You are currently browsing the category archive for the ‘Media’ category.

Here are some bits and pieces I highlighted for investors over the last few weeks. Thanks as always to BNP Paribas Cadiz Securities for allowing me to republish these snippets here … it is also a touch more information that most people require, but I post it here for the record, if nothing else.

I write these under considerable time pressure  - deadline 06h30 0n Monday mornings. They can sometimes be a bit scrappy, but mostly (although with exceptions) still relevant a few weeks later. Where I say ‘yesterday’ or ‘today’ (or whatever) I mean: relative to the date in the highlighted headline above each section. The newest is on the top – stretching all the way back to the ancient history of Nkosazana Dlamini-Zuma at the US-Africa summit in Washington.

 

01/09/2014

Lesotho, South Africa … and the Guptas

Lesotho Prime Minister, Thomas Thabane, was assisted by South African special forces soldiers to flee to South Africa in the face of a military backed ‘coup’ on early Saturday morning. The ‘coup’ (or ‘coup attempt’ – both terms are used extensively in the coverage) was allegedly orchestrated by Deputy Prime Minister Mothetjoa Metsing.

The key features of the event were the co-ordinated encircling of police barracks by the military, the disarming of the police and the seizing of the national broadcaster in the country’s capital Maseru on Saturday. (Sunday Times, Voice of America, City Press, Sunday Independent – 31/08/2014).

The Sunday Times story suggests the ‘coup’ was sparked by Friday’s firing of army chief Lieutenant-General Kennedy Kamoli by Lesotho’s King Letsie. The City Press reports that South African troops are on standby for further interventions.

Lesotho army spokesman Major Ntele Ntoi has denied there was a coup and says the army’s actions were purely to disarm police “who had been preparing to provide weapons to political parties” – Sunday Times.

Thabane, in a phone interview with Voice of America, said he was not going back until his safety was secured, that there was a situation of “total indiscipline” in the army and that soldiers were “running around the streets, threatening people” and “quite openly stating that they want my neck” – see here for VOA coverage.

So what?

This is almost too bizarre to type out, but here goes: a significant portion of the coverage of the event refers to the recent controversy surrounding the issuing by Thabane of diplomatic passports to the Gupta brothers (who we know better as key Zuma and ANC backers and funders, see Mail and Guardian coverage “The Grim Tales of the Brothers Gupta” for background).

At the time of the appointment Thobane said “(t)hese people (the Guptas) are good friends of the ANC and we have good relations with the ANC … I was introduced to them by ANC president [Jacob Zuma] and other ANC officials… I then appointed them to help scout for investment in my country. They have influence in a number of countries that can help Lesotho” – see here for that story.

In highly interpenetrated and interdependent systems of patronage and corruption, unsuccessful attempts to defend one part of the system can unravel the whole system and cause destabilisation throughout the linked networks.

 

Jacob Zuma’s Russian rest

Jacob Zuma visited Russia this week for six days. He had a light schedule and was, unusually, only accompanied by State Security Minister David Mahlabo and Deputy Minister of International Relations and Cooperation Nomaindia Mfeketo. There has been widespread but largely fruitless speculation about what the President was doing in Russia. (See City Press’s “Jacob Zuma’s mysterious mission to Russia” and former leader of the opposition DA Tony Leon in the Sunday Times in an opinion piece titled “How much more abuse can the constitution take from Zuma?” … unfortunately can’t find a link to that.)

So what?

The crisis faced by Russian President Putin is, by all accounts serious and urgent – and it might seem unlikely that he would have made time for a casual tête-à-tête with Jacob Zuma. Thus we can assume that Putin was in part motivated by wanting to demonstrate he still has friends in an increasingly chilly world. Also there is the sourcinig of agricultural products to fill the gaps left by European and US sanctions against Russia over Ukraine – a job South Africa could be well placed to do.

However Jacob Zuma appeared less to be representing South Africa and more on a personal visit – with several reports, including from government, that he would use the opportunity to rest.

It is difficult to escape the perception of two embattled leaders involved in a perhaps complicated exchange and attempting to secure their present and future:

  • there is the upcoming ZAR850bn nuclear build programme that probably depends on Jacob Zuma staying at the helm in South Africa – Russia reportedly hopes to be central to that programme.
  • Jacob Zuma’s key spy chiefs all reportedly resigned when he (Zuma) refused to allow them to investigate the Gupta brothers as a serious threat to national security (see back story on that here).
  • Jacob Zuma faces unprecedented blowback at home, including the possibility of a public discussion around the original fraud, corruption and racketeering charges against him (see here) now that the famous Spy Tapes are to be handed to the Democratic Alliance in the official opposition’s attempts to have the National Prosecuting Authority’s decision not to charge Zuma reviewed.
  • Also in yesterday’s Sunday Times was an important ‘leaked’ story that South Africa had sent a large group of intelligence officers to be trained in Russia and that “the Russians have recruited at least four of our people, which means we are sitting with double agents” – according to an unnamed source “with inside knowledge of the programme” – Sunday Times 31/08/2014.
Twinkle Toes (Pic from GCIS)

Jacob’s Ladder (geddit?) and check out the body languege (Pic from GCIS)

It is not inconceivable or unreasonable to consider the possibility that Jacob Zuma is asking for intelligence and security coverage and offering in return nuclear contracts and public expressions of support. It’s not a perfect theory, but some kind of explanation is required.

 

Ruling alliance divides itself neatly on defending or attacking the public protector – is Jacob Zuma becoming a cost the ANC cannot bear much longer?

Zwelinzima Vavi, Cosatu general secretary, broke ranks with the ANC on Saturday arguing that the Public Protector’s recommendations on resolving the Nkandla dispute (in which over ZAR200 million of public money was spent irregularly on Jacob Zuma’s private house) should be implemented immediately … “all of them, without exception.” Vavi went on to say that criticism of Madonsela were “absolutely disgusting, to say the least”– Vavi in the Sunday Times 31/08/2014.

So what?

While the main structures of the ANC and its government attempt to close ranks around Jacob Zuma as the multiple scandals unfold and the threats against him grow, the hegemony is crumbling and the edges.

The ANC still has a comfortable electoral majority although as I have pointed out on many occasions, at least part of the electoral declines the ruling party experienced in May, especially in the sophisticated metropolitan areas of the economic heartland of Gauteng, have to do with perception of corruption and mismanagement at the top. It is difficult not to concur with the implicit meaning of the headline of Barney Mthombothi’s column in the Sunday Times yesterday which reads: “ANC courts its own destruction”.

We must consider that the cost of defending Zuma’s multiple infractions is starting to tell on the ANC (as it is telling on the party’s alliance with Cosatu).

I would reason that the ANC’s brand value is being seriously impacted by Jacob Zuma’s presidency and that, almost as a natural law, such a threat to value will call into being an attempt to defend the value by those who have the most to lose (other leaders and members of the ANC)

It’s the future, so I am guessing, but I think it is an even chance that Jacob Zuma will be moved into retirement within the next two years and that the official reasons will be related to his health.

(This added as I post these comments here: the above several paragraphs might be wishful thinking. If you want to see a well reasoned opinion that takes the opposite view, see the interesting  Daily Maverick column by Ranjeni Munusami arguing that Zuma will see out his second term. I suspect that I just can’t live in a world where the thugs get away with it for ever (this paragraph was edited after posting – Ed)

 

Ebola spreads to Senegal – World Health Organisation warns of ‘rapid hike’ in infections

The Ebola (haemorrhagic fever) epidemic ‘sweeping’ West Africa has killed approximately 1500 people and the first cases have been confirmed in Senegal, having up until now being confined in Sierra Leone, Liberia, Guinea and Nigeria.

So what?

Ebola was first identified in the north of the Democratic Republic of the Congo in 1976 and outbreaks have been common in Central and Western Africa since that time. The disease is isolated and confined to countries with weak public health systems and high levels of poverty. In all the news coverage, the headlines tend to be more alarming than the content of the stories. There are various experimental drugs in trial (including one made jointly by GlaxoSmithKline and the US government which has achieved high levels of success) – Sunday Independent – 31/08/2014.

 

25/08/2014

Pay Back the Money … or we’ll huff and we’ll puff

Julius Malema and his cohorts in the National Assembly didn’t quite blow the House down on Thursday last week during President’s Question Time.

JULIUS

They disrupted parliament by demanding that Jacob Zuma pay back a portion of the costs of upgrades to his Nkandla home, as specified by the Public Protector Thuli Madonsela. Their chanted refusal to accept the stock brushoff from Zuma and the poor management of the showdown by Baleka Mbete, Parliamentary Speaker (and ANC National Chairperson), is the leading edge of yet another storm that concerns Jacob Zuma’s integrity – and the ability of the constitutional mechanisms to hold him to account. (Here for a useful and interesting take on festivities.)

 

But political theatre becomes something more serious as the Public Protector and the ANC and its allies go head-to-head on the issue

Several Sunday papers reported yesterday ( 24/08/2014) that the Public Protector Thuli Madonsela has sent a letter to Jacob Zuma criticising several aspects of his response to her Secure in Comfort report and specifically arguing that he (Zuma)  did not have the constitutional right to set aside or review her findings or to allow Police Minister Thathi Nhleko to do so (in essence Zuma has asked Nhleko to determine what his – Zuma’s – financial obligations are with regard to the Nkandla security upgrades).

According to constitutional law expert Pierre de Vos Madonsela is well within her rights. “This is not legally controversial,” he says, quoted in today’s Business Day (25/08/2014). “The president is either receiving appallingly bad legal advice or he is wilfully abusing his power and thwarting the law to protect himself in order to unlawfully benefit financially from the state.”

Both the ANC and the SACP came out late yesterday afternoon strongly critical of Madonsela, arguing that she had overreached herself, especially as a parliamentary committee was currently dealing with the matter.

So what?

The clash in parliament on Thursday made a significant media impact and it seemed for a moment that the damage being done the ANC by the party endlessly having to defend its wayward leader could conceivably lead to some profound political realignment.

But that feeling was brief.

The EFF has 25 MPs in the National Assembly, to the ANC’s 249 and the DA’s 89.  The chances are, the ANC in parliament will work out a set of rules that essentially disciplines the EFF (already MPs may be suspended for not more than 30 days and have their salary docked for the same period).

Jacob Zuma is a master at diverting crises like this into long (perhaps endless) processes that have a degree (or at least a semblance) of legitimacy and constitutionality. And there is a parliamentary process dealing with Nkandla underway and whether this process is an attempt to ‘set aside or review’ the Public Protector’s findings could be the subject of years’ of constitutional debate, such that many of the players will be long gone by the time it is resolved.

There is considerable stability in a system so tightly bound within itself through links of patronage and shared loyalties – although I suspect that when such a system eventually unwinds, it unwinds quickly and perhaps catastrophically.

Jacob Zuma is off for a week in Russia – to work and to rest – and the game will go on. “The visit will further strengthen the excellent bilateral relations with a view to consolidating and opening new avenues towards job creation, skills development, exchange and transfer of technology and trade and investment,” said the Department of International Relations yesterday.

