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Vol 58 No 7

Published 31st March 2017

South Africa

Omens and portents

Optimists are in short supply as the significance sinks in of Gordhan's recall from overseas and the implications of a reshuffle

Only the beleaguered judiciary and Pravin Gordhan's fiscal management stand between South Africa and economic doom. This is an increasingly common refrain within the political class as evidence mounts that, in emulation of neighbouring Zimbabwe President Robert Mugabe's survival strategy, President Jacob Zuma has not been deflected from a policy of protecting widespread rent-seeking behind a populist smokescreen.

Most ominous was the president's ostentatious recall of Finance Minister Gordhan from a four-day investment roadshow in Britain and the United States which had only just begun. Civil society and opposition leaders warn that the country's increasingly fragile constitutional democracy, the envy of the region two decades ago, is in imminent danger of being hijacked by politicians and securocrats benefitting from the patronage of the Guptas, the billionaire family with close business links to state corporations and to Zuma's family.

Gordhan's trip had been carefully planned and properly sanctioned, making the impact of its cancellation all the more damaging to investment. The rand fell by 2% at the news. 'Access to the state kitty through the front door of national treasury is more important to them than the national interest… They want to loot and loot with increased haste while they still can,' said Sipho Pityana, a former senior official in the governing African National Congress (ANC) and Chairman of the major gold-mining company AngloGold Ashanti, with the Guptas clearly in mind.

Some of Gordhan's meetings with institutional investors were held on the first day in London at the headquarters of Standard Chartered Bank. The mood was 'sombre' and by the end of the day, the entire party and its business entourage decided to return to South Africa, business people present told Africa Confidential. Morale was at a low ebb but support for Gordhan was undented.

On 28 March, the day Gordhan received his summons, the Guptas filed a new affidavit in the High Court. It is being asked to require Gordhan to appear in person to defend his position on the refusal of South Africa's commercial banks to accept business from the Guptas. He contends that it would not be lawful for him to order them to restore the Guptas' access to the banks, which was cut off last year over the movement of large sums of money out of the country (AC Vol 57 No 21, Stalwarts push for Zuma's exit). Gordhan applied to the High Court for vindication of his position while the Guptas insist it is his duty to order the banks to restore their previous access.

Embarrassing details
the Guptas are at pains for Gordhan's case to be withdrawn because if it goes ahead, they will be forced to provide what could be embarrassing details of the financial transactions which led the banks to suspend their accounts. the Guptas questioned Gordhan's bona fides in undertaking the investment roadshow and accused him of using the Treasury to block the delivery of 'radical economic transformation', Zuma's new policy package designed to defuse resistance in the ANC to his leadership and his attempts to control his succession. His new policy includes the expropriation of land without compensation (AC Vol 58 No 6, How to repeat the Mugabe mantra).

Three of the ANC's senior leaders – Secretary General Gwede Mantashe, Treasurer General Zweli Mkhize and its head of Economic Transformation, Enoch Godongwana – have contradicted the President and insisted that land reform should be carried out within the constitution. However, Zuma's move attracted instant support from the hitherto fiercely hostile Economic Freedom Fighters (EFF) and wrong-footed his foes in the ANC. Resistance to Zuma's new policies deepened at a meeting of the ANC's 100-strong National Executive Committee last weekend and the debate was remitted to a special NEC meeting before the party's policy conference in June.

The pro-Zuma lobby was not confident enough to force a vote on the land issue in the NEC, said an ANC source, as an attempt to oust Zuma several months ago at such a meeting failed only by a narrow margin (AC Vol 57 No 25, The numbers game next year). In the past fortnight, the Presidency has announced twice that Zuma would assume the chair of two key cabinet committees, on social welfare and communications. These committees include both loyalists and foes but the former clearly outnumber the latter, ensuring that Zuma's wishes prevail.

In sharp contrast to Zuma's increasingly belligerent and high-handed stance, Mkhize, who is seen as an outsider compromise candidate in the succession stakes, made a conciliatory and business-friendly speech at the Gordon Institute of Business Science, at a seminar in Johannesburg which included several other ANC leaders (AC Vol 57 No 23, tarting the post-Zuma race).

The recall of Gordhan has heightened speculation that Zuma is about to announce a far-reaching cabinet reshuffle which would see Gordhan either fired or emasculated by a hostile deputy and up to ten other anti-Zuma Ministers removed and replaced with compliant loyalists eager to get their share of presidential patronage. Brian Molefe, a staunch Zuma ally, is frequently mentioned as a possible successor to Gordhan. Revealingly, the Gupta-owned and state-subsidised television station African News Network Seven (ANN7) recently carried a comment from one of its in-house pundits that a cabinet reshuffle was long overdue.

Such a reshuffle could also see Nkosazana Dlamini-Zuma appointed to the cabinet as a means of increasing her heft as a presidential candidate. She made a scarcely noticed visit to London last week to address a group of select wealthy private investors at a rarefied Chatham House-rules event, with restricted questions and answers. She turned down other investment engagements and an invitation to speak at Chatham House itself but attended a private function at Buckingham Palace, home to Queen Elizabeth II.

Dlamini-Zuma remains her ex-husband's most probable successor because her regional constituency is more solid than that of her rival, Deputy President Cyril Ramaphosa. He is counting on a fragmented trades union movement, the Congress of South African Trade Unions, and the small but influential South African Communist Party, which has fallen out of favour with Zuma.

Meanwhile, the break-in at the offices of the Chief Justice, Mogoeng Mogoeng, over the weekend of 18-19 March prompted fresh concerns about judicial security. This followed the High Court ruling that the appointment of Berning Ntlemeza as head of the Hawks, the elite police investigation unit, was unlawful and bore suspicious resemblance to the break-in at the offices of the Helen Suzman Foundation just after it made a legal application to suspend Ntlemeza's directorship of the Hawks a year ago (AC Vol 57 No 7, Night of the generals).

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