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On my return on Sunday from 10 days relaxing in and around the unparalleled Lake Malawi a friend took me aside and said he had visited my blog and found only cobwebs, spiders and dust.

Forgive me.

So putting my shoulders back and girding my loins I logged on to deal with the decay and say something about the Numsa strike and the Brics bank when I noticed that I had had several ‘hits’ on a post from August 2010.

One of the (few) delights in running a WordPress blog is it generates several detailed statistics: the countries from which  people  have have visited the site, the search terms they followed and which posts they read … amongst other data.

I was intrigued to see what the the August 2010 post was about, so I read it. (It was only read by about 20 people over the last week, all from South Africa … but in my little world that is statistically significant, although of what I cannot say.)

It is interesting to go back to one’s opinions to check if they have shifted – or more interestingly, if they are unchanged or unmodified.

I suspect I am today slightly more bleak about the ANC than I was when I wrote the piece below; that I would say the same thing today, but with more of a grimace and the feeling more than ever that my hope really was a triumph over experience.

So, while I am tinkering around and deciding on whether I dare to borrow a picture from FT Online of Jacob Zuma looking like a lost child at the 6th Brics summit in Fortaleza, Brazil,  here, unexpurgated, unedited and unreconstructed is:

It is difficult not to imagine the tearing of some deep and important ligament in our body politic in the tone and content of this debate that starts in The Times, ostensibly between Pallo Jordan and Justice Malala and ostensibly about media freedom. The battle is joined – and complicated – by the ANC in its formal capacity in this unattributed article, by a reader’s reply to Justice Malala (K B Malapela’s article here) and a contribution by the redoubtable Paul Trewhela here.

My mother was taught at a Catholic convent in Johannesburg in the 40′s and part of the curriculum was a subject called “Apologetics”, which essentially means defending the faith and recommending it to outsiders. All of the contributions to this debate, to greater or lesser degrees, have the brittle quality of Apologetics. This is clearly not a debate designed to win over an opponent;  it is much more a debate designed to slag off the opponent – to influence perhaps separate audiences.

This does not mean that the opponents are all just political propagandists rolling out set pieces in an archaic ideological struggle. The anger, hurt and perhaps even fear are real and personal. After studying each spit and snipe, each appeal to history and every egregious character assassination (of which there are many) I find myself uncomfortably ambiguous about where my sympathies lie.

When we strip out all of the detail, at issue is the clash of these two broad assertions (this is definitely my formulation – the actual words or even ordering of arguments – will not necessarily be found in this form in any single contribution to the ‘debate)’:

  • The one view attacks Malala and defends the ANC – in the general context of supporting legislation to make the print media legally accountable. It goes something like this: ‘The ANC, admittedly imperfect and flawed, is thenational liberation movement that led the struggle against Apartheid; the organisation whose members and supporters paid the overwhelmingly highest price in the struggle against Apartheid and it is currently the political party in which resides the main hope of building a South Africa free of Apartheid and its vestiges (which are still strongly present and primarily injurious to black South Africans). Given this truth, the depth and ferocity of Justice Malala’s attack on the organisation can only be explained by him having made a profession out of attacking the organisation for the benefit of a self-satisfied and confirmedly racist audience – or that he serves some darker and deeper purpose of enemies of South Africa.
  • The other view defends Malala and attacks the ANC – in the general context of opposing legislation that seeks to control the media. This argument goes something like this: “The ANC has no claim to an exclusive role in the struggle against Apartheid and in any case the ANC’s contribution to that struggle was always flawed and undermined by deeply anti-democratic (or Stalinist) traditions and brutal repression of internal dissent. Justice Malala is part of a tradition of journalism in South Africa that has fought government censorship and general government abuse of power. Abuse of power, in various forms, characterises the ANC government today and it is right, fitting and brave for Malala to continue to ‘speak truth to power’.

I was going to paraphrase each article and attempt to draw out each essence but it’s probably better that you do that for yourself.

But here, for those who are interested, are my considered opinions on the issues that I think lie at the heart of this debate.

Firstly, regimes can reach a point where the only strategic option is complete non-engagement; where the only way forward is the destruction of that regime and its replacement by an alternative. But it is ludicrous to argue that this is where we are in South Africa with regard to the ANC government. Much of our political commentary and journalism seems to be phrased in these terms – as if we are all revolutionaries now, beyond any hope or care of reforming the system. This view is both implicit and, to a lesser degree, explicit, in the words of Malala and Trewhela. I am all for gung ho evisceration (by written word) of corrupt and pompous politicians, but there is a not-so-subtle line between vigorous – even exuberantly irreverent – criticism and the argument that government per se is the problem and therefore cannot be part of the solution. Many aspects of this government’s performance are deeply disturbing – as is the seeming avalanche of cronyism in our political culture. But I am absolutely clear that a government that continues to command around 70% of national electoral support (primarily because that electorate perceives the government as the main heir to the mantel of national liberation movement) has got to be engaged with, has got to be encouraged to be “the solution” more than it is “the problem”. And anyway the ANC, government, Cabinet and ‘the state’ in all of its manifestations is not some undifferentiated monster that requires slaying. The most important debates that shape our future take placewithin the ANC and the government as much as they do in the national media or in Parliament. Who wins and who loses within the ANC remains a decisive question that we cannot abandon as “irrelevant”.

Secondly, the ANC’s claim to legitimacy based on its historical role as the leading organisation representing black South African’s aspirations for national determination and in opposing Apartheid is a false claim. That the ANC was the main formation thrown up by Apartheid oppression of black South Africans is indisputable and that legions of its supporters, leaders and members fought bravely and suffered deeply is equally indisputable. But how often in the world have we seen claims of historical suffering and historical struggle against oppression justifying present corruption and brutal repression? The ANC needs to hear the claims of some journalists and commentators that the ANC of todayrepresents a radical discontinuity with that ANC of the past.  This is a legitimate assertion that can only be answered with specific claims to value based on present activities and achievements.

Too often the ANC’s claim to legend, previous heroism and fortitude, to banners and flags and songs, is the only answer it seems able to give to those who say it has become an unsalvageable cesspool of greed and self-interest.

The ANC needs to be reminded of the words of the great African revolutionary leader, strategist and philosopher, Amilcar Cabral (here I quote the first and last few sentences of this famous statement):

Always bear in mind that the people are not fighting for ideas, for the things in anyone’s head. They are fighting to win material benefits, to live better and in peace, to see their lives go forward, to guarantee the future of their children. . .

Tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures.

Claim no easy victories…

 

Three asides from the present:

  1. I have absolutely no idea how I justified to myself putting that Amilcar Cabral quote in the original … the link to the rest of the story is faintly tenuous. But I suppose I loved it when I first read it in about 1981 and I love it still … and any excuse to get others to read it will do.
  2. Do I still write such long, unbroken paragraphs?
  3. I will only be able to check whether all the links in the original article work at some future, unspecified, time  … apologies if they (the links) took you to a place even more dusty, cobweb infested and spider-ridden than where you are right now.

Some humble and not so humble opinions on various snippets of recent and not so recent political news.

Platinum strike finally over

Amcu and the platinum producers announced a settlement on Tuesday. The industry reports the strike cost producers R24-billion in lost revenue and the workers R10.6-billion in forsaken wages (see the pro-industry website here for other data.)

So what?

It is generally agreed in the financial press that the mineworkers lost more than they gained (see here and here - that second link to Carol Paton in the Business Day … well worth reading as always and way more subtle than a bald statement that workers lost more than they gained).

My own impression is the settlement will be hailed by the vast majority of the returning mineworkers as a victory for Amcu – and, explicitly, as a defeat for Num, the ANC and government.

I expect Amcu to continue strong growth in the gold sector, eventually threatening Num’s dominance there (Amcu is sitting at about 30% representivity at the major gold producers already). The gold sector has a centralised bargaining system (through the Chamber of Mines) and Amcu has been formally prevented by the Labour Court from holding a protected strike at AngloGold Ashanti, Harmony and Sibanye because the agreement struck last year is binding. However  an unprotected strike remains a possibility and I expect Amcu to apply constant pressure to the agreement – perhaps embarking on an unprotected strike before year end.

My ‘most likely’ scenario (published in January 2014, see here): cascading labour unrest during 2014 and 2015 stemming from Amcu’s rapid growth in the mining sector, Numsa breakaway from Cosatu and the public sector wage round in 2015 – remains my base case.

Numsa is threatening to bring over 200 000 out on strike in the metal industry (largely the auto industry) from July 1. (Summarised by my friend and colleague at BNP Paribas Cadiz Securities economist Jeff Schultz: “The NUMSA and a number of other unions, meanwhile, are threatening to bring over 200,000 out on strike in the metal industry (largely the auto industry) from 1 July. Employers and unions  in the metal and engineering sector have been at loggerheads for three months now. The current three-year wage agreement comes up for renewal at the end of this month. The unions reportedly opened negotiations with a demand for a 15-20% pay rise, while employers are  currently offering 6.5-7.0%. This is another key risk to the production side of the economy in H2  and we will be watching developments here extremely closely in the days and weeks to come.”)

Zuma sick and tired

This week’s Sunday Times led with the ‘revelation’ that a heart condition, diabetes, high blood pressure and exhaustion have combined to raise concerns about the President’s health.

So what?

The story contains no news whatsoever. It is conceivable that Jacob Zuma could retire early for health reasons and it is conceivable that Cyril Ramaphosa, Nkosazana Dlamini-Zuma or some other ANC leader could become president or acting president. There is no strong evidence that such a transition would be accompanied by a damaging power struggle or be otherwise destabilising. Given how the ANC formulates and implements policy, there is also no strong evidence that a new leader would radically depart from the broad policy thrusts of the current government. The ANC is, in any case, under increasing pressure to deliver on a ‘more radical’ transformation policy and this pressure would apply to any new leader of the ANC and government.

State of the Nation: “like watching someone try to make their granny look bad ass”

This is a bit dated, but every political analyst and his (or her) dog seemed to make huffy and opinionated comments about SONA2014#2 so before I get my FOMO on:

If you expected some meat on the bones of Jacob Zuma’s statement we have to embark on radical socio-economic transformation you would have been disappointed. The speech consisted, as it always does, of a series of signals packed in mind-numbing detail.

I have pulled out the relevant quotes and underlined the relevant part of each quote below, but in short the speech raised some concerns for businesses and/or financial markets:

  • He  (Jacob Zuma) made the call for a national minimum wage
  • We can expect increased costs on mining companies as Charter targets are more vigorously pursued: in effect increasing the wage bill and other costs
  • There will be more onerous requirements for BBBEE and EE – in effect increasing costs on the wage bill and lowering rate of return in the short to medium term
  • The nuclear programme is definitely on – and there are increased fears of corruption associated with what will be the biggest public tender in South African history.

However, given the powerful pressures acting on the African National Congress, the populist concessions in the speech were relatively mild – and, if you believe an expanding public infrastructure spending programme could drive economic growth, then there was some good news in there for you too.

My first response on Twitter was along the lines of: ‘If you don’t have a plan for transformation, then force the private sector to come up with one #SONA2014.”

But there is not a lot of threatened force in the President’s outline. In truth,  Chester Missing, a comedian’s ventriloquist dummy was probably more accurate when he posted: “Talking the ANC’s radical transformation programme. It’s like watching someone try to make their granny look bad ass #SONA2014”. (Which hints at what we think is the greater risk: if the ANC fails to meet the various expectations of the emerging middle classes its political hegemony – and electoral majority –  might become marginal, leading to real policy instability.)

QUOTES (with explanatory links):

“Change will not come about without some far-reaching interventions.”

The social partners will also need to deliberate on wage inequality. On our side as Government we will during this term investigate the possibility of a national minimum wage as one of the key mechanisms to reduce the income inequality.”

“To further promote improved living conditions for mine workers, Government is monitoring the compliance of mining companies with Mining Charter targets, relating to improving the living conditions of workers.”

“This situation calls for a radical transformation of the energy sector, to develop a sustainable energy mix that comprises coal, solar, wind, hydro, gas and nuclear energy … Nuclear has the possibility of generating well over 9000 megawatts, while shale gas is recognised as a game changer for our economy.”

“We will promote local procurement and increase domestic production by having the state buy 75% of goods and services from South African producers.”

“We will sharpen the implementation of the amended Broad-based Black Economic Empowerment Act and the Employment Equity Act, in order to transform the ownership, management and control of the economy.”

“The total assets of our Development Finance Institutions amount to some R230 billion …  will be repositioned in the next five years to become real engines of socio-economic development.”

“We have identified agriculture as a key job driver  … target is for the agricultural sector to create a million jobs by 2030  .. Government will provide comprehensive support to smallholder farmers by speeding up land reform and providing technical, infrastructural and financial support.”

