Azra Hoosen | ah@radioislam.co.za
24 May 2024 | 12:30 CAT
3 min read

As South Africa approaches its upcoming elections, concerns over potential violence, intimidation, and boycotts are mounting. A threat analysis by police crime intelligence, supported by various researchers, highlights the risk of election-related unrest fueled by divisive political rhetoric and the country’s deep-seated societal issues.

Award-winning economist Dawie Roodt expressed alarm over the potential for riots and the impact on business and investor confidence.

According to Roodt, the sectors most likely to be affected by violence are the primary and secondary sectors. However, the retail sector is also at risk, as evidenced by previous incidents of shop plundering in the industry.
“As an economist, I am more concerned about some of the underlying trends in the economy, which certainly don’t have a direct bearing on the elections, such as exceptionally high levels of unemployment and, of course, high levels of rising and absolute poverty and you don’t need an election to start riots in South Africa, you need any kind of spark. Approximately 30 million people are directly dependent on the state for a monthly income, and this kind of dependency on the state is totally unsustainable. I am concerned about any kind of development that could potentially set this thing in motion,” he said.

Roodt pointed out that the financial markets are anticipating a positive outcome for the elections. About two or more months ago, there was significant pressure on the rand and other financial markets. “Recently, I have witnessed that when election polls are starting to come out; we are not talking about the likelihood of an ANC-EFF coalition. The financial markets are reacting quite positively to this, and the equity markets are doing well,” he said.

Roodt speculates that if the elections yield a favourable outcome, we could potentially witness the rand strengthening to 17.5 against the US Dollar.

“International investors and local investors are only in it for one reason: that’s to make sure they get their capital back and a good return. Currently, South Africa is a cheap destination and attractive to investors, and one of the reasons has to do with weak economic growth. Another reason is the possibility of the wrong outcome during the elections; there is uncertainty out there. The financial markets are waiting to see who the next government will be to make a decision on whether they trust and whether this will be a gross government or not,” he said.

Speaking about proposed structural reforms to tackle the underlying causes of violence and social unrest in South Africa, Roodt recommends prioritising economic growth. He emphasises the need to implement specific policies aimed at fostering economic expansion, highlighting that one of the major hindrances to growth is the government’s obstructionism.

“For example, this populace manoeuvre by the President by signing the NHI Bill into law is cheap politics because it is unaffordable and would cause huge damage to the health industry in SA. He is doing it just because of elections. We have high levels of crime, Transnet falling apart, and the post office is falling apart, as well as problems with electricity; these are things we need to address to make SA a more attractive investment destination and grow the economy,” he said.

Roodt asserts that amidst challenges such as the collapse of state enterprises and local authorities in South Africa, there is a silver lining: the private sector is stepping in to fill the void. He cites the example of Eskom, where the private sector is now generating and utilising electricity more efficiently compared to before.

“What keeps democracy alive is certainly the role of civil society, the free press, the judiciary, and various institutions. I am glad that these institutions are very healthy and ensure democracy’s survival,” said Roodt.

LISTEN to the full interview with Ml Junaid Kharsany and Dawie Roodt, here.