Tag: Ramaphosa

By Luyolo Mkentane for Business Day

The unemployment rate rose to a near 15-year high in the first quarter of 2019, highlighting the enormity of President Cyril Ramaphosa’s plans to recover the country’s economy.

Ramaphosa said he wants to lead the country out of “nine wasted years”, a tacit reference to his predecessor Jacob Zuma’s term in office, which was marked by increasingly brazen corruption and state capture. Under Zuma’s watch unemployment soared and economic growth faltered, while confidence in the SA economy fell to new lows.

Statistics SA’s quarterly labour force survey revealed on Tuesday that the unemployment rate jumped 0.5 percentage points to 27.6% in the first quarter of 2019.

According to Trading Economics, the unemployment rate averaged 25.66% from 2000 until 2019, reaching a high of 31.20% in the first quarter of 2003 and a record low of 21.50% in the fourth quarter of 2008.

The economy lost 237,000 jobs during the first quarter of 2019. Leading that was the construction sector, which shed 142,000 jobs.

Due to subdued activity in the sector, construction and engineering company Group Five is intending to sell the only profitable assets it owns to help it survive, while Basil Read is in business rescue.

The finance sector trailed behind with 94,000 job losses, community and social services 50,000, and private households 31,000.

The mining sector, one of the pillars of the SA economy, shed 20,000 jobs and agriculture 12,000. Employment gains were recorded in the transport industry with 59,000 jobs, trade 25,000, utilities 16,000 and manufacturing 14,000.

Nedbank chief economist Dennis Dykes said Ramaphosa faced an enormous task in reversing the unemployment rate. “It is extremely unusual and it must be difficult for him because he was left this terrible legacy by the previous administration.”

The country needed economic growth that was labour absorbing, Dykes said, adding that Ramaphosa should create a conducive business environment to allow captains of industry to grow the embattled economy, which grew 0.8% in 2018.

Econometrix chief economist Azar Jammine said Ramaphosa needed to tackle policies that had led to unemployment, such as improving the education system and labour laws, to make them more attractive for business.

He singled out the national minimum wage, which came into effect in January, saying it could be argued that it is one of the factors that contributed to the spike in unemployment.

“The point is, are people going to support him in trying to fix the problems? Cosatu is one of his biggest supporters but it will oppose any amendment of the labour laws,” said Jammine.

Stellenbosch University political analyst professor Amanda Gouws said the rise in unemployment presented Ramaphosa with the opportunity to strengthen his hand and get rid of deadwood and corrupt ministers in his new cabinet.

“He has promised to improve the economy and clean up the rot in government. He has the ability to do that. Those numbers show this is the legacy Zuma left us,” said Gouws.

Ramaphosa appointed investment envoys in 2018 in his quest to raise $100bn in new investments over the next five years.

Nelson Mandela University political analyst Ongama Mtimka said infrastructure investment could help stimulate greater economic growth and help address what he described as SA’s long-term unemployment problem.

“We know there are underlying structural problems in SA that are long term and what makes matters worse is the fact that it’s mostly young people that are unemployed,” he said.

Cosatu spokesperson Sizwe Pamla said Ramaphosa had at most two years to convince the electorate that he had a plan to arrest spiralling unemployment. The 0.5 percentage point increase in unemployment was a wake-up call to the president and his incoming administration, he said.

“It speaks directly to the enormity of challenges awaiting them.”

President Jacob Zuma will face a fresh bid to force him from office when the ANC’s top leadership meets this week for the first time since he relinquished control of the party to his deputy, Cyril Ramaphosa.

A proposal to order Zuma to step down before his term ends in 2019 will be discussed at a Wednesday meeting of the party’s National Executive Committee in East London, according to three members of the panel who spoke on condition of anonymity.

Zuma’s scandal-tainted tenure has eroded support for the ANC.

The NEC’s 86 voting members are divided into two loose factions – one that backed Ramaphosa, 65, to take over as party leader at the ANC’s national conference last month and another that’s allied to Zuma and favoured his ex-wife Nkosazana Dlamini-Zuma to succeed him.

Ramaphosa won the contest with just 52% of the vote, giving him a tenuous hold over the party, and it remains unclear where exactly the balance of power lies within the panel, which usually takes decisions by consensus.

“Given Cyril Ramaphosa’s emphasis on renewing the ANC, doing things afresh, it makes all the sense that the matter should be a priority agenda issue,” Mcebisi Ndletyana, a political science professor at the University of Johannesburg, said by phone.

“If it is raised and the motion is defeated, then that is a serious worry. It would be indicative that he does not have everyone behind him. It would make him a very weak president.”

Graft charges

The ANC’s former head of intelligence, Zuma, 75, took office in May 2009 just weeks after prosecutors dropped graft charges against him.

He’s spent years fighting a bid by opposition parties to have those charges reinstated and fending off allegations that he allowed members of the Gupta family to influence Cabinet appointments and the award of state contracts.

Euphoria following Ramaphosa’s election as ANC leader helped boost the rand 11% last month, the most among the world’s major currencies. The rand declined 0.9% to 12.4318/$ at 16:06 on Monday, as analysts at Rabobank and JPMorgan Chase said the currency has rallied too far.

Corruption clampdown

Ramaphosa said the ANC, which marked the 106th anniversary of its founding on Monday, needed to lead by example and that its leaders needed to serve with humility, modesty and commitment.

“We will adopt a value system to root out corruption within our ranks,” he said at a wreath-laying ceremony at Inanda in KwaZulu-Natal. “Corruption undermines the interest of our people as a whole.”

While unsuccessful bids to oust Zuma were made at NEC meetings in November 2016 and March last year, a number of its members have changed since the elective conference in December. His second and final term is due to end around mid-2019.

ANC spokesperson Zizi Kodwa said the NEC meeting agenda had yet to be determined, but the issue of Zuma’s early departure could be raised. “There are no no-go areas in that meeting,” Kodwa said by phone.

Darias Jonker, an Africa analyst at risk-advisory firm Eurasia Group, expects Zuma’s ouster to be delayed until the second quarter of the year even though his continued presence in office may hamper the ANC as it gears up to contest elections in 2019.

“Ramaphosa must still tolerate Zuma allies in the NEC and minimise tensions within the party by not appearing to have a personal agenda against Zuma,” Jonker said.

“Zuma loyalists, such as newly elected Secretary General Ace Magashule, remain in key party positions.”

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