“We will also re-open the period for the lodgement of claims for the restitution of land for a period of five years’”

 

SONA debate, Malema response, expulsion and EFF walkout

The fractious debate that followed …

During his maiden speech to parliament, in reaction to Jacob Zuma’s address, EFF leader Julius Malema said: “The ANC government massacred those people in Marikana”. This led to an objection, a refusal by Malema to withdraw the statement, his expulsion from the House and a raucous walkout by the EFF. During the walkout, EFF members “howled and barked several derogatory utterances and made disturbing gestures,” according to Stone Sezani, ANC chief whip, which may lead to further disciplinary action against some EFF parliamentarians.

So what?

The State of the Nation address was marginally relevant and pretty tedious, but the colourful and combative follow-up presages a new atmosphere in the hallowed halls of the National Assembly. The EFF runs the risk of being characterised as a gaggle of truculent children, but the important issue here is that the party is articulating views that are probably mainstream in the black middle class.

In the words of widely respected ex-editor of the Sunday Times Mondli Makhanya, the EFF is challenging the “too good to be true” seamless transition from “the apartheid past to the democratic present”.

The main reasons Mr Makhanya welcomes the EFF’s parliamentary challenge, according to City Press, are that “unencumbered by the guilt of being beneficiaries of an evil system, white South Africans carried on with life as normal and did not feel the need to assist in redress. They took advantage of the opportunities democracy created and made full use of the head-start they had on the newly levelled playing fields. The tough conversation about correcting the wrongs of the past was given cosmetic treatment. If truth be told, one of the really good stories of the past 20 years is the fantastic story of guiltless white comfort.”

The point for Mr Makhanya is that the “questions the EFF is asking about the post-1994 dispensation are tough but necessary. The language is rough but it might just be the ice water the nation needs to wake itself. Its conduct is often uncouth, but that might be what we need to keep us alert.”

 

Land expropriation, South African style

Rural Development and Land Reform Minister Gugile Nkwinti has published a draft proposal that he describes as an “opening gambit” to speed up the redress of black landowners’ apartheid-era dispossession, according to the Sunday Times. (I covered these proposals in some detail ages ago, but the ST treated it as if it was brand new so I thought I better deal with it as if it was.)

The proposal is for commercial farmers to give half their farms to farm workers, “proportional to their contribution to the development of the land based on the number of years they have worked on the land”. The initial proposal (published on 9 April 2014) is that government would pay for the 50%, but that the money would not go to the owner, but to an “investment and development fund to be jointly owned by the parties constituting the new ownership regime,” according to the Sunday Times.

So what?

This proposal is similar to the charter process in the mining industry, whereby various transformation targets are linked to the process of renewal of mining rights – although the Mining Charter does not envisage that workers on mines would or should own significant parts of those companies.

I think this should be seen as a ‘bargaining position’ by government, albeit one that is likely to cause significant anxiety in the farming sector.

The ANC is under increasing pressure to deliver on promises to change the patterns of racial ownership and control of all aspects of the economy.  Transformation of the agricultural sector is attractive to the ANC, because it satisfies a number of imperatives: redress, creation of small businesses and black economic empowerment. However the ANC has also shown itself to be concerned about food security and property rights. Up until now. the ANC has upheld the idea that while land might be expropriated, this would not be done without a fair price being paid.

Mr Nkwinti’s proposals are virgin territory and probably primarily a warning shot across the bows of commercial agriculture, encouraging them to come up with workable and radical solutions to the racially skewed ownership patterns on the land. April next year has been set as the deadline for responses to the proposal.

 

Someone asked yesterday what I thought of Julius Malema being appointed to the Judicial Services Commission. Did the ANC not care about the kinds of judges that would be appointed? Does this mean the ANC policy is drifting towards the EFF?

These were my first, instinctive, thoughts:

I reckon the ANC is wisely taking a step back and attempting to formulate a more comprehensive strategy to dealing with Malema and the EFF than it (the ANC) has had up until now. During the election and the State of the Nation debate the ANC gave Malema endless opportunities to grandstand – and kept being forced onto the terrain that Malema chose.

So the question of whether the ANC government murdered workers at Marikana became the focus of the national debate around the SONA, as did the expulsion of Malema from parliament and the subsequent EFF walkout. Malema was – as always – cleverly playing out lessons that could have come from Sun Tzu’s The Art of War: draw the stronger enemy out to the terrain and the timing of your choosing … or something similar. (You made it up; you haven’t even read Art of War – Ed. Well … I bet it says stuff just like that in there – Nic.)

Malema has been on the front foot in almost every confrontation he has had with the ANC; more nimble, media savvy and quick, constantly making the bigger, better resourced, and much more popular party look lumbering, old and out of touch.

I think the ANC has finally hit ‘pause’, stopping itself responding automatically and defensively, suppressing the knee-jerk.

The first thing the ANC did then was go back to its own studies and documents like Strategy and Tactics  that constantly exhort the proper revolutionary to deal with a situation as it is and not how one would want it to be (that’s not a quote, it’s a vague memory – Ed).  Thus the ANC has decided to accept that, abhorrent as that may be, the EFF is here, in parliament, with over a million votes, and cannot be wished away.

The second step is to draw the EFF into terrain where it is weakest: the real business of governance, especially the tedious, behind the scenes, work … like the work done by the JSC.(that originally read ‘JSE’ … thanks Colin, totally a Freudian slip!)  I have no doubt that the ANC feels sure it has enough votes on the JSC (ditto – tks Colin) to influence the real outcomes of the commission, that Malema’s presence there will do little other than absorb Malema’s time and attention (and have him endlessly sparring with better trained minds than his – and mouths almost as skilful.)

So what the ANC is probably attempting to do (also with the appointment of Floyd Shivambu to the Pan African Parliament) is to incorporate the EFF, to drain the energy and time available to its leaders for grandstanding and guerilla theatre.

The ANC can argue to anyone: look these people have been elected to parliament, we are obliged to take them seriously and not side-line them, thus we are appointing them to real committees and giving them real responsibilities.

The EFF cannot refuse, after all it has been demanding to be taken seriously and complaining that the ANC doesn’t take them (or the electorate) seriously etc.

The ANC is probably betting that after 6 months of the EFF exhausting itself in the exhausting business of government it will have little room and energy for the kind of vibrant, youthful anarchy it has exhibited up until now.

Is the ANC risking financial market ire by allowing the EFF near the appointment of judges? Could this imply a new openness to the ideas of the EFF around private property, nationalisation, redistribution etc? I don’t think so – or at least not any more than the ANC is itself raising through, for example, Rural Development and Land Reform Minister Gugile Nkwinti published draft proposal for land reform.

The ANC is appropriately responding to the support the EFF has achieved in the recent election. It (the ANC) must address the concerns of those voters who have, or might still, defect to the EFF – but the ANC must do so on its own terms and not the terms and conditions set by the EFF.

The other bet the ANC is making is that the gradual bureaucratisation of the EFF leadership will make them easier to co-opt, and eventually entice them back, across the floor.

It might not work, but I think this is the right strategy: take Malema, as a member of the National Assembly, seriously and eventually he will be forced to take being part of government seriously (and eventually he’ll just be another porky little guy in a suit in the National Assembly?- Ed. Something like that – Nic).

Who can remember the power of the IFP when it refused to be part of the 1994 election? As soon as it was ‘part of the system’, its power drained away.”

And meanwhile quis custodiet ipsos custodes? Well, Julius Malema of course.

 

… which I entirely doubt will be made glorious summer by this sun of KZN when he gives his 5th nth State of the Nation Address this evening.

I am not, as my children might have said, very amped for this.

The only ray of light so far (I am watching on eNCA) was a brief interview with Floyd Shivambu who suggested it should be a ‘state of the resignation address’ … that if the President couldn’t make it to the Cabinet Lekgotla ‘then it would be best for him to just come here to explain that he is just too old and tired and to say goodbye’ – or words to that effect.

I thought I would use the time to publish some bits and pieces that I have sent to my clients over the last week.

The winter of our discontent – as the labour relations cycle meets a secular trend

Every year at this time South Africa is engulfed in strikes as annual wage agreements are traditionally renegotiated in several sectors of the economy. Every year analysts and journalists pontificate widely about the dire labour relations conditions – and the gloom deepens because this all takes place in winter.

Three factors this year are probably going to make the outlook more negative and threatening.

Firstly, the post national election winter has, since 1994, been characterised by spikes in service delivery protests. The causes of this phenomenon are not fully understood, but it is likely that:

  • voters confronting a hostile winter and declining services levels – so soon after being promised the earth by politicians – are likely to be unsettled;
  • local politicians who failed to make party lists begin mobilising factional support, perhaps to stand as candidates in 2016 local government elections, perhaps to discredit those whose positions they covet.

Secondly, the platinum strike is being driven by a number of ‘political’ factors – as discussed previously.

Thirdly Numsa is showing clear signs that its political aspirations are, as we predicted, going to drive deeper and more robust strikes and labour unrest. One sign is the growing violence as Numsa attempts to widen its action at the Ngqura container terminal in the Coega Industrial Development Zone in Port Elizabeth.  The South African Transport and Allied Workers Union (a Cosatu union) is opposing the Numsa strike and is calling for its members to stay at work at the Transnet facility. However, both Transnet and Satawu were quoted on radio (SAFM 20h00 news broadcast 08/06/2014) as decrying the burning of houses and cars of the workers who were at work. The SATAWU spokesperson warned that the situation had similar dynamics to those that were present in the platinum sector in 2012 – that this ‘is just like what happened with Amcu (same broadcast).

Additionally, Numsa is preparing to lead 220,000 workers out on strike from the metals and engineering sector next month. “The bargaining negotiations have spectacularly failed to produce the desired outcomes as expected by the thousands of our members in the sector,” spokesman Castro Ngobese said in a statement quoted in The Herald (5/06/2014). Numsa’s core demands includes a 15% pay rise and a one-year bargaining agreement, the Steel and Engineering Industries Federation of SA (Seifsa, which represents 23 employer associations) has offered an inflation-linked increase of 6.1 percent.

So what?

This is the cycle meeting the secular trend, with each driving the other deeper than either would have been driven ordinarily. Numsa is in the  process of breaking away from Cosatu and is beginning to vigorously compete with other Cosatu unions in overlapping sectors (container terminals, the big electricity generation projects and down and upstream mining and metallurgy operations).  This is, at least partly, about Numsa preparing to set up a ‘left’ party to compete for votes in the future. Comparable (but not identical) dynamics are driving the platinum strike. A winter with ‘normally’ increased social and industrial unrest will probably become unusually bleak and unwelcoming in the months ahead. The impact on GDP growth and on the possibility of ratings downgrades are both important considerations.

 

X Rated

Both Fitch and Standard & Poor made references on Friday (13/06/2014) to increased political risk when they changed their views on the South African government’s willingness and ability to pay the sovereign debt.

Fitch revised the outlook for South Africa to negative from stable and affirmed the country’s long-term foreign and local currency issuer default ratings at BBB and BBB+ respectively. S&P downgraded both the country’s local and foreign currency ratings by one notch from A- to BBB+ and BBB to BBB-  respectively, but moved its outlook negative to stable. None of this is a catastrophe  but of interest to us here is the central role of ‘politics’ in the given reasons for both Fitch’s and S&P’s changes.

Fitch says it most baldly in the press release announcing the change in outlook (my emphasis added):

“Following its election victory in May with 62% of the vote, the African National Congress government faces a challenging task to raise the country’s growth rate and improve social conditions, which has been made more difficult by the weaker growth performance and deteriorating trends in governance and corruption. This will require an acceleration of structural reforms, such as those set out in the comprehensive National Development Plan (NDP). In Fitch’s view, the track record of some key ministerial appointments and shortcomings in administrative capacity mean this is subject to downside risks.”

Fitch gives amongst the key drivers of its more negative outlook: “Increased strike activity, high wage demands and electricity constraints represent negative supply side shock.”

Standard and Poor’s downgrade was similarly motivated but adds some additional concerns:

“While we think that President Jacob Zuma’s newly elected administration will continue the policies of his first administration, which controlled fiscal expenditure and fostered broadly stable prices, we do not believe it will manage to undertake major labor or other economic reforms that will significantly boost GDP growth”.

My initial take on the new Cabinet is supportive of these motivations.

In addition both agencies made extensive reference to the negative industrial relations environment – and the negative impacts on GDP growth and government revenues. There is a significant political dimension driving industrial unrest – as I have argued above.

So what?

The validity of the actual ratings and ratings outlook of these agencies is much disputed[1] but the issues they use to motivate their views are interesting because they (the agencies) are cautious; clinging to a sort of ‘average view’ of investors. So if political criticism makes its way into the text (as is the case in both these instances) we are obliged to consider that these may represent, or may come to represent, a general view in markets.

South Africa has a small open economy and liquid financial markets and the difference that policy makers can make to economic outcomes is limited. But even within those limitations too many political choices (certain cabinet appointments, corruption controls, delivery performance and the honest brokering of labour contestation) are either not helping or are actively negative.

