South Africa has experienced its most turbulent year since the end of apartheid in 1994, a non-stop drama featuring allegations of high-level corruption and illicit influence by private interests which have led to court cases against the political elite, reaching as far as President Jacob Zuma.
The Treasury, the banking system, the judiciary and the office of the Public Protector – an independent investigator into government misconduct – have all been under attack by powerful public officials and businessmen allegedly bent on enriching themselves.
So far, these institutions are fighting back as they try to preserve the credibility of the financial system. The public is worried. According to the African edition of the Global Corruption Barometer released in December last year, 83 per cent of South Africans believed that corruption was increasing and 79 per cent believed that the government was doing a poor job of fighting the trend.
Perceptions are likely to have worsened this year, amid allegations that the influential Gupta business family are improperly benefiting from public tenders through links with Zuma – and even controlling the selection of top officials in key departments.
Expensive upgrades to Zuma’s family home in the province of KwaZulu-Natal became a rallying point for his opponents early in the year, after the Constitutional Court found that he had ignored a directive by the Public Protector to pay back public money spent on luxuries.
In the end, Zuma paid the 7.8 million rand ($550,000) which the Treasury calculated he owed – but well after the topic had become one of derision throughout the country. Officials had initially alleged that a swimming pool at the Zuma home was actually a firebreak needed for his security.
Against the backdrop of deepening public mistrust, the African National Congress lost significant support in municipal elections in August, with the country’s two main opposition parties – the Democratic Alliance and the populist Economic Freedom Fighters under Julius Malema – winning control of Johannesburg, Pretoria and Port Elizabeth.
Many ANC stalwarts and leaders then departed from the party’s collectivist tradition and joined the public outcry against Zuma from business leaders and civil society, warning that his tarnished image had damaged the party so badly it could lose the general election in 2019.
‘We desire a South Africa where people, as they interface with the state, will not see it as a reservoir or a bank where they must go and steal public money’
Opposition to the president climaxed in a heated meeting of the ANC’s leadership at the end of November, when three ministers called for him to resign, backed by many other leading members of the party. But Zuma’s backers prevailed in what the ANC described as a robust and open debate.
ANC Secretary-General Gwede Mantashe said afterwards there would be no reprisals. But there is concern that the president will reshuffle his cabinet in the coming weeks to strengthen his position.
Such a reshuffle is thought likely to include the removal of Finance Minister Pravin Gordon, who has led a joint effort by government, business and labour over the past year to avert a downgrade of South Africa’s sovereign credit rating to junk status for the first time since 2000. The three top global rating agencies gave the country the benefit of the doubt in their assessments at the end of 2016, while warning that political divisions could derail the reforms needed to revive growth.
This would not be the first removal of a finance minister. In December 2015 Zuma unexpectedly fired Nhlanhla Nene, a respected holder of the post, and replaced him with a relatively unknown politician, Des Van Rooyen. Zuma reinstated Gordhan – an ANC veteran who had held the post before Nene – after 500 billion rand ($35 billion) was wiped off the value of domestic shares and bonds.
Gordhan is now seen as the Treasury’s final bulwark. Since his appointment a year ago he has blocked every new or existing scheme to raid state coffers, including investigating coal supply contracts which the power utility Eskom signed with a Gupta-owned company. Gordhan faced down what were widely seen as politically-motivated charges of fraud late in the year but is still being investigated for his role in setting up a ‘rogue unit’ at the South African Revenue Service to fight tax evasion.
The president has never revealed why he sacked Nene, but the former finance minister had refused to provide further guarantees for loss-making South African Airways and reportedly balked at plans for a controversial nuclear power programme.
Gordhan has succeeded in having most of the board of SAA replaced and his Director General Lungisa Fuzile said in December that the Treasury would not allow Eskom’s existing guarantee facility to be stretched to cover the nuclear programme.
Zuma’s inability to remove Gordhan so far is testimony to the Treasury’s resilience as an institution, and to the strength of the country’s judiciary. The finance minister and other top officials in the Treasury are committed to keeping debt and spending in check, so their displacement would be a body blow to the country’s fiscal and political credibility.
South Africa’s financial system, rated by the World Economic Forum’s Global Competitiveness Survey as No 11 in the world, came under pressure from Zuma’s supporters when the country’s four main banks closed all accounts associated with the Gupta family and their businesses in April.
With both the family and cabinet asking him to intervene to reverse the decision, Gordhan turned to the courts for a ruling that the government had no right to interfere with the banks’ decision.
In doing so, he revealed in court papers that the banks had acted in response to a report from the Financial Intelligence Centre that there had been a staggering 6.8 billion rand ($480 million) of ‘suspicious and unusual transactions’ through those accounts.
In November the outgoing Public Protector, Thuli Madonsela, released a report on ‘state capture’. Hastily put together before her departure, the report concludes that Zuma may have broken the country’s Prevention of Corruption Act in ignoring claims by a senior MP and the deputy finance minister that the Guptas had offered them ministerial positions in return for favourable treatment of the businesses.
Other officials were implicated and there has already been one high-profile casualty of the report. Eskom chief executive Brian Molefe resigned shortly afterwards, even while protesting his innocence.
The Gupta family say they are victims of a political campaign and announced in August that they planned to sell all their shareholdings in South African businesses. But insiders say their influence remains entrenched and the changes they are making are superficial.
Over the past year a series of aggrieved officials, opposition parties and civil society groups have brought cases before the South African courts, which have repeatedly stood their ground and upheld the rule of law. In nearly every case their decisions have been upheld, keeping South Africa from slipping into constitutional crisis.
At the same time, vibrant civil society groups and the country’s independent media have kept the public aware of every twist and turn in the very public battle against patronage, cronyism and corruption. Unlike some developing countries, South Africa is a place where these issues are consistently exposed.
This has one perverse effect. It gives South Africans the information needed to put pressure on their elected representatives but it also creates the impression that the system is unravelling.
So is this the year that South Africa goes the way of Zimbabwe? This question has been put endlessly for more than a decade.
There is no doubt about the seriousness of the corruption challenge. But the fact that many top ANC officials have spoken out against the damaging consequences of his leadership bodes well for the survival of the country’s democracy.
Deputy President Cyril Ramaphosa departed from a prepared speech in November to say: ‘We desire a South Africa where people, when they interface with the state, will not see it as a reservoir or a bank where they must go and steal public money.’
Zuma will leave after the 2019 national election. Despite South Africa’s notoriously high rate of violent crime, nobody has been killed as a result of the legal and political wrangling to unseat Zuma.
Provided there are no big upsets in the meantime, the next milestone is an ANC conference at the end of 2017 when the party will select a new leader who will signal the future economic and political direction of the country.