South African president Jacob Zuma survived the latest attempt to oust him on August 8, as a motion of no confidence in the National Assembly was defeated by 198 votes to 177.

Despite being carried out by secret ballot, the measure failed to secure enough votes from members of Mr Zuma’s African National Congress (ANC) – which has led South Africa since the end of Apartheid in 1994 – to pass. The vote, which is the eighth that has been held against Mr Zuma, came on the back of a fresh wave of allegations of malpractice relating to a range of multinational and state-owned enterprises.  

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While South Africa is no stranger to corruption, recent allegations have centred on the extent to which people close to the presidency – in particular, a wealthy Indian family called the Guptas, who have close ties to Mr Zuma – have been able to engage in ‘state capture’, influencing state decision-making to their advantage over an array of public enterprises. Observers are calling the scale of the scandal “unprecedented”.    

South Africa’s local currency denominated credit rating has already been downgraded by Fitch to sub-investment status, and the risk of a downgrade by Standard & Poor’s has also increased.

“This could have far-reaching consequences for the South African rand, interest rates and growth, if two ratings agencies rank South Africa’s local currency rating at sub-investment status,” said Thea Fourie, a senior economist at IHS Markit Economics. “State-owned enterprise debt acquirement (backed by government guarantees), particularly Eskom and SAA, have been key contributors to the rising overall debt burden of the South African government and is therefore being scrutinised more carefully by investors. Increasing allegations of corruption have also raised concerns about the management of state-owned enterprises and the urgent need for a turnaround.”

“Mr Zuma’s survival will minimise economic and political disruption in the short run, however it will prevent any definitive resolution to the deepening concerns over his presidency,” said Vincent Freigang, analyst at risk advisory firm Protection Group International. “The vote and divisions it exposed will serve to reinforce doubts over the future direction of the ANC.”