On Saturday 09 May 2009 was the inception of the Zuma Presidency which continued for nine years or should I rather say “nine wasted years” as dubbed by many who are not happy with the outcomes of the Zuma administration. The former president is continuing to deny that he has failed South African citizens during his tenure as the head of state. Not so long ago on part 3 of a series titled “Zooming with the Zumas”, Zuma told his son Duduzane that a lot of progress was made in South Africa during his time in office.
His remarks are not in line with what the data tells us. For instance, the Consumer Confidence Index indicates that South African households had lost optimism about the overall state of the economy, employment and their financial situation during the Zuma era.
Recently, EW Blog editor wrote that “Jacob Zuma’s legacy needs to be zoomed with fairness”. This week we’ve decided to do Zuma’s “nine years in office” economic scorecard to break down how the economy was doing compared to his statements on how he believes it performed. Four days before Zuma ascended to the South African presidency, Statistics South Africa (Stats SA) had just released its first estimates for 2009’s first-quarter labour force survey. The unemployment rate (strict definition) came in at 23,5%, which was an increase from 21,9% in the previous quarter. The GDP growth came in at minus 6,4% mainly due to the global financial crisis that happened in 2008/09.
Some of the basic indicators used to measure the performance of an economy include unemployment, Economic growth, inflation, the balance of payment, government borrowing, exchange rate, and inequality.
A key part of Zuma administration was the implementation of the Comprehensive Rural Development Programme and the National Development Plan, both which aimed to boost economic development, grow the economy and create jobs.
Here’s how the economy performed during Zuma’s tenure:
Unemployment rate increased
The proportion of the labour force that was not employed when Zuma became the president of the Republic, was just above 23%. During his nine-year in office, it had increased to above 26%. This rise was simply the result of an economy that grew so slowly.
South Africa Unemployment Rate 2000-2018
Sluggish economic growth
Zuma didn’t manage to grow the economy to above 6% which was clocked during the Mbeki administration. The growth rate had gradually declined between 2010 and 2018 as shown by the black trendline on the figure below.
South Africa GDP Growth Rate 1993-2018
Read our review on a book titled The Upside of Down by Bruce Whitfield. In this review, Bruce is quoted saying “If South Africa was a hospital patient, and the GDP the measure of its pulse, the doctor would be telling relatives to get ready for the worst”. This is mainly the outcome of the Zuma administration.
Few months before Zuma become the President, the inflation target was adjusted to a range of 3 to 6 per cent for the year-on-year inflation. The annual average inflation rate declined from 7,26% in 2009 to 4,06% in 2010. It then went up to reach a high of 6,5% in 2016 then declined to 4,50% in 2018. From 2010, a year in Zuma administration, inflation rate (or consumer prices) went up moderately and was mostly within the inflation target.
South Africa Inflation Rate 2008-2018
Current Account deficit – the balance of payment
A current account records the rand value of the income received and goods or services exported, and income payments and goods or services imported. A deficit occurs when the value of imports is greater than exports. During Zuma’s tenure, the current account deficit in South Africa reached an all-time high of ZAR 232.1 billion – an indication of an uncompetitive economy.
South Africa Current Account 2009-2018
Government Debt – surged
A moderate increase in government debt is preferable over too much debt. Coincidently with the inception of Zuma administration, SA government borrowing and debt surged. When Zuma departed the high office, he left us with too much debt to repay.
South Africa Government Debt 2000 – 2020
Rand per US Dollar
The rand-to-dollar exchange rate had rallied, from a low of R8/$ to a high of plus R16/$, during the Zuma era. In the wake of Nenegate, it went above R16/$ causing fear among foreign investors. It then strengthened to around R12,50/$ in 2017 and bounced back down to plus R14/$ in the wake of Gordhangate.
South Africa Rand per US Dollar 2008 – 2018
The graph above shows how the rand has lost its purchasing power value overtime under the Zuma administration.
Gini coefficient (Inequality)
The Gini coefficient measures how the national income or wealth is distributed among a country’s population. Between 2009 and 2014, the distribution of income slightly improved as the Gini coefficient declined to below 0.680. However, a country with a Gini coefficient of 0.675 is still considered highly unequal. The favourable Gini coefficient is about 0.30, which the Zuma administration did not come close to.
It appears that the policies that were implemented during Zuma’s tenure failed to attract investor and consumer confidence, to grow the economy and to create much-needed jobs.