Analysis: South Africa's dithering strike response spooks investors

Tue Sep 18, 2012 9:14am EDT
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By David Dolan and Sujata Rao

JOHANNESBURG/LONDON (Reuters) - Wildcat strikes in South Africa's platinum belt have entered a sixth week with no resolution in sight and investors are worried about the government's inability to quell the unrest.

Critics say Pretoria's response to the strikes has been slow and ineffective, exposing the ruling African National Congress and President Jacob Zuma as ill-equipped to handle crisis and lifting the chances of a credit downgrade.

The rand has tumbled, insurance against default on South African debt has risen and foreign investors have sold shares in mining companies.

"The lack of government appearance or intervention is one of the most concerning things. What's that saying about any crises that we have in this country? It doesn't appear that there's anyone to pull it all together," said Nic Norman-Smith, a fund manager at Lentus Asset Management in Johannesburg.

Violence at Lonmin Plc's Marikana mine last month left more than 40 people dead, 34 of them striking miners shot by police in the bloodiest security incident since the end of apartheid in 1994.

The killings shocked South Africa and the world but Zuma and his government have done little to show they were on top of the unrest, started by miners demanding higher wages.

"I think they've been particularly poor in addressing it, in addressing the country as a whole," said Mohammed Nalla, an analyst with Nedbank Capital in Johannesburg.

For weeks after the Marikana shootings, Zuma mostly avoided the subject while dispatching cabinet ministers to the region for what was seen as symbolic shows of sympathy.   Continued...

A miner holds a placard as they gather at Lonmin's Marikana mine in South Africa's North West Province September 14, 2012. REUTERS/Siphiwe Sibeko