Is South Africa's Cyril Ramaphosa running out of time?

Irish Times

2 days ago

A few hours before
South Africa
's president
Cyril Ramaphosa
was subjected to a litany of false and embroidered charges by
Donald Trump
live on television in the Oval Office, back in Cape Town a more orderly but perhaps more significant debate reached a climax: the country's parliament finally passed a highly contested budget.
It was the third attempt. Two previous budgets had been shot down over disagreements between the two main political parties, the African National Congress (ANC) and the Democratic Alliance (DA), in the year-old government of national unity.
Each time, the financial markets were rattled over fears that the coalition might collapse – scuppering what investors see as the best chance in years for a business-leaning government. So the budget's passing was a vital moment for investor confidence.
The big question is which of last week's two meetings – one in the White House; the other in parliament – will have the greater long-term impact on South Africa's trajectory. The walls are closing in on the 72-year-old Ramaphosa at home and abroad, with a hostile US, a stagnant economy and radical populist parties hovering in the wings.
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Millions of South Africans watched the White House showdown live on their phones, as the US president repeated the lie, first propagated in his first term in office, that the white Afrikaner minority faces 'genocide'.
Some in South Africa have suggested it was ill-advised for Cyril Ramaphosa to go to meet with US president Donald Trump in the White House earlier this month. Photograph: Eric Lee/The New York Times
Members of Ramaphosa's entourage argue the visit went better than the fracas indicated. Two prominent Afrikaners, Johann Rupert, the billionaire founder of the luxury goods company Richemont, and John Steenhuisen, head of the DA party, did their best in the Oval Office to present a more accurate picture. 'I think we leave better than we came in,' Steenhuisen says.
Progress was made towards a vital trade deal with America to head off the threat of 30 per cent tariffs, officials insist; with unemployment over 40 per cent, tens of thousands of jobs may depend on this.
But many businesspeople are less sanguine, fearing that the spectacle did serious harm to South Africa's image, however much the claim of genocide has been debunked. 'This was awful for brand South Africa, for tourism and investment,' says a leading corporate figure.
Investors were delighted last June by the formation of the unity Government and the inclusion of the market-friendly DA, ending 30 years of solo rule by the statist ANC. It was hailed as a fresh start after more than a decade in which the former liberation movement had been mired in corruption scandals and presided over an erosion of public services.
One year on, with the economy growing at a little more than 1 per cent, optimism is waning. Now business leaders are arguing that the White House showdown has to be a catalyst for a new approach. They also hope Ramaphosa has returned aware of the need to act more decisively to open up the economy and keep populists on the back foot.
Hendrik du Toit, chief executive of the Anglo-South African asset management firm Ninety One, does not mince his words. While he praises South Africa's unified stance in the White House, he believes 'the wisdom of going there' is open to question.
'What South Africa has to do now is move on and focus on how we can grow our economy,' he says, pointing to the appallingly high rates of violent crime and calling for a clampdown on corruption and an investment in education. 'South Africa is on the brink of an economic emergency,' he adds, citing statistics suggesting 60 per cent of workers below the age of 24 are jobless.
The country is 'grinding through its challenges', du Toit says. But he worries that other developing economies are adapting better to a fast-changing world.
He goes on: 'In the White House I saw a clear understanding there are threats from the populists in South Africa which need to be dealt with and that we are starting to face up to our challenges . . . The big question is for our president: Mr President, what is the next step?'
John Steenhuisen, leader of the Democratic Alliance (DA). Photograph: Waldo Swiegers/Bloomberg
The ANC's critics have long argued that the party is better at promising reform than delivering it. When Ramaphosa, an anti-apartheid activist turned tycoon, took over the presidency from the discredited Jacob Zuma seven years ago, he was hailed as the man to rescue the country's fortunes. Under Zuma, the party had become engulfed in the scandal known as 'state capture' as businesspeople and politicians conspired to influence decision-making for their own financial interests.
After taking office, however, Ramaphosa's reputation suffered. The economy flatlined and the supply of essential services, in particular energy, water and transport, faltered. Ever the conciliator, the president was accused by many of ducking the tough decisions needed to energise the economy and root out corruption.