There may be some future moment when the ANC could face electoral losses because of public perceptions about corruption of its leaders, but that day is still far enough ahead to not impact (in any meaningful way) upon behaviour in the present.

(So … that isn’t a direct contradiction on what Nic thought on September 1, but it is more than a little close. I strongly suspect it might be a biorhythm, or hormonal thing – Ed)

 

Julius Malema … how did he ‘Pay Back the Money’?

Julius Malema appears in court today to face questions about where he got the money to pay his R18 million tax bill. According to Rapport newspaper (24/08/2014) the South African Revenue Service (Sars), would ask for a two-month extension of Malema’s provisional sequestration to determine where he got the money to repay his tax debt each month. The newspaper reports that “impeccable sources” allege that “cigarette smuggler Andriano Mazzotti was helping to pay his tax debt” – as re-reported at the Independent Online 25/08/2014 – see here. (I don’t know the Afrikaans language Rapport newspaper well – it is part of Naspers’s Media24 stable – treat the claim with maximum caution). (Not because of Naspers of Media24 – for so are they all, all honourable men … the caution is purely because the claim is faintly outrageous, which doesn’t mean it’s not true – Ed)

So what?

While Julius Malema’s insistence that Jacob Zuma account to parliament is welcome, we should be careful to not lose our sense of discernment. Julius Malema himself has faced a long list of accusations similar to those he is making against the ANC and Jacob Zuma.

 

Land and wage reform – unintended consequences

Two interesting articles in the Sunday papers hint at some of the negative unintended consequences of attempts to protect the interests of the marginalised and vulnerable workers on South African farms.

Firstly, the Sunday Times (24/08/2014) has a colour piece titled “Good intentions pave the road to rural hell” in which the 1997 Extension of Security of Tenure Act is assessed as having “led to as many as a million farmworkers being evicted countrywide”.

Secondly, the Sunday Independent (24/08/2014) records an interesting discussion about the impact of ‘minimum wage’ determinations on employment. The article shares different views on the matter, but concludes that in SA agriculture “the impact was devastating: Employment fell from 819 048 jobs in 2002, just before the law came into effect, to 623 750 jobs in 2003 and continued to decline to 555 549 jobs in 2007 – a net loss of almost a third in five years.”

So what?

The ANC has signalled an urgent desire to ‘get serious’ about land reform.  As we have mentioned previously ‘the land question’ seems to suggest to the ANC an answer to a host of social needs: employment, housing, food security, and black economic empowerment, to name only the most obvious. Racially unequal land ownership patterns (it is generally quoted that SA had 87% of land in white hands at the 1994 transition and that less than 8% has been redistributed since – see here) are also a driver of political dissatisfaction, perhaps helping feed the growth of the EFF and other ‘radical’ forces emerging in the society.

For now government is preparing a host of new legislation and regulation all the while signalling to commercial agriculture that it wants to be met half-way. There will probably be unintended consequences of government’s land reform and rural development programme (including negative impacts) but the lessons from the banking sector (for example with regard to the formulation of the National Credit Act) is that it is always a better idea for the private sector to go out and engage with government and attempt to shape legislation than it is to wait and deal with the future when it is a fait accompli.

 

21/08/2014

Mining, oil and gas sectors: legislative and regulatory drift and a scary audit

Mineral Resources Minister Ngoako Ramatlhodi didn’t calm nerves last week during his address to the third annual Mining Lekgotla. The minister is overseeing two significant regulatory processes causing anxiety in these sectors, namely a major audit of mining companies’ compliance with the 10 year targets of the Mining Charter and the signing into law of a bill amending the Mineral and Petroleum Development Act of 2002 (which the private sector thought it had essentially cautiously agreed to in exchange for it – the private sector – being consulted in detail about the regulations that would arise from the legislation).

With regard to the audit, Minister Ramathlodi said: “(w)hile the review process on the implementation of the Mining Charter is still under way, initial results suggest that whatever compliance we may have achieved, much more work still needs to be done” – Business Day -14/08/2014

With regard to the legislation the Minister said he had not been informed by the Presidency whether or when the bill would be signed into law. “There are legal teams that look at any legislation coming before the president and they advise him. When they do so we’ll act on that advice” – Business Day ibid.  Download Minister Ramatlhodi’s full address at the DMR website here.

So what?

Firstly, the audit obliges the mining companies to meet various ‘transformation’ obligations and targets by 2014 e.g., 26% of the company must be owned, through “full shareholder rights”,  by HDSA (Historically Disadvantaged South Africans) by the end of this year – as a precondition for the retention of the mining right. Go to www.dmr.gov.za to see the “Mining Charter” and the “Scorecard for the Broad-Based Socio-economic Empowerment Charter for the South African Mining Industry” to get a full view.

2014 is the year in which several definite obligations must be met by the mining companies and there is a degree of nervousness by investors and management as to how strict the audit will be, how much leeway the ministry will give and how severe the consequences of failure will be.

Purely the administrative aspects of the reporting process are enough to be a serious burden for smaller mining companies, according to Nic Dinham, Head of Resources at BNP Paribas Cadiz Securities

The apparent prevarication in signing the Mineral and Petroleum Resources Development Act Amendment Bill, after months of careful negotiations between the department and the mining companies, has caused the industry to worry that deals struck and compromises made might be up for renegotiation. There was a general expectation that the constitutionality of the amendments would need to be tested and examined (especially government’s 20% proposed free-carry interest in all new exploration and production rights in the oil and gas sector).  It appears to me that the delays are adding to a more generalised sense of uncertainty about the growing regulatory burden and costs associated with continuing to mine in South Africa.

 

Amcu set to go on the offensive at Num’s last toeholds in the Platinum sector – non-cyclical risk factors in the SA labour environment escalate

Nic Dinham (BNP Paribas Cadiz Securities Head of Resources referred to in a previous section) said yesterday that in the platinum operations where Amcu is not (yet) the major union (at several mines, but including those operations at Aquarius Platinum and Northam Platinum) there were significant indications that Amcu was close to recognition thresholds (specific to each company) and that it was reasonable to expect increased labour unrest at the particular operations and companies where Num was clinging to a majority.

“During the recent result presentations, several companies reported that operations previously dominated by Num are showing signs of losing ground to Amcu, especially in the Rustenburg areas”, said Dinham.

“This is the case at Aquarius Platinum as well as at Northam where Amcu membership has risen to 30% and 15% respectively, just short of both companies’ recognition levels. Clearly, this could be the harbinger of more labour storms to come. At the same time, only small numbers of workers in the existing Amcu fortresses switched to NUM after the end of the strike. So, despite all the rational arguments about the financial impact of the strike on labour, Amcu appear to have won the propaganda war with the mining industry” – Nic Dinham, 20/08/2014.

So what?

There are a number of important implications, not least of which is the confirmation (and deepening) of the implicit defection of mineworkers in the Platinum sector from a key ANC aligned union (Num) and the continued disintegration of previously powerful trade union federation and ANC ally, Cosatu.

In some ways this frees the ANC (and government) to decide on economic policy without having to kowtow to Cosatu, but it will also raise anxieties in the ruling party about the narrowing of its base – and a diminishment of its hegemony and moral authority.

None of that is necessarily a bad thing. It is my opinion that our legislative and regulatory environment has tended to suffer from a lack of clarity and focus as a result of the ANC attempting to keep a number of different legacy constituencies (and sectional interests) happy and on-board.

However, it is also worth noting that my general expectation of a deteriorating labour environment is strengthened by concerns about labour unrest driven by further contestation between Amcu and Num. This, together with a coming trial of strength in all (or most) Cosatu unions that will accompany the impending Numsa split out of Cosatu will be a strong, non-cyclical, driver of labour unrest for the next 18 months. Jeff Schultz (BNP Paribas Cadiz Economist) and I recently suggested that these strands driving labour unrest, along with what we expect will be a major confrontation that will accompany the lead-up to the expiry of the current 3-year public sector wage agreement in March 2015, will keep labour risks at elevated levels in the South African investment environment for at least another 18 months.

 

Cyril Ramaphosa – a hard week down at the Commission

Deputy President Cyril Ramaphosa last week faced an avalanche of criticism and heckling at the Farlam Commission (which is investigating the killing of 44 people at Marikana on and before August 16 2012 in the context of the protracted strike at Lonmin mines in the Rustenburg area at that time).

Cyril Ramaphosa was called to the commission to explain his actions in the lead-up to the Marikana killings. Ramaphosa was on the Lonmin board at the time and in an email to Lonmin managers he said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”. In both these cases I have added the emphasis.

At the Farlam Commission hecklers shouted “Blood on your hands” (City Press 11/08/2014) during Ramaphosa’s cross-examination. Hecklers wore T-shirts with several different slogans criticising Ramaphosa’s wealth, for example one showed a buffalo in reference to the fact that Ramaphosa bid – unsuccessfully as it turned out – R19.5 million for a buffalo cow and her calf at a wildlife auction a month after the Marikana killings in 2012.

So what?

There is a high level of speculation as to whether Cyril Ramaphosa will succeed Jacob Zuma as president (when the current presidential term expires in 2019 or at some earlier date due to Jacob Zuma’s purported ill health.) There appears to me to be a widespread assumption in the financial markets that Cyril Ramaphosa, as an experienced businessman and an experienced negotiator and conciliator who was central to easing the transition at Codesa 1 and 2 in the early 90s, would be more sensitive to the needs of the private sector, more compliant with global capital markets and, generally, run a cleaner and more efficient ship.

Implicit in that list of attributes is the person who Ramaphosa would be cleaner than, more conciliatory than, more understanding of private sector needs than, is Jacob Zuma. It is impossible to know either that Ramaphosa really has such attributes relative to Zuma or that it is really or primarily those attributes that make Ramaphosa a more attractive choice than Zuma for the financial markets … or, in fact, whether the ‘financial markets’ really makes these kinds of distinctions.

It is my impression that Jacob Zuma’s rise to power and performance as president has been accompanied (and in several cases directly caused) increased political risks associated with investing in the country. Almost any successor would probably be welcomed by the markets. However we would be cautious about seeing Ramaphosa as the knight in shining armour. He is badly damaged by his link to the Marikana killings (unfair as that may be) and he has not yet established a significant constituency within the ANC. The fact that he is a rich man can play both ways; it gives him resources to build his case but it makes him vulnerable to accusations of conspicuous consumption and being out of touch with common people. It is also inescapably true that his wealth has been accumulated more as a result of ‘empowerment deals’, the accumulation of large slices of equity, rather than the involvement in any of the underlying activities (mining, banking, health care etc).

More than anything we must keep front of mind that much ANC policy and politics is determined in the forums of the party – long in advance of such policies and politics becoming law and regulation. The particular character of leaders makes a difference, but in the South African case, not as big a difference as it might elsewhere.

