South Africa is collapsing under President Cyril Ramaphosa, with the rand weakening, debt increasing, and state-owned enterprises failing.
When Ramaphosa took over from former President Jacob Zuma on 15 February 2018, there was hope of a new dawn for South Africa.
Referred to as Ramaphoria, his ascension to power was seen as a positive shift from the Zuma era marred by corruption and economic decline.
The public trusted Ramaphosa to appoint competent leaders to bring about meaningful reforms, fight corruption, boost the economy, and address social issues.
This hope started to fade as many of the problems associated with Zuma and state capture accelerated.
Under Ramaphosa, Eskom’s decline accelerated with constant load-shedding. The railways collapsed, many municipalities became dysfunctional, and crime reached disastrous levels.
The economy is in a dire state, and the country continues to battle record levels of unemployment and poverty.
Skilled professionals are flooding out of the country as they do not see a future for themselves and their children in South Africa.
The 2022/23 Professional Provident Society (PPS) Student Confidence Index revealed that 90% of university students desired to work and live abroad.
The percentage of students, particularly younger black students, who want to leave jumped from 39% to 90% in two years.
They cited crime, corruption, lack of job opportunities, failing infrastructure, and the rising cost of living as reasons for wanting to move overseas.
Ramaphosa and the ruling ANC have failed to convince South Africans that there is light at the end of the tunnel. Most people accept that matters will get worse.
Many business leaders warn that the country is on the cusp of becoming a failed state and that people should brace for many tough years.
Renowned economist Dawie Roodt warned that South Africans should prepare for high inflation, a weak currency, high interest rates, and political and financial uncertainty.
Roodt said he could see the rand going to R25 or R30 to the US dollar in the next two to three years and that inflation could rise above 10%.
Sygnia CEO Magda Wierzycka said South Africa is already a failed state and that there is nothing on the horizon that would change the situation.
She highlighted that municipalities, which form the backbone of South Africa’s government, cannot provide basic services like water and electricity.
Wierzycka added that the government is sabotaging businesses and killing the economy. “We have a situation where the government is actively destroying jobs through incompetence,” she said.
To assess whether these criticisms are justified, Daily Investor analysed South Africa’s performance under Ramaphosa using objective metrics.
The sections below give an overview of South Africa’s performance under Ramaphosa since he took office in 2018.
Over the last five years, South Africa’s gross domestic product (GDP) growth has been very low when measured against peer countries.
The gross domestic product of countries with an emerging market economy typically grows by 6% to 7% annually.
In comparison, South Africa’s GDP growth has not exceeded 1.9% in any calendar year, excluding the Covid rebound in 2021.
The country’s GDP growth was also lower than its population growth, which means South Africans got poorer under Ramaphosa.
The rand has experienced tremendous deterioration compared to the US dollar and other international currencies over the last five years.
During Ramaphosa’s presidency, the rand weakened from R14.80 in 2018 to R19.72 in 2023, significantly diluting South African wealth on an international level.
The currency hit its weakest level in 2023 amidst the worst power cuts on record and a spat with the United States over allegations that a Russian ship had picked up weapons in South Africa.
South Africa’s debt
South Africa’s debt increased tremendously during Ramaphosa’s presidency. The government’s debt-to-GDP ratio increased from 52% in 2018 to over 70% in 2023.
During the 2023 national budget speech, it was clear that finance costs are the fastest-growing line item in the national budget.
This is due to South Africa’s high cost of debt due to its junk credit rating and debt levels continuously increasing.
Post Office collapse
State-owned enterprises have been run into the ground under Ramaphosa, with huge losses and government bailouts becoming the norm.
Since Ramaphosa became president, the South African Post Office (SAPO) has racked up losses on an incredible level.
In 2018, the SAPO reported a R1.08 billion loss. This has increased to over R2 billion in 2023. The Post Office has reported total losses of R8.5 billion since Ramaphosa became president.
The Post Office was placed under business rescue this year. Its liabilities exceed its assets by R7.9 billion, meaning it is hopelessly insolvent.
Eskom and load-shedding
Eskom collapsed under Ramaphosa’s watch. The country experienced record load-shedding, with power cuts now part of everyday life.
Apart from its operational challenges, Eskom is also in a worse financial position than ever.
Over the last five years, Eskom accumulated losses of R81 billion, which caused its debt to reach unsustainable levels.
It forced the government to provide Eskom with debt relief amounting to R254 billion, which puts taxpayers under increasing pressure.
Problems at the SABC
The South African Broadcasting Commission (SABC) has undergone the same trend as other state-owned enterprises, with mounting losses and relying on bailouts to survive.
The state broadcaster reported a R1.13 billion loss in the 2023 financial year. It reported total losses of R3.6 billion since Ramaphosa became president.
Over the last few years, Transnet has struggled to provide basic rail and port services, which caused tremendous damage to the economy.
Transnet’s poor service levels hampered commodity exports, which cost the South African economy billions each month.
It has reached such critical levels that miners have begun retrenchments. Analysts warned that up to 35,000 mine workers could be retrenched due to the collapse of Transnet.
Transnet’s troubles filtered down to its finances. It reported a net loss of R5.7 billion in the 2023 financial year.