South Africa Faces Deep-Seated Economic and Energy Crisis
By Kestér Kenn Klomegâh
South Africa, highly considered as an economic powerhouse, is in deep-seated crisis. Energy deficit has crippled industrial operations and supplies for domestic use has largely been reduced. Unemployment is rising and cost of living becomes unbearable across the country. Social discontent, as a result of the crisis, has engulfed every corner in South Africa.
Reports monitored here say South Africa's President Cyril Ramaphosa
and his cabinet on May 7 held an extensive meeting with key business
leaders as concern over the country's energy crisis, logistic
constraints and close ties with Russia grow. Attendees discussed
collaborating to obtain inclusive growth, inspire confidence in the
economy and create jobs, the Presidency said in an official Twitter
post.
Five years after Ramaphosa ushered in a wave
of business optimism that he'd revive the economy crippled by
industrial-scale corruption under his predecessor, executives are
running out of patience with the president, who is seeking reelection
next year.
Economic stagnation stoked by record
daily power cuts, rampant crime, disintegrating infrastructure and
foreign policy missteps is leading investors to the exits. Yields on the
benchmark 10-year generic government bond have risen 129 basis points
this year to 12.1%, foreign buyers have been net sellers of the nation's
stocks and the rand has plunged 11%.
Executives
including Daniel Mminele, Nedbank Group Ltd.'s chairman, and MTN Group
Ltd.'s Chief Executive Officer Ralph Mupita have called for urgency in
resolving domestic hindrances to economic growth and warned the country
is at risk of becoming a so-called failed state. Others such as
FirstRand Ltd. Chief Executive Officer Alan Pullinger have criticized
the country's relationship with Russia. The government's indifference to
the war in Ukraine and its friendship with Russia is "foolhardy in the
extreme,” he said.
Early March, reports also
warned that South Africa's banking industry faces a "profound
geopolitical risk” from the government's close ties with Russia. South
Africa has drawn criticism from some of its biggest trading partners,
including the United States and the European Union, over military
exercises it conducted with Russia and China. Those countries have also
censured Ramaphosa's administration over its abstention from United
Nations resolutions condemning Russia’s war with Ukraine.
"Our
government's left-leaning enthusiasm for China and Russia is being
noticed by countries vehemently opposed” to the war in Ukraine,
FirstRand Ltd. Chief Executive Officer Alan Pullinger said at an
investor briefing in Johannesburg. The government's indifference to the
war and its friendship with Russia is "foolhardy in the extreme,” he
said.
South Africa's banking industry is dependent
on access to international markets, global clearing and settlement,
Pullinger said. The country risks consequences because of its stance on
Russia, he said. "Our collective access is a privilege; it is not a
right and it can be revoked with ease,” Pullinger said. "FirstRand does
not share our government's enthusiasm for Russia.”
With
an estimated population of 58 million, South Africa is the southernmost
country in Africa. It is bounded to the south by 2,798 kilometres of
coastline that stretches along the South Atlantic and Indian Oceans; to
the north by the neighbouring countries of Namibia, Botswana, and
Zimbabwe; and to the east and northeast by Mozambique and Eswatini.
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South Africa Faces Deep-Seated Economic and Energy Crisis
By Kestér Kenn Klomegâh South Africa, highly considered as an economic powerhouse, is in deep-seated crisis. Energy deficit has crippled industrial operations and supplies for domestic use has largely been reduced. Unemployment is r