Local and international market analysts say the incarceration of former president Jacob Zuma has affirmed South Africa’s rule of law.
The move has also reassured investors that South Africa’s judiciary remains independent.
The arrest of Zuma has been shrugged off by local markets, but widely noted. Analysts say that it is a show of independence by the country’s judiciary.
Earlier this year, the rating agency Fitch ranked South Africa at 58th place for political stability and rights and for the rule of law, Institutional and regulatory quality and control of corruption. It said the country reflects strong institutions and well-entrenched democratic processes. However, the recent period of alleged State Capture has raised questions about whether these strengths are over-stated.
Ashburton Investments, Patrice Rassou, says: “In terms of investors especially foreign investors coming in, what they want to know is the constitution and the rule of law in South Africa, foreign investors see this positively in terms of the administration.”
The investment community says the markets would have reacted if Zuma was not incarcerated. However, this is a positive sign as this case proves to be a test of the country’s constitution and institutions of governance strength.
Sasfin’s deputy chairperson, David Shapiro, says: “I don’t think the markets will respond to Zuma’s arrest, they would have reacted if they had not arrested him it would have been a more of a negative response.”
The country’s image has been hit in a positive light as the former president’s incarceration proves that the country is fighting against lawlessness and corruption, while confirming that no one is above the law.
“Investors, economists and South Africans around the world concerned with lawlessness may see this as a signal that SA is taking action against lawlessness,” says Reputation 1st Group, Brand Reputation Analyst, Tshepo Matseba.
Although it may not have a direct effect on the markets and the country’s image, the former president’s arrest is viewed as a step towards long-term social stability to accelerate economic growth.
Incarceration of Zuma has affirmed SA’s rule of law: Market analysts