[1]No-one could have failed to notice the excoriating criticism of the credit rating agencies (CRAs) after their generalised failure to accurately assess the risks associated with the collateralised debt obligations allegedly because they were mostly issued by the CRAs biggest paying clients! However, it is the opposite with sovereigns: “It has also been suggested that the credit agencies are conflicted in assigning sovereign credit ratings since they have a political incentive to show they do not need stricter regulation by being overly critical in their assessment of governments they regulate.” http://en.wikipedia.org/wiki/Credit_rating_agency (accessed 13h56 16/06/2014.

 

The National Directorate of Public Prosecutions

I  dealt with this issue last week, but it is making bigger and more anxiety provoking headlines than ever.

So what

The NDPP was drawn into the fight between Mbeki and Zuma and since that time has limped along to the rhythm of one or other faction aligned to competing interests within the ANC seizing or losing power in the institution. This is not a situation in which one could safely choose one set of ‘good guys’ and back them against another set of ‘bad guys’. The situation is complex but relates primarily to the on-going struggle to either ensure that certain senior political leaders are brought to justice or to ensure that they are not.

The NDPP is one of the most important institutions of the justice system, and without certainty and stability here it is impossible to have certainty about the operating environment for any business in the country. This is a serious problem and it appears to be getting worse under the current administration.

 

Platinum Strike

(This is a bit dated, but you might be interested in my rude remarks about the new minister.)

“Government is ready to wash its hands of the protracted wage strike by platinum mineworkers in Rustenburg” according to the Sunday Independent 08/06/2014. Mines minister Ngoako Ramatlhodi threatened to pull out his inter-ministerial task team if a settlement was not reached at the last scheduled government facilitated meeting, which is due to take place today.

In addition, a formal ANC statement delivered by Gwede Mantashe at a press conference in Luthuli House in Johannesburg last night after the ANC weekend lekgotla[1] characterised the strike in a way that seemed to destroy the remote possibility that Ramatlhodi could have made a difference anyway:

“The articulation of AMCU position by white foreign nationals, signalling interest of the foreign forces in the distabilisation (sic) of our economy.

The direct participation of EFF in the negotiations, and thus collaboration with the foreign forces.

These two factors led the lekgotla into cautioning the Ministry of Mineral Resources in handling the facilitation with care. There were questions about the role of the state in workplace disputes where there are clear rules guiding it.”

This statement is interesting precisely because it borders on the bizarre

So what

The ANC statement indicates shows just why the new ANC minister cannot be an honest or effective broker in the negotiation – and it is therefore unsurprising that he is preparing to withdraw his team. The ANC is compelled to believe that this strike is only not ‘negotiable’ in the normal manner because the real issues driving it are political  and not about wages at all. The ANC might be correct about the strike being ‘political’ but the party itself is culpable of having politicised the strike by attempting to defend its Num ally against the vigorously growing Amcu, by alienating workers by characterising their union as ‘vigilantes’ and by the ‘Marikana massacre itself.’ s – There was never any real possibility of this government mediating between the parties or influencing the outcome.

 

Concerns about property rights

The South African Institute of Race Relations and AfriBusiness (AfriSake) have recently released warnings about property rights in South Africa. A proper assessment of these warning would require specialist legal opinions, but our own assumptions have long been that the South African Constitution provides adequate protections for private property (see here) and the ANC government is unlikely to risk fiddling with these principles.

However it seems to be a basic due diligence requirement to keep an eye on the risk – perhaps more so since Jacob Zuma spelled out at his Cabinet announcement (reiterating many recent ANC and SACP statements) that we are entering a “more radical” phase of economic transformation.

With this is mind, we reproduce the basic summary of legal concerns AfriBusiness and the South African Institute of Race Relations have raised in their research (note that below is a direct quote from the AfriBusiness statement linked above):

  1. The National Development Plan has as its aim the transfer of 20% of the agricultural land in a district to black recipients, at only 50% of the value as determined by the state (in terms of the Property Valuation Bill).
  2. The verdict of the Constitutional Court in April 2013 in the case of AgriSA v the Minister of Minerals and Energy distinguishes between “deprivation” and “expropriation”. After the verdict the state is able to dispossess and redistribute property, as long as the state does not assume ownership of the property and act (sic) only as custodian.
  3. The Green Paper on Land Reform aims a radical redesign of property rights, with inter alia a type of freehold on land which will drastically limit the rights of owners. Within this context a Land Management Commission is proposed, which will have discretionary powers regarding disputes over title deeds.
  4. The policy proposal by the Minister of Land Reform, Gugile Nkwinti, for “Strengthening the rights of workers working the land” aims to transfer 50% of the land to the workers, commensurate with their term of service. No compensation will be paid to the owner.
  5. The Expropriation Bill poses that expropriation may be used for the public interest and public goal. The Bill is not only applicable to land but will cover all types of property. Public interest and public goal are determined in an ad hoc manner and both have restitution as aim.
  6. The Promotion and Protection of Investment Bill allows state intervention in investment processes. The Bill explicitly provides for expropriation at less than market value. All in the name of so-called restitution. Any property used for commercial purposes is targeted by the Bill.
  7. The Infrastructure Development Bill aims to eliminate so-called inequalities in infrastructure. The Presidential Infrastructure Coordinating Commission is granted the authority to expropriate in the public interest and for the public goal.
  8. The Spatial Planning and Management of Land Use Act aims at centralized planning of land ownership. It proposed so-called spatial justice by integrating low and high cost housing in residential developments.
  9. The Extension of the Security of Tenure Amendment Bill expands the rights of occupants and their dependents. Evictions are strictly controlled and the Amendment Bill means a significant loss in control over property.
  10. The Restitution of Land Rights Amendment Bill creates further political and economic uncertainty regarding the future of property rights.
  11. The Rental Housing Amendment Bill proposes stricter regulation of the rental property market. Rental Tribunals will be established to hear disputes and will be able to determine increases in rent.
  12. The National Water Amendment Bill and Policy Review prohibits the trading of water rights and proposes a use-it-or-lose-it principle for water rights. Equality (including racial transformation) becomes the criterium (sic) for the allocation and re-allocation of water rights.

Consume that with the requisite amount of salt but keep an eye on the detail.

 

[1]Sesotho loan word meaning court or community council meeting; used in the South African context a “lekgotla is a meeting called by government, Cabinet or the ANC to discuss strategy planning”. Wikipedia accessed 04h30 09/06/2014.

 

Below are my comments about Sunday’s cabinet announcement followed by my comments about the elections from a week or so earlier – a sort of trip back in time.

In both cases the originals were written under tight deadlines and in both cases my initial impressions have been moderated by time, drifting towards the insipid end of the spectrum.

But for those who might be interested these were my first, slightly more vivid, impressions …

(Sent out 06h00 Monday 26th May):

Jacob Zuma’s Cabinet 2014 – through a glass darkly

From a narrow ‘financial market’ perspective the Cabinet announcement by Jacob Zuma last night was disappointing and confusing.

(Note: it would be possible to find much good in this Cabinet and the strategy it implies, but because the announcement was so late – about 1900 hours last night – I have decided to focus almost exclusively on the risks and problems, mostly because they dominate. Apologies if this makes me sound whiny.)

Cyril Ramaphosa

The appointment is finally made. It’s largely a good thing from a financial market perspective – given his understanding of how business works. However, the damage done him by his comments before the Marikana massacre should not be underestimated (he called for greater police action against strikers – see here) and his power within the ANC should not be over-estimated (he has, essentially, played hand-maiden to Jacob Zuma from assuming office of the ANC deputy president at Mangaung in December 2013). However, Ramaphosa was a clever and powerful negotiator for the ANC at Codesa I and II. It is likely that Ramaphosa’s authority and influence will gradually increase in the next few years, possibly leading to his ascension to the ANC’s and the country’s presidency.

Nhlanhla Nene – Minister of Finance

Nene became Deputy Minister of Finance in November 2008 and served in that role till May 2014. He is technically competent and liked by the few in the markets and in business who have dealt with him. As chairman of parliament’s finance committee Nene urged in October 2008 that “utmost care should be taken that parliament does not undermine macroeconomic stability” – see here for that reference.

Issues, problems and basis for assessment

Nene is the ‘continuity candidate’ in the absence of Pravin Gordhan – but it is this absence that increases uncertainty. Nene is not well known in the markets and he is particularly ‘lightweight’ politically in terms of his seniority and influence in the ANC (as opposed to his predecessors Trevor Manuel and Pravin Gordhan).

This becomes more of a problem when GDP growth is as sluggish as it is in South Africa and when the President himself summarises his intentions (as he did prefacing his cabinet announcement): “I announced on Saturday that we have entered the second phase of our transition to a national democratic society. I also said this would be a radical phase of socio-economic transformation.”

One must assume such “a radical phase of socio-economic transformation” would put even greater spending pressures on the Finance Minister. Gordhan (and before that Trevor Manuel) had proven levels of toughness and authority in holding the fiscal line – although at least in Manuel’s case the ‘markets’ were nervous for some time after his appointment in 1996 (and Gordhan was not, initially on the ANC NEC when he was appointed).

The problem is made worse by the fact that DTI and EDD are unchanged

One of my early concerns with Zuma’s first Cabinet in 2009 was that it distributed economic policy-making power around government apparently (to me) as a gift to the SACP and Cosatu for having backed Jacob Zuma in his struggle against Mbeki. Thus Rob Davies in DTI and Ebrahim Patel in EDD have been left in place in yesterday’s cabinet announcement. As it turned out after 2009 Pravin Gordhan was eventually able to establish the Department of Finance as the centre of government’s economic policy-making function. Appointing Nhlanhla Nene to head the Treasury while leaving the other (now more experienced) economic Tsars in place rather reawakens the original concern.

If public sector wages and public service productivity are key variables for balancing government books …

The removal of independent and powerful Lindiwe Sisulu to the backwaters of Human Settlements (formally housing) and her replacement with the quiet and self-effacing Collins Chabane, previously of monitoring and evaluation in the Presidency, is another cause for concern. Again, he is admired and liked and should be given the chance to rise to the challenge of this key portfolio, but my first take is this is another weak appointment. The major negotiations for 3-year wage agreements in the public sector come up for renewal this year. I would have preferred someone in this post who had the political weight to stand up to the public sector unions (and various other political interests).

The key idea seems to be to house the NDP in a politically beefed up Presidency

The new ‘centre’ of economic policy making will actually be within the Presidency where Zuma has appointed Jeff Radebe as a sort of Prime Minister of the National Development Plan into which he (Zuma) has collapsed performance and monitoring as well as ‘youth development’.

Radebe swings a lot of weight – and a more general comment is that Jacob Zuma has made weak appointments throughout his cabinet but has very significantly strengthened his own office. There are several problems with this, but I will mention only that Jeff Radebe has never played a role where he has been required to establish or defend (or even understand) macro-economic policy stability, but he has played the role of party fixer, strongman and bully in the ANC. If these talents can be deployed in giving flesh to the NDP bones that will be a good thing.

Supply-side misery

The Governor of the South African Reserve Bank consistently has expressed concern about various ‘supply side’ constraints (see here for the Monetary Policy Committee statement of May 22nd).

These constraints include energy prices, labour unrest, transport bottlenecks, broadband penetration and regulation and failures in the education system among a host of issues.

So here are just a few of the appointments in this area:

Energy: After a disastrous term in Agriculture, Forestry and Fisheries, Minister Tina Joemat-Peterssen has been appointed Minister of Energy. She has been the subject of several Public Protector Investigations and she has courted a highly confrontational relationship with the fishing industry. However, she is strongly supported by Jacob Zuma. Her new department will be central to the decisions about the biggest public tender in South African history: R1-trillion worth of  nuclear power stations.

Telecommunications and Communications: The functions have been split, with the  Minister of State Security Siyabonga Cwele moving to Telecommunications and Postal Services. The bigger problem is how many changes have been made here, with the telecommunications industry  having expressing the hope that Minister Yunus Carrim would stay in the post and finally move towards stabilising the policy framework under which the local loop would be unbundled and the sector regulated – after a long succession of disastrous appointments. There are no grounds to be confident that Cwele is up to this task. The only grounds that we can see for the appointment is if the sector is conceived of as an extension of the country’s state intelligence function.

Communications: Ms Faith Muthambi has been appointed to head this department which will include the functions of the independent regulator Icasa, the state broadcaster SABC and government information services, the GCIS. It still needs to be assessed whether the structural change and appointments here and in telecommunications will be positive for the industry, but on the face of it is peculiar, to say the least, to group the regulator of the private sector (Icasa) with the ‘marketing’ and ‘promotion’ capacity of the government and state.

(See here for the eviscerating comments on the ‘communications’ decisions in the cabinet from the SOS Coalition (‘trade unions, community media and content producers hoping to support quality public broadcasting’).

