FTI Consulting: Implications of Unrest in South Africa Following the Arrest of Jacob Zuma
This note seeks to brief our clients on current developments in South Africa and analyse the implications.
15 July 2021 Highlights
7 July - Former President Jacob Zuma jailed on instruction of Constitutional Court for refusing to appear before Judicial Commission of Inquiry into State Capture
8 July - Zuma’s children, key lieutenants and supporters incite violent protest against his imprisonment
10 July – Trucks burnt and traffic severely disrupted on N3 national road in KwaZulu-Natal
12 July - President Cyril Ramaphosa deploys the army to support law enforcement agencies and addresses the nation, calling for an end to lawlessness
13 July – Security cluster ministers say violence is fuelled by poverty but also organised in part by rogue intelligence agents loyal to Zuma
14 July - Rampant criminal looting and riots continue as police and soldiers struggle to contain the violence
Summary
Protests against imprisonment of Jacob Zuma erupt into widespread violence and looting
Critical transport, water, electricity and communications infrastructure targeted
Police Minister and Deputy Intelligence Minister say looting is a smokescreen to hide orchestrated attempts to destabilise the State
Analysts point to poverty, unemployment and hunger emerge as key factors behind looting • Looting and riots continue as police and army struggle to control lawlessness
72 dead, more than 1,200 arrested thusfar
Defence Minister says 25,000 soldiers to be deployed to hot spots across the country
Food and fuel shortages in Gauteng and KwaZulu-Natal prompt panic-buying
Overview
In a scathing majority judgment, South African’s Constitutional Court on 29 June found former President Jacob Zuma guilty of contempt of court and sentenced him to 15 months imprisonment following his refusal to participate in the ongoing Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector.
In the days preceding his arrest, Zuma publicly lambasted the Constitutional Court judgment whilst some of his key supporters warned of dire consequences if he were to be jailed.
Shortly after Zuma was taken into custody just before midnight on 7 July, protests against his imprisonment began in the former president’s home province of KwaZulu-Natal with supporters taking to the streets to demand his release 12 and burning tyres to block the N3, the national highway which connects the nation’s economic capital Johannesburg with South Africa’s largest commercial port, Durban.
The protests rapidly gained momentum, with at least 20 trucks being set on fire early on 11 July following a night of unrest in the Mooi River area of KwaZulu-Natal, with trucks being burned and shops looted. Multiple instances of looting of malls, shops and commercial centres erupted across KwaZulu-Natal and Gauteng.
On Monday, 12 July, President Ramaphosa deployed the army to affected areas and addressed the nation with a plea for peace and stability to be restored. However, in the days since, the looting of retail centreshas continued with factories, warehouses and upstream levels of the value chain being increasingly targeted.
As at close of business on 14 July, a total of 72 people had lost their lives due to the unrest and more than 1,200 people have been arrested in connection with the looting and public violence.
Of significant concern is the fact that critical economic infrastructure has been targeted, including transport, electricity and water treatment facilities, prompting Police Minister Bheki Cele and Deputy Intelligence Minister Zizi Kodwa to point to elements ‘orchestrating organised and deliberate destabilisation’.
Socio-Economic Factors
Whilst the situation was undoubtedly triggered by the incarceration of the former President and the related political agenda at play which we address in some detail below, there are a number of structural socio-economic issues which have made South Africa particularly vulnerable to this kind of outbreak of public violence.
South Africa leads has the world’s highest levels of inequality and unemployment in the world.
A significant portion of the population have no hope of improving their economic prospects.
Some 11 million able-bodied adults are unemployed compared to a tax base of only 6.9 million taxpayers.
Almost half (46.3%) of all young people between the ages 15 to 34 are unemployed.
Corruption under the Zuma administration diverted an estimated R2-trillion meant to improve the lives of ordinary people. Furthermore, corruption related to COVID-19 procurement indicates that the rot has continued in spite of concerted efforts to clean up the public sector.
These realities mean that South Africa is prone to protests related to socio-economic issues. Numerous analysts have pointed to the fact that the unemployed masses, particularly restless youth who have little hope of a brighter future, can be manipulated by political actors with nefarious motives.
Economic Implications
The damage to the South African economy is difficult to quantify at this stage but initial estimates place the cost at tens of billions of Rands. It is also clear, however, that the violent protests have dealt a significant blow to South Africa's efforts to rebuild the economy, which was already in recession before the coronavirus pandemic.
The violence has impacted retail supply chains and transport links which has disrupted the supply of food, medication and other basic consumer goods. These initial disruptions are set to usher in a period of prolonged food shortages, with companies like Tiger Brands already warning of a nationwide bread shortage due to disruptions in critical wheat and yeast supply. Further food insecurity is expected to follow, especially in KwaZuluNatal and Gauteng.
