It has been been a tough year for poor South Africans. South Africans have been feeling the pinch on South Africa’s decline. The unemployment rate rose from 25% to 30%. South Africa has one of the highest unemployment rates in the world. South African politicians often bandy about claims about employment in an attempt to score political points. They(Politicians) always sound optimistic about South Africa’s economy. In reality it is poor South Africans who are affected by the current economic turmoil.
At the beginning of the year, South Africa’s economy was doing well. We all had hope that it would grow by at least 1% and create jobs. The Rand was strong against the US dollar. In the first quarter, South Africa had seen a strong recovery of over the past 15 months, moving from some of its weakest levels post neneGate in 2016, to a position of relative strength in the first quarter of 2017. The currency had seen a significant recovery, climbing from R15.40 versus the dollar on 10 March 2016, to R13.20 a year later.
The rand retreated around April 2017 as the global demand for risk currencies eased and technical factors weighed on the local currency. The currency retreated from levels last seen on March 31 around R13.36, ending a rally that saw the unit gain 4.5 percent as it recovered ground lost following the firing of the finance Minister and two credit downgrades. A recovery by the dollar from the 5 month lows triggered by comments from US Treasury Secretary that the greenback was due to gain in the long term also drove the rand lower, according to Reuters Africa.
When South Africa’s president Jacob Zuma abruptly fired his Finance Minister Pravin Gordhan and shifting cabinet around to include two of his allies in what is being seen as an attack on treasury. He said, South Africans should expect a growth shock like after Nene-gate, when former Finance Minister Nhlanhla Nene was fired on December 2015. In reality no growth is expected. Instead South Africans should expect more looting by president Jacob Zuma and the controversial Gupta family, according to DA leader Mmusi Maimane.
For the few elite life has been good, but in the current ANC leadership, the future looks bleak for poor South Africans. The capitalist system remains irrational and is not about to change now because of political events. The recent downgrading of South Africa’s sovereign credit rating to junk status by Standard and Poor and Fitch Ratings will also stop potential investors from investing in South Africa. This means, the economy will continue to grow slow and no jobs will be created. This will directly hurt the poor.
Written by James Thomo