Education, transport and labour: It can have escaped no-one concerned with South Africa’s economic development that these functions of government are failing or significantly underperforming. But Jacob Zuma has left education and training with Blade Nzimande, basic education with Angie Motshekga (which, btw, some NGO’s and the DA reckon is a good thing), transport with Dipuo Peters and labour with Mildred Oliphant.

(Because I don’t know him that well, I didn’t discuss Adv Ngoako Ramathlodi as mining minister in that note. But here  is the new minister in 2011 essentially arguing that the South African constitution was a compromise from weakness on the ANC’s part and the the courts need to passop stepping on toes of government, the ANC and the Executive’s …. and here is constitutional expert Pierre De Vos apoplectic response to Ramatlhodi’s disturbing views.)

Full Cabinet

(The Deputy President is Cyril Ramaphosa)

1. The Minister in the Presidency is Mr Jeff Radebe.

2. The Minister of Women in the Presidency is Ms Susan Shabangu.

3. The Minister of Justice and Correctional Services is Mr Michael Masutha.

4. The Minister of Public Service and Administration is Mr Collins Chabane.

5. The Minister of Defence and Military Veterans is Ms Nosiviwe Mapisa-Nqakula.

6. The Minister of Home Affairs is Mr Malusi Gigaba.

7. The Minister of Environmental Affairs is Ms Edna Molewa.

8. The Minister of State Security is Mr David Mahlobo.

9. The Minister of Telecommunications and Postal Services is Dr Siyabonga Cwele.

10. The Minister of Police is Mr Nkosinathi Nhleko.

11. The Minister of Trade and Industry is Dr Rob Davies.

12. The Minister of Finance is Mr Nhlanhla Nene.

13. The Minister of Agriculture, Forestry and Fisheries is Mr Senzeni Zokwana.

14. The Minister of Water and Sanitation is Ms Nomvula Mokonyane.

15. The Minister of Basic Education is Ms Angie Motshekga.

16. The Minister of Health is Dr Aaron Motsoaledi.

17. The Minister of International Relations and Cooperation is Ms Maite Nkoana-Mashabane.

18. The Minister of Rural Development and Land Reform is Mr Gugile Nkwinti.

19. The Minister of Higher Education and Training is Dr Bonginkosi “Blade” Nzimande.

20. The Minister of Economic Development is Mr Ebrahim Patel.

21. The Minister of Transport is Ms Dipuo Peters.

22. The Minister of Mineral Resources is Adv Ngoako Ramathlodi.

23. The Minister of Social Development is Ms Bathabile Dlamini.

24. The Minister of Public Enterprises is Ms Lyn Brown.

25. The Minister of Sport and Recreation is Mr Fikile Mbalula.

26. The Minister of Labour is Ms Mildred Oliphant.

27. The Minister of Arts and Culture is Mr Nathi Mthethwa.

28. The Minister of Public Works is Mr Thulas Nxesi.

29. The Minister of Small Business Development is Ms Lindiwe Zulu.

30. The Minister of Energy is Ms Tina Joemat-Peterssen.

31. The Minister of Science and Technology is Ms Naledi Pandor.

32. The Minister of Cooperative Governance and Traditional Affairs is Mr Pravin Gordhan.

33. The Minister of Communications is Ms Faith Muthambi.

34. The Minister of Human Settlements is Ms Lindiwe Sisulu.

35. The Minister of Tourism is Mr Derek Hanekom.

ends ….

 

(And then this, sent out Monday 12 May 06h30)

Election 2014 results

South Africa’s Independent Electoral Commission (IEC) announced the following election results for the country’s National Assembly on Saturday 10 May 2014:

Elections1

The ANC has 15 fewer National Assembly seats and the DA 22 more than they achieved in the 2009 election.

The provincial results followed a similar pattern, with the ANC winning 8 out of 9 provinces (with the Western Cape remaining in DA control). In three of those provinces the ANC increased its majority (Kwazulu-Natal, Eastern Cape and Northern Cape – and increasing its percentage of the vote in the Western Cape) and in five provinces the ANC majority was reduced.

ANC drop more significant in Gauteng and some other major cities

The most significant reduction in ANC support occurred in Gauteng, the country’s economic and industrial heartland and the province with the highest population and highest population density. In the provincial poll in Gauteng the ANC fell 10.45% to 53.59% from 64.04% in the 2009 election.

In the table below the trend is clearly revealed in the three major Gauteng metropolitan areas and is reproduced to some degree in Nelson Mandela Bay in the Eastern Cape:

 

Elections2

 

(As an aside, News24′s coverage of the election as well as it’s app from which the above is a cut-and-paste was truly excellent –  it’s set the new gold standard for election coverage in South Africa. To get a taste of that, visit here.)

‘Racial voting’ patterns persist

A feature of South African voting trends is that, in general, the parties have quite distinct racial or ethnic support bases.

This trend clearly persists (from City Press 11/05/2014)

Elections3

 

So what?

A close examination of ward data changes between 2009 and today reveals that there is a blurring of the racial voting patterns in Gauteng’s metropolitan areas – but only to a limited degree and only in the most developed urban centres. The persistence of ‘racialised’ voting patterns is unsurprising given the country’s history and the persistence of apartheid’s spacial planning and economic, demographic and cultural disparities in the present. The implication is that party support patterns are as suborn and persistent as other social patterns. From a financial market perspective this can mean both that the political environment is stable and predictable but also that such secure incumbency is likely to gradually increase patronage and complacency.

(You might want to temper these conclusion with the views of Pallo Jordan who wrote in a Business Day column: “Racial interpretations of voter behaviour might be very comforting for analysts who confuse public manifestations of discontent with the rejection of the governing party. Unless the coloured voters of the Northern Cape are being included in the “racial solidarity” African voters are accused of, their political choices can only be explained in terms of attractive policies”. I think Jordan’s argument is taking on something different to the points I make above, but I include them – Jordan’s comments – here in case I am missing something.)

The main implications: government, the ANC, the NDP, the middle ground and the EFF

These are, in my opinion, the main financial market implications of the election:

  • The result is generally financial market positive: it leaves the ANC with a secure enough majority to be able continue ‘grasping the nettle’ of macro-economic policy stability, including fiscal consolidation.
  • However, there may be just enough voter admonishment implicit in the ANC’s loss of 15 National Assembly seats and the more dizzying drops in the major metropolitan areas to cause the party to attempt a clean-up of the behaviour of some of its top leaders.
  • My reading of the relative ANC losses in the main urban centres of Gauteng is that these were only partly driven by the introduction of unpopular e-tolling gantries in that province. A more fundamental divide is the kind of leadership Jacob Zuma has brought to the ANC: with his ‘rural big man’ characteristics, the casual diversion of public funds for the development of his Nkandla home, his backing of patriarchal legislation like the Traditional Courts Bill and his too cosy, mutually beneficial, relationships with business people like the Shaik and the Gupta families (see here and here). The most educated urban voters are the least likely to tolerate this kind of behaviour by the country’s top politician – and this is reflected in voting patterns.
  • There is very little disagreement between the ANC and the DA (and most of the smaller opposition parties, except the EFF) as to the broad outlines of economic policy. Thus the National Development Plan and a broadly stable macro-economic policy platform is the consensus of over 90% of the political establishment.
  • It has long been a feature of South African politics that ‘the real opposition’ and political contest is not in parliament, but actually within the ANC/SACP/Cosatu alliance itself. This alliance has not, since 1994, been less divided over economic policy. The SACP is firmly backing the Zuma government and Cosatu is in disarray, leaving the ANC/SACP to pursue the NDP and related policies.
  • While I do not think the NDP is a panacea for South Africa’s myriad economic problems, the programme’s holistic approach to economic development, it’s emphasis on improving infrastructure and its greater reliance on market mechanisms for the allocation of capital (more so than previous such policies like Asgisa, IPAP 1 & II and the New Growth Path) make it broadly financial market positive.
  • The ANC is signalling its intention to ratchet up Black Economic Empowerment and affirmative action in the workplace (through legislative, regulatory, political and state spending mechanisms.) This will get loud – and will become a more central feature of the valuation of companies and economic sectors in South Africa.
  • The rise and vibrancy of Julius Malema’s Economic Freedom Fighters has been, perhaps, the most notable feature of this election. Malema faces a final sequestration hearing on May 26 – and if his provisional sequestration is upheld he will be barred from being a member of parliament.
  • With or without its leader in parliament the EFF is already vigorously attempting to link up with striking platinum workers and with service delivery protesters.  This will become an increasingly noisy feature of South African politics. The upside is the ANC will probably become less ambiguous in its attitude to such strikes and protests. The downside is there will now be a parliamentary pressure group backing the radical populist policies of land seizures and mine nationalisation. My view is this is, on the whole, a healthy development. The radical populist views have been present in the ruling alliance and the society more generally since 1994 anyway. Having those views directly represented by a minority party in parliament formalises the debate and contest within the democratic and constitutional structures of the country. Of course that doesn’t mean the EFF won’t constantly attempt to take its struggle to the streets, but it does mean that the ANC will be clear on where it stands in relation to those issues.
  • All attention will now move to Jacob Zuma’s new cabinet (which will be announced soon after his inauguration – which I expect on the 24th of May) and to succession issues within the ANC.

A couple of asides as I tinker away at a framework for assessing Sunday’s Cabinet announcement.

EFF

The media noise surrounding Helen Zille’s putative attitude towards Lindiwe Mazibuko is interesting, but largely because it is so loud.

In the last hour I have been asked twice (by journalists) for an opinion on Mmusi Maimane‘s acceptance of nomination to the position of DA Parliamentary Leader.

Not long ago I would have (privately) filed news of DA power-struggles and leadership changes under ‘white mischief’ and forgotten about it – confident that no client or journalist would ask for an opinion.

Real politics, the stuff that actually made a difference to legislative or regulatory outcomes, happened within the Tripartite Alliance or in the interactions between the ANC and business.

I think that was a useful shorthand that saved me time in the past, but clearly I will have to break the habit.

The Alliance no longer contains its own opposition – and is therefore no longer the primary site of politics.

The EFF, Amcu, whatever Numsa finally initiates and the DA all (healthily in my view) strip out a sort of multi-polar disorder from the ANC.

Politics will now (tend to) happen where it is meant to: on the streets and in parliament … and not where it previously tended to happen: in back room deals and as a result of other shenanigans in the ANC-led alliance.

There is an obvious trade-off between clarity of government policy/structure and the broadness of the ANC’s alliances. As those alliances break or simplify or are otherwise transformed I expect some kind of dividend for governance and economic policy.

If I might add …

Another habit of thought I might soon have to break is my instinctive intellectual pessimism about politics.

By ‘pessimism’ I do not mean an automatic assumption that politician are corrupt or incompetent.

What I mean is that I tend to think that politics changes little in the world, but that the world changes the politics.

I think this might make me some kind of market fundamentalist. I am certain that to grow, the DA will have to become more like the ANC – in its policy and in the class and racial character of its leadership.

The assumption (and maybe error) I make is believing that  the electorate purely aggregates the interests of broad groups of people and the political parties are compelled to reflect the character and interests of those groups.

So my ‘habit of thought” is that I assume that for a party to grow it will necessarily become more generic and bland.

Why this is ‘pessimistic’ (and I hope incorrect) is I tend to assume that our politics increasingly changes nothing (except to the negative) and parties endlessly drift towards a sort bland and generic centre in response to the ‘market’ of the bland and generic voters.

No wonder I was a secret reader of P J O’Rourke. He once observed in his normal right-wing, smug but hilarious way:

Now majority rule is a precious, sacred thing worth dying for. But like other precious, sacred things …. it’s not only worth dying for; it can make you wish you were dead. Imagine if all life were determined by majority rule. Every meal would be a pizza.

P. J. O’Rourke, Parliament of Whores, 1991

Why this is a bad habit

I worry that my instinctive attitude is a potentially serious error. I can see how this ‘political pessimism’ might be a useful short cut in relatively homogeneous and stable first-world countries.

The main parties in those countries blur into each other.

But recession and unemployment, even in those countries,  is inevitably accompanied by a growing divergence in the political arena – a shrinking of the centre and growth of radical nationalists and/or populists.

Surely this is a better permanent model for understanding South Africa?

I suspect our calm transition and the stable predictability of the ANC and it’s comfortable electoral majority might have lulled me into a false sense of security.

Who could not smile at the jaunty red boiler-suits, gumboots and maid’s outfits adorning the mostly young EFF members being sworn in to parliament yesterday?

I am delighted the EFF are there and I think it is healthy for our politics that the ANC will have to contest with the EFF in the minds of voters and in the national and provincial assemblies.

Rather that than the nodding and winking and/or furious factional splits that have gone on up until now in the closed shop of the ANC.

But it should be front of mind that the ANC has to answer the challenge of the DA and of the EFF.

The ANC still has a safety margin and room for manoeuvre, but party leaders will have heard the howls in the night and are unlikely to just sit back staring into the fire hoping  for the best.

