Andre de Ruyter warns of social unrest in South Africa

Without a significant correction in course, resulting in faster economic growth and employment, South Africa could be hit by widespread unrest. 

The country’s downward spiral, characterised by crime and corruption among the political elite, is coming to a head. 

South Africa ultimately has two paths. Either the government significantly deregulates the economy and moves to encourage private sector investment to boost growth, or change will come through means other than voting polls. 

This is feedback from former Eskom CEO Andre de Ruyter, who warned that South Africa is on the edge of collapse and could see events similar to what recently played out in Nepal. 

Nepal was rocked by widespread social unrest led by the country’s youth, where high-ranking ministers and government officials were physically attacked and removed from power. 

De Ruyter told the audience at the second BizNews Investment Conference that without drastic changes, South Africa is on a similar path with high youth unemployment and a stagnant economy. 

“This is where things become very challenging because if you look at the situation developing in Nepal, the unemployed, dissatisfied youth are taking to the streets and physically dragged the Minister of Finance through the streets,” De Ruyter said. 

The former Eskom CEO also paraphrased Anton Rupert’s famous quote, “You cannot sleep easily if your neighbour is hungry.” 

“We need to get impatient and we need to get alarmed,” De Ruyter said in relation to demanding more urgent action from the government to address South Africa’s economic crisis. 

The only alternative to this outcome for South Africa is to quickly implement reforms to boost economic growth and investment, particularly in infrastructure. 

De Ruyter pointed to the example of Morocco as a counter to the Nepal path for South Africa, saying the country is investing over 20% of its budget in infrastructure. 

This stands in stark contrast to South Africa’s budget, where nearly half of it is spent on servicing debt and paying public sector employees. 

“Morocco is spending heavily on infrastructure and, lo and behold, investors are streaming into the country to build factories and export goods from there to the European Union,” De Ruyter said. 

“These are the two paths I see, and I am not sure there is much of a middle road here. So, we really do need to pivot.”

South Africa on the edge

In his speech to conference attendees, De Ruyter drew parallels between the situation South Africa finds itself in today and the situation it was in a few years before the 1994 elections. 

The factors in this situation include a stagnant economy, soaring government debt, high unemployment, and increasing political violence. 

“South Africa is in crisis. The economy shows no sign of meaningful growth, investor confidence is sinking, the currency is beleaguered, and government debt is ballooning to unsustainable levels,” De Ruyter said. 

“Our relationship with the United States has taken a significant turn for the worse. Geopolitical forces beyond our control force us to find new markets.” 

“Civil unrest is destabilising our cities and our towns. This is everywhere. It is not just in Gauteng. Political murders are an all too frequent event.”

All the while, the government appears to be doubling down on the policies that put South Africa in this precarious position. 

Over the past year, the government has pushed through new Black Economic Empowerment targets, the Expropriation Act, and the National Health Insurance Act. 

These policies are likely to have a negative effect on economic growth, with their implementation discouraging investment. 

“Crime, a problem that has always been pervasive, has become increasingly violent. Prominent activists and lawyers are murdered without impunity,” De Ruyter said. 

“Senior police officers make startling disclosures about political interference in their work and the misuse of the police for political ends.” 

“There are dark rumours of plots and coups. The military seems to grow restive under the yoke of civilian control.”

“If you think I am talking about 2025, you are sadly mistaken. I am talking about 1989, which is exactly when these conditions prevailed.”

“The picture that I have painted is the one that immediately preceded the end of Apartheid.”

De Ruyter said the lost decade South Africa experienced under Jacob Zuma has been extended by Cyril Ramaphosa, resulting in 17 years of economic mismanagement and unfettered corruption.