President Jacob Zuma. Picture: GCIS
President Jacob Zuma observes the salute at Armed Forces Day 2016 in Port Elizabeth. Picture: GCIS

OF ALL those I encountered on a visit to Johannesburg last week, the person closest to the problems facing SA’s economy was Vusumuzi, a would-be developer of rural shopping centres. Business was slow so he was driving an Uber taxi, waiting for his schemes to work.

He explained the barriers to gaining planning and development approval in a place where rent-seeking is rife. Four people needed to be squared in any township or village: the municipal boss, the tribal chief and his deputy, and a local politician from the African National Congress (ANC).

At some stage in the negotiations, each of these officials was likely to ask for a bribe.

"I record every discussion and, when they say that, I remind them that they are being taped. They see nothing wrong with it. They say to me, ‘We have families to support.’ They see the chance to enrich themselves because our president is corrupt and he puts a blanket over them."

Jacob Zuma has never been convicted of corruption: charges against him were dropped in 2009. It is hard to find a business person or official in Johannesburg, though, who does not think that the president has degraded the ANC and diminished the economy. He has built a patronage machine within his party rather than devoting himself to his nation’s challenges.

The budget unveiled on Wednesday by Pravin Gordhan, the finance minister Zuma was forced to appoint in December to stem a loss of investor confidence, is important. Gordhan has the job of avoiding a downgrade in SA’s sovereign rating to junk after it was put on negative outlook by Standard & Poor’s.

The finance ministry and the country’s other strong institutions, notably its central bank, also have a broader task. They need to restore confidence that SA is a fair place in which to do business — that, despite Zuma’s misrule and the weakening of the ANC, companies should invest and entrepreneurs seek opportunity.

The bid made this week by Steinhoff, the furniture retailer, for the UK’s Home Retail is a sign of the global ambitions of South African companies. It also indicates that they will look for opportunities elsewhere if growth continues to stagnate and politics fester at home.

Steinhoff sent a signal by moving its primary listing from Johannesburg to Frankfurt in December.

The difficulty facing those who are not privileged in making an honest rand through enterprise is only one of many. The country still suffers the scars of an apartheid system that made whites insiders and blacks outsiders. It has very high unemployment — 35%, counting those who have given up looking for work — terrible public education, and weak infrastructure.

It is not beyond hope. As well as strong civil institutions, it has a mature economy that has grown at an average of more than 3% in the post-apartheid years, helped until recently by a commodity boom. It is a middle-income country with per capita gross domestic product of nearly $6,000 last year, a sizeable African middle class and high-growth companies in finance, retailing and other services.

Its challenge is to achieve broad-based black empowerment rather than personal enrichment for a few insiders. Until a retreat was recently imposed on Zuma by investors, the courts and public opinion, it was sliding from the former to the latter. He then had to back down on the control of the finance ministry, and the repayment of some of R246m of taxpayers’ money spent on his home.

Zuma uttered some decent words about reform in his state of the nation speech this month. But he sets a dismal example through his financial involvement with the Guptas, three Indian brothers who run a sprawling business empire.

Glencore recently sold a coal mine to the Guptas and Zuma’s son Duduzane, allegedly after pressure from the mining ministry.

Such incidents send a message through the ANC and across the country that the best way to prosper is to take advantage of public sector contracts, rather than compete openly.

Public sector employment has risen steadily under Zuma, in government and public services, and in state-owned entities, including Eskom.

The first step on to a better path is for Gordhan to halt the deterioration in public finances.

Then the country needs a larger space for the private sector to expand and invest, not just overseas, but at home. This is the best hope for economic opportunity and renewing the growth of the black middle class.

The ANC’s wiser minds know it, and they also know the danger of allowing corruption to become entrenched. Kgalema Motlanthe, briefly president before Zuma, describes his country as being "on the brink once more". When we spoke, he dismissed the hostility of some party officials to private capital: "If you do not understand that capital is a lubricant, then nothing moves."

The route to the airport took me through Alexandra township and the shantytown of Stjwetla, where there is little prospect of betterment.

As we drove, Gwede Mantashe, the ANC’s general secretary, was interviewed on the radio, accusing the US of plotting "regime change" in SA. Paranoia and rent-seeking will not help the ANC; more enterprise could.

Financial Times