I am up to my neck in it, trying to tease out the main implications and trends of the election – in a way that might be useful to investors in our financial markets.

As part of the process I read everything I can find that has been written about the elections. I have just read the Sunday Independent to see what the journalists and columnists had to say and I came across something that I felt I needed to share; and social media granted me immediate gratification.

Jeremy Cronin, deputy general secretary of the SACP, wrote a column assessing the election under the title “No room for complacency for ANC and alliance partners”.

Cronin is always good value and worth reading and today he was especially feisty.

Opposition emerging to the left of the ANC/SACP/Cosatu alliance is an important matter for anyone who has an interest in how South African politics will progress. And Cronin deals with this question as part of his election assessment.

Cronin’s tone reminds me of the sectarian and slightly Stalinist tendencies that I was very much part of throughout the 80′s … and I felt almost nostalgic when he characterised the threats from the left thusly:

Will a serious left challenge now come from outside the ANC alliance? It’s possible, but only if we in the ANC alliance are clumsy or arrogant. We need to distinguish the proto-fascist demagogy of Malema from the hybrid neo-Stalinist business unionism of Irvin Jim, from the ethnically-tinged vigilantism of the Amcu leadership, from the preachy capitalist philanthropy of Jay Naidoo and Mamphela Ramphele.

I wanted to follow that with a few exclamation marks. It’s funny and it has a certain poetic rolling cadence that left me smiling … for a few seconds.

Until I realised that the trick Cronin has pulled here is he has created a sort of ideological bestiary and placed within it every conceivable left critic of the ANC and the SACP.

If you are a left critic of the ANC, SACP, Cosatu alliance then you are either a  proto-fascist demagogue or a hybrid neo-Stalinist business unionist, or you might be an ethnically-tinged vigilante or even a preachy capitalist philanthropist. You certainly couldn’t be a principled socialist of some kind, because then you would be in the ANC/SACP /Cosatu. Dah!

“Clumsy or arrogant”?

The article is worth reading because it gives a mostly subtle and thoughtful assessment of the election from an insiders view, but is, as you can see from the excerpt, occasionally entertainingly clumsy and arrogant.

After fiddling around a bit, I found it at IOL.com. Read it, it is here.

I swore I would never write a listicle as clickbait for my blog; although I once tried mansplaining what that meant.

But anyway … here are the 4 most egregious examples of  … of  just general political awfulness from the last week’s political news:

1. Chancellor House gets another slice of the Eskom pie – and says: F*%& you, we can do what we like

The Weekend Witness (also City Press 27/04/2014) reports that Chancellor House, an investment arm of the ANC, has begun the purchase of Swiss-owned Pfisterer, a manufacturer of electrification components. Pfisterer is a major Eskom supplier and has a R550 million contract with the state owned power utility.  The report alleges that Chancellor House will invest R34 million in a transaction that gives it immediate control of 49% ofPfisterer , and that Chancellor House will buy out the remainder over the next 18 months. Chancellor House’s Mamatho Netsianda told City Press: “If Chancellor House invests, it is not a crime. Why are you bothering me? We didn’t break any law. You don’t have a job to do. I have a job.”  Hmm, nice work if you can get it.

2. State nuclear corporation channels public money to the ANC – and is about to adjudicate the biggest public tender in South African history

The Nuclear Energy Corporation of South Africa (Necsa), a wholly state owned entity recently paid R76 000.00 for seats at an ANC fundraising dinner. This quote from an unidentified board member of Necsa from the Sunday Times’s (26/04/2014) story: “We get money from government. How can we use it to fund the ANC?”

The deadly serious point of the article is that Necsa will soon be adjudicating bids for the R1-trillion nuclear build programme, the biggest public sector contract in the country’s history.

The country is still reeling from the corroding effects of the R30-billion Strategic Defence Acquisition finalised in 1999. Then deputy president Jacob Zuma was charged on various counts of racketeering, money laundering, corruption and fraud in the wake of the successful prosecution of his then financial advisor Shabir Shaik for charges that included the soliciting of a R500 000 (per annum) bribe for Jacob Zuma from a leading defence contractor.

3. No parliamentary scrutiny of Nkandla

The African National Congress yesterday quashed the parliamentary committee established to scrutinise President Jacob Zuma’s responses to the Public Protector’s findings on the R246-million upgrade to the Nkandla homestead. Opposition parties were furious, claiming ANC members of the committee were “submitting to the will of the (ANC) headquarters, Luthuli House, rather than following the oath they made to uphold the constitution, part of which was to keep the executive accountable.” Committee chairman Cedric Frolick said the next Parliament could resurrect the issue, a point non-ANC members of the committee felt was unlikely and certainly not guaranteed – Business Day 29/04/2014

This particular story gets worse: a key ANC  member of the now disbanded committee said during a march in support of Jacob Zuma over the weekend that Public Protector, Thuli Madonsela, “is not our god”, regardless of being named as one of the world’s top 100 most influential people by Time magazine. “They can praise her good work, which is advancing the political agenda of the DA … We still reserve our right to expose that she is acting more as a politician and that she has brought that office into disrepute.” (City Press 27/04/2014)  … which rather explains why the ANC has sunk the committee which was the last opportunity for government and the ruling party to acknowledge mistakes and culpability around the Nkandla upgrade. It is widely reported that the ANC is encountering, along its election trail, significant and harsh criticism from its own electorate about the Nkandla issue in all provinces except Kwazulu-Natal.

4. Sadtu accused of running jobs for cash racket

City Press published an exposé of allegations that the South African Democratic Teachers Union, a key Cosatu affiliate, had run a “promotions and appointments for cash” racket that “led to scores of illegal appointments” across the country – and at least one murder of a principal (City Press 27/04/2014). The article describes several situations in which principals were threatened with death to leave their jobs to make way for someone who has paid the R30 000.00 to occupy the job. The article implicates some Cosatu, Education Department and ANC officials and leaders in the scam. “On Tuesday, Mfundi Sibiya (54) the Kwazulu-Natal education’s department Ugu (lower South Coast) district director, two principals and an ANC ward councillor were granted bail … (after) allegedly ordering the murder of Nyon’emhlope Primary School principal Nkosinathi Zondi (46) … shot five times, allegedly by hitmen Andile Zulu and Lungisani Makhoba …)”.

The failing South African education system is an important constraint to South African economic growth, and a key component of this failure is Sadtu’s success in thwarting attempts by governments to properly assess and grade teachers and to link advancement to performance. The exposé in City Press suggests (but, it needs to be noted, does not prove) how deep and pathological is the impact of Cosatu’s Sadtu union on the failure of the system.

 Stories that didn’t make the cut … because this whole exercise was starting to make me nauseous

  • Journalist Nickolaus Bauer photographing the handing out of ANC T-shirts from a traffic police vehicle, and then having his pictures forcibly deleted by a member of the SAPS VIP protections services.
  • Journalist Max du Preez’s accusation that Jacob Zuma “is using every trick he used while being head of intelligence for the ANC in exile in Angola and Zambia”. That he has “plunged the ANC back into its darkest era when commanders in exile issued the orders and cadres even remotely suspected of being hesitant or questioning were victimised, even jailed, tortured and executed.” Further that “the criminal justice system was perverted and abused and the powerful State Security Agency employed to make sure Zuma and his inner circle stay in power.”  Catch the article here.
  • The allegation that emergency parcels (food, toiletries and blankets from the SA Social Security Agency) are being dished out at a certain political party’s rallies – no guesses, this is getting ridiculous. The allegations have been made to the Public Protector. Hmm what is it that MP Buti Manemela said? Oh yes: the Public Protector is “advancing the political agenda of the DA”.

This from my 22nd of April 2014 news update:

The Sunday Times 20/04/2014  released a second “fully representative” survey conducted by Ipsos using a sample of 2219 registered voters. Here are the results as published in the Sunday Times tracked against both the 2009 election and the earlier Sunday Times commissioned poll of March 11, 2014 that used the identical methodology:

recent poll 1

The City Press the same week led with the claim that bespoke polling data commissioned by the ANC is predicting the ANC will get 48% of the vote in Gauteng and that bespoke polling data commissioned by the DA is predicting that the DA will get 37% of the vote in Gauteng. The City Press claims are untestable and none of the parties has confirmed that these figures are, in fact, their estimates..

The Ipsos survey puts the ANC safe in Gauteng and the DA safe in the Western Cape:

recent poll 2

A few comments

Firstly, and most obviously, be cautious of these figures – they are contradictory – and the ones in City Press are undoubtedly leaked by the parties for their own ends.

Secondly, there are few surprises in the latest Ipsos poll. The ANC is trending downwards from its 2009 share of the vote, but not as steeply as I expected. This is probably because damage done by the “Jacob Zuma and Nkandla factor” is balanced against the boon the ruling party has enjoyed from the presence in the public mind of long-time ANC leader Nelson Mandela as well as the “20 Years of Freedom” celebrations this year. The EFF found quick and significant traction but the obvious unworkability of the new party’s economic policy is being quickly – and earlier than I expected – exposed in the cut and thrust of election debate.

Thirdly, the possibility of coalition governments in some provinces, especially Gauteng, raises interesting tactical questions. If alliances with the smallest parties are unable to bring a coalition led by either the DA or the ANC above 50% then both the major parties must consider an alliance with the EFF. Of course an alliance with each other is also conceivable, but from the ANC perspective (in my opinion) an alliance with the EFF would be the better tactical choice. The DA is shaping up to be the main challenger to the ANC by 2019 and the ANC should be loath to give the DA the legitimacy that might come with a governing coalition in an important province. Also a pact with the EFF would allow the ANC to co-opt EFF members and leaders. The point might be moot, because it is myimpression that the ANC is close to the 50% mark in the most populous province.

Fourthly, if the ANC does get above 64% of the vote in this election (which is looking possible) the incumbent leadership of the party will comfortably dismiss the various urgent criticisms of corruption and mismanagement it has faced. The Nkandla scandal is just one of a myriad improprieties that have characterised Jacob Zuma’s leadership of the ANC and it cannot be good for South Africa if the electorate gave him the go ahead to continue in the same vein.

 

 

 

(Note: please read Jonny Steinberg’s comments on my miscasting of the implications of the recent HSRC’s South African National HIV Prevalence, Incidence and Behaviour Survey, 2012. Jonny argues that I have taken “a story of resounding success and twisted it into a tale of alarm”. Jonny Steinberg is correct on all counts and I hope to redress my error  at some time in the near future. Catch his brief criticism and my initial mea culpa in the comments section here.)

 Before it gets too out of date, herewith my last week’s (Monday 14 April) news update … it’s worth it just for Ronnie Kasrils’s comments about Zuma.

  • Employment equity in South Africa is glacially slow and will continue to help drive regulatory and political uncertainty
  • A spoilt ballot campaign and some unusually forthright statements from ANC leaders about corruption in their party and government
  • Ramapohosa brokers a truce, Vavi’s reinstatement holds and Cosatu totters on

Employment equity – dead slow ahead

Last week the Commission for Employment Equity released its 14th Annual report (available here) indicating glacial progress in making workplaces more representative of the demographic profile of the South African Economically Active Population (EAP).

Below is an indicator of race and gender breakdown of the working population as a whole:

Politics1

Original Source: Statistics South Africa, (QLFS 3 2013)

In the report’s ‘Top Management’ category, the trend between 2003 and 2013 is strikingly poor:

Employment equity reports 2003 - 2013

Employment equity reports 2003 – 2013

(The report uses categories: Top Management, Senior Management, Professionally Qualified and Skilled. The Department of Labour begun collecting data on ‘foreign natlonals’ as a distinct fraction of the EAP from only 2006.)

The performance is best in the government sector, but this only slightly improves the overall picture:

Employment equity reports 2013

Employment equity reports 2013

There have been some improvements at the lower end (Skilled Technical):

Employment equity report 2003 – 2013

Employment equity report 2003 – 2013

However, not unsurprisingly, the Employment Equity Commission believes this is not good enough in itself, nor is it adequate compensation for failures elsewhere.

(The Commission is a statutory body that reports to the Department of Labour and operates within the aegis of Employment Equity Act, 1998 – amended by Employment Equity Amendment Act of 2013.)

So what?

Poor performance by the private sector in reaching employment equity targets is a constant irritant to government and to the ‘designated groups’ (Africans, Coloureds, Indians, women and people with disabilities). Employers might argue that the administrative burden of the act is counter-productive and that the top employment categories require skills that are relatively scarce amongst the ‘designated groups’. However, the political consequence of the failure gradually adds to the risks in the operating environment.

Employment equity legislation in South Africa has, since 1998, tended not to concentrate on sanctions to enforce compliance. However it is apparent that government is gradually increasing the pressure. The Employment Equity Amendment Act of 2013 increases fines for non-compliance – both with regard to reporting requirements and with regard to targets.