 

The noise around land reform is (partly) bluster designed to get commercial agriculture to act voluntarily

Urging Commercial farmers to take voluntary steps ‘advancing the transformation project in the agriculture sector’, ANC Secretary General Gwede Mantashe said “change that is imposed is more painful” – Business Day 14/08/2014.  Mantashe told attendees at a conference on land reform and food production that land reform was necessary if South Africa was to deal with the “ugly past of racial land dispossession of black people” and that farmers must never allow themselves “to be victims of change” – Business Day ibid.

So what?

We previously described in some detail some of the legislative initiatives around land reform and one of the points we made about assessing the risks associated with the land reform initiative is reinforced by Gwede Mantashe’s choice of words.

The ANC feels keenly its failure to successfully complete a significant process of land reform and redress – and is, in part, being punished for that failure by the (still slight) electoral traction achieved by the ostensibly more radical Economic Freedom Fighters on their debut in the general election on May 7 2014.

However, the ANC feels, at least as keenly, the threats to investment that would result if property rights were ever threatened by an unruly and uncertain ‘land reform’ process à la Zimbabwe.

Commercial farming does not have the handy (from the ANC’s point of view) equivalent to the mining sector’s mineral rights to attach to a number of ‘transformation’ objectives. The ANC would be extremely cautious about bluntly attaching a ‘licence to farm’ (or in fact a ‘licence to operate any business’) directly to ‘transformation objectives’. There is a line beyond which such rights and obligations could constitute a nationalisation in fact and might be both unconstitutional and, certainly, a serious barrier to future investment.

Thus the ANC, in the form of its secretary general, is snapping at the heels of domestic commercial agriculture, attempting to herd it towards the ‘transformation’ objective, putting the argument that this is the national good, but hinting that a bite on the ankle could be the laggard’s reward. It is an open question as to whether farmers would respond to such incentives with greater compliance or with resistance, both covert and overt. However, for now, we think the ANC’s (and therefore government’s) land reform bark is worse than its bite.

 

Bits and pieces

  • Jacob Zuma put out a report last week which he and his spokespeople claim is a satisfactory response to the Public Protector Thuli Madonsela’s, “Secure in Comfort” report into the upgrades to the President’s private Nkandla residence in which she finds several faults with the President’s actions and inactions. The delay, over many months, of a response from Jacob Zuma to Thuli Madonsela was ostensibly as a result of him (Zuma) awaiting a report from the Special Investigating Unit. However, on Friday a spokesperson for the Public Protector said Zuma’s report was not a response, adequate or otherwise, to Secure in Comfort. ““That means a document that comments on the public protector’s report or indicates action taken or to be taken to implement remedial action in compliance with section 3(5) of the Executive Members Ethics Act must still be submitted to Parliament by the president” – my emphasis added.
  • Jacob Zuma’s team is preparing to hang expense overruns and incorrect categorisation of some items as ‘security related’ on Jacob Zuma’s architect, Minenhle Makhanya. The Mail and Guardian reports that the “Special Investigating Unit has lodged a R155-million claim against Makhanya” – 15/08/2014.
  • And in other news Bruce Koloane, the former chief of state protocol who was shouldered with the blame for the landing of a large private wedding party at a secure military base by the close Zuma allies and business partners the Gupta brothers and family last year, was nominated by Jacob Zuma as Ambassador to The Hague. In August last year, Koloane pleaded guilty to all charges relating to his involvement in authorising the controversial landing of the jet.
  • It’s not (just) idle mischief putting these bullets together. If the President’s own actions around his accumulation of personal assets and special favours to his friends can impact on the formal judicial, disciplinary and constitutional oversight functions, if his party can go to extreme lengths to protect him from the consequences of his actions in accumulating personal wealth and influence, it is unlikely that private companies will be trustful of, or willingly and enthusiastically compliant with, the ‘transformation’ agenda emerging from the state, government and party he leads. Ultimately the private sector needs to believe that the value of its various social obligations ends up benefiting those who need the assistance the most. This is the price the private sector seems prepared to pay for stability and growth. Any sense that the public purse is hijacked or that equity transfers and affirmative action obligations have become a kind of asset that can be hoarded and dispensed as patronage by the politically powerful will cause the ‘transformation’ objective – and much else – to fail.

 

11/08/2014

‘Cabinet leaning to break-up Eskom’ – Business Day 05/08/2014 … I would be extremely surprised

Business Day reported that the idea of breaking up Eskom and privatising some of its power stations “is starting to gain traction in government circles, as a team of cabinet ministers and government officials seeks ways to alleviate the company’s financial crisis and restructure its business” – Business Day 05/08/2014.

The governing ANC’s alliance partner, the Congress of South African Trade Unions (Cosatu) vowed the next day to fight any such privatisation “to the bitter end” arguing that electricity price inflation, driven by the ‘commercialisation’ of the utility in the first place, was “one of the key constraints” on economic growth and an important reason South Africa “is not creating decent jobs the country so desperately needs” (catch the full August 6 Cosatu statement here.)

On the same day Lynne Brown, the Minister of Public Enterprises, said “I want to indicate that there is a portfolio of options for the interministerial task team to consider. To my knowledge Cabinet has not discussed the matter of privatisation and there is no need to unnecessarily raise temperatures around this matter” – City Press Online, 06/08/2014. The ‘task team’ to which she refers was described (in the same story) as “representing energy, public enterprises and the treasury” and further, that the findings of the team had not yet been made public.

So what?

This is, supposedly, a defining issue for the ruling faction of the ANC and its allies in Cosatu and the SACP. Much of the motivation for backing Jacob Zuma (and ousting Thabo Mbeki) was – apparently – that Mbeki’s policies were a species of Thatcherism (especially the plan to privatise the major state utilities). The alliance backing Jacob Zuma defined its historical mission as the combating of this “1996 class project”, a catch-all phrase for neoliberalism, fiscal rectitude and the ‘Washington Consensus’.

It might well be true that the breaking up and privatisation of Eskom is an urgent necessity – or even a precondition for recovery from our dire economic state – but it is a political nonstarter, requiring the complete breakup of the alliance of groups that hold power, and is therefore vanishingly unlikely to happen, even symbolically.

 

National Prosecuting Authority in free fall and intelligence services are extensively deployed on behalf of senior politicians and criminals – and the storm is beginning to batter against the South African Revenue Service – this is as serious and urgent as it is confusing and complicated

There is an on-going meltdown at the heart of the criminal justice system which is increasing risks in doing business with, or in, the areas administered by the South African state.

Here are only a few of the most recent visible features of the (complex and confusing) disintegration:

  • Jacob Zuma has asked the National Director of Public Prosecutions Mxolisi Nxasana to give reasons why he should not be suspended. The apparent motivation is that Nxasana has problems associated with his security clearance (owing to his brushes with the law, including a murder charge, when he was a younger man). However, almost all the coverage and analysis suggests that the ‘real reason’ is Nxasana has pursued investigations of key Zuma allies in the NPA and Crime Intelligence Division of the South African Police Service and his (Nxasana’s) actions threaten to lead, eventually, to fraud and corruption charges being reinstated against Jacob Zuma.
  • Award winning journalist Mzilikazi wa Africa published his memoir last week which includes a detailed account of how Jacob Zuma and his allies vigorously undermined the credibility of the first National Director of Public Persecutions Bulelani Ngcuka by spreading the false information that he (Ngcuka) was an apartheid spy.(See an interesting examination of this thread from Business Day 07/08/2014 here.) In here is the source code of much of the chaos in the prosecuting authority and intelligence service: Bulelani Ngcuka led the original investigation into the allegations of fraud, corruption, money laundering and racketeering against the then Deputy President Zuma, concluding that there was “prima facie” evidence that Zuma was guilty, but not enough to win in court – a statement to which Zuma, not unreasonably, strongly objected.
  •  “Sex, SARS and rogue spies” announced the front page headline in City Press yesterday (10/08/2014). The accompanying stories allege that senior SARS official, Johan van Loggenberg, has been the subject of a ‘honey trap’ operation by the State Security Agency “Special Operations Unit”. The story is Byzantine, but the important bit is the detailed allegation that the secret spy unit operating against van Loggenberg has also been used to discredit and smear a ‘anti-Zuma’ camp in the NPA and in Crime Intelligence. Bizarrely, the Special Operations Unit supposedly includes drug dealer Glen Agliotti.  (Read some of this story here and here … if you have the time or the patience.)

So what?

This level of political and criminal infiltration into key state institutions and functions, especially of the security services, the prosecuting authority and the South African Revenue Service raises real questions about judicial, regulatory and legislative certainty in the operating and investment environment. Uncertainty about the application of law, the integrity of the criminal justice system and the functioning of the revenue service must all be considered by anyone wanting to invest in South Africa or in assets regulated by South African institutions of state and law. Frankly, given the deep connections between the instability in these key sectors of the South Africa state and the rise to power of Jacob Zuma I am pessimistic that we have the capacity to fix this problem while the current administration is still in power.

The National Prosecuting Authority has appointed highly respected retired Constitutional Court judge Zak Yacoob to head an inquiry, or ‘fact finding mission’ into its dysfunctional state. Unfortunately Yacoob almost immediately (on Thursday last week while speaking at a workshop at the University of the Witwatersrand) happened to mention that he would have “set aside” the judgement that found Jacob Zuma not guilty of rape in 2006, because he would have put less emphasis on the alleged victim’s sexual history – see here. An outraged African National Congress said it learned of Yacoob’s comments “with shock and dismay” saying they “opened old wounds” and were “an attack on  principles of our jurisprudence and the judiciary.” Yacoob attempted to clarify his comments here but either way he is no longer likely to be the instrument that cleans up the National Prosecuting Authority.

 

 

Cyril Ramaphosa at the Marikana Commission today as succession debate begins

Deputy President Cyril Ramaphosa will have to explain today at the Marikana Commission what he meant when emailed other senior Lonmin managers just before the August 12 2012 killing of 34 striking mineworkers at Marikana and said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”.

So what?

It is unlikely that the Commission will find anything untoward in Rampahosa’s messages. He was, after all, doing nothing other than responding to the growing violence of the strikers and Lonmin’s increasing anxiety about the strike. We are of the view that there is some political harm done Ramaphosa by his identification with mine management and government – and the police killing of the 34 mineworkers. There is a considerable degree of unease within the broad structures of the ANC and the electorate about the Marikana killings. The ANC is obliged to stand with its Deputy President on this matter, but it can’t be comfortable. This will play against Ramaphosa (although perhaps not decisively) in the coming succession contest in the ANC.

 

Nkosazana Dlamini-Zuma

Chairwoman of the African Union, fresh from pride of place at the US-Africa summit in Washington announced yesterday that she was undecided as to whether to stand for a second term in the AU (her current term expires in 2014 2016) This is inevitably raising questions about whether she will compete with Ramaphosa to succeed Jacob Zuma as president of the country.

So what?

