Ramaphosa’s On Trial as Much as Zuma: Bobby Ghosh

South Africa is one of the world’s most unequal societies. According to the International Monetary Fund, the top 20% of the population receives more than 68% of income, compared with 47% for an index of emerging market. Joblessness is at crisis levels: Only 15 million people out of a working-age population of 39.5 million are formally employed. The coronavirus pandemic, in addition to killing over 66,000 South Africans, has deepened economic anxieties, some of which was reflected in last week’s rampage.

Rattled, Ramaphosa is talking up a welfare scheme his finance minister seemed to rule out only last month: cash stipends for the poor. “The basic income grant is being given serious consideration,” he said on Sunday. “It is being discussed in the governing party and at government level.”

This is not a new plan. The ruling African National Congress last year circulated a proposal for paying a 500 rand ($29) monthly grant to all South Africans aged 19 to 59 who are not eligible for other aid. The scheme would cost the state 197.8 billion rand ($13.7 billion) a year; between half and 60% of this would be paid for by levying extra taxes on those with jobs. (This is far more ambitious than the emergency unemployment grant of 350 rand introduced in April 2020, as the country entered a pandemic lockdown.)

But raising taxes to pay for the grants will not endear Ramaphosa to South Africans who do have jobs, or to businesses. It doesn’t help that the rioting dented hopes of an economic recovery and disrupted the country’s Covid-19 vaccination program. The government must also find billions of rand to repair the damage to infrastructure, especially in the provinces KwaZulu-Natal and Gauteng. The former includes the vital port of Durban, and the latter includes Johannesburg, the country’s commercial heart.

Where will the money come from? A month ago, Finance  Minister Tito Mboweni was invoking a fiscal ceiling to defend a three-year freeze on wages of government employees. And earlier this year, the Treasury’s consolidated spending plans for the next three yearssuggested there’s very little room for maneuver, with only miniscule increases for welfare, health and education.

Ramaphosa must also reckon with the political fallout of last week’s events. He has only just secured his grip on the ANC after sidelining his main rival, Ace Magashule. Municipal polls are due in October, and the party was hoping to ride on improved economic numbers and a well-publicized anti-corruption campaign to regain some of the ground it lost five years ago in its worst-ever election performance.

Instead, the vote is likely to become a midterm referendum on Ramaphosa’s presidency at an especially difficult moment. His biggest challenge will be to keep the Zulu minority within the ANC tent, which will be harder with the prosecution of Zuma, the most prominent Zulu politician. The president will need no reminding that the party won an outright majority in only one of the country’s biggest cities in 2016: Durban, long a Zuma stronghold.

Can he count on his 500-rand-a-month scheme to deliver dividends on election day?  If the proposed basic income grant is too much of a burden for the Treasury to bear, it might be too little, too late to win over disgruntled voters.

Bobby Ghosh is a Bloomberg Opinion columnist. He writes on foreign affairs, with a special focus on the Middle East and Africa.

Source: Bloomberg Business News