It’s been pretty clear for some time that the quarter of a century honeymoon the ANC has enjoyed with the international community is at an end.
Rampant corruption has undermined faith in the South African government. This is clear from a joint memorandum signed by the governments of Germany, the United Kingdom, the USA, the Netherlands and Switzerland, warning that South Africa needs to take action against corruption.
President Ramaphosa’s spokesman acknowledged the memorandum, which calls for a ‘clear, unqualified and manifest political commitment to the rule of law, the independence of the judiciary and to honest and ethical business practices’. The five countries also said that they were concerned about the challenges of foreign investment, referring to the ‘constant changes of the goalposts’ in the regulatory framework for mining, BEE targets and intellectual property rights.
The fact that the ANC tolerated the looting of the state by the Guptas, Zuma and their associates has not gone unnoticed.
Cap in hand to the IMF
This comes as two events coincide.
On the one hand, the South African government has gone to the International Monetary Fund to seek $4.2bn in emergency finance, as its own funding has dried up. This is dressed up as help to meet the Covid crisis.
The conditions will not be as severe as a full bailout, but still harsh.
“They are the subject of negotiation, not IMF-designed “structural adjustment” packages. And with the emergency facilities, unlike with standby arrangements, the IMF has no way of enforcing, after the fact, that countries deliver on their promises. So Mboweni can legitimately say that the IMF loan would not put national sovereignty at risk, which is the basis on which the ANC gave its blessing to apply.”
On the other hand, the Treasury is attempting to refuse a further bailout for South African Airways. Together with other state owned enterprises, SAA is draining the coffers and this cannot be tolerated any further.
Unions are resisting the liquidation of the once-profitable airline, and calling for Tito Mboweni to be sacked.
“The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) intend to take legal action to prevent the liquidation of South African Airways (SAA), and have urged President Cyril Ramaphosa to fire Finance Minister Tito Mboweni.”
A titanic struggle is under way between those (like Mboweni) who want to save the country’s finances and those in the ANC and its allies who want President Ramaphosa to intervene to save jobs.
The latter position is clearly more attractive, but it could leave South Africa having to accept a full IMF restructuring – and that would be very painful indeed.