The African National Congress is increasingly challenged by radical populists (e.g., the EFF) and a militant left-wing (e.g., the incipient Numsa breakaway from Cosatu) which together argue that black South Africans have failed to adequately benefit from ‘liberation’. Part of the answer to this challenge from the ruling party is likely to be a rapid escalation of pressure around employment equity and Broad-Based Black Economic Empowerment.

There will be an increasing burden on all companies operating in the country and increased government hostility to defaulters. The ANC will not be tempted towards the nationalisation policy platforms of the emerging populist and leftist groups, but must find an answer that satisfies its constituency in the rapidly growing black middle class.

Spoiled ballot campaign

Ronnie Kasrils, a former intelligence minister, and long-time leader of the African National Congress, has embarked on a campaign with some other disaffected ANC members to call for a spoiled ballot in the May 7 election.

So what?

Nothing much, except that this is probably the tip of an iceberg of discontent in the African National Congress. Perhaps what is significant is that despite the emergence of the EFF and Numsa breakaways, and the apparent success of the DA campaign, many dissidents in the ANC still find themselves unable to follow a party other than the ANC.

Kasrils’s main problem with the ANC is what he perceives as a spread of serious corruption and abuse of public funds at a senior level in government and the party.

Obviously the strategic or tactical value of a spoiled ballot will be a matter of deep controversy.

(My own view is that Kasrils and his colleagues are well within their rights to propagate this option – it is, however, not an option I will be pursuing.)

Most interesting

What is most interesting is to read Kasrils’s comments about Jacob Zuma and other ANC leaders in the interview with published in the City Press yesterday. I quote him here in-depth, because of how unusually explicit his mode of expression is and because I believe this view is representative of a significant group of ANC insiders, deeply unhappy with their party, but not yet ready to leave it:

People will tell you and it has been stated from people in exile and I can confirm – (that) he (Zuma) was a pretty simple guy. He wasn’t a person who was looking for fancy clothes and flash cars. He was pretty down to earth … I did see a certain ambition there by acquiring so many feminine relationships and wives and then children … (But Zuma has) changed very dramatically. Here is a man who comes back to South Africa and you can imagine how worried he must have been, how he was going to take care of this kind of menagerie … And then there are the people, capitalists, with money in their back pockets, who were looking at the new political power and pounced like vultures … There were some who were only too happy in the embrace because they did not have to worry about the wolf at the door, how they would have to pay the bills, how they were going to educate their kids, where they find a way to house their women … from then on, what happens to your fine principles of serving the people first and thinking of the key things that are necessary when you are now in league, and in bed, with people who become your sponsors? From that point of view, you change.

My view is that the people who now run the ANC, not every one of them, but there is an elite that has become incredibly corrupt that managed to take over – take power from Mbeki and kick him out and it’s just been downhill ever since with this system just rolling on like a snowball becoming larger and larger.

Ronnie Kasrils, City Press 13/04/2014

(Again, my personal views on whether Mbeki, Zuma or none-of-the-above are the root of all evil might differ somewhat from Kasrils’s but I think his plain speaking here is useful anyway.)

Ramapohosa brokers a truce, Vavi’s reinstatement holds and Cosatu totters briefly on

Cosatu’s Central Executive Committee meeting on Tuesday last week was widely expected to be the close-to-final act in the trade union federation’s unravelling. However an ANC delegation led by Cyril Ramaphosa persuaded the Zuma loyalists as well the Zwelinzima Vavi-led faction to postpone a final showdown till after the elections. (Such a ‘final showdown’ is ostensibly about the suitability and prudence of the Vavi, but is actually about loyalty to Jacob Zuma to the ANC’s policy positions.)

So what

Again, it is interesting to note the interaction between fragmentation and momentum in the ruling alliance. The ideas and history (mythological or otherwise) that bind the members and supporters to the ANC make the split that is happening bizarrely protracted. However, there is no question that several splits in the ruling alliance are, in fact, in process. It is tactically important for Vavi and Numsa to hold on within Cosatu for as long as possible. Cosatu remains terrain which neither contestant feels ready to abandon to the other.

 

Perhaps you are a journalist covering the May 7 elections or the Oscar Pistorius trial – and will soon be immersed in Shrien Dewani’s adventures in our specialist niche of the honeymoon-tourism market.

You might be a TV continuity announcer-cum-journalist, circling endlessly between serious discussion about bone fragments, Nkandla’s fire retarding swimming pool, Numsa’s endless exit  from Cosatu –  and then back to Oscar standing up, Oscar sitting down, Oscar making gagging noises, Oscar weeping about how horrible and sad this whole business is for him.

If you’re very lucky you might get to do a colour piece on Zuma’s ‘shorty and the machine gun’ routine:

JZ with  DJ Finzo Lannister at the the Fezile Dabi Stadium on Saturday

JZ with DJ Finzo Lannister at the the Fezile Dabi Stadium on Saturday – pic by Leon Sadiki in City Press 06.04.2014

But after the 10th showing of that, between the traffic, Oscar Pistorius, the sport, Oscar Pistorius and the economy … and Oscar Pistorius, even you must be having to fight to keep your food in your stomach.

I understand the private honour in doing something deeply distasteful and humiliating when this is the price of earning a living. So, in an attempt to provide us all with some light relief, I hereby republish and rework some ‘cynical quotations’ I have posted on a few occasions previously. Apologies to those long time readers who have seen these more than once … but this is a public service I feel compelled to render.

These are from the excellent Cassell Dictionary of Cynical Quotations (John Green – Cassel, 1994) with a few comments from the peanut gallery.

As we listen to politicians as we head towards May 7

People never lie so much as after a hunt, during a war or before an election.

Otto von Bismarck

 

There are hardly two Creatures of a more differing Species than the same Man, when he is pretending to a Place, and when he is in possession of it.

George Savile, Marquis of Halifax, Political, Moral and Miscellaneous Thoughts and Reflexions, c.1694

 

An Honest politician will not be tolerated by a democracy unless he is very stupid … because only a very stupid man can honestly share the prejudices of more than half the nation.

Bertrand Russel, Presidential Address to LSE students, 1923

Jacob Zuma

An honest politician is one who when he is bought will stay bought.

Simon Cameron, 1860

 

In general, we elect men of the type that subscribes to only one principle – to get re-elected.

Terry M. Townsend, speech 1940

 

That a peasant may become king does not render the kingdom democratic.

Woodrow Wilson, 1917

 

Anybody that wants the presidency so much that he’ll spend two years organising and campaigning for it is not to be trusted with the office.

David Broder, in the Washington Post, 1973

 

When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.

- P. J. O’Rourke

Should you bother voting at all?

Bad officials are elected by good citizens who do not vote.

George Jean Nathan

 

… yes, but (and forgive the emphasis here on the over-cynical … and slightly fascist):

Democracy is the name we give to the people each time we need them.

Robert, Marquis de Flers and Arman de Cavaillet, L’habit vert, 1912

 

A democracy is a state which recognises the subjection of the minority to the majority, that is, an organisation for the systematic use of violence by one class against another, by one part of the population against another.

V. I. Lenin, The State and Revolution, 1917

 

Parliaments are the great lie of our times.

Konstantine Pobedonostsev, 1896

 

Democracy is a device which ensures that we shall be governed no better than we deserve.

George Bernard Shaw

 

Democracy is a form of religion. It is the worship of jackals by jackasses.

H. L. Mencken, Sententiae, 1916

 

Now majority rule is a precious, sacred thing worth dying for. But like other precious, sacred things …. it’s not only worth dying for; it can make you wish you were dead. Imagine if all life were determined by majority rule. Every meal would be a pizza.

P. J. O’Rourke, Parliament of Whores, 1991

 

The democratic disease which expresses its tyranny by reducing everything to the level of the herd.

Henry Miller, The Wisdom of the Heart, 1941

 

Democracy is the art of running the circus from the monkey cage.

H.L. Mencken, 1916

 

On the ANC and the (infamous) liberal media

Democracy becomes a government of bullies, tempered by editors.

Ralph Waldo Emerson, Journals, 1909 – 14

 

EFF

It is a general error to suppose the loudest complainer for the public to be the most anxious for its welfare.

Edmund Burke – 1769

 

What seems to be generosity is often only disguised ambition – which despises small interests to gain great ones.

Francois, Duc de La Rochefoucauld, Maxims 1665

Revolution, n. In politics, an abrupt change in the form of misgovernment.

Ambrose Bierce, The Devil’s Dictionary, 1911

 

Every revolutionary ends up either by becoming an oppressor or a heretic.

Albert Camus, The Rebel, 1955

 

Fame is but the breath of the people, that is often unwholesome.

Thomas Fuller 1732

The urge to save humanity is almost always a false front for the urge to rule it.

H.L. Mencken 1956

Certain judges

A judge is a lawyer who once knew a politician.

Anonymous

 

The DA

What a liberal really wants is to bring about change that will not in any way endanger his position.

Stokeley Carmichael

An arbitrary comment about families

Sacred family! …. The supposed home of all the virtues, where innocent children are tortured into their first falsehoods, where wills are broken by parental tyranny, and self-respect smothered by crowded, jostling egos.

August Strindberg 1886

On love – and the current state of the ruling alliance:

The voyage of love is all the sweeter for an outside stateroom and a seat at the Captain’s table.

Henry Haskins 1940

On the global debt crisis and the Great Recession?

What is robbing a bank compared with founding a bank?

Bertolt Brecht 1928

 

or:

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.

-Robert Frost

Bloggers (as a sort of author-lite) – in an attempt to be even-handed in my sneering

An author, like any other so-called artist, is a man in whom the normal vanity of all men is so vastly exaggerated that he finds it a sheer impossibility to hold it in. His over-powering impulse is to gyrate before his fellow men, flapping his wings and emitting defiant yells. This being forbidden by the police of all civilized nations, he takes it out by putting his yells on paper. Such is the thing called self-expression.

H.L. Mencken, Prejudices 1919-27

 

It’s the 1st of April and I have already seen that Helen Zille has accepted an ‘elecnomination‘  to spend two weeks living in Khayelitsha, surviving on the minimum wage and using a bucket toilet. Good for her, I say.

In other news the DA has announced that the Western Cape government it is going to upgrade Zille’s private residence in Cape Town. They plan to spend R20 million, but have wisely put aside  R246 million in case of overruns. Nothing wrong with that … as we have seen elsewhere.

In entirely unrelated news the Sunday Independent carried a story about some polling apparently undertaken by the legendary Stan Greenberg on behalf of the DA.

Just as an aside: the headline in the Sunday Indepent calls Greenberg the “De Niro of politics”.

This is a picture of Stan Greenberg:

StanGreenberg

This is a picture of Robert De Niro:

de niro

Oh yes, now I get it. They are both white men, over a certain age …. (oh leave it alone! It’s not important, why don’t you just let it go? And anyway maybe there is a joke here you just don’t get – Ed)

Hmm, okay, sorry …

The DA polling was something of an antidote to an Ipsos poll commissioned by the Sunday Times and published a week earlier.

First the antidote from Stan, the DA and their various minions:

pollsPoilin

 

Then the Sunday Times Ipsos poll published March 22:

IpsosSundayTImes

 

I am not, actually, saying treat this sort of thing with the same caution as you would treat an April Fool’s story. Both the pollsters have defensible and explicable methodologies … but clearly they can’t both be right.

In general I treat the polling with a degree of caution. Results are often leaked or announced with the intention of impacting on the final outcomes (by, for example, scaring voters and supporters into getting out to the voting booths or by bolstering the flagging energies of party workers).

I have used, as a sort of deductive shorthand, a ‘below 60 percent’ versus an ‘above 60 percent’ for the ANC as an indicator of a ‘danger zone’ for Jacob Zuma.

Instinctively I think the ANC will lose votes because of the leader’s breathtakingly cavalier attitude to public money and resources. The alternative would be for me to believe things about the average South African voter that I would feel uncomfortable about admitting in public. The average ANC member voted for Jacob Zuma as president of the party at both Polokwane and Mangaung … so there is nothing I need to say about that.

So … as part of my weekly review of SA politics yesterday morning I tried to collate some of the responses to the Nkandla Report with the specific intention of using these as an heuristic tool  to gain some deeper insight into what is going on.

That’s just a fancy way of saying that when I am unsure of what is going on then I look around at the responses of people I suspect do know what is happening and try and extrapolate from that a greater level of insight i.e. I am using the responses as a heuristic tool … although as you will see in the link ‘heuristic’ means more than just an investigative short cut.  It didn’t achieve what I hoped, but here are my truncated efforts anyway:

Responses to the Public Protector’s Nkandla Report reveal much, but not enough

Responses to Public Protector, Thuli Madonsela, ruling that President Jacob Zuma and his family directly benefited from the improper use of state funds in the (approximately R230m) upgrade to his (Jacob Zuma’s) Nkandla homestead and that he “failed to act in protection of state resources” are flooding in from all directions.

