I have read a lot of views from a number of quarters in the days post Cabinet reshuffle on Tuesday evening last week. The ones that particularly caught the eye were the middle class critics who have argued that the ZumaMustFall campaign is being conducted by a group of self-interested middle class South Africans. Here’s an insert from Kelly-Jo Bluen’s compelling article in the Business Day: “It is unthinkable in a country in which 34 black workers were killed in Marikana that the removal of Nene is delineated as the turning point in democratic SA.”
I am sympathetic to the critique. A significant portion of the middle class is suspiciously outraged due to the negative impact of the recent developments on their own back pockets. This is a self-interested perspective and it deserves to be questioned. Clearly the inability of government to protect striking miners from police, the failure to provide children with textbooks and police brutality against street vendors and students can be interpreted as more noble causes for a protest. However dismissing the need for the President to be fired because of the obvious risk that a significant portion of the protest is self-interested completely misses the point and misinterprets the magnitude of the moment that South Africa is facing. There is no doubt that there have been far bigger tragedies in South Africa’s history but A) the implications of this decision will be severely felt by masses of South Africa, B) the recent actions by the President highlight a much broader trend in policy that is completely unacceptable and C) this is an incredible opportunity to pressure the government and the bring about change.
The Poor are the Losers from the Cabinet Reshuffle not the Middle Class
The economic impact of the recent rand weakness and the impending sharp increase in interest rates will be more acutely felt by poor South Africans than by the middle class. Already food prices are rising steadily on account of drought conditions in South Africa but the weak rand is going to make necessary food imports increasingly more expensive in 2016. Food is a far bigger proportion of household spending for the poor than the rich.
The impending increase in SA interest rates will also disproportionately hurt the poor over the middle class and rich. Not only do poorer people live much closer to the margin and are often reliant on credit facilities from retailers but the impact of a sharp interest rate hiking cycle on the economy will be severe. SA is heading into a deep recession in 2016 and one can be sure that the biggest job losses will be felt in the low skilled sections of the economy, not the middle/upper class.
The middle/upper class can also hedge themselves against rand and economic weakness through off-shore investments, limiting the negative impact of the current conditions. The poor have much less opportunity to hedge themselves. Mark my words, when food prices accelerate sharply next year and joblessness increases, the poor will be rioting on the streets. SA has one of the highest unemployment rates in the world and currency weakness is incredibly destabilizing. For a little bit of evidence on this second point see the graph below, which shows the currencies which have weakened the most vs. the USD of the past three years. SA has incredibly troubled company on this front. Civil unrest is a major risk heading into 2016 as the negative growth and inflation impacts filter through in earnest.
Middle Class Responsibility
The unfortunate fact that middle class support for Marikana and the #FeesMustFall protests was disappointing shouldn’t undermine the magnitude of the current situation and the opportunity that this presents. Zuma’s economic management has been terrible for the entirety of his rule but the full impact of his policies is now being felt in earnest as global events also take their toll on the economy. Unemployment is elevated and growing, the education standard abysmal and economic opportunities for low skilled workers are terrible. I firmly believe that the magnitude of SA’s economic malaise will find expression in additional protests in the student, teacher, unemployment, service delivery, public sector, etc. over the coming year as government has run out of the fiscal room with which to appease the population.
When the protests return again and find expression elsewhere in the economy, we have a duty as a middle class to galvanize these protests and make aggrieved protesters aware of the underlying reason for the protests, poor economic management. Sound economic management by government would have created the jobs for the poor, satisfactory wage growth for workers, afforded the government the space to maintain above inflation increases in welfare grants and generated the fiscal space to respond to the student protests adequately. It is the weak economy that has led South Africa into this malaise and it is only an economic recovery that will sort out the problem. So yes, maybe the middle class perspective is distorted and potentially self-interested but we have a responsibility to direct this perspective to ensure a united front against economic underperformance.
Accountability where others have failed
The government pushed the Marikana massacre under the rug, hid the reports in the courts and managed to avoid accountability through its control of the judiciary. In fact, each time that there is police brutality against protesters, students or foreign national these are pushed under the rug. Every time there is a blatant case of government corruption, officials have been able to spin accountability away from those who are central in the power games, particularly diverting attention away from the President. Think about it, each and every time the government plays Russian roulette with South African lives and livelihoods they largely get away unscathed because they have control over the judiciary, the legislature and the executive.
The point to take home here is that none of these events has led to accountability, a fundamental shift in government policy or much recognition that policy is problematic in any way shape or form.
But in the past week the financial markets were able to get President Zuma and the ANC NEC to U-turn on a massive decision that has cost both Zuma and the ANC a huge amount of political capital. While government holds the strings to the judiciary, parliament and the treasury, it still has to go with cap in hand to the international markets in order to borrow money to fund the deficit. The international bond markets are perhaps the only place where the ruling party is truly accountable. This is powerful. Don’t discount the importance of it because of a seemingly self-interested white middle class. This is a grave situation that has a profound impact on all South Africans, rich/poor, black/white and the
The sharp weakness in the rand, the rise in bond yields and the pressure being exerted on South Africa is a signal from the international community that economic reform is required in order for SA to continue to warrant capital from the international markets. This reform isn’t for the benefit of those capital markets, or for international investors, or middle class whites, it is for the benefit of everyday South Africans who are living under an incompetent government. If we pass up this opportunity to heighten the pressure on the government for reform we also diminish our voice when the reform finally takes place.
Replacing Finance Minister Nene, with Van Rooyen and then again with Gordhan is not enough. In fact in the days since the appointment of Gordhan the ANC has tried to spin the decision as a victory for democracy and indeed it is encouraging that the NEC has been able to rein in the President but the comments from the hierarchy confirm that they remain in full support of President Zuma. Moreover the current trajectory in economic policy remains firmly intact and further economic underperformance a certainty heading into 2016 and 2017. This is not enough. The ANC must understand the full weight of their folly by backing an incompetent leader in the form of Jacob Zuma.
So yes, there is a risk that the #ZumaMustFall protest is an event dominated by the white middle class but I implore you to reassess this perspective and try to understand the gravity of this situation. So what! This is important! It effects all South Africans, particularly the poor. Each and every piece of protest movement over the coming phase of South Africa’s socioeconomic turmoil deserves its time in the spotlight. All of them will have their flaws but hopefully we can direct the crux of the displeasure towards the government, which continue to underperform in so many facets of governance.