The Rand has plummeted, resulting in a reported 86 billion lost in SA banks’ market capitalization, and on Monday Standard & Poors has finally downgraded South Africa’s foreign currency credit rating to sub-investment or junk status (other agencies may well follow soon), which will result in higher cost of debt and imported goods, leading to inflation and higher interest rates. It will harm everyone.
Why all this? 10 Ministers, 10 Deputy Ministers, axed and replaced with loyalists in one swipe and without the consent from his own party executive… quite a show of confidence by President Zuma, and it remains to be seen whether this move will be remembered as arrogance instead and cost Number 1 dearly. The events that are to unfold this very week will likely determine the way forward. Will it again be a case of “back to normal” - possibly after some fractured protest action here and there, but no wider consensus? Or will the pressure from ratings agency downgrades and the discontent inside the ANC and its alliance partners, and amongst the broad electorate, be sufficiently strong to effect something more powerful? Critical times in South Africa, and each of us will have to think carefully about how we can best support any action towards better leadership without putting it at risk of being dismissed as being driven by a particular minority agenda.
Watch this space.