Given Jacob Zuma’s recent arrest: What under-covered developments should investors be focused on? Does the government have control of the ensuing unrest? What actions can it take to stabilize things in the near term?
This situation is unfortunately common in South Africa. The government has the capacity to prevent the situation from getting out of control. The South African army is powerful and used to being deployed in the streets to deal with conflicts — during Covid, it was responsible for managing tensions in townships). Please note that the media is currently focusing on KwaZulu Natal, a particular region of South Africa’s nine provinces. In Johannesburg and Cape Town, the two economic centers, the business environment remains unchanged. In the near term, I would advise limiting travel outside of these cities. The current situation is amplified due to the media’s effect and things will calm down in the coming weeks.
REGIONAL HEAD OF SOUTH AFRICA-BASED CORPORATE SECURITY FIRM
I’ve seen little reporting on roadblocks established by both protest groups and the security forces/community defense groups. These roadblocks have the potential to cause supply chain disruptions, particularly in KZN. While Zuma’s trial was a flashpoint, economic frustrations are a key driver of the unrest. The disruption — and reduced investor confidence — caused by the unrest will exacerbate economic challenges, potentially launching a dangerous spiral of destabilization. The situation is likely to intensify on July 19, when the opening arguments begin in Zuma’s trial. The police and military are highly under-resourced, and locally-mobilized community defense groups — now the main counter-force to the protesters — are unlikely to bring the situation under control and run the risk of inflaming tensions.
CHIEF RESEARCH OFFICER AT A STRATEGY CONSULTANCY
The current unrest is the worst experienced by South Africa since 1994. However, it is important to note that unrest is limited to only two of nine provinces. The latest facts are that troops increased on the 14th of July from 2,500 to about 15,000 troops. Police have begun to reappear after a conspicuous absence. Various citizen defense groups are protecting suburbs. The government has already started admitting that ex-spies may be driving the riots in alliance with elements of Zuma political faction-related alleged corruption networks. To note, it appears to have been a coordinated effort to destroy the food chain, trucks, shops, warehouses, and farms. The purpose behind all of this is to pressure the government to release Zuma and to trigger a recall of Ramaphosa.
HEAD OF AFRICA PROGRAM AT A THINK TANK
The protests sparked by Zuma’s imprisonment are the latest symptom of underlying frustration with the ANC’s failure to fix structural economic problems that worsened over the last decade. The most serious is the lack of jobs. The national unemployment rate of 32% masks the rate for black South Africans (more than 55%) and youth (more than 70%). Other factors include the failure of state-owned enterprises to provide reliable electricity and water (while running bloated budgets that imperil state finances), poor policing and education, state corruption, and growing wealth disparity. All of this, combined with the Covid-induced increase in infection/death rates and economic lockdown, also eroded patience. The government knows what to do, but needs to act faster to vaccinate, fix ESKOM, and jail corrupt politicians.
CORPORATE SECURITY CONSULTANT AT A REGIONAL OIL & GAS COMPANY
Scan horizon for indicators about power brokers’ discreet negotiations to reconsider Zuma’s jailing sentence and conditions in mid-term. Something to watch out for is the closed main logistic route from Durban to Johannesburg. Covid degradation and vaccine slowdown is having an additional impact on the government. But, the authority has the tactical and political capacity to control any large escalation in the near term. Civilians’ parallel structures interference are now reduced, and the military is embedded to protect the critical site. So far, there has been no incident recorded affecting corporate business districts and offices. Lastly, the government response is a key turning point. The president addressed the nation in a televised speech and did some background negotiations with Zuma’s clan, to avoid excessive force/lethal ammunition and to contain the unrest (dynamic-diffusion).