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Vol 58 No 4

Published 17th February 2017


South Africa

The state of Jacob Zuma's presidency

Relentless attacks on the President's character are weakening the economy and undermining his influence on the succession

With ten more months as leader of the African National Congress (ANC), President Jacob Zuma tried to shore up his government with a flurry of populist policies – long on rhetoric and short on detail – at the opening of Parliament on 9 February. Together with the pomp and splendour, as members of parliament and their spouses sauntered along the red carpet to the parliamentary buildings, these were signs of the country's deep political malaise.

Military helicopters circled overhead. Over 6,000 armed police, equipped with anti-riot gear, and half a battalion of soldiers stood in conspicuous guard over the proceedings. State officials spoke about threats to law and order, some mentioned terrorism. To opposition politicians, this was intimidation, the militarisation of Parliament.

To others it conjured up the Republic of Ruritania. In the days before the opening, military bands marched up and down the streets around Parliament. On the day itself, the 21-gun salute was mistimed; the first fusillade went off before Zuma had mounted the podium outside Parliament.

This unprecedented show of force failed to prevent fist-fights in the chamber or more serious clashes between rival supporters on the streets. Journalists found themselves corralled in a media pen.

The heavy policing saddened South Africans nostalgic for the spirit of Nelson Mandela. In his day, the opening of Parliament was a celebration of national liberation, with political leaders, writers and artists flying in from across the world. When the armed forces saluted the country's first democratically elected President, it was a powerful symbol of change. Now, the military was like an occupying force in the parliamentary precinct: more PW Botha than Mandela.

As Zuma entered the chamber to deliver his State of the Nation address, MPs from the militant Economic Freedom Fighters (EFF), dressed in red boiler suits and miners' helmets, yelled out 'Tsotsi!' (thief). They had wanted a debate on the failure of Parliament to hold Zuma to account over the use of state funds on his Nkandla homestead (AC Vol 57 No 21, Stalwarts push for Zuma's exit).

Barracking
For over an hour Zuma, 74, tried to deliver his speech against the opposition barracking. Millions of South Africans watched the spectacle on television: angry young militants shouting down and abusing a much diminished leader. The audience for televised sessions of Parliament has shot from a few thousand to several millions, thanks to the EFF's direct-action strategy.

Railing against Zuma works for the opposition. Both the leftist EFF and the centre-right Democratic Alliance (DA) boosted their votes in local elections last August: opposition parties now run four of the country's biggest cities. The governing ANC's share of the vote plummeted by 7.7% from the last national vote in 2014 to 54.5% in last year's polls.

EFF leader Julius Malema told Zuma he was 'rotten to the core' and should resign immediately. Then Speaker Baleka Mbete called in the parliamentary security team, known as the 'White Shirts', to eject Malema and his fellow militants, amid cheers from the ANC benches. Fist-fights broke out, the ruckus escalated. Some White Shirts used pepper spray to subdue the rebels; it wafted upwards and many left the public gallery sneezing. More White Shirts stormed in, to ensure that the entire EFF caucus was thrown out. Malema was jubilant outside, telling journalists that his party had again denied Zuma legitimacy in Parliament.

DA leader Mmusi Maimane took his MPs out of the chamber, heaping more blame on Zuma and the ANC. That left the opposition benches empty, apart from a smattering of MPs from the African Christian Democratic Party, Inkatha and the Freedom Front. As the tumult subsided, a shaken Zuma surveyed the wreckage and launched into an hour-long set-piece speech which failed on two counts. It had little to inspire the ANC base but its rhetorical claims about breaking up monopolies and speeding up land distribution did nothing to reassure investors already unsettled by the day's political shenanigans.

Even Zuma's fellow ANC MPs grew visibly bored after about ten minutes and applause gradually became more desultory. His theme – radical economic transformation – or the lack of it, is at the centre of the country's politics. Zuma faced the dilemma of every long-term incumbent party which starts to promise sweeping changes: Why didn't they do it before?

Populism
It was a familiar list of inequities: black South Africans directly own just ten per cent of the shares on the Johannesburg Stock Exchange and white families earn on average five times more than black ones. Zuma promised changes in patterns of management, ownership and control of corporations but set out no detailed strategy to achieve them. Instead, he adopts a populist code, taking some radical policies from the EFF on land, cutting student fees and nationalising the mines – but sanitising them a little. He's careful not to get into a bidding war on policies with the EFF, for it would always outflank him.

Calls for land redistribution and more black ownership of the mines are now politically mainstream. At a business gathering a few days before the opening of Parliament, the billionaire owner of the giant Shoprite retail chain, Christoffel Wiese, said it was vital to speed up the transfer of land title to black South Africans and to release government-owned land for black ownership. 'I agree with EFF leader Julius Malema when he says that the most important priority in South Africa is black land ownership,' he said.