She is in the running – and is clean and capable. She is perhaps more of an insider in the ANC’s power elite than Cyril Ramaphosa and her winning this race might mean (unwelcome) continuities with the current administration. It’s too early to call it one way or another, but the ANC Women’s League has indicated that it could back Dlamini-Zuma (or Baleka Mbete) while the Gauteng ANC has indicated it could back Ramaphosa.  Officially succession would only take place after elections in 2019, but there are constant rumours that Jacob Zuma might want to retire early (or be forced to do so due to failing health). An early retirement of Jacob Zuma would probably be a significant positive for perceptions about South African political risk, but the specific circumstances of such a move would determine whether it would, in fact, be positive, negative or natural.

(This is part of a brief note I sent out to clients this morning)

Nelson Rolihlahla Dalibunga Mandela,  95, died last night on Thursday December 5 2013.

  • There may be short-swings in some South African financial instruments but it is unlikely that this will be a longer term driver of the markets. Nelson Mandela has been ill for some time and has not played a role in South African politics since the late 90’s.
  • There will be intense world focus on the country – and much of that focus is likely to negatively compare the current crop of leaders with Nelson Mandela (but the martyred and canonised version of the man). It should be noted that investors in South African equities and bonds appear increasingly bleak about the environment (labour unrest, labour productivity, uncertain mining legislation – as well as uncertainty about a host of other regulatory and legislative interventions by the government –  corruption and cover-up around the President’s Nkandla residence, the use of state security apparatuses to advance certain interests of politicians, uncertainty about the infrastructure build programme, the difficulties in achieving fiscal consolidation and the possibility of further ratings downgrades). Those uncertainties will increase with Mandela’s death, although his passing is unlikely to impact significantly on the real situation.
  • The country will be crawling with celebrities and senior politicians from other countries (including as many as 5 current and former US presidents) – which will be highly disruptive in a number of different ways. There is also likely to be a period of formal national mourning, which could feed through into already anaemic GDP growth numbers for the 4th quarter.
  • For the African National Congress the opportunity emerges for the ruling party to run an election campaign centred around the great and popular ex-president – and we should expect Nelson Mandela to be alongside Jacob Zuma in many posters and promotional material. Of course the risk is that this makes the comparison more obviously unfavourable for the incumbent. But on the whole we think the ANC election campaign will benefit from foregrounding the key role played by Nelson Mandela at all times casting himself as a loyal member and leader of the ANC.
  • As I say in the final paragraph below: the financial market is unlikely to react wildly or in a sustained manner to this single event … but then the financial markets do not list the price of everything that is important.

Here is an updated version of some comments I have made on previous occasions (including here) when his death seemed imminent:

The country will initially be bathed in a blinding light and then buried in mountains of obscuring verbiage taller and wider than the verbiage that covers the September 11 attacks on the World Trade Centre, the US invasions of Iraq and Global Warming combined.

It is only the usually skittish financial markets that I expect  to take the old man’s passing with equanimity.

For those who comment on South African financial markets, Nelson Mandela’s death should be considered “investment neutral” – but in an investment environment that looks anything but neutral from a political risk perspective.

But there are more important meanings than prices in financial markets.

Nelson Mandela is the last symbolic link to the full ambit of the struggle of all Africans, but black South Africans in particular, to free themselves from colonialism, Apartheid and slavery.

Crucially, he is also the symbolic representative of the compromises and tolerance that characterised the negotiations from 1990 and the election in 1994.

If that was not enough for the symbol to carry, Nelson Mandela’s 27 years in prison and his calm forbearance have come to represent for many throughout the world the manifestation of the human spirit in its best possible form.

His passing will give focus to the anxieties many feel about  South Africa’s future – but also to anxieties about the world, about the predation of humans on each other and on the planet. He was, after all, as much a global symbol and leader as a South African one.

Our feelings about the lives and deaths of “great” men and women allow us an emotional link to the grand scope of the history we live in and through.  The death of Pope John Paul II and of Diana Spencer gave a sense of how, in the age of celebrity, the so-called ‘general public’ becomes emotionally connected to the grand human drama that can usually only be understood a long time afterwards and at many degrees of abstraction.

Nelson Mandela’s death will be such a moment for humanity, because it will represent the drawing together of important threads of the last several hundred years of human history.

The point, however, for South African financial markets is that little will change in South Africa with the passing of the man. The real running of the country and the dealing in the compromises between the old South Africa and the new, has long moved on from Nelson Mandela.

It has now become a truism that even in his last years as president Nelson Mandela was already more important as a symbol than as a politician and statesman.

There is real and visceral grief from comrades, friends and citizens who have participated with him in the struggles for African liberation. I imagine too, that throughout the world there will be an unprecedented outpouring of emotion that will elevate the symbol even higher than the man.

South Africa, for one last time, will be bathed in light and the centre of puzzled global attention – as it often has been since the formal beginnings of Grand Apartheid in the late 40′s and early 50′s.

But  South African financial markets – the currency, the equities, the bonds and products that derive from these – are unlikely to falter.

But that only tells us one thing: that the ticker tape does not list the price of every important thing.

An irresistible opportunity for a caption competition arose when I saw this picture on Die Burger‘s webpage:

RadebeCwelebetter

What is intelligence minister Siyabonga  Cwele whispering in the ear of justice minister Jeff Radebe? What is Radebe thinking? I hesitate to ask.

Post your suggestions in the comments section below. The winner will receive a copy of the excellent ‘SA Politics Unspun’ by Stephen Grootes – which I will review here soon. The judge’s decisions are arbitrary and subjective … and seldom final.

That picture accompanies a story in Die Burger describing the alleged cover-up by the security cluster of public protector Thuli Madonsela’s Nkandla report – thanks to the person who pointed it out … catch the original here.

Below follows a sliver (‘slither’ as a young close relative of mine is wont to say) of my weekly politics summary and analysis from early Monday morning – I have stripped out some technical issues so what is left is little thin (although it was, frankly, a little thin anyway.)

But purely for the record:

Election fever and the registration weekend

  • Election fever takes hold – AgangSA launches with tea and cakes, EFF slaughters 8 bulls
  • Winnie Mandela still in ANC colours, but speculation as to her loyalties continues
  • Vigilante violence in Khutsong – Minister Nathi Mthethwa holds the thin blue line
  • The Democratic Alliance feels the stress of attempting to hold on to its old support base while pursuing a new one

Despite the 2014 election dates not yet having been announced, most parties are entering campaigning mode. (The elections must be held, according the SA Constitution, between April and July 2014). This weekend the Independent Electoral Commission held the second and last national voter registration drive and managed to register just under 500 000 new voters – and change the details of an additional 600 000 others (Independent Electoral Commission).

Election noise from almost every corner of the country is already deafening. Here are some of the highlights (and lowlights) from this past weekend:

Winnie appropriately dressed in Bekkersdal

Various leaders visited Bekkersdal, a community to the west of Johannesburg that has been plagued by violent service delivery protests and where many IEC registration booths were unable to open on Saturday morning. The most notable was Winnie Mandela who was “warmly received” by the community (eNCA). The twitterati and commentariat were obsessively interested to see whether she would arrive wearing red – indicating a possible defection from the ANC to the EFF. She arrived in ANC colours and spoke like a loyal ANC leader – for now, anyway. Registration booths opened in Bekkersdal yesterday.

Police minister stands his ground

Minister Nathi Mthethwa and several of his generals bravely faced down an extremely angry Khutsong audience (also west of Johannesburg) yesterday. Mthethwa visited the troubled area in the wake of last week’s vigilante violence in which 6 alleged criminals were murdered – by stoning and burning. Mthethwa, a close Jacob Zuma ally, stood his ground as audience members screamed at him and his senior officers, accusing the police of incompetence and corruption and threatening to fry criminals ‘like chicken’. Mthethwa urged the crowd to work with the police – and expose the area’s drug lords and corrupt cops.

The best action was on Twitter

Much of the off-beat action was on Twitter. A flyer portraying itself as having been distributed by the ANC Youth League promising a R60 car-wash by scantily clad young women near a registration station in Kenilworth (looks fake, but you never can tell). One tweet pointed out an essential difference between AgangSA and the EFF: “Agang launched with Tea and cakes, EFF slaughtered 8 Bulls” – which, in our opinion, nails down the difference between the two new parties rather well.

DA swerves

The Democratic Alliance continues to shudder from its ‘mistaken’ backing of the Employment Equity Amendment Bill in the National Assembly recently. It appears the flip-flop is based on tension in the official opposition between those who believe backing state interventions to reverse the relative exclusion of black South Africans from senior management positions as well as from other forms of ownership and control of the economy is essential if the DA is to win black votes. The South African Institute of Race Relations quoted in the Business Day on November 6th says: “DA support for this kind of racial engineering will come as a shock to many of its current supporters.” As it happens Helen Zille backed away from supporting the bill and has reshuffled her shadow minister of labour, Sej Motau. Tension around this matter will remain and grow in the party.

Walking back home from the Sea Point promenade I encountered, no more than thirty minutes ago, two tall attractive young women in blue t-shirts standing next to a table full of DA literature.

Nearby is a church hall that serves as a voter registration station.

This weekend is the last nationwide drive to get as many potential voters as possible signed up before next year’s election.

The DA girls had long ponytails and light-brown hair and they held apparently identical and delicate Japanese umbrellas.

I gruffly (to avoid being misconstrued) asked them how it was going.

“Good!” they chimed brightly and in unison, their thick cables of hair bouncing in a way perfectly described by the aforementioned style’s name.

They politely enquired if I had registered and I muttered something about not being sure if I was going to vote and stumbled off in a confused retreat. (I have registered, I will vote … I am just not sure for whom.)

I was thinking as I walked the final kilometre to my modest apartment that it was about time the DA put some zest into its campaigning – good for the staid old liberals. (Patronising thoughts, I know, but I can do no more than apologise for having them.)

I walked into my flat, came straight to my computer and clicked on my Twitter feed.

Imagine my delight when I almost immediately found this:

ANCELEC

 

Here is the full text of the Tweet – although it is the picture that is important:

‏@iroiphotography:

Lack of creativity RT @Mr_Mpangase: Surely this is in breach of ANC conduct?  pic.twitter.com/Sujnop3cdK Retweeted by Siphelele Mpangase

(I think that is a real flyer or poster, but at this time we all have to be extremely careful of fake advertising designed to make one or other of the parties look bad.)

My delight was immeasurably enhanced as I found another Tweet that really gets to the meat of the election matter.

African ‏@ali_naka29m:

@CdeJMN Agang launched with Tea and cakes, EFF slaughtered 8 Bulls. Spot the difference!

I am still grinning.

This voter registration weekend is specifically aimed at younger potential voters and it has not escaped my attention that none of the myriad and complex messages here are intended for me.

I doubt I will be this sanguine and good natured after another five months of this … but before the nausea sets in I thought I would share some of the silly syrup.

Have a good week.

 

 

As promised some comments on the politics of Pravin Gordhan’s medium-term budget … but first forgive me for expressing some of my irritation at two of his (Gordhan’s)  recent statements.

That will be followed by some of  the bits and pieces I found interesting in the weekly newspapers – if you didn’t see the ‘Zuma gaffes” selection in the Sunday Times and City Press I reproduce some of them here.

