‘If Zuma leads South Africa . . .’

Economic analysts have been assessing the chances of South Africa continuing its trend of economic growth once President Thabo Mbeki leaves office in 2009, and many believe if Zuma is his successor, the country could lose a significant amount of the foreign investment that has led to its much vaunted growth.

A recent report by South African economic consultancy firm Econometrix has sparked debate in the country’s economic circles, saying the prospects of Zuma succeeding Mbeki as president could have an adverse effect on capital inflows into South Africa.

The company said a Zuma presidency could result in a policy shift from Mbeki’s current “market-friendly approach” to a more socialist thrust, in line with Zuma’s strong support among the country’s labour organisations.

The result, Econometrix said, would be considerable uncertainty within business and possible investor flight.

In comments attributed to Alastair Collins, chief executive of global construction consultancy Davis Langdon & Seah International, local news wire Business Report said “the spectre of a Jacob Zuma presidency is the greatest threat to foreign investment”.

Concerns have apparently centred on Zuma’s failure to offer assurances of a long-term economic stability for South Africa, and more particularly South Africa’s business community, which appears to be worried about his strong ties with labour.

“The Zuma affair simply confirms for them (foreign investors) the fact that South Africa isn’t settling down into something that can promise long-term stability,” political analyst Lawrence Schlemmer told a local weekly recently.

But government officials have been quick to calm concerns over a shift in policy.

Yvonne Johnstone, chief executive of government’s International Marketing Council, told Business Report that there was unlikely to be a shift in South Africa’s economic stance once the leadership reins were passed on.

Zuma himself has stated that the ANC’s economic policies would continue to be applied as long as the party was in power, regardless of who it chose to become its next president.

Addressing the Congress of South African Trade Unions (Cosatu) conference in September, the ANC deputy president said the party’s economic policies were “well thought out” and that the government was doing well in managing the economy.

Investment rating agencies have said they do not expect a major change in policy direction once Mbeki hands over power ‘ regardless of who the next president would be.

According to Fitch Ratings “policy is expected to remain pragmatic (no matter who becomes president in 2009), though there may be a difference in emphasis on how to address the more difficult structural and social issues”.

November 2006
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