A weaker currency would mean rising profit margins for exports which could result in cost push inflation. Altogether, the monetary affect of his dismissal was that of a debt servicing rising between R1.5 billion and R2 billion estimated Dr. Azar Jammine. Two years after Jacob Zuma removed Nhlanhla Nene in 2015 from his position as finance minister of South Africa, he announced the 2017 South African Cabinet Reshuffle

which led to the sudden dismissal of finance minister at the time Pravin Gordham. The reshuffle was catastrophic for the economy as for one it lowered South Africa’s credit rating from Standard & Poor’s Financial Services to junk level (which is worse than the rating it got during the aftermath of Nene’s removal) and the

around $7 million over the next two years following the removal due to the drop in economic growth. Finally, probably the most controversial moment of corruptive play in Jacob Zuma’s presidential career, the Gupta Family is an exceedingly money was misused. wealthy Indian family whose business including the Sun City wedding of Vega Gupta and Aakash Jahajgarhia and the white monopoly capital hashtag, the Vrede Dairy Project was most definitely the one that was most likely to affect the economy. In 2013, many newspapers and social media outlets alleged that R30 million of public money that was suplaundered through Dubai and used to pay for the hefty price of the Sun City wedding. If this were true, then there

would be a high possibility of the public money that should have been used by the government to provide goods and services for the general

public were actually not used to increase economic growth whatsoever. This relates to Jacob Zuma due to his extremely close connection with the Gupta Family and as shown by the extra upgrades for his Nklanda homestead, he is willing to use government spending money for corrupt purpos-

country’s GDP was estimated to lose

Many newspapers and social media outlets alleged that R30 million of public

es. ventures are mainly located in South posed to be spent for a farming and Africa. While the Gupta’s and South agricultural project found in Vrede, Africa have had many controversies Free State, South Africa was actually