South Africa's Balancing Act

Cyril Ramaphosa must introduce market reforms that many of his leftist and Marxist supporters detest

- Sam Mkokeli

When President Trump tweeted in August that South Africa was engaged in “the large scale killing” of white farmers to seize their land, the nation’s president, Cyril Ramaphosa, didn’t respond personally. A fabricated accusation from the leader of the free world was the least of his problems. Ramaphosa probably felt his time was better spent doing his job. These days that includes confronting his top deputies, his fractured party, the powerful labour unions he helped found, an unemployment rate of 27 percent, deep-seated corruption, and a clutch of heavily indebted state companies that have been mismanaged for a decade. Oh, and the economy unexpectedly fell into recession in the first half of the year.

The scope of the task is exceeded only by its urgency. After Jacob Zuma’s ruinous, almost nine-year run as president, many inside and outside South Africa regard Ramaphosa as the last best hope to restore the country’s luster. The damage— billions of dollars looted from state coffers—has been on vivid display in judicial hearings set to extend beyond next year’s elections.

No place symbolises all those flashpoints more than the bunker-style building housing Eskom, the colossal state-power utility. Goldman Sachs Group Inc. says the company, laden with $28 billion in debt and a passel of power plants it doesn’t need and can’t finance, is the biggest systemic risk to the economy. Domestic and foreign capital markets are increasingly disinclined to provide yet more credit—with the exception of China, which has stepped in with $2.5 billion. And the government can’t grant Eskom, or other state companies, unlimited bailouts without undermining its own solvency.