South Africa must enshrine its reform process in law to guarantee the momentum gained under President Cyril Ramaphosa endures after he leaves office, said the head of a key business lobby group.
“The reform project is the most important project that is happening in this country,” Business Leadership South Africa Chief Executive Officer Busi Mavuso said in an interview at Bloomberg’s office in Johannesburg on Wednesday. “Reducing government dominance in the country gives the country the resilience in order to continue functioning, irrespective of what happens in politics.”
Investors have warmed to Africa’s largest economy as reforms begin to bear fruit, most visibly with the end of almost daily power cuts as the state-owned electricity utility improves its performance. South Africa’s credit-rating has been upgraded, the much-maligned rand has strengthened, and the stock market hit a record high in February.
But the legacy of corruption and mismanagement under Ramaphosa’s predecessor, Jacob Zuma, still dogs an economy that has expanded at less than 1% annually for more than a decade. And with Zuma still a political force, there’s apprehension whether the pro-growth track of Ramaphosa and his government coalition partners will survive the election cycle.
The next general election isn’t until 2029. But Ramaphosa will stand down as leader of the African National Congress — the country’s biggest political party — in late 2027, and in the past the incoming head of the ANC has then become president.
Before then, the country holds municipal elections on Nov. 4.
If the ANC loses ground with voters – as polls suggest it might — it may weaken Ramaphosa’s ability to steer the selection of his successor toward someone who will continue reforms. He also faces a potential parliamentary impeachment process over a 2022 cash-in-sofa scandal that he’s challenging in court.
“Our country has been undermined by politics,” Mavuso said. “You are therefore, through reforms, decoupling the functioning of the economy from politics, you are derisking the function of the economy from politics.”
Her remarks come as the government and private sector launch the third phase of their partnership aimed at lifting national economic growth to 3% by 2030.
Ramaphosa established Operation Vulindlela, a unit within his own office aimed at fast-tracking reform implementation, and between 70% and 75% of those in the energy and logistics sectors are complete.
The urgency is pressing. Data this week showed the economy contracted by a larger than anticipated 0.2% in the second quarter, snapping six quarters of consecutive growth.
Mavuso cautioned that the numbers show the economy remains vulnerable and that improvements at State power utility Eskom and the State port and rail operator Transnet only mark the beginning of the process. That’s why getting the reforms written into law is essential, she said.
“If the reforms are reducing the government dominance on the economy, it shouldn’t matter who the president is because we’ll still be able to generate electricity irrespective of what happens,” Mavuso said. “At that time, it will be a function of implementing what’s in the law.”
