In July of 2021 political unrest peaked in several South African provinces in response to prolonged economic instability and the imprisonment of former president Jacob Zuma. The protests were amongst the worst political violence South Africa has witnessed since the end of the Apartheid. The nation’s economy was particularly vulnerable to civil unrest, and served to deepen the impact of the riots.
The Cause of the Violence
On the 7th of July, former president Jacob Zuma began a 15 month prison sentence for refusing to attend a hearing on government corruption during his presidency. Zuma’s political allies called for action in an attempt to release the former president. Anger over the imprisonment caused some supporters to turn to violence.
The unrest began in Zuma’s home province of KwaZulu-Natal (KZN), the home of many of Zuma’s fellow Zulu, and soon spread to the nearby province Gauteng. The rioters focused their ire on small businesses and homes belonging to other Zulu, and interprovincial infrastructure. After the dust settled over 300 people had died and the insurrectionists had caused over $1 billion in damage. 20 warehouses and factories were severely damaged, but small local businesses suffered immense damage.
Analysts have noted that only 24% of South Africans approve of the direction the country is heading. While Zuma’s imprisonment was certainly a catalyst, rampant corruption and unemployment have been longer-term contributing factors to the violence.
The Purpose of the Violence
The goal of the rioters was more complex than the release of President Zuma from prison. President Ramaphosa has described the unrest as an “insurrection targeting the country’s economy and infrastructure”. Unemployed and poor South Africans see the nation’s corruption and violently claim their share of the nation’s prosperity. While the unrest does not appear to be a coordinated attack, South Africa’s economy is uniquely vulnerable to such disorder because it is constituted by state-owned enterprises (SOEs).
Why is South Africa’s Economy particularly vulnerable?
South Africa’s state-owned enterprises were formed during the Apartheid era, to support the industries most affected by international sanctions imposed by anti-Apartheid countries. They were introduced to encourage economic independence, as foreign support and investment were unavailable. However, the greatest flaw of the state-owned enterprise structure is that its success depends on the strength of the current administration. Zuma’s administration was characterised by corruption, as Zuma siphoned government revenue and eroded confidence in state-owned enterprises. The sorry financial state left by poor governance hamstrung the SOEs’ ability to borrow money, limiting their future prospects.
South Africa has 26 SOEs, meaning that government resources and attention are spread thin. As a result, many SOEs are run with low supervision and support, making them prime targets for sabotage. In their guideline suggestions for South African SOEs, the OECD notes that SOEs tend to set the business climate for a nation. After all, private entities are unlikely to obey the rules if public companies don’t. They also assert that the structure of SOEs makes them particularly vulnerable to corruption throughout the enterprise, particularly in governance and leadership. South Africa’s heavy reliance on SOEs and the storied history of corruption make fertile ground for inefficient business.
“Bill of Rights, Durban South Africa” by bistandsaktuelt is licensed under CC BY 2.0
While the insurrectionists’ attack was mostly against the engines of the economy, it is the citizens that will pay the price. The violence put as many as 129,000 jobs in SOEs and small businesses at risk in a nation with staggeringly high unemployment. Daily life has been thrown into utter chaos as food supply chains break down and people face homelessness.
The strong potential for a maritime shipping industry could be thrown into jeopardy by a bad reputation, one which is developing with the given instability and unrest. Should this kind of unrest prove effective in creating political change, the nation risks bringing violence into the political equation. However, this eventuality appears highly unlikely, as the June disruption grew from a rare series of events. In order to progress out of an economic system built due to the global sanctions on apartheid, South Africa needs to project itself as a safe and stable new nation.
Polling suggests that public opinion on the once dominant African National Congress Party (ANC) party is currently waning. The party has been in power since Nelson Mandela ascended to the presidency, and both Zuma and Ramaphosa are members. To retain their grip on the reins of government, Ramaphosa will need to consider the legacy his party has left.
Forecast
In the future, more politically motivated violence is likely. Economic disruption from the riots and COVID-19 have only made unemployment and poverty worse. On the other hand, an increase in COVID-19 relief money and deployment of the army makes it unlikely that future violence will reach this level of destruction for the time being. With unemployment spiking in the nation, keeping unutilized workers content is a top priority. If state-owned enterprises continue to prioritize aiding the achievement of political goals instead of profits, they will likely continue to exacerbate the nation’s economic vulnerability.
