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What came first, the struggling economy or a bumbling Jacob Zuma?

The proverbial guns (and the real ones), billboards, hashtags and tweets are out for President Jacob Zuma. “Zuma must go” they all demand, even some in his own party (not least in Gauteng). The list of reasons they cite are long and many of them justified. Poor folk cry the lack of economic opportunities and bad service delivery, middle-class folk cry corruption, while the rich sigh at the price of Swiss chocolates in Dubai Duty-Free. MANZA MUSA analyses.

The most sung, tweeted and shouted motivation for Zuma’s imminent fall has been the state of the economy. Jobs, jobs, jobs goes the DA’s mantra. After all, there’s only so much a gogo’s pension of R1430 a month can do for the extended family. There’s only so many times a person can walk from home to shop to factory asking for a job. Employment is the one uniting cause – black or white you need to eat, and a job allows this.

And so the DA abandoned its whiney-middle-class corruption cause, and took up the economy and jobs. The DA blame President Zuma and his government for the poor state of the economy and high levels of unemployment. They marched through Jo’burg and put up a ticker-billboard counting the number of jobs lost due to Zuma. Don’t believe everything you read folks, those are some dodgy numbers.

Is the state of the economy doings of Zuma alone? Let’s look at the facts:
In the Mbeki years (1999 – 2008) the economy grew by an average of 4.2% a year, and by 2.6% on a per capita basis (that’s relative to the population of the country). When he was kicked out of office, the official unemployment level sat at 22.8%, the broad rate – which counts discouraged job-seekers was 30.9%. The US dollar costed R7, 50. The government’s debt sat at 23.3% of GDP.

Then, enter His Excellency Zuma. Under him, the economy has grown by a paltry average of 2.4% a year. Per capita growth decreased to less than 1% a year. The official employment rate increased to 25% (broad is almost 37%). The US dollar costs more than twice it did when Thabo left the Union Buildings (R15, 45). Government debt has soared to 43.5% of GDP.

To your average Mmusi or Helen it would seem that Zuma is squarely responsible for this mess. And JZ’s deceptive detractors in the opposition and media would like to leave it at this – correlation must mean causality. But in first-year economics or statistics they teach that correlation does not equal causality. If two events occur at the same time – it doesn’t necessarily mean that that one caused the other. For example, if Herman Mashaba bought the KFC at Park Station, and then prices went up, the cuts were smaller, the chips were burnt and the Coke was flat, we’d be wrong to conclude that this was because of Mashaba’s poor management. We need to look at all possible factors. Perhaps in this time, the drought affected the quality of the chicken and potatoes, and the KFC franchisors increased the prices and coke supplier supplied old stock. Herman may have in fact done everything he could have to prevent a bigger disaster!

So, the economy under Zuma requires an honest look (even if he doesn’t):
Zuma came to office in the eye of the perfect storm – 2009. Eight months after the US stock market crashed, setting off a global financial crisis on a scale never seen in over 80 years! Zuma also took the top job a year after the country started experiencing a crippling electricity crisis – with a lot of load shedding.

The whole world experienced the effects of the financial crisis – that’s why it’s called a global financial crisis! Global growth and trade slowed down big time. Our peers such as Brazil, Russia and Turkey are still struggling. It affected everyone. It affected South Africa disproportionately because we’re a small economy that trades a lot with the world. Our biggest trading partners Europe, China and USA reduced the amount they imported from us. This didn’t only affect the amount we exported – but also the price we got for our exports. When demand decreases, so does the price – so exports such as platinum, iron ore, coal etc. – which bring in the foreign currency required to keep the rand going – fell, and so did the rand! The world has still not recovered.

On the domestic side, keeping the lights on became Zuma’s problem. A problem that started under Mandela and Mbeki (in the 1990s, Eskom approached government saying that we needed more power else we’d run out by the late 2000s – but Mbeki, Alec Erwin and Trevor Manuel and co. told Eskom to go eat a mopani worm). Without power, there is no economic activity. Eskom tried to reduce demand for electricity by reducing economic activity – they started paying companies to stop business activity and even slowed down connecting new businesses to the grid. That bought Eskom some breathing space, but choked the economy.

Building new power plants only began in 2007, so it was going to be a few years before this problem was resolved (9 years later we’re still waiting!). As if the shortage wasn’t enough, electricity prices had to rocket after 2008 to pay for the new plants (Medupi and Kusile). Almost overnight, consumers and businesses saw their electricity bills double, increasing the cost of living and doing businesses. Businesses that had grown used to cheap electricity now saw their profitability falling. This hit us hard.

Zuma’s role in this period was to provide decisive leadership and a steady hand to sail the ship that is the SA economy through the heavy winds and waves of the perfect storm. This was not the time to increase our speed or to change direction, but rather to weather the storm and wait for it to pass.

Zuma failed spectacularly, and we’re still being battered by the storm.

Here’s what he could have done:
1. Appointed and retained competent folk in key positions in government and parastatals. Incompetent appointments have hampered government’s ability to deliver.

2. Made doing business a lot easier and cheaper. We have too many pain-in-the-butt regulations which make people think twice about starting a business.

3. Intervened in the Eskom build program when he got into office – a whole seven years ago!

4. Required government departments to assess the impact of proposed policy changes. That way, silly changes to visa regulations (which harmed tourism) wouldn’t have been made.

4. Only funded job creation programmes that work – too many don’t and cost the taxpayers billions of rands.

5. Decreased, rather than increased the number of government departments. We have a Department of Trade and Industry, why do we need the Department of Economic Development and a Ministry of Small Business?

6. Adopted and enforced best practice at the municipal and provincial level – even if the best practice was from an opposition-run municipality.

7. Not agreed to the greedy demands from public sector unions – they’re costing the tax payer billions of rands.

8. Not fired Nene.

9.Paid for Nkandla.

10. Prayed for higher global growth and commodity prices.

These changes would never have delivered us to the Promised Land of 7% growth, 10% unemployment, and R6 to the US dollar and iPhones for all. But we would have been in a slightly better position than we are now.

There are many reasons for Zuma to go (and he must), but to squarely blame him for the state of the economy and unemployment is poor economics, deceitful, and accords him too much credit. It’s cheap politics. The next president, not matter how awesome, faces a massive task!

Manza Musa is a rebel economist.

Featured image via GCIS. 

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