“How seriously to take the EFF is becoming the question of the year for a view on South African political risk”

As I listened to Pravin Gordhan’s budget speech I thought I would share with you an extract of my news commentary from Monday morning.

But I forgot to hit ‘publish’ as I was being torn between being slightly underwhelmed and moderately admiring that Gordhan could make so few populist concessions this close to May 7.

Thus, the EFF  and DA manifesto launches:

  • The Economic Freedom Fighters and The Democratic Alliance both launched their manifestos this weekend
  • The EFF will likely out-perform and its policies are the ‘sum of all fears’ for investors in emerging markets
  • In the longer term, however, the ANC is set free to pursue more growth orientated, investor friendly policies – and success or failure in this regard is the key question about South Africa’s future
  • The Democratic Alliance also launched its manifesto and is rapidly shifting its demographic appeal
  • By 2019 we could have a Goldilocks scenario where the ANC and the DA comfortably occupy the middle ground of South African politics, keeping at bay both the left and right-wing, and pursuing economic growth. Other scenarios are both possible and plausible, but I thought I would, just this once, hope for the best

EFF – radical left-wing populism of old (and marketing genius)

The EFF packed out the Mehlareng Stadium in Tembisa in Gauteng and launched a radical populist manifesto with great aplomb. Ambitious plans announced included free education up to tertiary level for all and double social grants paid for with the proceeds from nationalising 60% of the mines and banks. The party will build a state pharmaceutical company to produce medicines, scrap the tender system, ban the use of consultants while increasing civil servant salaries by 50% and it will subsidise the taxi industry and provide housing finance for middle-income earners. Mineworkers will take home a minimum wage of R12500.00 a month (undoubtedly designed to chime with current Amcu platinum sector strike) and other minimum wages would vary from R4500.00 for waiters and waitresses to R7500.00 for private security guards.

Yeah, right.

To get a sense of the scripting and impact of the launch here is Ranjeni Munusamy of The Daily Maverick describing the Marikana widows on the platform: “To make the point about the treachery of the ANC government, Malema had invited as his special guests the widows of the Marikana massacre, all clad in EFF t-shirts. They sang and spoke of the hardship, their heartbreak and the betrayal they feel at the ANC government killing their husbands on behalf of capital.”

So what?

The EFF is becoming the big story of this election. Previously in SA politics the ANC managed to encompass within itself the full spectrum of liberation ideologies including this radical populism. The expulsion of Julius Malema (paralleled by the pushing of Numsa out of the ruling alliance) has left the radical populists on the outside and unconstrained by previous alliances and loyalties.

The ANC ran a counter rally/concert aimed at a youthful audience not far from the EFF manifesto launch. While that concert/rally was well attended and festive, it didn’t appear to detract from the EFF launch. All it really indicated was that the ANC is taking the EFF threat seriously.

How seriously to take the EFF is becoming the question of the year for a view on South African political risk. The EFF is articulating the set of demands and occupying the political space that has always been of concern to investors in South Africa – characterised as it is by chronic unemployment, poverty and inequality with the racial underpinnings of apartheid. Previously markets had become convinced that the ANC by its size and reach and general authority, was able to mediate between the different and competing demands of the transition.

However, it is now clear that the ANC has either been forced to abandon the terrain of the radical populists and ultra-left and expel those factions – or it has chosen to do so for its own strategic objectives.

On the one hand this sets the ANC and government free to develop policy without the straitjacket that came from clinging to the populists and leftists. On the other, those groups are now free to compete for votes and the ANC is vulnerable to electoral shrinkage.

The EFF will undoubtedly grow, but the question for me is: ‘can the ANC, in the longer-term, now find policies to grow the economy that will allow it to regain ground in the 2019 election that it is likely to lose in the 2014 election?’

Meanwhile I think the EFF will do better in this election than expected …. and I am moving my expectation for its electoral performance up from 8% to 10% (a thumb suck, rough guide, purely for me to keep track) of the total vote on May 7th. I do, however, think that once the EFF gets to parliament the unworkability of its policies and the manipulations inherent in its campaigning will inevitably be exposed. Over the longer term it could be under pressure to hold onto its parliamentarians and its voters, especially if the ANC is pushed by the pressures from left and right into a process of internal renewal … and especially if the Cosatu unravelling results in a real labour/left party.

The Democratic Alliance

The Democratic Alliance also launched its manifesto this weekend – on Sunday in Polokwane in Limpopo Province. The launch was well attended – with an almost exclusively black audience, a feature which puzzled many commentators (but not you?- ed)

The party was at pains not to attack the pre-Zuma led ANC with Helen Zille saying of the ANC’s 2007 Polokwane conference ‘(t)hat was the moment when a great political movement lost its sense of direction. It was hijacked by leaders who care more about themselves than the people they are meant to serve … (the) good story ended in 2007.’

The economic aspects of the election platform emphasised job creation: ‘The manifesto we release today is a ‘manifesto for jobs’… Job creation is only possible if we cut corruption’.

The manifesto is worth reading and pushes all the right buttons balancing state encouraged redress with laying the conditions for private sector led growth. Catch Helen Zille’s speech, which is a useful summary of the manifesto, here.

So what

The DA appears to be on top of its game and performing optimally, given the limitations imposed by its origins as a largely white party. The ‘ethnic’ or ‘racial’ character of the DA is clearly in transition, with Helen Zille the only white person who took the stage and the cameras covering the launch having to search long and hard for the few white faces in the audience. These contortions are going to be difficult.

The DA has clearly decided to appeal directly to defecting ANC voters and much of the tone and approach was structured with this in mind – including being respectful of the pre-Zuma ANC history. However it is my impression that defecting ANC voters are (mostly) going to abstain from voting or will vote EFF (and maybe UDM/COPE leftovers). I think that while the DA might get a portion of these votes the ‘racialisation’ of our politics means it is too early for the DA to capture enough black votes to shake the ANC.

However, I think the political realignment’s now taking place could mean that it will be the ANC and the DA that occupy the middle ground of South African politics by 2019, a scenario that has many more positive than negative features. (I wrote that line on Monday morning. I am not sure I agree with it still. Nothing has changed except my mind.)

In passing I should note the strong convergence of two features of both the DA and the EFF. They have both identified Jacob Zuma as the key individual responsible for the ANC’s and the country’s failures. True or not, fair or unfair, the ANC must be under pressure to find ways of shifting this president into the side-lines – which is, in my opinion, one of the features necessary for the emergence of a process of renewal in the ANC.