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February 2013

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Do recent socio-political and economic developments in South Africa suggest that, even though we’ve made some progress since achieving democracy in 1994, we’re actually going backwards? This is the question asked by The Economist, in its ‘Over the rainbow’ article (20 October 2012 edition).

“On 26 June 1955 around 3000 people gathered in a dusty square in Soweto… Members of the ANC gathered beside their anti-apartheid partners to declare a new vision for the future of South Africa.

The Freedom Charter announced that the people shall govern and that South Africa belongs to all the people – regardless of their colour. People would get jobs, an education and security and everyone would be equal. This pronouncement was extraordinary and full of hope for a better tomorrow.

Today the square is named after Walter Sisulu, an ANC hero and mentor to Mr Mandela. It boasts shops, offices, a conference hall and a pricey hotel… But just across the railway track, rickety shacks huddle together. .. Communal latrines stand useless, their doors open and rubbish piled inside… the aspirations of the Freedom Charter are nowhere to be seen.…”

Yes, there has been real progress since 1994. Millions more have access to clean water and electricity, while between 1996 and 2010 the proportion living on less than $2 a day fell from 12% to 5%. Apartheid has been abolished and our new constitution is widely respected.

But last year South Africa and the world were shocked by the Marikana tragedy, leading to a wave of strikes that continue today. In September 2012 Moody’s, a credit agency, cut South Africa’s sovereign rating, citing the declining quality of the government, growing social stresses and worsening conditions for investment. Then in January 2013 Fitch moved South Africa’s investment-grade rating to just two notches above junk territory, citing similar reasons.

Nevertheless, our country’s financial management and regulation are the best in the world and underpinned by a generally sound banking system, a deep local bond market and a floating exchange rate. The Global Competitiveness Report ranks South Africa first for auditing and reporting standards, as well as securities exchange regulation.

The election of Cyril Ramaphosa offers hope of more insightful leadership and a greater focus on structural reforms, especially now that the ANC is throwing its weight behind the National Development Plan. The way is clear for the ruling party to firmly grasp the nettle of effective governance.

Gerinda

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