South Africa was slowly reaching the point of ‘maximum pessimism’, said Investment Solutions chief strategist Chris Hart at a media breakfast on Monday, with only a change in leadership at presidential level likely to change the course of events.

Hart said weakness in the rand, slow economic growth, a continued strike in the platinum sector, increasing interest rates and inflationary pressures were all aiding in moving households backwards.

He noted that South Africa reached its first important inflection points in 2007 and 2008, during the global financial crisis, as well as the ANC conference in Polokwane, which kicked then African National Congress (ANC) president Thabo Mbeki out in favour of current president Jacob Zuma.

Zuma later became South Africa’s president.

Hart said the ANC conference brought a shift in policy to the left, while South Africa’s economic struggle since the global recession had served to reveal that the country did not face an external crisis, but an internal crisis.

The global economic crisis was “like manna from heaven, an external bogeyman that could be blamed for the struggling economy”, noted Hart.

However, the recovery in developing markets since the crisis, absent in South Africa, had showed that South Africa’s problems came from within its own borders.

Hart also noted that South Africa had seen increased trade union involvement in policy making since 2008, as well as increasing labour unrest as unions flexed their muscles.

“We have a tainted president that is guiding South Africa leftwards,” added Hart.

He said that Zuma came from a rural base, which was more fuedal in nature. It was a base where people did not pay taxes, but tributes to a fuedal lord, which was why the taxpayer-funded multimillion-rand upgrade to the private presidential home at Nkandla did not raise eyebrows on a rural level.

“In a constitutional democracy this is theft. So we have this clash of cultures.”

Hart believed the next inflection point in South Africa’s history would be after the May 7 election. Should Zuma not be replaced as president, “we will be in trouble”.

Should he remain at the helm, the country was likely to see a continued push “from the looney left”.

However, a change in leadership would place the National Development Plan – a centre left plan – “firmly on the agenda”, with higher economic growth possible than what was currently the case.

Business and investor confidence were also likely to pick up upon Zuma’s departure, believed Hart, with the current “business as the enemy” approach likely to change.

“So, things are changing, but for better or worse, I don’t know. It depends on whether we see a change in leadership.”

Hart also doubted whether the ANC could return to the 2019 elections with the struggle motto as one of its main campaign points, as younger, more urban voters, would confront the liberation movement with the fact that they could not “eat the struggle”.

AMCU’s DEMISE?
South Africa's Association of Mineworkers and Construction Union (AMCU), leading the current strike on the platinum belt, could be dead within a year, predicted Hart.

He believed the union had lead its members into a corner from where it could not deliver the wage increases it had promised.

“They overplayed their hand.”

Once the strike was resolved a number of mineworkers could be out of a job as a number of shafts were likely to close as a result of the strike.

Anglo American Platinum’s pursuit of a legal process to claim damages from AMCU could also leave the union in a position where it would have to spend its income on defending a legal case, and no longer on “buying thugs” to ensure the strike “kept on going”, said Hart.