South Africa—New leadership boosts mining and investor sentiment
Threat of a parliamentary 'no confidence' vote led Jacob Zuma to resign as President. There ends a nine year reign characterised by insipid growth, soaring public debt, corruption scandals, and falling private investment—which led two credit ratings agencies to downgrade South Africa’s debt to junk in 2017. Cyril Ramaphosa—a former trade unionist and businessman—will now serve as president until 2019 elections, and will retain his position if the ruling African National Congress (ANC) wins.
Mr Ramaphosa’s twin priorities are rebuilding ANC’s record low popularity and stimulating the economy via ‘policy certainty and consistency’. Early interventions swelled business sentiment—the ZAR hit a near three year high and the Johannesburg stock market surged over 3% following the switch. Importantly, the Chamber of Mines agreed to postpone its High Court challenge to the revised Mining Charter in lieu of new negotiations with government. Comprehensively reworking the charter would benefit the beleaguered mining sector. Ongoing uncertainty, combined with volatile commodity prices, have deterred investment and seen over 55,000 mining jobs shed over the past three years. But other contentious issues such as land reform (the ANC voted in favour of expropriation without compensation in December), labour laws and black economic empowerment will likely continue to frustrate investment.