Political Economy

Fracturing ANC alliance now SA’s biggest threat

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South Africa got a reprieve from formal credit junk status last week, but the ANC alliance’s inside politics have now become the biggest threat until the next ‘judgement day’ in December.

As far back as March 2013 we wrote: “Yet another of the dog-eat-dog power struggles in the ANC alliance that have come to characterise the Zuma political era, may soon come to a head;” and in July last year: “ The realignment in South African politics has all the potential to become a very messy affair.”

In December last year we warned that the ANC alliance’s internal battles have the “…  potential to seriously destabilise the country as a whole”.

Last week in maintaining the negative outlook for South Africa and listing potential threats to the country’s investment attractiveness, Standard & Poor’s identified political instability as the most serious one.

After listing in their Friday statement, provision of a reliable source of energy, labour reform and Black Economic Empowerment, especially in the mining sector, for “potential adverse consequences of low GDP growth and signalling that we could lower our ratings on South Africa this year or next if policy measures do not turn the economy around,” it notably goes on to state about the political situation surrounding the ANC and President Zuma:

“We believe that these political factors – if they continue to fester – could weigh more on investor confidence than inconclusive labor (sic) or mining sector reform. We base our rating affirmation on the expectation that they will be held in check, albeit in the context of political jockeying in the run-up to local government elections in August of this year and the ANC's elective conference in December 2017.”

Messy ANC break-up

The increasingly messy alliance factional battles – fed by inbuilt conflict of interests, highlighted in an article in July last year – and the intensity of state capture by a power group surrounding President Zuma, are reasons for serious concern.

Also read: ANC state capture – SA in very serious trouble

The process of getting the ANC’s list of candidates together for the August municipal elections has brought the tensions within the alliance to dangerous fever pitch levels in recent weeks. To the extent that the ANC’s secretary general, Gwede Mantashe, on the day the list had to be filed with the Independent Electoral Commission (IEC) remarked

that submitting candidate lists for the local government elections is “like being responsible for a nuclear bomb”.

In the meantime, the process has also brought tension between the ANC and its South African Communist Party (SACP) alliance partner to boiling point. Not only has the SACP picked up the baton to fight “state capture” by President Zuma’s close friends, the Gupta bothers, but competition for positions on candidate lists has seen a flare-up of violence in especially KwaZulu-Natal.

SACP leader and Minister of Higher Education, Blade Nzimande, last week said, when addressing the central committee of the National Union of Mineworkers (NUM), the relationship the Gupta family has built with some of the country’s leaders is toxic.

Although he did not mention President Zuma by name and was at pains to say that he is not making an attack on the president, the message was clear and at the very least a warning shot in his direction.

The SACP also crossed swords with the Gupta-controlled The New Age newspaper. It came in the week after Mantashe effectively canned the ANC’s own investigation into allegations of Gupta state capture. It also illustrates to what extent the level of conflict of interests in the alliance has reached intolerable levels.

Besides being the SG of the ANC, Mr Mantashe also was Chairperson of the SACP and holds a record for being the first trade unionist to be appointed to the Board of Directors of a JSE-listed company namely Samancor.

President Zuma’s position

Much of the reasons of why S&P kept South Africa’s on negative revolves around the position of President Zuma. Among other things it stated that state-owned entities with often inadequate management skills might pose a challenge to fiscal health.

Last week Moneyweb reported that conflicting orders from the president and Minister of Finance Pravin Gordhan are frustrating South African Airways’ management.

The role of Mr Zuma is also notably central to the following assessment by S&P: “South Africa has a strong democracy with independent media and reporting. We believe South Africa will continue to maintain strong institutions such as the Public Protector and the Judiciary, which provide checks and balances.

“However, the latter has been tested after the executive and ANC-dominated legislature attempted to set aside some of the recommendations of the Public Protector.”

For now, the Zuma faction in the alliance seems to be firmly in control. However, if the election results bring marked setbacks for the ANC, as is widely expected, that could quickly change.

A battle to remove Mr Zuma from the ANC leadership and the presidential office before the end of this year, with all the uncertainties that will go with it, just might still be on the cards.

 

by Piet Coetzer

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