GUMANI TSHIMOMOLA: SA pays a high price for failing to address economic racism

In the recent past we have watched as the rand has exhibited unpredictable fluctuations, driven by a seemingly invisible and pervasive force known as “the market”.

Former president Thabo Mbeki once described this phenomenon during the celebration of the 120th birthday of Cape Times, likening the market’s influence to a faceless, odourless and non-corporeal band of musicians.

While Mbeki stopped short of labelling this force as racist, the reality is that SA remains at the mercy of a racially biased organised group — the market. This group, primarily composed of whites, controls a highly financialised economy that relies heavily on investors, including foreign investors gambling in the JSE for quick and short-term returns.

Today, if it is not “the market”, it is “the investors”. Consequently, South Africans exercise their democratic choices at the ballot, but these choices are undermined by the market whenever the outcome displeases these powerful economic players. Which raises the question, whose democracy is it?  

We are making this comment against the backdrop of the current negotiations between the ANC and DA as they attempt to form a government of national unity, which we have correctly characterised as grand coalition. It does not come as a surprised that the rand favours the DA, a party dominated and led by whites that represents a minority. Whenever the DA threatens to withdraw from negotiations the rand weakens or shows signs of instability. Conversely, any indication of agreement or satisfaction from the DA results in the rand strengthening. 

When Nelson Mandela announced the appointment of Trevor Manuel as the first ANC finance minister at the end of the 1996/1997 budget debate — the last budget presented by a white minister during the transitional years from apartheid — the rand tumbled. At the time of the announcement the currency lost 2% of its value, continuing to drop by 9.4% over the next four weeks. Many attributed this decline to market uncertainty, but the underlying truth was far more profound — Manuel was the first black finance minister in the post-apartheid SA, something the so-called investors did not like. 

SA is now paying the price for its failure to transform its economy and for allowing the beneficiaries of apartheid, a crime against humanity, to retain control of the economy. This economic stronghold has ultimately undermined the very foundation of democracy. Despite millions of South Africans voting, a minority — predominantly white — still wields decisive power over the nation’s economic future. The chickens have come home to roost, and the country is paying a high price for failing to deal decisively with economic racism.

When the ANC announced that it had signed a statement of intent with the DA, paving the way for the re-election of Cyril Ramaphosa as SA president in the National Assembly, the market’s response was immediate. Before his re-election the rand was trading slightly more than R18.40 to the dollar. However, after his re-election with the support of the DA uncontrollable excitement ensued, with reports like “rand gains as markets cheer ANC, DA agreement to form national government”, suggesting that anything else would inherently be bad, as if the market holds a veto vote over SA’s future. Unsurprisingly, it strengthened to a record low of R17.80/$, a level last seen nearly a year ago in July 2023. 

A week after Ramaphosa’s inauguration, and every time it  appeared that the ANC was reconsidering its unholy alliance with the DA, the rand began to tumble as negotiations hit a deadline. The DA demanded key cabinet positions such as trade, industry & competition, energy and transport, that would not only in effect lead and direct the economic future of SA but also grant the party substantial influence over the nation’s economic policies and decisions. Put simply, the DA would be in the driving seat of SA’s economic trajectory and priorities according to its agenda.

During an exchange of letters between Ramaphosa and the DA, filled with threats, condescending tones and sometimes demands bordering on the illegal and unconstitutional, the rand became the carrot while the DA held the stick. We were told that the rand, which dropped slightly back to the R18.40 level, did so because of this discord.  

This must not come as a surprise. This is not the first time the rand has been weaponised politically. During the election campaign DA federal chair Helen Zille said in an interview that if the ANC were to form a coalition government with the EFF the rand would immediately tumble. This statement clearly illustrates how the currency is used as a tool to influence political outcomes and maintain economic control in the hands of a few. 

It is about time South Africans appreciated that as long as the economy remains concentrated in the hands of a few minorities, their democracy is meaningless. The media plays a crucial role in this manipulation. Journalists who report that the market — the very same “faceless, odourless and non-corporeal band of musicians”, as Mbeki put it — prefers certain coalitions, and insinuate that only cabinet appointments from a party dominated and led by whites representing a minority “could see some upside for the rand”, must be called out as racists. 

At the core of this insinuation is the racist white superiority thinking that only white people are competent to manage complex economic institutions, which we know is far from the truth. The fact that the ANC has succumbed to this unfortunate racism is not only the reason we find ourselves today dealing with the “markets” as a driving factor and scaremongering tactic to threaten us, but it also perpetuates racist stereotypes. This narrative undermines our capacity as black people to manage our own affairs competently and sustains SA’s apartheid economy. 

If anything, what is happening now is nothing but the undermining and manipulation of SA’s democracy. Mandela, Mbeki and Manuel failed to call it racism. We must not fail, or else we will forever be at the mercy of the rand. It is essential for South Africans to recognise and confront the racial dynamics at play in their economy and politics, ensuring that true democracy is realised and that economic power is equitably distributed. 

• Tshimomola is EFF senior researcher in the parliamentary caucus.