Nigeria and South Africa have been experiencing currency fluctuations for a while now and the World Bank has given notice that the latter may be headed for a recession. The World Bank’s programme leader for South Africa, Catriona Purfield, has said the country is not in a recession but could be heading there due to the fact that the drought has pushed an estimated 50,000 people below the national poverty line of 501 Rand ($31.90) a month. The Rand lost around 25 percent of its value versus the dollar last year and hit its lowest level last month
In 2012, Moneyweb tagged the economic challenges in South Africa on a deteriorating standard of education education and the sustained high level of unemployment. According to the report, this situation leads to other challenges such as a high prevalence of crime and a higher burden on tax-paying individuals in order to fund welfare spending. Years later, the narrative is not so different than it was back then.
Last month, President Zuma admitted that the country’s economy is relatively unstable. “Our reality right now is that global growth still remains muted. Financial markets have become volatile. Currencies of emerging markets have become weak and they fluctuate widely. The prices of gold, platinum, coal and other minerals that we sell to the rest of the world have dropped significantly and continue to be low,” Zuma said, however, he believes the country’s positive attributes far outweigh its economic challenges.
According to Aljazeera, economists noted that the country will experience far worse economic conditions as they warn that things will get harder, especially for the poor in the country. The World Bank has, however, advised South Africa to balance its economy by adopting fundamental structural reforms in the economy to kick-start growth. “Another reform is developing trade within Africa, it is very important for employment,” she said.
However, it seems that President Zuma is ready to tackle the economic challenges his country is currently facing. In his last State of the Nation address, he gave a nine-point plan which his administration intends to use to stabilize South Africa’s economy.