Excuse me?

Look I am not yet ready to start calling him a tubby little tyrant with the charisma of a mud prawn but Pravin Gordhan has been saying some things that are not hugely endearing.

First he told a joint parliamentary committee that negative news flow from ‘the media” was partly responsible for sovereign downgrades of South Africa’s debt. So what, he thinks Moody’s, S&P and Fitch get their understanding of government policy from the Sunday Times?  It is just a stupid thing to say and makes him sound just like a National Party ministers circa about 1986. Catch that here.

Secondly, responding to the flurry around South Africa’s cancellation of its bilateral investment treaty with Germany he “blamed lawyers serving the private sector for increasing uncertainty in South Africa’s investment environment” – catch that Business Day story here .

I didn’t personally hear Gordhan in either of these instances but there might be a pattern emerging:

Pravin (PW Botha) Gordhan

Look familiar … think PW Botha? (That’s Business Day’s photo btw, I hope and trust they don’t mind)

Okay, I am glad I got that off my chest – on with the rest.

Political messaging and the medium-term budget – all good

If political messaging was all that we were looking at in the MTBPS then we would have to conclude that Pravin Gordhan’s performance was overwhelmingly financial market positive. Obviously ‘messaging’ doesn’t determined the price of eggs or the price of much else. The believability of Minister Gordhan’s various estimates and projections is ultimately more important for determining sovereign risk, but the overt politics of the message indicates a more confident government prepared to stand on organised labour’s toes to reassure global capital markets (and other investors).

Firstly, Gordhan was on message with regard to the Employment Tax Incentive Bill. This is the latest manifestation of the youth wage subsidy and has been bitterly opposed by Cosatu and, to some degree, by members of the SACP (for reasons that I have explained elsewhere). It is unclear whether the policy will make a significant dent in South Africa’s serious youth unemployment problem (which deputy minister of Finance Nhlanlha Nene recently put at  42% for  those aged between 19 and 29) but what the rating agencies have been looking for is signs that the ANC and government can forge policy independent of, especially, Cosatu – and in this confident assertion by Gordhan they have their signal.

Secondly, the Finance minister cast the MTBPS – and, in fact, all future budget statements – as the accounts of the National Development Plan (NDP). Again, the NDP is bitterly opposed by Cosatu – and is less than warmly regarded by the SACP. It is a confident Jacob Zuma that backs his Minister of Finance to define government budgeting as : “(t)aking the National Development Plan as the point of departure”.

The NDP is little more than a shopping list and a general statement of intent but it generally conceives of the market as the appropriate mechanism for the allocation of capital (at least more so than the New Growth Path and the Industrial Policy Action plans do). It also puts the infrastructure plans and improving capacity and accountability of the public service as key planning objectives. There is no evidence that the ANC and the Zuma administration is going to succeed in moving beyond planning to implementation, but Gordhan made the right noises in his speech.

Thirdly Gordhan pressed every conceivable button in his attempts to tone down excesses in the executive and the public services. He placed a number of ceilings on luxuries, cars, travel, catering, accommodation, use of credit cards – and amongst the Twitterati the cry went out: Gordhan derails the gravy train!

Again this is good form but we have to keep an eye out for the content. After all this is a government led by a president deeply implicated in the ambitious abuse of various privileges. It is going to take a more than fine sounding words to convince the country that the gravy train has, in fact, been delayed let alone derailed.

Fourthly the key political aspect of political risk in relation to the budget is the commitment to restrain growth of the public sector wage bill and social grants – two pillars of both political stability and continued electoral support for the ANC. Obviously the minister (at this stage the apparently tough and skilful Lindiwe Sisulu) in public service and administration will have to hold the line in public sector wage negotiations – we will have to wait to see how that plays out, but Sisulu is the right person for the job of holding that thin red line.

Loud and widespread muttering about power struggles in the Democratic Alliance

It should probably be seen as a sign that the Democratic Alliance is on the verge of breaking out of its previously narrow ethnic base that the fine details of its internal power struggles are becoming a matter of national public debate. All the major weeklies discussed a putative succession struggle between the DA’s national spokesman and candidate for Gauteng premier, Mmusi Maimane and the DA parliamentary leader Lindiwe Mazibuko. The point being that Maimane’s supporters are pushing for him to be on the parliamentary list so that if the DA does not win Gauteng next year (dah!) he will still get into parliament.

So what?

Obviously the Democratic Alliance believes that it needs a black leader if it is to make a serious dent on ANC support in 2019 – but the matter is not so pressingly urgent that they are likely to dump their extremely successful and popular leader Helen Zille any time soon. I still think there is space for an amalgamation of the DA and AgangSA after that new party performs adequately but fails to shoot out the lights in 2014. That will leave the tantalising possibility of Mamphela Ramphele finding her way into the top leadership of the DA some time in about 2016. So of the three potential black leaders of the DA, Maimane probably has most township credibility and would represent the DA going out there head-to-head with the ANC for the African vote. Lindiwe Mazibuko would be the most palatable for the DA’s traditional support base (yes, we all know who I mean). And Ramphele, with her struggle credibility and achievement in academia and business seems like a perfect – and heavy hitting – compromise. She might need a charisma injection, but that is purely a personal observation.

Mozambique – Renamo rears its scarred and ugly old head

The Mozambique army overran a key Renamo base in central Sofala province on Monday last week and Renamo guerrillas hit back on Saturday by ambushing a minibus, killing one person and injuring 10 more.

So what?

This might seem like small cheese, but Monday’s government attack has forced Renamo opposition leader Afonso Dhlakama to flee into the bush and has raised the spectre of the restart of the 16-year civil war which ended in a 1992 peace pact that established multi-party democracy in Mozambique. Renamo has lost every election since 1992 but Dhlakama’s party said on Monday it was abandoning the peace agreement. In and of itself what has happened over the last week is not huge, but in the context of the hopes for Mozambique’s economic growth as that country emerges as a natural gas giant, Renamo becomes a significant risk that needs careful attention.

The Cosatu vortex is sucking in everyone in – this is a clear and present danger

This weekend the national general council of the powerful South African Democratic Teachers Union lined up in precise opposition to Numsa in the on-going and bitter struggle taking place in Cosatu. Sadtu backed the disciplinary process against Zwelinzima Vavi, it vigorously opposed the holding of a special Cosatu conference and it unequivocally backed the ANC in elections next year.

So what?

My own (perhaps counter-intuitive) view is that the only way for Cosatu to remain as a functional federation and part of the ruling alliance is for a special congress to be held during which Zwelinzima Vavi wins the popular vote, escapes disciplinary action for his various infractions (both the real ones and the made up ones) and Numsa decides to stay in the federation. However, it is looking increasingly like the ANC loyalists are going to force Numsa, Vavi and their various allies out of the federation. Note that Sadtu itself is facing something of a minor palace revolt after receiving threats from some of its own members who are angry at the suspension of the union’s president Thobile Ntola for supporting Zwelinzima Vavi. Yes the key Zuma and ANC allies in Cosatu can force the leftist critics out of the federation but that will lead to a split – and, in my opinion, cascading instability throughout the labour sector as Numsa and others compete in every workplace against the incumbent Cosatu union. This outcome is closer than ever and it appears to me can only be averted if a special Cosatu congress is allowed to take place and that a likely democratic victory by Numsa and Vavi is allowed to carry at any such conference. It would stick in some ANC craws, but it would re-establish the status quo of a restive Cosatu that remains a faithful, if critical, ANC ally.

Jacob Zuma provides some light relief

Politicians often say things that outrage some and delight others by providing grist to the social satirist’s mill.

Jacob Zuma provided a gem last week when he said:

“We can’t think like Africans in Africa, generally; we’re in Johannesburg (the N1 is) not some national road in Malawi”.

(Gauteng ANC manifesto forum – October 21 2013)

This provided the opportunity for several journalists (most notably Gareth Von Onsellen in the Sunday Time and Carien Du Plessis in the City Press) to aggregate some of Jacob Zuma’s more illuminating gaffs from the last several years. Here, purely to save you from having to dig into the papers yourself, are some of those:

“I’ve always said that a wise business person will support the ANC … because supporting the ANC means you’re investing very well in your business”

(ANC 101st anniversary gala dinner in Durban – January 12 2013)

“Sorry, we have more rights here because we are a majority. You have fewer rights because you are a minority. Absolutely, that’s how democracy works”

(President’s question time in the National Assembly – September 13 2012)

“Kids are important to a woman because they give extra training to a woman, to be a mother.”

(SABC interview with Dali Tambo August 19 2012)

“Even some Africans, who become too clever, take a position, they become the most eloquent in criticising themselves about their own traditions and everything”

(Speech to the National House of Traditional Leaders November 1 2012)

“When you are carrying an ANC membership card, you are blessed.”

 (Address to ANC supporter in Easter Cape – February 4 2011)

“The ANC will rule South Africa until Jesus comes back.”

 (Gauteng ANC special council – March 15 2004)

We don’t want to review the Constitutional Court; we want to review its powers.

(Interview in The Star Newspaper – Feb 13 2012)

So what?

When compared with other famous presidents Zuma’s gaffes are fairly benign … (hmm I am no longer as sure that those are quite as benign and cute as I thought they were when I wrote that early Monday morning … but I will let it stand for now.) What is interesting is how socially conservative some of his off-the-cuff comments are. It gives some insight into the gradually building pressures in the ANC with regard to appealing to an urban professional class versus traditional rural groups. There is no question that Zuma represents only one of those choices.

Bits and pieces

  • Pravin Gordhan’s medium-term budget statement received both criticism and praise. Cosatu’s spokesman Patrick Craven described it as “a conservative macroeconomic framework predicated on a neo-liberal paradigm”. Piet le Roux, the senior economic researcher at Solidarity (coming, in some ways, from the other side of the spectrum) said Gordhan’s mini budget was based on an “unsustainable model of deficit spending, mounting government debt and onerous taxation”.
  • The Association of Mineworkers and Construction Union (Amcu) announced on Friday (25/10/13) it would consult its members on a possible strike after it received a certificate to strike at Impala Platinum (Implats) when wage negotiations deadlocked. Amcu is demanding a basic salary of R12 500 a month for underground workers and R11 500 for surface workers.

Herewith my news commentary as of yesterday morning. I thought I would republish it here because it includes my brief assessments of how to think about the Zimbabwe election, Vavi and the EFF. I also, politely, imply that the Seriti commission might be a cover-up and that Amcu’s underlying objectives in the gold sector are potentially quite scary.

Zimbabwe – grin and bear it

Robert Mugabe has won 61% of the votes (2.11 million votes) in the presidential poll, against Prime Minister Morgan Tsvangirai’s 34% (1.17 million votes). Zanu-PF won 158 parliamentary seats against the MDC’s 49.

