South Africa: this way down

You can tell we are in serious trouble when the Presidency has to remind the world that Nelson Mandela was our first president and of the success of the 2010 Fifa Soccer World Cup to counter negative publicity. A cover story by The Economist titled Cry, the beloved country - South Africa's sad decline, hit hard and cut deep.

The journal takes an in-depth look at the country, noting in one of its articles that in many ways "South Africa is in a worse state than at any point since 1994". It cites the Marikana massacre and subsequent upheaval in the mining sector as well as the downgrade in the country's sovereign rating due to "the declining quality of the government, growing social stresses and worsening conditions for investment".

"Economic malaise and the chronic failure of government services are an indictment of South Africa's politicians," the piece said. "Under Apartheid, a role in the ANC was about sacrifice and risk. Today it is a ticket for the gravy train. Jobs in national and local politics provide access to public funds and cash from firms eager to buy political influence."

The journal is extremely critical of Zuma: "The ANC under his aegis has sought to undermine the independence of the courts, the police, the prosecuting authorities and the press. It has conflated the interests of party and state, dishing out contracts for public works as rewards for loyalty - hence the bitter jest that the government is in hock to 'tenderpreneurs'. This has reduced economic competitiveness and bolstered a fabulously rich black elite. As a result, too little wealth trickles down."

Unlike the local media, which is trying to maintain a dispassionate view of the ANC's Mangaung conference, The Economist sliced to the core: "Although the ANC still has no obvious alternative leader, the party should look to chuck out Mr Zuma when it holds a party election in December, though pollsters consider that unlikely".

And the reason for the Presidency's hasty response was the sting in the tail: "Most of all, South Africa needs political competition. Its neighbours to the north are moving away from the one-party systems that dragged them to corruption and stagnation for decades. South Africa is heading in the opposite direction. The best hope for the country in years to come is a real split in the ANC between the populist left and the fat-cat right to offer a genuine choice for voters. Until that happens, South Africa is doomed to go down as the rest of Africa goes up".

Ironically, on Friday Zuma was discouraging negative talk about the country. Clearly by then the president's attention had not been alerted to the assessment of one of the world's foremost publications as he assumed the negative sentiment was a domestic problem.

"During this period of a global economic downturn, we urge those who have access to the media from all sectors including opposition politicians, to stop talking our country and economy down. No country should be made to withstand such negativity and total disregard of progress being made or any positive attribute," Zuma said at the opening of an infrastructure conference in Johannesburg.

On Sunday the Presidency released a detailed statement saying the assertions in The Economist could not "go unchallenged as they are so misleading".

"The country may have received a downgrade from two rating agencies, but so have many other countries even in Europe and elsewhere. It is the sign of the times. The world is going through a period of serious economic upheaval," the statement read, saying that although South Africa was privileged to have had Nelson Mandela as its first president, this does not make the country "immune from economic, social or political challenges".

"Despite the challenges, South Africa is getting many things right. On the economic front, the economy possesses the necessary dynamism to position the country as a competitive player in a difficult global economic environment," the Presidency said, tracing its successes in delivery and the treatment in HIV/Aids.

"Building on the 2010 FIFA World Cup infrastructure build success, we have unveiled a 20-year infrastructure development programme that will cost around 4-trillion rand over the next 15 years. We will spend around R844-billion over the next three years. We are truly a country at work for a better life."

Due to the line between party and state, the Presidency could not respond directly to the criticism around the battles in the ANC. "We have noted the tendency of late to exaggerate the debates and contestation within the ruling party, the African National Congress as being as symptom of instability. ANC conferences are no more controversial than political dynamics in many other countries," it said.

The statement also referred to the crisis meeting convened by Zuma last week to deal with the chaos in the mining sector and economic turbulence.

"In response to the economic meltdown and the wildcat strikes, President Jacob Zuma convened the High Level Dialogue on the Economy, bringing together government, business, labour and the community sectors. A similar initiative during the 2009 recession worked tremendously to cushion the economy and protect jobs. The outcome of the dialogue was an economic package designed to stabilise the labour environment, improve living conditions of mining communities and to further promote job creation."