Obviously all the major opposition parties are using the report to attack the ANC and Zuma – and are generally deifying the Public Protector. However, the diverging responses from within the broad membership and leadership of the ruling African National Congress are the most relevant and interesting.

The party itself (and the SACP and the formal structures of the divided Cosatu) are essentially defending the President and/or attacking Madonsela (or the manner in which her report was delivered).

Several news media have attempted to list the number of ANC leaders and widely respected ‘liberation heroes’ who have in some way expressed both support for the integrity of the Public Protector and support for her findings. The list has included previous President Thabo Mbeki, Deputy President Kgalema Motlanthe, Defence Minister Nosiviwe Mapisa-Nqakula (although her problems were primarily with the sexist language of some of the criticism … and up till now I have seen her as something of a Zuma loyalist, so I will have to do some homework on this one), ex-minister Pallo Jordan, ex-minister Ronnie Kasrils and a host of other individuals (e.g. Ben Turok and Marion Sparg) and particular branches of the party and parts of individual unions of trade union federation ally Cosatu which have in some way defended the Public Protector and supported her findings.

So what?

‘Nkandla’ is, on the face of it, small change compared to myriad similar scandals surrounding the President.[1] The difference in this case is a ‘Chapter 9 institution’ (an institution established in terms of Chapter 9 of the South African Constitution to “strengthen constitutional democracy in the Republic”) has made findings that essentially allege that Jacob Zuma has improperly benefited from state spending and that while there is no proof that he engineered this outcome, he had a responsibility, according to the Public Protector, to be aware that it was happening. These might be ugly, but not exactly impeachable offences – unless you believe they are purely the tip of a much larger iceberg hidden through luck, trickery and a good legal strategy.

There are so many issues that this raises, but I will mention only 3:

Firstly, does the ANC lose votes because of this? More precisely: does the release of the report just over a month before the election lose the ANC more votes than it would have lost anyway as a result of its president’s … how should I put this … now very widespread reputation for poor judgement with regard to his private financial affairs?  I would guess ‘yes’.

I have no doubt that there are vast groups of voters who see Madonsela’s report as just another attack on their candidate and who will be completely unmoved by the details. I also suspect that there is a large group that despise the ANC leadership choices but will stick with the party in the belief that it will self-correct sometime soon. However, there are obviously those for whom Madonsela’s report is the proverbial straw – but I suspect this is a marginal group. If the margin is between 60% and 59% then Madonsela’s report could make an important difference. If it is between 63% and 64% then, voting wise on May 7, it is not going to make much difference.

Secondly, the ANC has benefited from occupying the high-ground of moral authority. Whatever its failings it was always the party of national liberation, the party of Nelson Mandela, the party that embodied the majority of black South Africans’ struggle for self-determination and against apartheid – unimpeachable and morally irresistibly aspirations and goals. The voices of disquiet from within the party are beginning to suggest that this objective or record has been redeployed in a baser struggle.

Listen carefully to the coded and heavily portentous words of Thabo Mbeki talking at the 20th anniversary of Wiphold at Sun City on March 22 2014:

 “Regrettably, today, a mere 20 years after our liberation, it is obvious that many in our society have forgotten or are oblivious of the human cost our freedom entailed.  Accordingly, these abuse the gift of our liberation to abuse our precious freedom to do things for themselves whose only objective is personal aggrandisement – thus to use their access to state, corporate and social power radically and systemically to subvert the required sustained and speedy advance we need towards the realisation of the objective of a better life for all our people.”

The Public Protector’s report is reverberating through the ANC (see key ANC intellectual and former cabinet minister Pallo Jordan’s column in the Business Day for another example) and forcing many of the ‘old guard’ to take a public stand. In almost all cases the criticism is unspecific and is being made by people who no longer occupy key positions in the party or state. However, there is a cumulative loss by those who hold central power in the ANC of moral authority. Without moral authority, hegemony must be won with patronage, manipulation, blackmail and force. The ANC is still close enough to its ‘liberation roots’ for such a changing of the guard to cause serious, even dramatic, ructions amongst the party faithful.

Finally, Jacob Zuma has been (significantly) responsible for growing ANC electoral support in Kwazulu-Natal from 33.33% in 1994 to 63.97% in 2009. The province has a population of 10 456 900 people (second to Gauteng which has 12 728 400 according to the 2011 census). Kwazulu-Natal is now a key ANC stronghold and the only province where the party’s electoral support grew during the 2011 municipal elections. More than a quarter of the party’s total membership comes from the province. “On Friday, thousands of ANC supporters wearing yellow T-shirts emblazoned with the words “Hands off Zuma’ marched in Port Shepstone on the south coast … after eThekwini did so earlier this month” – (City Press 30/03/2014). If, as we suspect, Jacob Zuma’s lifestyle and probity issues are losing the ANC a degree of support in many, especially urban, areas of the country but that his personal support is continuing to grow amongst isiZulu speakers in rural Kwazulu-Natal, the party will face the further corroding influences of regionalisation and tribalism. My suspicion is Zuma’s vote pulling power in Kwazulu-Natal peaked in 2011, but only May 7 will put that to rest one way or another.

[1]Jacob Zuma’s financial advisor Shabir Shaik was sentenced to two 15 year terms in prison after he was found ‘guilty of corruption for paying Zuma 1.2 million Rand (US$185,000) to further their relationship and for soliciting a bribe from the French arms company Thomson-CSF, as well as guilty of fraud for writing off more than R1 million (US$154,000) of Zuma’s unpaid debts” – http://en.wikipedia.org/wiki/Schabir_Shaik_trial accessed on 30/03/2014 at 21h17 CAT

 

 

Herewith some of my latest news updates.

(Just as an aside before I start: I couldn’t help but smile at Richard Poplak’s seriously over-the-top take on the Nkandla report in Daily Maverick this morning: “But Madonsela has certainly nailed Zuma to history’s grimiest post—he will be forever remembered as a thief, a fool, and a Zulu man who was incapable of managing the affairs of his kraal … Jacob Zuma will not escape his fate as one of this country’s more reprehensible figures. And Nkandla will be the crown he wears as he slithers into historical ignominy” … anyone who reads this column probably realises that I am not overly enamoured of Jacob Zuma as our president, but Richard seems to think he is a sort of Vlad the Impaler in leopard skins, which I think is a metaphor too far.

… and while I am making asides did I just hear Gwede Mantashe throw Riah Phiyega under a bus for the fire pool/swimming pool confusion in the Presidential mansion? So she is going to take the fall for Nkandla and Marikana? Shem, as they say on Twitter.)

… anyway:

  • South Africa’s Public Protector ruled that President Jacob Zuma improperly used state funds to upgrade his Nkandla homestead and “failed to act in protection of state resources”.
  • The Public Protector said Mr Zuma’s behaviour amounted to misconduct, but that she couldn’t conclude that the president had misled parliament. He will have to repay some of the funds.
  • The report is negative for the ANC and will cost it votes in the May general election.
  •  Trevor Manuel’s exit from parliament has not been quite as smooth and painless as it first appeared. He will end up as a public critic of the ANC, but not, as yet, in an opposition party.
  • A thickening seam of discontent and activism opposed to growing government intervention in the economy is beginning to reveal itself in the South African financial press.
Zuma deemed guilty of misconduct, but not of misleading parliament

After a 28-month investigation, South African Public Protector Thuli Madonsela announced that President Jacob Zuma and his family had improperly benefited from upgrades to his private Nkandla home worth around ZAR 246mn. “Expenditure on Nkandla was excessive,” Ms Madonsela said and involved the “misappropriation of funds”.

Ms Madonsela said President Zuma knew of the scale of the Nkandla project and “failed to act in protection of state resources”, allowing extensive upgrades beyond security. She explicitly said Mr Zuma’s failure to protect the state’s interests during this saga amounted to “misconduct”, that his failure to protect state resources was a “violation” (of what we are not exactly sure yet) and that his conduct had been inconsistent with the constitution. However, she said that he did not wilfully mislead parliament on the matter. That would have been a criminal offence.

Mr Zuma will now have to respond to these findings to parliament within 14 days and repay some of the misappropriated funds. It doesn’t look like anyone will go to prison or be forced to resign and the actual practicalities of the crisis are not desperately serious for the ANC and President Zuma (or rather not in a new way … they were already quite serious in terms of general respect for the integrity of the President.)

So what?

Ms Madonsela recently described the function of the Public Protector as being to “curb excesses in the exercise of state power and control over state resources”. However, there is some confusion as to the status of her rulings and consequent recommendations to the president for remedial action.

Getting President Zuma to take remedial action against himself for the misuse of public money would seem like something of a non-starter. Already, ex-police chief Bheki Cele, former minister Dina Pule and Agriculture Minister Tina Joemat-Pettersson – all of whom had adverse findings against them by Ms Madonsela – have found their way onto the ANC’s election list.

Still, this is very much a negative for the African National Congress (ANC) – even more so than the general public expected, though probably not more than the ANC expected. The party knew the report was going to be damaging and has been stiffening its spine for some time, weighing up the costs of attacking Ms Madonsela – an illegal act – or taking it on the chin.

The party will lose votes as a result of this, but we think it was losing votes anyway because of Mr Zuma’s general probity (please see our most recent rough guide overleaf for an idea of how we think support is shaping up). Mr Zuma’s position in the ANC will be weakened (but remember he is strong in the sense that he controls the majority of powerful ANC structures).

Still, the brand value of the ANC is being damaged and this is likely to trigger a self-correcting mechanism. While the changes are still 40-60 against, we think a rescue mission by the party’s ‘old guard’ is now more likely  and that it might successfully mange to shift Mr Zuma aside by around 2016 (a sufficiently strong group just needs to emerge that can cut him a deal with proper guarantees). Obviously the worse the ANC does at the polls, the more the under performance is ascribed to the character and probity of the president … the more likely it is that such a group emerges and coheres to a degree that it is able to offer any enforceable guarantees.

votelates

Trevor Manuel: Concealed weapons

Last week, warm tributes were paid to former Finance Minister Trevor Manuel as he took his leave of parliament and it appeared that his sometimes fractious relationship with his party and cabinet colleagues would, for once, be smoothed over. However, in a high-profile Sunday Times interview, he proceeded to warn that “attacks on public bodies, such as the Public Protector and the courts, would weaken these institutions — and that democracy would then battle to survive”. ANC Secretary General Gwede Mathanshe responded sharply to Mr Manuel, saying: “We do not attack the public Protector, but criticise her where we feel we should … Trevor refuses to participate in the activities of the ANC NEC, and if you refuse such, you want to be a free agent.”

So what?

Trevor Manuel has been something of a ‘market darling’ and (according to himself and in his own words) the rand “fell out of bed” when the news broke that he had resigned after Thabo Mbeki had been recalled on 22 September 2008 (The Zuma Years, Richard Calland, August 2013, Zebra Press … read it, it really is quite good!!). There is no love lost between the country’s longest-serving finance minister and architect of the National Development Plan (NDP) and the incumbent leadership of his party.

In a coded farewell speech in parliament, he quoted a seemingly benign passage from a work by historian Tony Judt: “For thirty years, we have made a virtue out of the pursuit of material self-interest: indeed this very pursuit now constitutes whatever remains of our sense of collective purpose.” There were knowing nods all around, but Mr Manuel usefully forgot to mention the title of the book he was quoting, Ill Fares the Land. We expect Mr Manuel to emerge as a critic of the ANC in its present form, although he is unlikely to join any of the existing opposition parties.

Mr Manuel was also interviewed by the Business Times, in which he criticised the short-sighted way in which some trade unions were approaching negotiations, saying it has sparked a “race to the bottom”. He accused National Union of Metalworkers of South Africa (NUMSA) General Secretary Irvin Jim, who has constantly attacked the NDP, of “speaking a lot of rubbish”.

