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SOUTH AFRICA: Third wave collides with fragile recovery, choppy politics

Table of Contents

  • A third Covid-19 wave has prompted President Cyril Ramaphosa to raise South Africa’s lockdown level by one notch, but the restrictions are very mild compared to last year’s economy-wide lockdown.
  • The Covid-19 surge and slow vaccine rollout remain major downside risks to South Africa’s recovery, alongside electricity shortages.
  • The political waters, particularly Ramaphosa’s anti-corruption fight, are getting choppier; this will imply near-term headline risk, though the president has a good chance of consolidating ahead of the 2022 ANC conference.

Recovery challenges

In response to the onset of a ‘third wave,’ President Cyril Ramaphosa on 30 May raised South Africa’s lockdown restrictions to “Level 2.” The measures still look very light compared with last year’s highly restrictive Level 5 and 4 lockdowns, undoubtedly because of concerns over South Africa’s fragile economic recovery.

Economic data this week will signal the extent to which South Africa’s economy is recovering from 2020’s 7% GDP contraction. First-quarter unemployment data, released on 1 June, saw the unemployment rate inch up to a new record of 32.6% – a “narrow” definition that does not take into account discouraged jobseekers. One of the top downside risks to South Africa’s recovery remains electricity shortages. Indeed, on 31 May, power utility Eskom announced fresh “stage 2” load-shedding and warned that generation outages would persist through the high-demand winter months (June-August).

Another clear downside risk to the economy is the third pandemic wave and a slow vaccine rollout. Four provinces – Gauteng, the Free State, Northern Cape and North West – are already considered to have entered a third wave. Under Level 2, night-time curfew hours are extended to last from 11pm to 4am and gatherings have been limited, to 100 people indoors and 250 outdoors. While Level 2 keeps the economy mostly open, the evolution of the Covid-19 surge and possible further lockdown restrictions present clear risks. For example, unions have raised concerns about the mining sector, which to date has reported 35,571 Covid-19 cases among a workforce of 488,854, with 399 active cases and 401 deaths, including in the platinum, gold and coal sectors.

The slow pace of South Africa’s vaccine rollout is an additional concern as the third wave arrives. Phase 2 – targeting over 60s – only got under way on 17 May, while Phase 1b – the vaccination of remaining health workers – is still being concluded. As of 22 May, only 642,946 people (or 1.08% of the population) had been vaccinated. Nevertheless, the vaccination program is finally accelerating. Of the two procured vaccines, Pfizer will be delivering 640,000 vaccines per week as of this month while J&J jabs are expected to be delivered at a rate of 1mn per month. Vaccines are now delivered in greater numbers than they are being administered, meaning initial concerns about supply shortages will give way to worries about vaccine registration, scheduling and capacity to administer the shots, even with private sector support. In the first two weeks of Phase 2, South Africa administered on average 24,551 vaccines per day in week one, which rose to 52,782 in week two. However, more than 200,000 shots would need to be administered per day to hit the government’s target of vaccinating 40mn adults by year-end.

Political outlook

While the pandemic has been socio-economically devastating, it has not harmed Ramaphosa’s political standing by equal measure. On the contrary, a University of Johannesburg/Human Sciences Research Council Covid-19 democracy survey found that 65% of South Africans believed Ramaphosa was doing a “very good” or “good” job of handling the pandemic when surveyed between July to September 2020, which rose to 85% by January 2021.

Within the ruling ANC, messy politics could further hamper reform efforts and pandemic management. Ramaphosa had gradually gained the upper hand in a protracted internecine war to remove corruption-accused Secretary-General Ace Magashule and thus begin to improve the ruling party’s tarnished image ahead of municipal elections currently scheduled for 27 October. Magashule is now fighting an ANC suspension order in the courts (with hearings set for 26-27 June). His side will also try to make the case about Ramaphosa’s 2017 campaign funding and his recent attempt to “suspend” the president. This appears to be an uphill legal battle, but the process could be tactically messy as the ANC constitution and processes come under scrutiny. Magashule’s shrewd legal counsel, Dali Mpofu, in 2019 secured the reinstatement of then-ANC North West chairperson, Supra Mahumapelo, even though the legal victory proved short-lived and the ANC has now suspended Mahumapelo for five years.

The court battle will also delay a coinciding internal disciplinary process. This could see Magashule expelled altogether, though his ‘radical economic transformation’ (RET) allies on the ANC national disciplinary committee (NDC) and national disciplinary committee of appeal (NDCA) present another hurdle. Even if Magashule remains locked out of his Luthuli House office for now, the intertwined legal and disciplinary cases may take another couple of months to resolve.

An added complication for Ramaphosa’s corruption clean-up is that his own faction faces a growing number of corruption scandals. In recent weeks, ANC chairperson and Minister of Mineral Resources and Energy Gwede Mantashe has come under scrutiny over emergency power procurement, in which Turkey’s Karpowership has been named preferred bidder to provide 1,220 MW of electricity via floating LNG power ships over 20 years. The latest scandal – “Digital Vibes” – involves Health Minister Zweli Mkhize, who has been implicated in a corrupt communications contract with his former PA and secretary. The case is currently under investigation by the Special Investigating Unit (SIU).

The first obvious implication is that these scandals, even if they do not amount to formal charges at this stage, fuel accusations from the RET faction that the anti-corruption crackdown is selective and that implicated comrades should equally be forced to “step aside.” This will limit the president’s room for maneuver and dent the credibility of his cleanup efforts.

The second implication will be that the scandals will further limit Ramaphosa’s options in his expected cabinet reshuffle. One increasingly wonders who Ramaphosa should retain in cabinet in the interest of reform, but he might just opt for minimal changes instead.

Finally, the anti-corruption drive could have implications for the 2022 ANC national conference. Magashule’s game plan was to build opposition to Ramaphosa from the branch-level upwards in a bid to try to topple Ramaphosa in 2022 by exploiting dire socio-economic conditions and growing unemployment. However, being locked out of the ANC HQ, Magashule will find it much harder to rally support and a membership that had grown to about 1.4mn under his watch will now be audited. While a few branches will likely continue to call for Magashule’s reinstatement and a special ANC conference on the step-aside rule, this is unlikely to make headway, particularly as the overdue ANC National General Council (NGC, currently slated for July) is also likely to be postponed further amid the third pandemic wave – a delay that plays into Ramaphosa’s hands. Although ANC politics will remain messy and volatile, the odds are against Magashule. Ramaphosa, on the other hand, has a chance to consolidate ahead of 2022, even if internal factions begin to realign amid the corruption battles.

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SOUTH AFRICA: Third wave collides with fragile recovery, choppy politics

A third Covid-19 wave has prompted President Cyril Ramaphosa to raise South Africa’s lockdown level by one notch, but the restrictions are very mild