The head of the SADC facilitation process, South African President Jacob Zuma’s office yesterday released a statement that began:

H.E President Jacob Zuma extends his profound congratulations to HE President Robert G Mugabe on his re-election as President of the Republic of Zimbabwe following the successful harmonised elections held on 31 July 2013. President Zuma urges all political parties in Zimbabwe to accept the outcome of the elections as election observers reported it to be an expression of the will of the people.

The opposition MDC has called the result “fraudulent” and has threatened not to take up its 49 seats and to boycott government institutions and “pursue peaceful, legal, political, constitutional and diplomatic remedies” (several online news sources, including BBC Africa).

The Mail & Guardian points out that monitors from the African Union and the Southern African Development Community (SADC) have stressed that the elections were peaceful and have endorsed them as ‘broadly free’. In contrast, the United States and European governments, which have sanctions in place against Mugabe over past election-rigging, “listed a litany of alleged flaws in the vote, from lack of availability of the voters’ roll to pro-Mugabe bias in the media and security services that skewed the election run-up” – M&G.

So what?
Even allowing for the myriad ways in which the MDC was (deliberately – and probably illegally) disadvantaged in this election it appears there has been a real shift away from the opposition. Perhaps this is because just by entering the unity government in 2008 the MDC both saved the economy from collapsing (and thereby saved Zanu-PF) and suffered some of the sins of incumbency. Perhaps it was how mediocre Morgan Tsvangirai has turned out and how endless have been his romantic and sexual travails. Whichever. I am not certain that the MDC will follow through and actually not take up it seats – this will only be revealed in the next few weeks.

To repeat comments I made on Friday:

  • It is deeply unfair. The election was brutally stolen in 2008 and every state resource that could be deployed against the MDC has been so deployed in the last 5 years. Slight economic upticks post 2008, the deepening indigenisation programme (or at least the promise of the goodies from the programme) combined with a host of tactical and strategic errors by the MDC appear to have allowed Zanu-PF to ‘pull off’ a victory at the edge of acceptability … and the edge of the law, but just within it. Even if that is not the opinion of the MDC or Western observers, it is going to be the formal assessment.
  • Thus, I am not suggesting that this result reflects the “will of the Zimbabwean people” … but it reflects it adequately to avoid the crisis that would result from an outright declaration that voters’ roll irregularities … and inadequate other preparations … and the historical legacy of repression and cheating … and misuse of security agencies and state media … constitute enough impact to declare the result not reflective of the will of the people.
  • Does this mean Zanu-PF’s deeply investor unfriendly, GDP growth unfriendly, economic policies will continue? Not entirely. I think Zanu-PF has, miraculously, won back a chance to control the post-Mugabe succession period. They very nearly lost it as a result of their catastrophic policies. I expect Zanu-PF to be more cautious and embracing of investors in future … including with regard to the indigenisation programme. 
  • I am less sure  of that final bullet than I was when I wrote it on Friday, but it appears to me that, at very least, Zanu-PF, will have learned a lesson from nearly losing its hold on the country and is likely to give more emphasis to ensuring that the benefits of its economic policies flow to ordinary Zimbabweans (and less to buying off Zanu-PF cronies, which has been the emphasis up until now.)

Arms probe in tatters

Last week Judge Francis Legodi resigned from the The Seriti Commission into the arms deal scandal and evidence leader, advocate Tayob Aboobaker, announced his resignation citing ‘nepotism, unprofessionalism and infighting’ (he may since have withdrawn his resignation). These ructions follow the earlier resignations of senior researcher Mokgale Norman Moabi and the law researcher, Kate Painting.
So what?
The elephant in this room is the Jacob Zuma himself is one of the individual ANC leaders whose reputation has been most tarnished by the scandal (corruption charges against him in this regard were only – controversially – withdrawn in 2009). At the same time, it is Jacob Zuma himself, in his capacity as President, that has instituted this commission, possibly in the hope that he can put the threat of the return of those charges permanently behind him. At this stage the commission is meant to begin hearings today, and among those who will be called are former President Thabo Mbeki, head of Cope and former Minister of Defence Mosiuoa Lekota, former Minister of Intelligence, Ronnie Kasrils, former Trade and Industry Minister Alec Erwin and former Minister of Finance Trevor Manuel. I think it extremely unlikely that this commission will ever pronounce on why the bizarre decisions were taken to purchase the singularly inappropriate (for the country’s defence needs) set of expensive weapons systems (including 48 Saab Gripen fighters and trainers, 4 Daphne class submarines and 4 frigates). I also think it vanishingly unlikely that the commission will find out where the kickbacks went.

I will not be surprised if it emerges that the resignations from the commission are motivated by the belief that the process will achieve the exact opposite to its apparent purpose.

Zwelinzima Vavi

Several of the weeklies speculate as to whether Zwelinzima Vavi will survive the scandal in which he had unprotected sex in Cosatu’s headquarters with a junior employee whose employment in Cosatu he had irregularly organised – and who accused him of rape and later withdrew the charge in an internal Cosatu procedure.

So what
I covered this in some detail last week, but there is an implication to what is happening here that needs emphasising.

The ANC is facing an election next year and much of the pressure Vavi has been under up until now (from ANC/Zuma loyalists in Cosatu) has been directed at pulling him (Vavi) into line, to stop him constantly accusing government leaders of corruption, to stop him criticising macro-economic policy. The ANC needs to establish a united front so that it can take on the various challenges it faces in the national election next year. 

But there is a difference between placing pressure on Vavi and forcing him out of Cosatu. If Vavi is forced to resign because of his actions in relation to the junior employee it is not inconceivable that Cosatu’s biggest union Numsa might go with him.

It is as if the ANC has been pushing a board – that it thought was solid – to get it into a better position. But the board was rotten all along and it suddenly collapses as it is being pressed. An actual split in Cosatu that drove the most left-wing elements together and out of the ruling alliance would be negative for the ANC in a number of ways. It would further weaken the credibility of the trade union ally, it could raise the spectre of a viable ‘left’ party, it could force the ANC into having to contest on too many fronts in the 2014 election, it could increasingly lead to policy paralysis in government and it could cause serious labour unrest as Cosatu member unions reconstitute and split in a number of different industries. None of this is certain (or even likely) but it is a threat or a series of threats we need to bear in mind.

Economic Freedom Fighters – taxing times … but behind the theatre there are credible risks

Along the same lines as the above, the latest round in the colourful pageant of Julius Malema’s attempts to re-establish himself at the centre of South African politics came yesterday when he mounted a fierce attack on the South African Revenue Service (the full text published at politcsweb.co.za) after SARS made public the details of his tax record. (Here for the SARS statement and here for Malema’s response.)
So what?
SARS is defending itself from Julius Malema’s accusation that it is being used as a tool by what Malema calls the ZANC (the Zuma ANC). The truth or otherwise of this particular matter cannot be established, but I wanted to use the opportunity to raise what I see as the main risk associated with the Economic Freedom Fighters. The risks are not dissimilar to those associated with a potential ‘left’ split in Cosatu. It is increasingly likely that the ANC will be contesting the 2014 elections with significant threats both to its ‘left’ and its ‘right’.

The Democratic Alliance, perhaps in a formal alliance with other opposition parties and independent candidates is starting to seriously consider the possibility that it could win the Western Northern and Northern Cape and come achingly close in the, Eastern Cape and Gauteng. While I am unable to assess whether these are realistic objectives, I think it is important to consider how the ANC might behave if it faces this threat at exactly the point as its own members, allies and the Economic Freedom Fighters, place it (the ANC) under pressure.

I have no grounds to argue that the EFF and any ‘workers’ party’ that could conceivably emerge from a split in Cosatu could win enough votes to become a viable parliamentary opposition, but I do think that the operation of these forces place the ANC in an awkward, even untenable, ‘policy’ and ‘message’ position.

In adopting the investor friendly National Development Plan at Mangaung and in the presidency’s concerted attempts to stabilise the platinum mining sector, the Zuma administration has made it clear that it is extremely worried that investor sentiment towards South African policy and policy risk has turned negative. An ANC fighting a populist wildfire from the EFF (perhaps more heat than light … but anyway), an incipient ‘ left’ split from Cosatu and an ascendant DA is hemmed-in, constrained, unable to formulate viable national policies and increasingly tempted to engage in dirty tricks against its enemies.

 

Amcu and the gold negotiations – some tentative speculation

Following Amcu’s apparent walkout from the Commission for Conciliation and Mediation of the gold sector wage negotiation that had become stuck at the Chamber of Mines last week, I made the following comments (note that Amcu has since said it intends participating in the process, although as you will see from the below, I would be cautious of accepting that at face value):

I think that it is directly in Amcu’s rational best interest to:

  •  ensure that collective bargaining through the Chamber of Mines breaks down (i.e. that the central bargaining chamber is destroyed) and that companies are forced to seek agreements on a mine by mine basis; and
  • to provoke crises similar to those that took place at Impala in January last year and Lonmin in August on gold mines where it is not yet recognised as the majority union.

Firstly, why is this “rational”?
Because any of the anger, hot-headedness and youthful passions rooted in the history of Amcu leadership’s conflict with Num would have been burnt out of them last year.

Now it is probably more accurate to conceive of Amcu as rational competitors in a game where the objectives can be stacked in a very similar way to how one would stack objectives of a company with three or four major competitors in a set market.

Amcu can certainly get things wrong – and engage in activities that are counterproductive to the likelihood of it achieving its objectives – but this is less likely to be because Amcu is led by anarchist lunatics, and more likely to be because its leaders have made tactical and strategic errors.

Thus, while it is possible to argue that Amcu’s members and potential members are “tired of strikes” or “unable to bear the burden of further strikes” this should be conceived of as a constraint to Amcu pursuing its objective rather than an absolute barrier.
So what are Amcu’s objectives in the gold sector?
Firstly, to destroy the National Union of Mineworkers.

The Num, the loyalty of its (declining) membership, and its abuse of its prior dominance, is the most important obstacle to Amcu achieving its main objective which, unsurprisingly, is to be the only significant union in the resources sector. That is, Amcu’s primary objective is to occupy the eco-niche that Num has occupied up until now.

Trade unionism is a business … it’s about money and power. So yes, Amcu grows by more effectively representing (or portraying itself as more effectively representing) the collective interests of its members or potential members … and thereby actually getting greater numbers of signed up, due-paying members.

However, it cannot be effective in this task, even where it has already got more members than Num … because Num occupies an institutional and regulatory “space” that it is using to maintain its dominance.

Thus, in a central bargaining chamber system where the representivity of the participating members is outdated (as it clearly is in this case) the union that is actually dominant (or in the process of becoming dominant) must destroy the process and force employers to deal directly with it … and not with the old dinosaur that is taking up all the space by trading purely on the institutional lag effect.

So forcing employers to deal with Amcu, on a mine-by-mine basis, seems to be a no-brainer for the upstart union and explains perfectly Amcu’s actions up until now in the gold negotiation process that started 2 weeks ago.

The next step is that Amcu has to establish dominance at each mine … it has to “force” the employer to deal with Amcu rather than Num … even if the outdated books still show Num as the dominant union at each mine.

