(This is a guest post from Vestact.com, a Johannesburg based asset-management company)
Gregory White noted yesterday that The Mining Industry Is Terrified By The Rise Of South Africa’s Julius Malema.
Malema is the enfant terrible of South African politics.
This week’s inflammatory comments about Zimbabwe and his verbal scuffle with a BBC journalist were just the latest in a series of bizarre antics.
Unlike most public figures in this unusual country, Malema makes little attempt to endear himself to the rich and powerful.
Malema’s power in the ruling African National Congress (ANC) derives from his appeal to the marginalised sections of the country’s populace. Notwithstanding much economic progress since democracy in 1994, unemployment levels amongst the (mostly black) urban poor remain unacceptably high.
In the election of 2009 which brought Jacob Zuma to the Presidency, the ANC lost support amongst the urban middle classes, but fared well in the category of first time voters (18 to 23 years) where Malema
campaigned hard. Zuma owes his ascent, in part, to early support from Malema. More than 50% of the population is under the age of 25, so his visibility amongst the youth cannot be ignored.
Malema is certainly no intellectual, and opposition parties have made much of his shoddy high school results. Yet he has seemingly staked his career on an oddball campaign to nationalize the mines in South Africa. This in a country which has an extreme shortage of skilled managers in the private and public sectors, and which has experienced severe organizational challenges in the existing publicly-owned corporations (most notably Eskom, the embattled power utility).
Rather than dismissing the nationalization option as outdated and unworkable, senior members of the cabinet have prevaricated – denying that it is “government policy”, or wringing their hands and saying that the matter “ought to be debated”.
Even more disturbing to local elites are Malema’s comments about Zimbabwe. The prospect of this country turning into an economic hell hole like our northern neighbour is their worst nightmare.
Is the threat that he poses to the stability of the country and its economy to be taken seriously?
We do not think so. It is likely that he will self-destruct before he can do too much damage.
He leads a flamboyant lifestyle, and journalists have recently uncovered stakes in engineering businesses which have benefited improperly from contracts awarded by municipalities in his home province, Limpopo. It seems that no taxes have been paid on these irregularly gotten gains, and investigators are closing in.
Malema’s colleagues also finally seem to have had enough. Today, in response to his attacks on the media, the party spokesperson issued this stern rebuke.
South Africa’s formal economy is well developed and resilient. Apart from the mining companies to which White refers, there is a substantial financial services sector, which is very profitable and highly regarded globally. Tourism, telecommunications, retail, property and manufacturing are also growing strongly. The business community is well organised, but low-profile politically.
At its core, the leadership of the ruling party understands that the integrity of the tax base must be preserved, in order to address the developmental needs of the nation. More inward foreign investment is needed, not less. They find themselves saddled with a young demagogue who is spouting crackpot economic theories.
It’s a matter of time before Malema is thrown overboard.
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