Yet beyond rhetoric about land redistribution, Zuma offered a few incremental measures, such as speeding up the issue of title deeds and the processing of state-backed land sale agreements. The Land Appropriation Bill is to be referred back to Parliament because its provisions may be unconstitutional.

Wiese may be less sympathetic to demands, pushed by activists in the ANC and the EFF, to break up the monopolies: retail conglomerates such as Shoprite and Pick n Pay; the four big banks – First National Bank, Nedbank, Standard Bank of South Africa and ABSA; and the telecommunications barons, MTN and Vodacom.

Short on detail
Again, Zuma offered few details of how the ANC would change its policy on conglomerates beyond platitudes, such as party policy should move 'beyond words to practical programmes.' He defined these as 'fundamental changes in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor, the majority of whom are African and female.' He added that the government would prioritise the use of its 500 billion rand (US$38.4 bn.) procurement budget to buy more things from black-owned businesses: again, no specifics, no measurable targets.

More details emerged on education. This is where the radical 'Fees Must Fall' movement, organised after a successful campaign by students to remove a statue of the 19th century Cape Colony Prime Minister and businessman Cecil Rhodes from the grounds of the University of Cape Town, had already pushed the government into a humiliating U-turn.

While all levels of educational funding are under review, Zuma listed several concessions, such as paying all the debt owed last year by students for that financial year and exempting students from families whose total annual income was less than R600,000 from increases in college and university fees this year.

Congratulating his government on rolling out mass welfare provision, Zuma said that over 17 million people, more than a third of South Africans, now received social grants. He didn't mention the funding constraints that these commitments will face in April. Nor did he propose any new strategies to tackle the underlying reason for this high volume of welfare payments: mass unemployment. For people of working age, unemployment is running at 26-27%, according to official figures; for the under-30s, it's over 40%. Many of those will be eligible to vote for the first time in the 2019 elections.

The clearest policy in Zuma's address – a minimum hourly wage of R20 or R3,500 a month – had in fact been launched the previous day by Deputy President Cyril Ramaphosa. The pair had been due to turn up together for that launch but when the Congress of South African Trade Unions (Cosatu) declined to sign up to the launch (it wants a monthly minimum wage of R4,500), Zuma pulled out.

Mass rally
After an intense week of political argument in Cape Town culminating in Zuma's opening of a rowdy Parliament amid intense media coverage, it seems likely that the President's standing with the wider public has fallen further. Posting soldiers and armed police around Parliament was particularly unpopular.

The day before that, the former Director General of Foreign Affairs, Sipho Pityana, and the Save South Africa campaign had a mass rally at St. George's Cathedral just behind Parliament and called again for Zuma's immediate exit. Pityana, a veteran anti-apartheid activist and now Chairman of mining giant AngloGold Ashanti, outdid the parliamentary politicians – Malema and Maimane – in his straight- talking to Zuma: 'The real state of the nation is that it is being torn apart by nepotism, corruption and state capture and you are at the centre of it all…' (AC Vol 58 No 1, Power struggle goes nuclear).

To cheers from an audience that included ANC luminaries such as former Finance Minister Trevor Manuel, Pityana continued his message to Zuma: 'You do nothing about the governance crisis, mismanagement and corruption in state-owned entities, which has become a major destabilising factor in the economy… Your focus is on making sure South Africa's agenda serves your own personal interest, as well as those of your family members and your cronies.'

Yet the biggest question for the ANC is how these unending critiques and attacks on Zuma will affect the 4,500 delegates due to vote in the party leadership elections, due in December. The next leader of the party will determine its policy direction, the chances of serious reform and perhaps the results of the 2019 general elections.

Parallel to the policy arguments and caucus meetings in Cape Town last week, the two front-runners jostling to succeed Zuma as party President, national Deputy President Ramaphosa and the former Chairperson of the African Union Commission, Nkosazana Dlamini-Zuma, have started their own not-so-discreet lobbying.

Both have been attending party branch meetings to listen to local concerns and to influence voting delegates. President Zuma has made it clear several times that he favours his ex-wife Dlamini-Zuma. That gives her much of the power of an incumbent and certainly the strength of his lobbying network: the many members of the ANC's National Executive Committee for whom he has done personal favours.

On top of that, Dlamini-Zuma would have the bulk of delegates from KwaZulu-Natal, the province with the biggest number of ANC branches, together with the ANC's Women's League. She and the President are also strongly courting the Premier League provinces, North West, Mpumalanga and Free State. Yet support there is no longer assured, we hear, with some of the top politicians, such as Free State Premier Ace Magashule, being advised to keep his options open.