Thus Amcu will attempt to destroy Num’s negotiating position … it will work to ensure that workers do not feel that whatever Num and management settle for is an adequate settlement. Amcu only wins if that settlement fails; therefore it has an absolute imperative to cause those settlements between Num and management to fail (by proposing levels that are more difficult for management to meet and by mobilising workers against whatever settlement Num reaches).This is a competition that Amcu can lose. Num and management might strike a workable deal that the majority of mineworkers back … but it (Amcu) has got to fight it.

If this is correctly reasoned, there is a strong pressure on the central bargaining system in the gold sector and for possible mine level negotiations to be traumatic – in a very similar way to the trauma associated with strikes in the platinum sector last year and with an almost identical ‘architecture’.

Once (and if) Amcu has crushed Num and established its dominance across the industry its motivational hierarchy changes; it will then want to lock itself into the monopolistic position that Num now occupies. But that is a long way ahead, so long that it is not yet worthy of serious consideration. For now, it (Amcu) is trying to free up space so that it can go head-to-head with Num, which in turn is hiding behind bureaucracy. Thus Amcu is trying to increase competition because it believes in a straight fight it will win.

Finally, Amcu does not have a free hand in pursuing these objectives. Management and Num are going to fight back in all the ways (positive and negative) open to them. Also, workers are tired, indebted, the industry is shrinking and management is looking for excuses to downsize workforces – but within these constraints, I would argue that Amcu is forced by its own nature, to pursue the objectives here set out, as effectively as it can within those constraints.

Early on Monday mornings I send my clients a review of the previous week’s political news which might be of relevance to financial markets.

This morning I thought the issues were of more general interest.

Thus …

Summary:

It is difficult not to see the main items in this review as connected:

  • The ANC yesterday disbanded its Youth League’s executive and the executive of its Limpopo provincial structure – both epicentres of the unsuccessful campaign against Zuma in the lead up to Mangaung;
  • An investigation into Cosatu secretary general Zwelinzima Vavi’s affairs and political loyalties deepens and widens – although, just because it is a stitch-up doesn’t mean there is no fire within the smoke;
  • Zuma’s approval rating among city dwellers drops to an all-time low and disapproval ratings rises to an all-time high.

Main body text:

ANC disbands its Youth League executive soon after axing its Limpopo Provincial Executive Committee

Yesterday, it was reported that at its 4 day legotla [1], the ANC National Executive Committee disbanded, as expected, the Provincial Executive Committee of the party in Limpopo. More surprisingly the NEC of the ANC then went on to axe the NEC of the ANC Youth League – which most observers had thought abased itself adequately to Jacob Zuma after failing to unseat him at the Mangaung national conference. (Note I am reliant on news reports for this … the ANC NEC is due to hold a press conference at 12h00 today where it will give a fuller report.)

So what

The Limpopo ANC and the ANC Youth League were the launching pads of the challenge against Jacob Zuma that had been led by Julius Malema. Disguising itself behind the ‘nationalisation of mines’ call and funding itself through tender abuse in Limpopo the challenge peaked in mid-to-late 2011, just before Julius Malema was suspended. While the leaders of the ANC Youth League were clearly surprised by their axing yesterday, they can probably count themselves lucky that they are not being taken down the same path as their erstwhile leader Julius Malema, which might well end in prison for corruption charges.

While the Limpopo ANC, and to a lesser degree the ANC Youth League NEC, were riddled with corruption, it would be a very generous interpretation of what happened yesterday to see it as a “clean-up” of the ruling party. The  more appropriate prism would be to understand this as an attempt to get rid of centres of resistance to the leadership of Jacob Zuma and the faction he represents. In a less jaundiced view, it is also an attempt to establish a basic degree of coherence in the party before the national elections which will be held midyear 2014.

Cosatu – 3 commissions to investigate Vavi

Zwelinzima Vavi is facing 3 simultaneous commissions into aspects of the criticism that members of Cosatu’s national executive committee made against him two weeks ago – including that he has been involved in corrupt activity and that he is disloyal to the ANC. This comes against the backdrop of ANC secretary general, Gwede Mantashe, attacking Cosatu for failing to defend the ANC against “a neoliberal agenda” and he has warned that anarchy is taking root in Cosatu: “my conclusion is that Cosatu is on a dangerous downward slope” – (Mail & Guardian March 15). (This added after publication – Carol Paton, in her excellent article in Business Day about this matter a few hours ago said: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.

So what?

The answer is best provided by a quote from “a senior Cosatu leader” in the same article: “All this is a smoke screen. The main cause of divisions in Cosatu is ANC and SACP politics. The two organisations are trying hard to capture Cosatu, but Vavi is the obstacle. He is the only one prepared to defend the interest of workers. Dealing with him will ensure that they capture the federation.”

Not unlike the decision by the ANC NEC to close down internal opposition in Limpopo and in the Youth League, at least part of what is happening in Cosatu is an attempt to close down criticism of Zuma (especially after Vavi called for an investigation into the R230 million state spending on Zuma’s home in Nkandla) and criticism of the ANC more generally. This is the Nkandla faction crushing the last vestiges of the attempts to unseat Zuma at Mangaung – as well as an attempt to establish coherency in the ruling alliance in the lead-up to national elections next year.

(The allegations against Vavi – aside from ‘collusion with opposition’ parties – includes that he sold Cosatu’s old head-office for R10 million less than its market value and that he awarded a tender to a company at which his stepdaughter was employed. Just because there are other agendas at play, says nothing of the veracity or otherwise of these charges. Vavi himself has welcomed the commissions, stating that he believes they will clear him of all charges – although, interestingly, he attempted, unsuccessfully, to have ANC stalwart Pallo Jordan and Minister of Economic Development, Ebrahim Patel as commission leaders.)

(This added after publication: Carol Paton writing in Business Day argued a few hours ago as follows: “One of the most distasteful dimensions of Cosatu’s internal fight has been the partial role played by several journalists, who have published information from parties to the conflict designed to smear Vavi. For example, allegations have appeared in the press to the effect that Vavi sold Cosatu’s former headquarters for R10m less than the market price. But such a direct allegation has not been made in a Cosatu meeting.” I wish I had put that  in earlier.)

 

Zuma approval rating among city dwellers drops to all time low

The Sunday Times reports that President Jacob Zuma’s approval rating among urban dwellers is lower than ever and his disapproval ratings are at their highest – and, in general, views are firming up on this matter.

%

Apr

‘09

Jun

‘09

Sep

‘09

Nov

‘09

Feb

‘10

May

‘10

Sep

‘10

Nov

‘10

Feb

‘11

Mar

‘11

Sep

‘11

O/N

‘11

Feb

‘12

Apr

‘12

Aug

‘12

Feb

‘13

Approve

52

57

53

58

43

51

42

49

49

48

45

55

55

46

48

41

Disapprove

29

13

19

23

41

33

44

34

35

38

41

38

35

46

44

51

Don’t know

19

31

28

12

17

16

15

17

16

14

14

14

10

8

8

9

Net positives

+23

+24

+34

+35

+2

+18

+2

+18

+2

+15

+14

+1

+20

0

+4

-10

Zuma’s approval ratings amongst city dwellers over time (TNS Research)

TNS conducted home interviews with “1290 blacks, 385 whites, 240 coloureds and 115 Indians and Asians.”[2]  54% of black people were still happy with Zuma’s performance, but only 13% of whites. The president still has 64% of the vote from “younger Zulu-speaking adults, of whom 64% – down from 71% in August last year – were happy with his work” (Sunday Times).

An important indicator comes near the end of the story: “Zuma’s biggest drop in approval was recorded in Soweto, where the figure of 42% was the lowest since he assumed office. The Port Elizabeth figure of 22% was also an all-time low.”

So what?

National general elections must be held some time between April and July in 2014. For the first time “born frees” (young people born after 1994) will be eligible to vote. This first wave of born frees will consist of approximately 6 million people, “using the 76% turnout of the 2009 elections, these new voters could make up more than 20% of the vote by 2014 … for context, the Democratic Alliance won 17% of the vote in 2009. From 2014 onward, the born-frees will come in waves of just over 5-million each national election until they make up nearly half of the voting population by 2029” -  (Osiame Molefe in the online news source Daily Maverick).

There is growing excitement that, perhaps, this category of voter, and urban African voters more generally, might be open to political choices unthinkable only a few years ago. Much of the growing expectation in the Democratic Alliance and the energy behind Agang comes from this source. Could younger and urban voters (especially Africans) vote for a party other than the ANC in 2014?

Jacob Zuma has established a rigid hold on the ANC, but the TNS and other market research could indicate that it is precisely this victory that makes the ANC a less appetising choice for younger and urban voters. If Jacob Zuma leads the ANC in an election in which the ruling party gets much less than 60 % of the vote, his hard but brittle hold on the party could shatter.

ANC strategists are seriously worried about both the Eastern Cape (especially, but by no means exclusively, the Nelson Mandela Bay metropolitan area) and the Northern Cape. The idea of whole of the Cape (Western Cape is already in Democratic Alliance hands) in opposition hands and a party the equivalent to the Movement for Democratic Change in Zimbabwe giving the ANC a run for its money in urban areas throughout the country is a nightmare scenario.

Analysts have consistently been surprised at how well the ANC has performed in national elections (62.65% in April 1994, 66.35% in June 1999, 69.69% in April 2004 and 65.90% in April 2009) so treat any wild predictions with a degree of scepticism. However, the TNS survey of Jacob Zuma’s ratings is an indicator that shifts are in progress .

Bits and pieces

  • Business Times quotes a succinct put-down by Finance Minister Pravin Gordhan of the ratings agencies: “[You must] understand that we in South Africa did not create this crisis …when … the financial sector began to create … derivatives, based on sub-prime mortgages … [they] had an AAA rating given to them by the same agencies.” Last week S&P affirmed South Africa’s foreign currency sovereign credit rating at BBB and kept the outlook negative, arguing that external imbalances and underlying social problems remain.
  • All the major weeklies expressed deep levels of concern about what they see as out-of-control police violence in the country – most obviously evinced in the killing of Mozambican taxi driver Emidio Macia in Daveyton, but also brought into public focus by police commissioner Riah Phiyega’s spoon-fed testimony to the Markikana commission on Thursday last week. Police minister Nathi Mthethwa is one of Zuma’s closest allies and his department is, truly, in a parlous and dangerous state.

[1] A word in South African English borrowed from Sesotho, usually meaning a consultation or community meeting with government and the community or within a political party

[2] Categories and language routinely used in South Africa where the racial categorisation of the past is correctly understood to have a significant influence in the present and is routinely used in the media and academic analysis.

I am struggling to make up my mind whether there really is a small accumulation of good news, clearly visible against the looming night … or if I am just desperate. Today’s Business Day story by the always interesting Carol Paton looking at Manuel and Sisulu on a stern clean up the public service drive must be positive, surely?

