South Africa’s new president Cyril Ramaphosa delivered his State of the Nation Address last month, starting with the words ‘It’s a new dawn’. After Zuma, South Africans were utterly disillusioned with government, but Ramaphosa’s election is turning the tide. He is bringing new hope to the country, as many believe that Ramaphosa can change South Africa’s fate. But in order to bring about real change, he will have to overcome many obstacles.

Our observations

• Cyril Ramaphosa is the ANC’s business-friendly new leader and its candidate in 2019’s presidential elections. In the first quarter of 2018, business confidence reached its highest level since the start of 2015.
• Unemployment in South Africa is at a disturbing 36%. Public debt is expected to rise to 56% of GDP by 2023, up from 26% in 2009, when Zuma became president. Education and public health are in bad shape and the country is struggling with a water crisis (especially Cape Town) and Eskom, the state utility generating 95% of the country’s electricity, is in chaos.
• Land reform is high on Ramaphosa’s agenda. Although with the end of apartheid in 1994, the government promised to transfer 30% of white-owned farmland to blacks by 1999, it is estimated that only 10% has been transferred. Roughly a third of the land is privately owned and 72% of it is owned by white South Africans.
• In 2018, South Africa takes over the rotating presidency of the BRICS countries. Although the BRICS countries have not managed to realize all ambitious plans so far, due to difficulties in reaching agreements, as well as economic stagnation in South Africa, BRICS remains relevant. It helps that in 2017, South African GDP had better growth than expected, of 1.3%. In 2017, BRICS countries’ joint contribution to the world economy was 23.6% and this will grow to 26.8% by 2022. Their share of the world's population was 41% in 2015. Although South Africa accounts for only 3% of the BRICS economy, the country is considered by the partners to be a leader in Africa. For South Africa, BRICS is important in facilitating greater trade and investment.
• Earlier, we noted how Afrofuturism is becoming more visible and mainstream. Particularly the recent movie Black Panther imagines a future through an empowered black lens.

Connecting the dots

In the year of Nelson Mandela’s centenary birthday, South Africa has elected a new president. Ramaphosa’s election has sparked new hope for the ANC, whose support was declining, and for the whole country. However, the new leader faces challenges and obstacles that could continue to hinder the country’s progress.Land reform is a major challenge and part of the bigger issue of wealth inequality. During the time that the country was under colonial rule and apartheid, South Africans were ousted from farmland. Ramaphosa has expressed his support for redistribution without compensation. However, he warned that this must not undermine the economy, agricultural production or food security. This means that he does not intend to imitate Zimbabwe’s president Mugabe, who land-grabbed white-owned commercial farms in 2000 and thereby destroyed much of the agriculture, mining, tourism and manufacturing industry. In South Africa, partnerships between private investors and communities that are given land have been successful. Yet, farming represents 2% of GDP and voters are more interested in jobs in the city than in land as compensation. This means that Ramaphosa will have to create equitable economic activity, starting with granting access to basic services. Today, education, health care and transportation infrastructure are in bad shape and this affects economic growth and the distribution of that growth among the population. Although this will be difficult to improve, Ramaphosa could achieve successes in the shorter term by safeguarding basic needs such as water and electricity. He has already expressed that he sees an urgency to restore good governance at all state departments and state-owned companies. The recent removal of Eskom’s board is a promising sign that he’s serious about this. The water crisis in Cape Town could be a next step for which he has now put together a team. If he is successful in granting access to these basic needs, these could be ‘easy wins’ to support his approval for the presidential elections in 2019. Another major issue Ramaphosa is facing, is the corruption that became the governing principle in the country under Zuma. South Africa became another ‘broken democracy’ as the people saw how their political system was used for exclusion and nepotism, instead of representing the will of the majority. The prosecution of Zuma will be the first test. Ramaphosa will have a hard time justifying the presence of the ANC members supporting Jacob Zuma in court. Furthermore, Ramaphosa has to replace corrupt officials in power with capable new officials and revive the ANC. However, a cautious reason for optimism is that Ramaphosa’s wealth makes him less susceptible to the desire for personal aggrandizement.Regarding these obstacles, what can we expect from Ramaphosa in the longer term? A likely scenario is that Ramaphosa is indeed capable of implementing reforms in several relevant areas and that his leadership will lead to economic growth rising above 2% by 2020. As regards the Asian search for African commodities, South Africa will solidify its hub position with its ports. The country will also become more active in the immediate region, Zimbabwe and Botswana, to strengthen its regional position. Moreover, it will emerge as a technological power. As South Africa is already leading in media, telecommunications and the African digital economy (think of Naspers, MTN), this will enhance its regional soft power and economic performance. Although South Africa is on a rocky road, under the guidance of Ramaphosa, this road could lead to progress.

Implications

• Already, the country has a leading startup ecosystem and the highest amount of tech hubs, incubators, accelerators, and formal partnerships and leading universities to attract the necessary talent. Cape Town and Johannesburg are the continents’ leading tech hubs. Johannesburg is the largest IT skills hub on the continent. Moreover, the BBC writes that millennials are heading for wilder tech cities, like Nairobi, Johannesburg or Cape Town.
• South Africa is a developing country combined with a relatively mature corporate sector, these are important factors for the success of leapfrogging technologies in fintech, ecommerce, logistics, etc.