Mining companies told to “get off their knees” and stop sucking up to government

Tension in the mining sector under the twin pressures of serious labour instability and increasing government regulatory pressure is causing unusual fractures and pressures, according to Business Day and the Sunday Times, provoking something of a growing campaign of activism in some sectors of the ‘private-sector intelligentsia’, for want of a better term. Here are some of the highlights and lowlights of the tension (it gets complicated, but stick with it):

  • Eight weeks ago, a respected Chamber of Mines negotiator in the platinum strike (now in its eighth week), Elize Strydom, said Commission for Conciliation, Mediation and Arbitration (CCMA) mediators in negotiations between employers and the Association of Mineworkers and Construction Union (AMCU) had ”showed an absolute lack of economic acumen” by suggesting companies meet the AMCU’s wage demands “half way”. The mediators had suggested they accept a rise of 25-30% for entry-level miners with basic pay of ZAR 5,700 (the AMCU had demanded ZAR 12,500 a month, a rise of 120%, the companies had offered 8.5%).
  • Ms Strydom (and the Chamber) were immediately attacked by the CCMA and accused of ‘‘white-anting” the mediation process. The CCMA insisted the Chamber either apologise or endorse Ms Strydom’s comments. If the Chamber did endorse Ms Strydom, in the words of the CCMA, it would indicate that the Chamber clearly had “no faith in the institution that is made available by the state and which is accepted by all social partners in other economic sectors”.
  • Business Day editor Peter Bruce says in his Thick End of the Wedge column this week: “But the mines did nothing. Until, that is, they flung themselves into the arms of the state and savaged Strydom for what she had said … A depressing scene.” Mr Bruce’s comments, bitterly critical of the Chamber and the mining firms, underpin Rob Rose’s column in the Sunday Times, in which he says: “So, when some maverick breaks the conspiracy of silence, it’s no surprise that there’s a hullabaloo of outrage. Spin doctors reel blindly … the gutless Chamber of Mines, and the even more enfeebled legion of platinum CEOs [fail to take a stand]. Now, this is why this issue is so important: the platinum industry is on a precipice. Workers have been on strike since January 23 and the mines have lost billions in revenue and even more in terms of international investment goodwill.”
  • Also in the Sunday Times, a report on the Mineral and Petroleum Resources Development Act (MPRDA) amendment bill says “the ANC rushed through controversial changes … that opposition parties feel will create further uncertainty in the mining sector.” The article notes that the new regulations will give government the right to a free stake of up to 20% in any new oil and gas projects, with a right to acquire the rest at an “agreed price”. The story quotes the Democratic Alliance’s James Lorimer as saying that only “cronies, comrades and cousins” would benefit from the bill, which he said would “severely damage” the industry. Mineral Resources Minister Susan Shabangu said critics were resisting change and transformation, “representing white minority interests” and “wanting to sell the country’s natural resources to the highest foreign bidder”.

So what?

The Chamber of Mines said that “while further work is required on developing the regulations that will help give effect to the MPRDA Amendment Act, the chamber is firmly of the view that through this problem solving process, greater regulatory certainty is emerging for the mining sector.” Obviously, for the Chamber and the companies engaged in negotiating the details of legislation and regulation with government, or engaged in the constitutionally created structures of the labour market, there is no upside in attacking the government or the institutional framework. Equally obviously, key sections of the financial press disagree and are essentially sounding a call to arms and arguing that the growing institutional, regulatory and legislative hostility to the private sector is becoming a crisis.

I am on my way to London to speak to the funds that buy and sell South Africa’s corporate and government bonds i.e. the market that sets the price at which the world is prepared to lend us money.

Daily I become more convinced that the South African political economy is, like quick clay so unstable that when a mass …  is subjected to sufficient stress, the material behavior may transition from that of a particulate material to that of a fluid.” 

The other metaphor I was fiddling with was: all the cards have been thrown in the air and where they will land, nobody knows. (I’m sure there is an elegant song or poem that says something like that, any help there would be appreciated  … that request  is the WordPress equivalent of a  #twoogle - Ed) 

But before I get onto the more lofty questions about the future of life, the universe and everything, I thought I would send you my latest news update – so you can see the gradually building case for my sense that everything has changed. (Thanks as always to BNP Paribas Cadiz Securities for generously allowing me to republish this – albeit a few days later – here.)

  • A new socialist party appears on the horizon of South African politics … it’s not all good news, but nor is it all bad
  • Murmurs about vote rigging – a leading indicator of political instability 
  • Mining policy meets with surprising levels of push-back from the private sector – in the Business Day at least
  • The future push for the NDP, Hitachi and the ANC, final takes on the budget and why South African telecommunications infrastructure is a very fat golden goose

Numsa confirms it will launch socialist party

The biggest union in the country is effectively in the process of being expelled from the ANC- aligned Cosatu and has announced its intention to establish a party, provisionally to be called the United Front and Movement for Socialism.

“We need a movement for socialism,” general-secretary Irvin Jim told reporters in Johannesburg on Saturday.

He (Jim) continued on to argue that ‘leadership of the national liberation movement as a whole had failed to lead a consistent radical democratic process …’ (Jim paraphrased in numbing detail in SABC Online, Sunday, 2 March 2014, 17h49.)

Numsa has been given seven days (from last Thursday) by the Cosatu NEC to provide reasons why it should not be suspended from the federation. The main issues motivating the suspension are that Numsa has been openly critical of the ANC and the Cosatu leadership and that Numsa has begun competing with, especially, the National Union of Mineworkers, in defiance of Cosatu’ s one-industry-one-union slogan.

So what?

This is unfolding much as predicted. The ANC under Jacob Zuma has decided (or been compelled) to impose discipline on the ruling alliance and force a degree of compliance with the various policies of the ANC and its government. The discipline sought by the ruling group within the ANC is motivated by apparently divergent concerns. On the one hand, Jacob Zuma and his allies are attempting to get the left-wing to stop attacking them (Jacob Zuma and his allies) as corrupt and incompetent. On the other, Jacob Zuma and his allies are attempting to force a degree of support for the National Development Plan (NDP), a policy that the left-wing generally sees as ‘neo-liberal’, anti-poor, anti-working class and conservative in fiscal and monetary terms.

There is a fine tension here between positives and negatives (for the audience NB writes for … mainly fund-managers – Ed). The NDP has been widely welcomed in financial markets. But the corruption associated with the holding of high office in South Africa is becoming something of a crisis for investors of all stripes. It is as inaccurate to think of Jacob Zuma’s Nkandla faction as purely the champion of market friendly policy as it is to think that Irvin Jim, Zwelinzima Vavi and Numsa are purely the anti-corruption champions of South African politics.

For now, we need to watch for the formation of the socialist party, probably at or before the year-end. Such a party will have a multiplicity of impacts including (but not limited to) undercutting areas of ANC support and forcing the ANC towards finding policies that stimulate economic growth.

(By-the-way I feel it is likely that this new party will have more substance and longevity than the EFF and through a variety of possible mechanisms – including some kind of alliance or even amalgamation – could subsume much of the EFF support and intellectual leadership. But that sort of speculative concoction will follow this post some time over the next few days.)

UDM says beware of vote rigging

The Sunday Independent (2 March) reports that Bantu Holomisa of the United Democratic Movement claimed that ‘rogue elements’ in the Independent Electoral Commission will help rig the 7 May election to ‘facilitate the underperforming ANC’:

“The ANC is very concerned (about shedding votes), hence they are pinning their hopes that those rogue elements will run the elections, so rigging will be on the high. There is no doubt about that” – Bantu Holomisa in the Sunday Independent, 2 March 2014.

So what?

The effectiveness, reliability and constitutionality of the Independent Electoral Commission have been important guarantors of aspects of South African democracy. While Holomisa’s allegations are not substantiated (in the aforementioned interview), the fact that such allegations are made can be an important leading indicator of long-term political stability. People and political parties must trust the electoral system if they are to accept the outcome of elections.

(Holomisa’s ‘rogue elements’ probably refers to Pansy Tlakula, chairperson of the IEC, who was found last year by Public Protector Thuli Madonsela to be guilty of improper conduct and maladministration with regard to the R320 million lease contract for a new head office for the IEC. Tlakula is currently challenging Madonsela’s finding in courts. The IEC and the Public Protector are both institutions established in terms of Chapter 9 of the South African Constitution with specifies that they are designed to “strengthen constitutional democracy in the Republic” – Chapter 9 of the Constitution of the Republic of South Africa, 1996.)

Mining policy pushback – in the Business Day anyway

Today’s Business Day leads with a story claiming that there are ‘growing rumblings’ from the mining industry about the ‘once empowered, always empowered’ equity provisions in the Mining Charter. The issue in this case is that the government will this year audit the mining companies’ requirement to be at least 26% black owned. Neal Froneman, CEO of Sibanye Gold, is threatening to go to court to have Sibanye’s empowerment transactions counted in the audit, even if the black beneficiaries have since sold out of their equity.

Mining companies are issued licences pursuant to them meeting certain criteria with regard to Black Economic Empowerment, employment, social, community and labour obligations.

So what?

The series of stories in the Business Day about this matter smacks a little of a campaign by the newspaper – nothing wrong with that but then consume them tentatively. The story is worth reading just to catch the tone and tenor of Neal Froneman – who sounds fed-up to the point of rebellion. Catch it here.

The article quotes Mike Schroder, a portfolio manager of Old Mutual’s gold fund, at a mining conference last year: “One cost that I can’t chart is BEE (black economic empowerment). It doesn’t affect the bottom line or the EPS (earnings per share) or PE (price:earnings) ratios, but every time a BEE deal is done, our pension funds, our provident funds, our unit trusts have to chip in.”

I expect these legislative interventions by the government to strengthen not weaken over time. It is my initial impression that part of the ANC’s answer to the populist incursions onto its territory by the EFF will be to significantly strengthen ‘transformation obligations’ on the private sector – and in return the government will back the private sector against the labour unions. I think these trends will become visible before the end of the year and will be accompanied by greater emphasis on the NDP and by the axing of the ANC’s left-wing elements. Thus, the ANC will attempt to reconfigure South African politics, basing itself more tightly on the emerging property-owning and middle classes than previously, and in a loose alliance with the private sector.  This feeds into my ‘hoping for the best’ view of last week – although we should be cautious, because these complicated trade-offs will as likely end in tears as smiles.

Bits and Pieces

  • Last week, Helen Zille, leader of the opposition Democratic Alliance, became involved in an unseemly Twitter spat with City Press journalist Carien du Plessis. Actually, it was only Zille doing the spatting and (probably to Zille’s mortification) du Plessis wrote a calm and thoughtful defence of herself in the City Press on Sunday (2 March 2014). In the Twitter exchange, Zille essentially accuses du Plessis of apologising for being white (as far as I can make out). Zille is feisty and combative and there have been several ‘scandals’ around her phraseology and views. She definitely skirts the boundary of what is acceptable in the highly circumscribed and sensitive language of political debate in ‘post-apartheid South Africa’. Will this lose the DA any votes on 7 May? Will it gain the party any? I have no idea.
  • Business Day editor Peter Bruce’s Monday morning column, ‘The Cutting Edge The Thick Edge of the Wedge: The Political Basis for budgets (if he perchance comes to these lonely shores and find’s that error, I ask his forgiveness in advance) should be required reading for anyone interested in the speculative intersections between South African politics and economics. This morning, he claims that a normally reliable informant, someone “spectacularly close to the Presidency”, told him that Trevor Manuel will stay on in government as a super-minister in the Presidency in Zuma’s next administration, that other ‘left leaning ministers in the economics cluster’ (he probably means Ebrahim Patel in EDD and Rob Davies in DTI) will be shifted aside, that the ANC will hold its vote above 60% on 7 May, that the new administration will make “a big and forceful push after the elections to begin implementing the National Development Plan”, that the EFF and Numsa’s new party will not fly, and that Zuma will secure his safety from prosecution for fraud post his presidency by ensuring that his ex-wife and African Union President Nkosazana Dlamini-Zuma is his successor. (The argument in Peter Bruce’s article being: “She would not put the father of her children in jeopardy – which I don’t necessarily buy, but is interesting anyway). This view concurs quite closely with my view articulated last week that it appears, shorn of its ‘left’ and ‘right’ factions, the ANC will be obliged (and set free) to pursue vigorous economic growth if it is to win the 2019 election.
  • Hitachi has bought back the ANC stake (held by investment company Chancellor House) in Hitachi Power Africa as the shareholding constituted ‘a conflict of interest’. You don’t say. Hitachi Power Africa won R38.5 billion of contracts from Eskom for the Medupi and Kusile power plants. Nuff said.
  • The weekend press had a few ‘final takes’ on the budget. The two I found most interesting were Peter Bruce, in his aforementioned column, writing that it was “a budget of almost unsurpassable banality”, and Numsa’s Irwin Jim saying at his Johannesburg press conference on Saturday that the budget “more than anything else confirms the right-wing shift in the ANC/SACP government”. I won’t say anything.
  • Telkom CEO Sipho Maseko wrote a paid-for ‘open letter’ in the Sunday Times yesterday accusing MTN SA and Vodacom of acting against the public interest (of expanding access to and lowering costs of a ‘modern communications infrastructure’) by opposing lower termination rates. Maseko claims that Telkom had subsidised Vodacom and MTM to the tune of R50bn over two decades. Professor Alison Gillwald of Research ICT Africa was quoted in today’s Business Day (by the excellent Carol Paton) as saying “Telkom is right. MTN and Vodacom had an extraordinary termination rate asymmetry with Telkom over 20 years.” She went on to say that, during the period of asymmetry, the private companies rolled out “enormous infrastructure that has improved access.” Finally, she says: “While one wouldn’t want to kill the golden goose, she was a very fat goose”  … which I thought was a good enough turn of phrase to deserve republication anywhere.

* That is deliberately missing an apostrophe – the ‘*’ makes you think it might be there and you are forced back and forward between the noun and verb meaning. (Get a life! – Ed.)

“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.

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

A significant portion of my income is currently derived from BNP Paribas Cadiz Securities (Pty) Ltd.

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