South Africa is facing a myriad of challenges. The country is facing its worst drought in decades leading to hike in food prices, and several jobs are being lost in its all-important mining sector where about 440,000 people in the country are employed. The rand has struggled and stocks are falling, while political unrest builds with every wrong word and decision made by the country’s leadership. This may not be the best period to be a South African. The country whose economy is Africa’s most advanced and second largest is not having things great; it is Africa’s most miserable country.
According to analysis published by Cato Institute, South Africa is for the second time in a row the continent’s most miserable country, ranking fifth on the Institute’s 2015 Misery Index. The annual Index ranks nations based on data from the Economist Intelligence Unit (EIU). Professor Steve H. Hanke of the Johns Hopkins University compiles the ranking using a simple a formula: a nation’s ‘misery’ is equal to the sum of unemployment, inflation, and bank lending rates, minus real GDP’s percentage change. When this formula was used, South Africa had a score of 40, following Venezuela’s 214.9, Ukraine’s 82.7, Brazil’s 67.8 and Argentina’s 60. Last year, South Africa was the 10th most miserable country in the world with a misery index of 39.16 and the contributing factor to its misery being unemployment. Nothing has really changed.
Recently, South Africa’s Democratic Alliance (DA) party marched against high unemployment in the country, blaming the situation on the ruling African National Congress. According to the party, 774 people become jobless every day. While AfricaCheck.org, a non-partisan organisation which promotes accuracy in public debate and the media, proved that the DA was wrong, what has been proven is that South Africa’s unemployment rate was 23.2 percent in the second quarter of 2009 and had risen to 25.5 percent in the third quarter of 2015, according to the quarterly labour force survey trends for 2008 to 2015. If the expanded definition of unemployment would be used, the rate rose from 31.7 percent in the second quarter of 2009 to 34.4 percent in the third quarter of 2015. South Africa’s unemployment rate has not gone below 20 percent for almost two decades and it has remained the major reason for the country’s misery.
In South Africa, 65 percent of unemployed people have been without a job for over a year, and 34.5 percent of the youth population remain out of work and out of education, new data from the Organisation for Economic Co-operation and Development (OECD) shows.
Critics have blamed the situation on political mis-steps by President Jacob Zuma. The president’s decision to replace his respected finance minister, Nhlanhla Nene, with little known David van Rooyen dealt his administration a big blow. To many, it confirmed what they had always believed about Zuma, as his decision was seen as meddling unduly in the affairs of one of the most credible institutions in the country which had been free from the president’s influence. The backlash from the public, businesses and even the rand was more than Zuma bargained for and he made a stunning u-turn, appointing highly-respected Pravin Gordhan. But the damage had been done. In five days, South Africa has had three finance ministers and billions of dollars had been wiped off the nation’s equity and bond markets.
South Africa is forecast to have grown at about 1.4 percent in 2015, its lowest level since the 2009 recession. Business confidence is also at its lowest since 1993, according to the South African Chamber of Commerce. The global economic situation and low prices of commodities might have affected mineral-rich South Africa, but allegations of wasteful spending, corruption and perceived regulatory uncertainties are issues the South African government needs to address to restore confidence, both business and public.