Highlights
– Oppositional COPE party faces defeat; violent protests and party member clashes anticipated in the near to medium-term
– High expectations for Zuma to confront rising crime and unemployment
– No major policy changes in near to medium-term, as public morale remains high in interim
South Africa’s national and provincial elections will be held on April 22, 2009, with Jacob Zuma, leader of the ruling African National Congress (ANC), projected to win the presidency.
Zuma’s charismatic appeal among the poor black community has managed to garner strong support and sympathy in the last six months. Despite his strong support and likely victory, we do not anticipate Zuma will act on his campaign promises in the near to medium-term.
We believe South Africa will continue to struggle for economic and social stability, as well as continue to be plagued by corruption and rampant crime. International leaders will pressure Zuma to act on crime and safety issues, particularly with the approach of the 2010 World Cup. Actions in these areas by Zuma could increase the prospects for international investments in South Africa in the near to medium-term (Previous Report).
Hope in Zuma
South Africa’s poorest citizens expect the most out of Zuma. With an official unemployment rate topping 20 percent and widespread poverty, the country is desperately awaiting Zuma to act on his campaign promises to improve education, health services, living conditions, and combat crime and corruption. At the ANC’s last rally, Zuma stressed the message of racial unity and prosperity for South Africa. An unexpected appearance from Nelson Mandela, wearing an ANC t-shirt, added more support and credibility to Zuma’s claims. However, we feel Zuma’s near-term promises may have been made without recourse to reality as he has no program to address the problems he outlined.
Forecast: More of the Same
We do not expect Zuma will deliver on his campaign promises in the near to medium-term. An ANC win will be the result of an anti-Mbeki campaign, rather than a pro-Zuma movement. We believe Zuma will continue promoting improvements after the elections, but little change will materialize among the people. Zuma’s fear for widespread riots and civil/political unrest will keep him advocating for change. Despite this encouragement, the country’s deep-seeded poverty and violent crime will demand much time and patience to undo. Zuma will most likely need to enact major political and economic reform in order to attain a sustainable and positive change in South Africa. With many diverse groups in the ANC, including communists, union workers, and businessmen, agreeing on mutually beneficial legislation will likely prove more politically difficult than South Africa’s masses currently expect.
This could be potentially disastrous for Zuma and the ANC, as COPE and other opposition groups have projected Zuma will fail to deliver on such priorities and will likely continue on a path of corruption. We believe incidents of violent crime and political unrest will breakout among rival party members following the elections.
Moreover, the economic infusion that will benefit South Africa as a result of its hosting the World Cup cannot be underestimated. Tournament planners are expecting nearly half a million visitors during the months of June and July 2010, when the tournament will take place. In addition to creating 159,000 jobs, the event is expected to contribute $2 billion to the nation’s GDP, $1.2 billion in visitor spending, and $670 million in additional tax revenue. Planners hope the World Cup will increase investment, trade, and especially tourism.
With such expectations surrounding the World Cup, Zuma will be forced to present an investment-friendly environment for interested foreign investors. However, should Zuma fail to present a transparent government – free from rampant corruption and economic stability – South Africa may potentially loose a golden opportunity to significantly advance its economy and improve the lot of its people.