Eastern Cape trip
Moreover, Dlamini-Zuma made a disastrous trip to Eastern Cape last week to solicit the support of the Xhosa King, Mpendulo Zwelonke Sigcawu. That fell flat, ostensibly because the traditionally-minded King questioned the suitability of a woman as President. Insiders say that Eastern Cape has already decided to back Ramaphosa, thanks to some highly effective lobbying by ANC Secretary General Gwede Mantashe in his home province.

Elsewhere, it seems, Ramaphosa has also been closing the gap. He already has Eastern Cape, a big membership province, and he is lobbying hard to get full support from Gauteng, the richest province in the country, though opinion is still divided, insiders say. Although Cosatu has come out for Ramaphosa, some of its senior officials remain close to Zuma and that could affect voting.

Three of the smaller provinces seem to be lining up behind Ramaphosa: Northern Cape, Western Cape and Limpopo. On good form at a meeting of the Progressive Professional Forum, essentially a group of ANC-supporters in business, Ramaphosa cantered through a field of new economic policies, fluently and confidently.

That's something that neither Dlamini-Zuma nor her ex-husband are adept at but for now, the head count is in their favour. Yet with a few more bad weeks for Zuma like the one just passed, the numbers could change quickly. That would open up the contest for Ramaphosa or perhaps a third candidate, such as ANC Treasurer Zweli Mkhize, who's waiting quietly in the wings.

 

Budget 2017: Revenue falls as risks rise

On 22 February, Finance Minister Pravin Gordhan is to read his budget to Parliament, which will have to fund the biggest revenue shortfall for over a decade. It follows five years of lacklustre and falling prices for South Africa's main exports. Yet Gordhan's budget test will be more political than economic: his survival in the job. For the past year, he has been locked in battle with President Jacob Zuma over sundry investigations into the well-connected Gupta family's influence on state spending decisions and presidential plans for multi-billion dollar nuclear power contracts to be awarded to Russian state companies (AC Vol 58 No 1, Power struggle goes nuclear).

A veteran of the liberation struggle, Gordhan has resisted, with the support of several senior government members, including Deputy President Cyril Ramaphosa, Secretary General of the African National Congress Gwede Mantashe and ANC Treasurer General Zweli Mkhize.

Yet it is constitutionally possible for President Zuma to sack Gordhan or reshuffle him to a lowlier role without seeking permission from his colleagues. Zuma has at least three options. One is a straight dismissal of Gordhan and his replacement just after the budget by a technically qualified figure but one thought more pliable, such as former Reserve Bank Governor Tito Mboweni or Planning, Monitoring and Evaluation Minister Jeff Radebe. Or Zuma could appoint a close ally, such as the former head of the state power company Eskom, Brian Molefe, as a deputy and understudy to Gordhan in order to rein in his initiatives. Failing that, Zuma could wait until June, when Nkosazana Dlamini-Zuma, having finished her role in the leadership transition at the Africa Union Commission, would be available for assignment in South Africa – and be given the Finance portfolio. This would give Dlamini-Zuma a high-profile job before she contests for the ANC leadership in December, with Zuma's full support.

Meanwhile, Gordhan will continue to challenge Zuma over excessive government spending while working with businesses and banks to prevent the country's investment rating being downgraded to 'junk' status. Nomura Bank's Peter Attard Montalto said that an estimated US$3-5 billion in portfolio investment would flow out after a downgrade because of the regulatory provisions governing institutional investors (AC Vol 56 No 25, EFF's economic roadshow). Others suggest the outflow could be four to five times that amount. The effects would quickly hit the cost of credit for the middle class and job creation for the working class.

Some 6,000 international investors meeting in Cape Town for the Mining Indaba on 6-9 February underlined the importance of South Africa's mining industry but were looking increasingly northwards for better returns and more predictability in countries such as Ethiopia, Ghana, Kenya, Namibia, Nigeria and Rwanda.

At a fringe event, former President Thabo Mbeki, present throughout the Mining Indaba, expressed surprise that Mining Minister Mosebenzi Zwane had attended only the first day of the meeting while his deputy left the following day without resolving questions over the government's new mining charter. Mbeki said the degeneration of governance was worse than many realised, exacerbated by corruption and patronage. 'It is time to speak out and make your voice heard. It is not a time to be afraid,' he said. Mining investors have been holding back on new ventures for several years, citing policy uncertainty, labour unrest and bureaucratic bottle-necks.

In the past five years, South African companies have invested $250 bn. abroad. Several wealthy individuals hold more than half of their assets overseas, Africa Confidential hears. In the past year, $180 million of portfolio investment has gone abroad as perceptions of political risk rise.



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