February 15, 2018 / 12:54 PM / 7 months ago

FACTBOX-The big issues facing South Africa's new president

Feb 15 (Reuters) - New South African President Cyril Ramaphosa faces an uphill battle to win back public and investor support after Jacob Zuma’s nine-year tenure was blighted by corruption, economic mismanagement and ruling party infighting.

Ramaphosa was confirmed as president in a parliamentary vote on Thursday after scandal-ridden Zuma reluctantly resigned on orders from the ruling African National Congress (ANC) on Wednesday.

Below are five of the big challenges facing the new leader.

AVOIDING CREDIT DOWNGRADES

The most immediate threat is the prospect of downgrades by credit ratings agencies that have been closely watching political developments.

A downgrade of the local-currency rating to “junk” status would result in South Africa being removed from Citigroup’s bond index and could trigger the exodus of around 100 billion rand ($8.6 billion) in investment, the central bank says.

Ramaphosa’s state of the nation address expected on Friday will be his first chance to convince Moody’s, S&P Global and Fitch that South Africa is being steered onto a new path.

His choice of finance minister and the budget that person delivers next week will also be key.

REBUILDING ECONOMY

South Africa needs faster economic growth if it is to reduce high unemployment - currently 27 percent - and alleviate the widespread poverty that stokes inequality and instability.

Africa’s most developed economy slipped into recession last year for the first time since 2009 while it has dropped in indices that measure corruption and the ease of doing business.

Fixing state-owned firms, reviving pivotal sectors of the economy, such as mining, and tackling graft could lift growth by 1-2 percent, economists say.

FIGHTING CORRUPTION

Ramaphosa’s ability to tackle endemic government corruption will play a big part in the fortunes of the ANC at elections next year and on the prospects of restoring investor confidence.

Zuma’s tenure was dominated by a myriad of personal and broader government scandals that have included politicians who are still in high-powered positions.

Rebuilding trust in the criminal justice system and holding accountable people associated with corruption will be a crucial parameter by which the success of the next president is measured.

FIXING STATE-OWNED FIRMS

The mismanagement of state-owned companies, notably the behemoth power utility Eskom, has been one of the chief concerns of investors and ratings agencies under Zuma.

Ending a culture of graft, implementing reforms and placing capable technocrats at the top of state institutions are the first steps Ramaphosa will be expected to take.

Many investors would like to see some commitment to partial privatisation of state firms, like struggling South African Airways, but this would be politically divisive.

MENDING A DIVIDED ANC

Next year’s parliamentary elections will mark the first realistic possibility of the African National Congress losing power since it swept to victory under Nelson Mandela at the end of apartheid in 1994.

Under Zuma the ANC has become increasingly divided, mainly over his leadership and corruption allegations that have eroded public support for the liberation movement.

Ramaphosa will need to restore ANC credibility by appointing capable individuals to key roles without isolating the support of ex-Zuma allies who still wield clout in key constituencies. ($1 = 11.6569 rand) (Reporting by Joe Brock; editing by Mark Heinrich)

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