A week ago, this little chart from mybroadband.co.za started doing the rounds:


Now I realise that this fits in to a tidy political narrative: that President Zuma is driving this country into the ground. It also seems to suggest that AIDS-denier Thabo Mbeki was one of the best things to ever happen to South Africa – which wasn’t really the feeling at the time, as I recall (but perhaps that’s just me).

Either way, I think that you could easily spin another narrative here: that the world (and South Africa) was going through a boom period between 2000 and 2008, and then there must have been some kind of crisis, and the world (and South Africa) has been going through some kind of recession ever since.

What a pity that there’s no evidence of th-

*interrupts self with some randomly selected comparisons from tradingeconomics.com*

Italy’s Debt-to-GDP, dropping steadily from the mid-1990s, until flipping around in about 2008
Irelands’s Debt-to-GDP, dropping steadily from the early-1990s, until flipping around in about 2008
Australia’s Debt-to-GDP, dropping steadily from the early-1990s, until flipping around in about 2008

Of course, that doesn’t mean that the situation is not a problem. Clearly, a country like Ireland seems to be doing a much better job of bringing itself under control – while South Africa runs a real risk of never fully recovering.

A breakdown of how South Africa’s Debt-to-GDP numbers are calculated

Here’s the debt (in US dollars):


Which almost seems encouraging, because it looks like it’s stabilising.

Until you see South Africa’s Gross Domestic Product (in US dollars):


That depreciation of the Rand, eh?

Because in rand terms, South Africa’s economy is growing anaemically. But in dollar terms though…

What this means: the Debt-to-GDP graph at the top is being driven by two things:

  1. Between 2009 and 2011, there was a rapid spike in government debt; and
  2. Between 2011 and today, there was a rapid decline in USD-based GDP. That is: since the Quantitative Easing bubble blew the funds out of Emerging Markets.

And just so we’re clear, I’m not sure that we can completely blame the Rand depreciation on President Zuma – because if you’re going down that track, then you’d also have to credit him for that massive increase in USD-based GDP between 2009 and 2011.

It’s a no from me.

The point is: I think we have to be more careful about conflating economic realities with our own political prejudice.

Because as it stands, South Africa’s next economic miracle can come from two places:

  1. A sudden global economic recovery with a strong risk appetite for Emerging Markets; or
  2. A sudden and unexpected shift in the socio-political status quo.

And if it turns out to be Option 1 (which, to be honest, I think is the most likely), I don’t think we should be rushing to credit the political party in power for having the good fortune of being in power at the right time.

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.