'I think Ramaphosa was pretty unequivocally pro-growth when he came to power in 2018,' says Jonny Steinberg, a South African author now at Yale's Council on African Studies. 'He's subsequently learned that governing the ANC and being pro-growth are not only not the same thing, but they tug against each other.'
Reform of Black Economic Empowerment regulations may be under way, driven by none other than South Africa's most famous émigré, Elon Musk
Ramaphosa's ANC was punished in last year's elections. Securing just over 40 per cent of the vote, it lost its overall majority for the first time since Nelson Mandela took office in 1994 and ended white-minority rule. But the formation of the unity government, crucially without the two biggest populist parties that had broken away from the ANC – the Economic Freedom Fighters (EFF) and uMkhonto weSizwe (MK) – inspired hopes of an economic recovery.
Yet a combination of the global fallout of Trump's protectionism and the government's failure to fully embrace the private sector has held back prospects for this year, analysts say. The economy is set to grow at 1.4 per cent in 2025, not nearly enough to reduce unemployment.
Privately, potential investors argue the biggest disincentive is South Africa's network of quotas and regulations, which were designed to address the legacy of white rule. Many have singled out the Black Economic Empowerment (BEE) regulations for particular criticism. Introduced after the 1994 elections, they were aimed at tackling the economic injustices of apartheid, when almost all companies were white-owned and run, by creating a black business class. The key clause mandated transferring a stake to a black business entity.
Ramaphosa himself was one of the ANC leaders 'deployed' by the party into business in the mid-1990s as white-run companies raced to seek a high-profile black partner. But over time, critics accused BEE of doing little more than creating a new elite, one that most black South Africans could never dream of entering.
Moeletsi Mbeki, a prominent commentator and the brother of democratic South Africa's second president, Thabo Mbeki, has long been a sceptic of the project. He argues that by handing out stakes in businesses, the law stifles a sense of initiative essential to foster true entrepreneurs, and that its official mission of 'economic equality' is little more than a sideshow.
European managers who tell him they want to invest in South Africa say BEE is a 'major obstacle', he adds, and they 'don't have a way round it'.
While the policy has been tweaked over the decades, the ANC has seen it as a touchstone. But reform may now be under way, driven by none other than South Africa's most famous émigré,
Elon Musk
. The Pretoria-born billionaire adviser of Trump has in recent months launched a campaign against BEE laws, labelling them as 'openly racist'. If he has to comply with them, he will not introduce his satellite broadband network Starlink into South Africa, he has said.
On the eve of the White House meeting, Maropene Ramokgopa, minister for planning, monitoring and evaluation, and one of the most senior ANC officials, told the Financial Times a compromise may be in the offing, and not just for Musk. More investors could take advantage of a 'workaround' to allow them to fund social projects instead of handing over equity, she said.
Julius Malema, leader of the Economic Freedom Fighters, at a rally where he chanted 'Kill the Boer!' in the Soweto township of Johannesburg in July 2023. US president Donald Trump surprised a South African delegation with a video montage of apartheid-era chants from Malema. Photograph: Joao Silva/The New York Times
'Scrapping BEE is not a good thing,' she added, arguing it would outrage the ANC's supporters and lead to a 'revolution'. But, she added, there were 'mitigating avenues' that could facilitate investment. 'For example, you can say, 'I'll create thousands of jobs or I'll help you build schools.''
Although Musk attended the White House session with Ramaphosa, he did not speak, but was present at the subsequent private lunch. It is seen as no coincidence that two days after the talks, the government published a proposed policy change that could enable Starlink's owner to invest. This would allow people applying for a communications licence to invest in social projects instead of giving a 30 per cent stake to 'historically disadvantaged groups' – a workaround already offered to car manufacturers.
Business leaders and DA insiders hope this may be the first step to a broader rethink, but they are not holding their breath. 'BEE must remain,' says a senior business figure. 'But does it have to include ownership? We should be the mining capital of the world but we're not, and a lot of that is because of the difficulties of BEE.'
One of the few obvious positive outcomes of the trip for South Africa was that Trump did not scold the country over its close ties with America's rivals and enemies, nor its hostility to Israel. Democrats and Republicans alike have been irked by South Africa's uncritical stance towards Russia, China and Iran in recent years, and also by its sponsorship in 2023 of the genocide case against Israel at the International Court of Justice over its assault on Gaza.
