Political Blogs - Blog Catalog Blog Directory

Friday, 17 October 2008

The Economist, 19 October 2018

Many economies have, in the past few years, started to recover from the deep recession caused by the credit crunch which started in 2007 and hit its peak in 2008, ten years ago. 

As expected, the Chinese and Indians were among the first economies to recover.  The US today is clearly not the hyperpower it used to be. The high rates of taxation under President Obama, used to fund his ambitious but unaffordable healthcare plans, has proven to be a hindrance to the US's growth.

While many have started to recover, to some countries, 2008 was the beginning of a precipituous decline. South Africa is one of them. It started when investors started fleeing emerging economies and the South African currency, the rand, started dropping dramatically.

From a high of R5,50 to the dollar in the mid-2000's, the rand stands today at R100 to the dollar.

South Africa was not only hit by the credit crunch. Its banks, ironically, were in fairly good shape at the time. The double whammy was a combination of the credit crunch and the disastrous policies the ANC under President Zuma implemented. After the split in the ANC in 2008, the left, in the guise of the Communist Party and Cosatu, grew increasingly influential.

Major industries such as steel, Sasol and many mines were nationalized under pressure from the communists. Two mainstays of the economy, gold and platinum mining, were in decline already, and platinum mining suffered under the slump in vehicle sales caused by the worldwide recession. The nationalization of key industries caused a sharp drop in productivity and investor confidence, a flight of capital, increased emigration of skilled individuals, a crash in the currency and inflation approaching 50%.

The 2010 Soccer World Cup, widely expected to have brought a much-needed stimulus, instead turned into a damp squib due to the worldwide recession. Far fewer Europeans could afford to fly south than were anticipated. The event was also marred by at least 50 murders of soccer fans. The vast investment in white elephant stadia to this day continues to haunt the very few remaining taxpayers.

Further exacerbating South Africa's woes was the fast-tracking of the land reform policies. By 2008 it was already clear that land reform was a dismal failure. Blacks without agricultural skills were forcibly placed on former white farms. Within 2 years, these farms died - often literally, in the case of livestock. The Zuma government however sped up the process, leading to a complete collapse in agriculture.

Millions of rural and urban dwellers went into a state of permanent semi-starvation. From being a nett exporter of food a few decades before, South Africa turned into a typical African begging-bowl country, dependent on food aid for its people to survive. The collapse in the currency made importing food much more expensive and unaffordable to the ordinary man on the street.

In short, a country that was once the richest and most developed in Africa, has turned into yet another African basket case.

Your correspondent will leave the last word to a very old black man, who grew up under the apartheid regime: "Come back, PW! At least we had food back then..." 
blog comments powered by Disqus
free counters Afrigator