Beyond the malls and retail centres that have been affected, some of the other companies that have experienced the most damage include Samsung Electronics (distribution centre), LG Electronics (factory), JSE-listed IT3 distribution group Mustek (offices and warehouse), South Africa's largest alcohol producer SA Distell (distribution centre), Massmart (over 30 of its stores and a distribution centre), and many others.
The South African Rand slumped as the unrest continued whilst business and investor confidence has been severely dented and may be further negatively impacted if law enforcement agencies struggle to contain the violence in coming days.
There have also been significant interruptions to South Africa's vaccination program in KwaZulu-Natal and Gauteng, the two largest provinces by population, which will inevitably prolong the economic recovery from the COVID-19 pandemic in the short- to medium-term.
Political Implications
The events unfolding in the wake of former president Jacob Zuma’s imprisonment will have significant political consequences for South Africa, exacerbated by the economic woes already facing the country.
President Cyril Ramaphosa has been credited with trying to revive South Africa’s economy, driving a campaign to root out corruption and restore State institutions hollowed out by State Capture during the Zuma era but the mayhem in recent days, combined with evidence that corrupt elements still have influence in the State and party, clearly illustrates the enormity of the challenge facing the incumbent. Rampant poverty and unemployment are key factors influencing the current looting and lawlessness. Added to this is the fact that State structures and law enforcement agencies were severely weakened by Zuma loyalists over more than a decade following the 2007 elective conference of the governing African National Congress (ANC).
Since coming to power on the back of a narrow victory over Nkosazana Dlamini-Zuma at the ANC’s December 2017 national conference held at Nasrec in Soweto, Ramaphosa has slowly gained the upper hand and is now firmly in control of the governing party. The November 2020 arrest on charges of corruption of Ace Magashule and the subsequent suspension of the ANC’s Secretary-General, upheld by a Gauteng High Court judgment against Magashule last week, has further bolstered Ramaphosa’s renewal agenda. Magashule is one of Zuma’s key strongmen. Shortly after Ramaphosa was elected President of the governing party, Magashule vowed that Zuma’s supporters, the so-called ‘fight-back faction’ of the ANC would work to overturn the landmark victory. “It’s just a matter of five years Comrades; conferences happen every five years so let’s work hard,” he told an ANC gathering in KwaZulu-Natal in January 2018.
The fight-back by Zuma’s lieutenants is far from over, not least because the writing is on the wall for those implicated in corruption and State Capture. The threats of violence which preceded Zuma’s arrest did not yield the desired outcome; it did not deter the police from executing the Constitutional Court’s order that he be imprisoned. Zuma’s twins, Duduzile and Duduzane, as well as current and former intelligence operatives are reportedly persons of interest in the State’s investigations into the violence which followed his arrest. Some of Zuma’s children, family members, former ministers and associates are close to the Gupta family and have a vested interest in derailing the efforts of investigators and prosecutors to pursue all those fingered for looting the State’s coffers during his tenure.
Whilst the threat posed by the Zuma-Magashule faction is on the wane, the current unrest is set to have profound and lasting consequences for the South African economy, not least the prospects of attracting the domestic and foreign investment that has been a centre-piece of President Ramaphosa's strategy to tackle the country’s socioeconomic challenges.
On the upside, the jailing of Jacob Zuma has reinforced the principles of constitutional democracy and the rule of law in South Africa. It is the strongest signal yet that no individual will be spared by the criminal justice system. However, the ongoing violence and the slow pace of quelling it has dealt a significant blow to perceptions of the South African government’s ability to protect lives and property, although the restraint shown by the police and army is also an indication of the leadership’s awareness that deaths at the hands of the State could potentially fuel the current lawlessness.
Forward View
In coming days and weeks we can expect:
Government, organised business, labour and civil society will work together to bring the situation under control.
Peace and stability will be restored as security forces are deployed in greater numbers.
Businesses and properties will be protected by combined public and private security.
Instigators and perpetrators of the violence will be arrested and prosecuted.
Once peace is restored and the current crisis is contained, the State, business and organised society will need to strengthen their resolve and compact to address the major structural, socio-economic issues in the South Africa.
South Africans can expect a period of tension and instability in the short-term, especially as they relate to food security and unemployment. In the longer term, South Africa will need to take concrete steps to address the structural problems that make it vulnerable to this kind of instability. Meaningfully addressing poverty, unemployment and inequality will need to be a central focus for government and all social partners to insulate South African society from those seeking to exploit its fragile fault lines.
Jeremy Michaels Managing Director, Group Public Affairs Strategic Communications FTI Consulting +27 82 772 1122 M | +27 21 487 9000 T jeremy.michaels@fticonsulting.com
Lelo Skosana Director, Public Affairs Strategic Communications FTI Consulting +27 82 775 4810 M lelo.skosana@fticonsulting.com