In a sign of a possible thaw in relations, Ramaphosa says Trump might after all come to the G20 summit in November, which South Africa is hosting. Trump's secretary of state, Marco Rubio, and treasury secretary, Scott Bessent, have boycotted meetings of their G20 peers this year.
Diplomats argue South Africa has been far less nimble than other nonaligned states. 'South Africa has not been as agile and responsive in balancing interests [as its peers],' says Elizabeth Sidiropoulos, head of the South African Institute of International Affairs. 'We need to think how we can manage our relationship with America more effectively, and in a way that doesn't compromise our vital economic priorities.'
The scale of the economic stakes is all the more apparent since Trump launched his trade wars. South Africa has benefited hugely from America's 25-year-old Africa Growth and Opportunity Act, which allows duty-free access for certain products from some African states. This is due to expire in September, and South African officials accept that it is unlikely to be renewed, with potentially devastating repercussions for South Africa's agriculture and car industry.
If the government does fall, investors fear the more radical wing of the ANC might push for an alliance with parties that advocate nationalisation of industry and land redistribution of the sort Trump claims falsely is already under way
Vincent Magwenya, Ramaphosa's spokesman, told the Financial Times this year that South Africa would not be bullied by Trump into dropping its nonaligned stance. 'It's going to be hard for Americans to swing us in one direction or another,' he said. 'Trump will not be president of the US forever and if we have to ride over a few years, we will ride it.'
Still, Ramaphosa clearly concluded he needed to repair relations with Washington, not least after his US ambassador was expelled in March after saying Trump was 'mobilising a supremacism'.
With this in mind, Ramaphosa came to Washington with a package of measures, including preferential access for US companies to South Africa's critical minerals and gas, and also easing South African restrictions on US poultry and pork. 'We need America,' said minister Ramokgopa, adding: 'They need us as well.'
For decades, South Africa has lurched between optimism and pessimism – usually to undue extremes. Now, once again, it is at a critical juncture.
On the more moderate end of the ANC spectrum, Ramaphosa is seen as uniquely able to hold together a coalition that spans stalwart ANC ideologues on one side and DA free-marketeers on the other.
The passage of the budget – after the DA rebelled successfully against a move by the ANC finance minister to increase VAT – has underlined the ability of the coalition to weather storms. Privately DA and ANC insiders concede it is in their interests for it to endure, although it will be tested again, not least next year when the country holds local elections.
Tony Leon, a former DA leader and author of a new book on the formation of the government of national unity, says it will face more strain, but that the DA has decided it is there for the long haul. 'Crises can erupt down the line, but the DA is saying that if you want to get rid of us, you need to fire us, we are not walking out.'
If the government does fall, investors fear the more radical wing of the ANC might push for an alliance with the EFF, led by the demagogic Julius Malema, and Zuma's MK, which advocate nationalisation of industry and land redistribution of the sort Trump claims falsely is already under way.
For now, its defeat over VAT has put the ANC on its mettle and brought a new competitive vigour to politics. 'For all its weaknesses and internal fights, the [coalition] performed better than the ANC Government in the previous five years,' says William Gumede, a prominent commentator.
'There is a sense of hope. We've seen real movement in some areas of delivery. Public servants are feeling the pressure. Up to now they were so complacent. Now ministers are being upstaged in public by the DA. The populist cause is on the back foot – but if the [unity government] collapses the populist cause would come back.'
As ever in ANC politics, there is much intrigue. Behind the scenes, a succession battle has begun ahead of leadership elections in 2027. For the first time in the party's post-apartheid history there will be no liberation-era grandee contesting the top job. The future of the coalition – and the chances of the populists making a comeback – depends on the identity of the victor.
Long before Ramaphosa became president, many in and outside the ANC pinned their hopes on him as a prudent helmsman. Many of his erstwhile fans have grown disappointed and now see him as too cautious. 'The country is on autopilot,' says Mbeki.
Now the final chapter of Ramaphosa's long career has begun. For his allies, he has one last opportunity to prove his sceptics wrong – and grasp the nettle of reform. – Copyright The Financial Times Limited 2025