But what gave fuel to the negative take of The Economist and several other publications, including The Wall Street Journal, The Washington Post and the Financial Times, were the successive downgrades of South Africa's sovereign debt rating by Moody's and Standard & Poor's (S&P).

Moody's also downgraded credit ratings of 12 municipalities, Eskom, Telkom, the Industrial Development Corporation, the Development Bank of Southern Africa (DBSA), Absa, First Rand, Nedbank and Investec. S&P has issued downgrades for the DBSA, Standard Bank, FNB, Eskom, Santam and Anglo American. Sasol, Gold Fields and AngloGold Ashanti were placed on negative credit watch.

Business Times on Sunday quoted Kevin Lings, chief economist at Stanlib, as saying that unlike country downgrades in the European Union, South Africa's downgrade was "not because of a tough economy. It has to do with our domestic issues and the way we have not managed to articulate our economic policy and that has led to a high degree of uncertainty around policy".

The uncertainty and negativity has even drawn former President Thabo Mbeki out from his self-imposed silence on domestic issues. Delivering a lecture on Oliver Tambo at the University of Fort Hare on Friday, Mbeki said: "I must state that I have prepared this lecture deeply troubled by a feeling of great unease that our beloved Motherland is losing its sense of direction, and that, we are allowing ourselves to progress towards a costly disaster of a protracted and endemic general crisis.

"Today, as we meet here at Fort Hare, I, for one, am not certain about where our country and nation will be tomorrow, and what I should do in this regard, to respond to what is obviously a dangerous and unacceptable situation of directionless and unguided national drift," Mbeki said.

"My feeling of unease is also informed by what I sense is a pervasive understanding throughout the nation that there is no certainty about our future with regard to any of our known challenges, and therefore the future of the nation," he said.

Although pointing to the failure of leadership, Mbeki clearly did not want his rare engagement on domestic issues to be used to pit him against his successor. "I hope, sincerely, that nobody will resort to what seems to have become normal mischief, to highlight any part of what I have said to generate short-lived media sensation, thus to divert attention away from the serious national tasks to which we, together, must attend."

But as quotable as Mbeki's comments might be, he is not saying anything that the world does not already know about South Africa's crisis of leadership. In the midst of the negative economic environment and battered investor confidence, Finance Minister Pravin Gordhan will table the medium-term budget policy statement in Parliament on Thursday.

This is likely to be Gordhan's most difficult budget statement since he was appointed to head the Treasury in 2009, with growth and deficit forecasts unlikely to be met. Gordhan is likely to urge further belt-tightening, but these are likely to be counter-posed against yet another scandal around excessive state spending at the president's Nkandla homestead.

City Press reported that a few days before Zuma called on executives to take a pay freeze, the public works department approved payments of millions of rand to contractors developing his homestead. The paper said multimillion-rand payments to at least nine companies were authorised last Friday.

Government has a difficult few weeks ahead as the international investor spotlight will remain on the country in light of the instability in the mining sector, the commencement of the Farlam Commission of Inquiry into the Marikana massacre and policy worries ahead of the ANC national conference.

Clearly the president's appeal to refrain from negative commentary about the country is not enough to counter the negative environment. It would take good leadership to achieve that.

The Economist stated in its brutal assessment of the country: "If (Zuma) is simply re-elected without promising anything new, it will be a worrying sign that the ANC has failed to grasp what ails their country.

The tragedy of Marikana appalled South Africans and outsiders alike. If it does not jolt the government into action, what will?"

Many South Africans have been asking the same question and ringing the alarm bells about the consequences corruption, wanton state expenditure and the undermining of the independence of the courts, the security agencies, the National Prosecuting Authority and the media. Unless government and the ANC specifically address these and show demonstrable action towards reducing inequalities in society, including by curbing their own flamboyance, the bad news will keep coming.

This is the only way the ANC government can hope to return to the success story the world once fell in love with.

This column appeared in The Daily Maverick.