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23 April 2019
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Is Africa the next tourism growth frontier?

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South African President Jacob Zuma resigned on Valentine's Day, ending nine years of his scandal-marred administration. History will not be kind to his legacy.

Cyril Ramaphosa was sworn in as president on Feb 15, 2018. Markets cheered the transition of power as he enjoys a lot of support. He is expected to adopt business friendly policies, prompting the rand to rise.

Mr Ramaphosa has a number of serious challenges to deal with. Both the National Executive Committee (NEC) of the African National Congress (ANC) and its top six leaders are deeply divided.

The Cabinet he inherited from Mr Zuma was perceived to be corrupt and inefficient. Mr Ramaphosa also inherited a number of state-owned enterprises (SOEs) that are bleeding cash, with executive teams perceived as corrupt and inefficient.

The international ratings agencies are watching South Africa keenly, after two of them downgraded the country to junk-bond status.

Mr Ramaphosa also inherited an economy growing at below 1 per cent. He needs to convince the global investment community that he has South Africa's best interests at heart.

The road ahead is going to be difficult. Mr Zuma's departure, however, does give him more time to convince voters before elections in 2019 that he is committed to meeting his pledges to rebuild a battered economy and clamp down on corruption.

The path to the current poor situation South Africa finds itself in has been quite an eventful one.

THE ZUMA PERIOD
Mr Zuma's leadership of South Africa has been filled with maladministration and corruption. Before his election as president of South Africa in 2009, he had been faced with 783 charges of corruption. Although he had the charges against him withdrawn, the High Court later ruled that the charges should be reinstated.

In addition, the Public Protector ruled that he had to pay back some of the R250 million (S$27.6 million) involved in the renovation of his private house. The Constitutional Court also ruled that he had neglected his constitutional duty in his handling of the Public Protector's verdict.

The Zuma administration was also tarnished by his ties with the influential Gupta family from India, who are perceived as corrupt. Reports were rife about the extent of "state capture" and the Gupta family's involvement.

Various ministers were said to have been appointed on the recommendation of the Guptas. Mr Zuma's handling of the finance ministry portfolio led to both S&P and Fitch downgrading South Africa's credit rating to junk status. The rand weakened significantly, senior party leaders accused him of acting unilaterally, and people began to protest.

Mr Zuma's actions raised concerns that the ANC could lose support in next year's national elections. As it is, his leadership did cost the ANC a lot of support in the local elections of August 2016. Various parties within the ANC started to call for him to step down as president.

He blamed the situation on foreign entities wanting to destabilise South Africa, portraying himself as a victim. The Guptas obtained the services of British public relations firm Bell Pottinger to focus campaigns on the racial division in South Africa, taking away attention from Mr Zuma. Last year, it also became public knowledge that SAP, McKinsey and KPMG had been involved in various irregularities.

Mr Zuma survived various votes of no confidence in his presidency, including one as recently as last August 2017, in which about 30 ANC MPs voted for the motion.

THE POST-ZUMA PERIOD
Returning from the World Economic Forum in Davos in January 2018, Minister of Trade and Industry Rob Davies remarked about the new mood of optimism for South Africa and its prospects.

In previous years, investors had highlighted their concerns and raised criticisms of the country, but there was now an overall mood that South Africa was getting on top of its problems, for instance, by appointing a new board at Eskom and commissioning an inquiry into state capture.

Since Mr Ramaphosa took over as president, the country's volatile currency has been stabilising. Markets are seeing that things are finally improving.

The new president's insistence that corruption in SOEs such as Eskom be weeded out, not only strengthened his pitch at Davos, but also restored confidence within South Africa.

South Africa faces many challenges, and its people are quite vocal about it, showing that democracy and free speech are alive and well.

Also, the constitutional institutions designed to safeguard the democracy - the courts, the Treasury and the Auditor-General, to name but a few, are still resilient. Unfortunately, it seems that the current Public Protector has lost her credibility.

RAMAPHOSA'S TO-DO LIST
President Ramaphosa's work is cut out for him. He has to:
• Remove corruption from his Cabinet;
• Fix the bloated nature of his team and the government sector;
• Plan for economic growth as a driver of employment;
• Tackle the high unemployment (27 per cent), most of it among youth;
• Improve the level of trust among foreign and local investors in South Africa;
• Arrest the deterioration of South Africa's rankings on the World Bank's Ease of Doing Business Rankings (from 35th in 2007/2008 to 82nd in 2017/2018);
• Weed out the corruption and inefficiency in the country's SOEs;
• Develop a sustainable solution for the 17 million South Africans receiving government grants;
• Tackle the country's high level of crime, which has become a deterrent to foreign investors and tourists;
• Deal with the National Prosecuting Authority (its head is deemed to have been in Mr Zuma's pocket);
• Deal with the Public Protector, who has been severely criticised by the country's high court for her lack of insight in South Africa's laws, her lack of impartiality, dishonesty and incompetence;
• Restore confidence in the South African Revenue Service, the head of which was recently suspended for various irregularities;
• Tackle the land issue. Parliament adopted a resolution to change the Constitution to provide for land expropriation without compensation. Mr Ramaphosa declared that everything would be done within the letter of the law. This issue can create chaos in South Africa and deter foreign investors.

Mr Ramaphosa announced changes to his Cabinet on Feb 26. One change was the replacement of Malusi Gigaba as Minister of Finance. Nhlanhla Nene, fired as Minister of Finance in December 2015 for his opposition to some of Mr Zuma's plans, is again Minister of Finance. Pravin Gordhan, the last Minister of Finance to be fired by Mr Zuma in 2017 before the appointment of Mr Gigaba, is now the Minister of Public Enterprises, with the responsibility of overseeing the country's SOEs. These appointments should give comfort to the ratings agencies and foreign investors.

Strange retentions include previous Minister of Social Development Bathabile Dlamini as Minister of Women, and Mr Gigaba as the new Minister of Home Affairs. The appointment of Nkozasana Dlamini-Zuma as minister in the presidency responsible for planning, monitoring and evaluation, also raised a few eyebrows.

Mr Ramaphosa's new Cabinet is seemingly a balancing act, reconciling various factions within the ANC. It is likely that as he strengthens his power base in the ANC, he will have more freedom to appoint ministers of his own choosing.

By having elected him as ANC president and successor to Mr Zuma, the ANC has effectively ensured it will win the 2019 national general elections by a comfortable margin. It is now up to Mr Ramaphosa to deliver. He will be closely watched by all.

This article was first published in the The Business Times, 6 April 2018.

The writer is director of the NTU-SBF Centre for African Studies. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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