Protests take their toll on the economy and the state

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South Africa may be a victim of events beyond its control, namely the decision by the US Federal Reserve to taper its programme of easy money starting last month.

For six years, monthly monetary boosts from the Fed flowed into emerging markets, including South Africa, boosting local currencies and funding economic growth. But the Fed’s policy shift, signalled in May last year, has sucked funds from the countries that benefited, sending their currencies tumbling and stalling their economies. As a result, the rand hit a five-year low and the economy is struggling to expand by 2 percent a year.

But US monetary policy is not entirely to blame for these problems. Each of the countries has made itself a sitting duck in a number of ways.

In South Africa, there is a more fundamental concern than the weak rand, which will inevitably strengthen over time. It is the continuing destruction of the country’s social and economic fabric through the mismanagement of public resources. People who should be appointed to key positions in local government are not. And the people who are appointed don’t get there because of their skills. If they do possess the skills it is usually incidental. They are there for political reasons.

Because of this, funds which should be channelled into social and economic infrastructure, are wasted by inefficiency and corruption. And opportunities to create sustainable and meaningful jobs are lost. Not surprisingly, the people who have been cheated of their rights are on the streets venting their anger.

The cost of violent service delivery protests around the country over the past few months is impossible to quantify. Estimates will eventually be made of losses from property damage, as well as the bill for attempting to keep order – but the disruptions to the communities involved and the operations of businesses can never be accurately calculated.

As to the human lives lost in the process, no one can put a figure on their value.

Economic losses of this kind are never identified in the country’s national accounts or itemised in the annual budget. But it is certain that they represent a huge burden on taxpayers who have to foot the bill for government spending, and that they choke economic growth and strangle job creation.

Protests of this kind against housing shortages, delays in providing sanitation and the sudden disappearance of water, among other things, are a part of South Africa’s way of life. But in recent months these events have escalated. Gauteng police have dealt with 569 protest marches, of which 122 were violent, over the past three months, according to The Star. The newspaper quoted Gauteng’s acting police commissioner Lieutenant-General Lesetja Mothiba, who said the cost of the riots would run into billions of rand.

The introduction of e-tolls on Gauteng’s freeways by the SA National Roads Agency (Sanral) is another example of expensive mismanagement.

Lack of proper consultation created bitter opposition to the scheme. And the many delays caused by the overwhelming public opposition damaged South Africa’s credibility in global markets.

A failure to communicate is at the heart of the problem – sowing distrust of government in civil society. Together with ostentatious displays of wealth in the top echelons of government, this failure will continue to provoke protests, lawful and unlawful, peaceful and violent.

Ahead of the elections, policymakers may be reflecting on the cost to them in terms of votes.


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