South African economy feels jitters too

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KAI RYSSDAL: The global financial crisis is coinciding with a political meltdown on the other side of the world. The African National Congress has run South Africa since the first democratic elections in 1994. But a power struggle among ANC leaders has sent jitters through the country’s economy.

Gretchen Wilson has the story from Johannesburg.

GRETCHEN WILSON: This is Africa’s biggest economy. South Africa’s political stability has been a draw card for investors. But this week President Thabo Mbeki was forced from office by a rival faction of the African National Congress. The faction’s led by ANC President Jacob Zuma.

Now everyone’s wondering whether Zuma will tamper with the country’s economic policies by closing markets or leaving inflation unchecked.

NICKY NEWTON-KING: It’s important that the new government expresses with clarity and as soon as possible the policies that they’re going to apply.

Nicky Newton-King is deputy chief executive of JSE Limited, Africa’s leading stock exchange. Shares on the JSE plummeted this week when South Africa’s finance minister said he would resign. Markets recovered somewhat, but the sell-off shows investors are nervous.

NEWTON-KING: Because we have a high percentage of foreign investment — both portfolio investment and direct investment — in this country, and investors want certainty.

So do ordinary South Africans. Economists say the country’s rapid growth has created as many as 5 million new jobs in the last decade.

Chris Hart is chief economist at Investment Solutions in Johannesburg.

CHRIS HART: Over the last eight years, the entire country has got wealthier. The poor are not as poor as they were.

ANC president Zuma reassures business that little will change. But his backers — labor unions and the Communist Party — are pushing hard for economic reforms and increased social spending. Especially when the country’s unemployment rate still tops 26 percent.

In Johannesburg, I’m Gretchen Wilson for Marketplace.

All reporting by Gretchen L. Wilson, © 2008

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