… and several points in my take on the political news in the English language weeklies from last week are postive:

Cabinet reshuffle

The Sunday Times says Jacob Zuma is planning to axe Dina Pule, Minister of Communications and Lulu Xingwana, Minister of Women, Children and People with Disabilities. Pule’s tenure has “limped from one scandal to another – including the questionable millions paid to her boyfriend from sponsorship money meant for the ICT Indaba last year” – Sunday Times.

So what?

The Department of Communications has failed to unbundle the local loop, missed innumerable opportunities with Telkom, under-resourced the regulator Icasa and generally failed to appoint/settle/keep senior management … and has had three ministers in 3 years. Fixing this is a priority area in the National Development Plan and one of the key ‘bottlenecks’ or ‘obstacles to economic growth’ that need to be removed. So Pule’s removal has (if it actually happens) to be seen as a good thing.

(Interesting – to me – speculation on the side is that Zuma might move Thulas Nxesi (Public Works) to replace Angie Motshekga (Basic Education) and have Motshekga replace Xingwana. This means that Jeremy Cronin (deputy minister in Public Works) might then replace Nxesi. But, as the Sunday Times says “there are concerns in the Zuma camp about whether he (Cronin) can be relied on to protect the president from the repercussions over the controversial R206-milliion Nkandla upgrade.”

Public service

Lindiwe Sisulu (Minister of Public Service and Administration) is quoted in the Sunday times about planned amendments to the Public Service Act setting in place ways of stopping senior administrators benefiting from government contracts. She also promised a “super-director-general’ who would ensure that all heads of department adhere to performances linked reward systems.

So what?

Cosatu’s Zwelinzima Vavi lauded Sisulu plans, saying this would stop the “looting” of public funds by government employees. “We can only say halala (congratulations) to that!” he is quoted in the Sunday Times. I have to agree with Vavi. The biggest political failure that is actually in control of government in South Africa is the poor performance and monitoring systems – and therefore delivery failure and corruption – in government and public sector institutions. Sisulu’s intentions are to be welcomed – and she probably has the steel to follow through. So another plus.

Ramphele wanted DA to be dissolved

The Sunday Times quoted several DA members essentially claiming that Mamphela Ramphele almost joined forces with the DA, but wanted the party to be dissolved first and for her to have an equal share of a new institution. “She wanted a new political party and not to join the DA … she came with nothing but wanted an equal share” said one unnamed source.

So What?

The week has been beset with rumours about the impending announcement by the respected academic and business person Mamphela Ramphele that she is to set up a new opposition party. Speculation reached a climax when it was announced that she had resigned as Chairperson of Goldfieds on Wednesday last week. Ramphele would make an excellent addition to opposition parliamentary politics in South Africa – but the idea that one person, with no party structure or obvious constituency in hand, will change the South African game is hopeful at best. However, on the balance, this is undoubtedly another positive. (That’s three in a row for those who are counting.)

Zimbabwe referendum

Several of the weeklies reported that Zimbabwe’s President Robert Mugabe issued an official proclamation on Friday setting March 16 as the date for a referendum on a draft constitution. Most expressed concern that local activists felt that that gave very little time to explain the draft constitution (it took 3 years of bickering to cobble together) to voters and that the draconian Public Order and Security Act would need to be suspended or repealed before campaigning for a ‘Yes’ or a ‘No’ vote could take place. All opposition parties have  called for a referendum ‘Yes’ vote to allow the constitution to be accepted and signed into law without any further changes.

So What?

Zimbabwe’s stability and growth prospects impact on South Africa in a myriad ways, for example in the floods of economic refugees and the shifting size of the export and investment markets in Zimbabwe. An interesting story in the Sunday Times by senior editor Mondli Makhanya argued that Zanu-PF is likely to benefit from opposition disarray and an improving economy. “With the elections just months away, Zanu-PF is smiling and looking forward to strolling to victory. After having brazenly stolen four parliamentary and presidential elections between 2000 and 2008 Zanu-PF will not have to resort to violence and skulduggery this time.” If Makhanya is correct (which he may well be) it is going to stick in a lot of craws that through a combination of looting, patronage networks, repression and the chasing of the urban poor into the arms of the South African informal economy and welfare system, Zanu-PF might remain in power.

New Iran claims hit MTN

The jailing of Iranian born US citizen Mohammad Hajian for supplying “sensitive and potentially dangerous equipment to MTN’s mobile network in Iran” (Mail & Guardian) deepens MTN’s woes in relation to its Iranian operations.

So what?                             

“The conviction is damning for the South African mobile giant, as it provides judicial corroboration that the company used sanctions-busting networks to beef up its technical infrastructure in Iran” (M&G).

State of the Nation Assessment

Most reviews pointed to the key absence of any binding theme in Jacob Zuma’s State of the Nation Address.

City Press probably had the best coverage.

  • It (CP) correctly points out that there was a specific “shift on land reform” –  with a move from “willing buyer, willing seller” to a “just and equitable” formulation.  This refers to the establishment of a “valuer-general who intervenes on behalf of the state … who then oversees land valuation …to keep the price … affordable for the state to redress” – CP quotes Gugile Nkwinti (Minister of Rural Development and Land Reform).
  • It argues that the youth wage subsidy has been swept aside and that government, business and labour in negotiations through Nedlac will announce a plan soon whereby “growth industries with young workforces will attract state support to hire the young and jobless … unskilled young people will also be offered a second chance to write their matric exams”. So no across-the-board subsidy … but a directed one, only in selected industries.
  • It picks away at the infrastructure programme and the various roles that will be played by Malusi Gigaba (Minister of Public Enterprises) and Ebrahim Patel (Minister of Economic Development). City Press interviewed the ‘up-and-coming’ Gigaba and asked him if Ebrahim Patel had left him much of a role to play. Gigaba replied: ““Economic Development is responsible for a broader plan. My department is responsible for three big infrastructure projects: the roll out of broadband, electricity infrastructure and logistics like rail. Other departments are responsible for roads, transport and dams.”

So What?

The State of the Nation address is always over-anticipated and usually bitterly lamented as not having been specific or visionary enough. This year, not unexpectedly, Zuma enumerated the successes of government and hyped the plans.  Much of what Zuma and his government will do and say in the next while will be focused on the national election in 2014 – and expectations likely to be disappointed.

Bits and Pieces

  • City Press reports that the department of fisheries, headed by Tina Joemat Pettersson is in “total free fall” – raising serious concerns about government’s ability to conduct research required to determine quotas of ‘allowable catch’ for key species.
  • Sunday Times business section reports that industrial unrest and violence at the Medupi construction site make the “chances of the R91bn power station feeding power into South Africa’s overstretched grid by the end of this year … slim”.
  • Sunday Times reports Harmony Gold made history by making individual workers at its Kusasulethu mine sign a treaty with the company in order to lock individual workers into a contract with the company. “This is quite a revolutionary move … (it) means that individual workers can now be taken to task when stepping over the line” says Peter Major, Cadiz mining analyst. Major argues, according to the report, that if similar agreements had been put in place a year ago when trouble first started brewing on the mines at Impala Platinum, a “Marikana” might have been prevented.

(Added as an afterthought: I realise I haven’t made any kind of conclusion given that the opening paragraph suggests I was going to indicate either that I am more positive than negative or vice versa. Frankly, I can’t make up my mind. Which probably makes me a fairly bog standard South African.)

Enthusiasm is a quality I value.

It’s especially endearing in children and dogs. But in human adults beyond the blush of youth it is nothing short of heroic.

However, when enthusiasm is both sentimental and irrational it is decidedly less attractive.

Which brings me to Mamphela Ramphele, Cyril Ramaphosa and the National Development Plan – severally and apart.

When Ramphele resigned yesterday as Chairperson of Goldfields an anticipatory shudder went through the local and international intelligentsia (from the well known Russian word интеллигенция, and defined in Wikipedia as “people engaged in complex mental labour aimed at disseminating culture”).

Yes Ramphele:

  • is tough, principled, intelligent, successful, well organised and has experience at running large organisations;
  • has a degree of “struggle credibility” having been involved in the Black Consciousness Movement 70s;
  • and is unlikely to have made her move without adequate capital backing and other promises of support by significant others …

… and yes we all assume, undoubtedly correctly, that there is a significant (and growing) urban, African, middle-class electoral constituency that is increasingly unrepresented by an ANC that is tending, under Jacob Zuma,  to drift towards a  rural, chauvinist, patronage driven complacency.

The point, for the интеллигенция, is that this constituency is ripe-for-the-plucking by an opposition party lead by Ramphele … a constituency that feels unable to support the Democratic Alliance for historical, ethnic, cultural, policy reasons.

What is it with us looking for a saviour to rise from these streets?

In the recent months it has been Cyril Ramaphosa who will save the ANC from itself and us all from Zuma’s government.

And if that fails we have the National Development Plan that will fix everything.

Like Ramphele and Ramaphosa, the National Development Plan is great.

It might be my own pessimism, but in my opinion these are, all three, not (powerfully) shapers of historical outcomes … they are effects, not causes.

The NDP is just a piece of paper, an adequate diagnosis and a bundle of good intentions.

Ramaphosa is embedded in something much more powerful, and scarier, than he will ever be.

Ramphele is a single person with no established political constituency, no party machinery and a reputation for humiliating her senior managers in public (… aside from all those good things I mentioned earlier).

Sure, we can hope that she will sweep the ANC’s patronage networks aside and replace it with a meritocracy pure as the driven snow.

But I wouldn’t hold my breath.

I was interviewed on eCNA by the excellent Gareth Edwards yesterday about some matters relating to Mangaung, policy and succession. Catch that here.

… and here is a part of my weekly news summary from Monday morning:

  • Nelson Mandela hospitalised on the eve of Mangaung conference;
  • A leaked KPMG audit conducted for Zuma’s corruption trial indicates serious money from some surprising sources has flowed into the bank accounts and bonds of what Mail & Guardian is calling the “kept politician”;
  • Mangaung is going to be all about economic policy – and ANC leaders are very directly signalling this, so that what is ultimately decided won’t come as too much of a shock… it is best to sit up and take notice now;
  • With the presidential leadership contest all but resolved, the only interesting story is the choice between Motlanthe and Ramaphosa;

Nelson Mandela hospitalised

It only just made the Sunday papers, but: “President Jacob Zuma wishes to advise that former President Nelson Mandela has today, 8 December 2012, been admitted in hospital in Pretoria to undergo tests… As said before, former President Mandela will receive medical attention from time to time which is consistent with his age” – presidential spokesman, Mac Maharaj.

So what?

There is no direct financial market implication of Nelson Mandela’s health (he has long since stopped playing any role in relation to South African politics or policy). However, the financial markets do not list the price of every important thing. At the level of sentiment, it will be impossible to separate the growing unease about many aspects of South African politics (see below) from the failing health of the universally loved founding father of the country.

Secret audit reveals how millions flowed to President Zuma

The Mail & Guardian has placed on its website a secret September 2006 KPMG audit of fund flows into Jacob Zuma’s accounts – it is still there this morning. According to the Mail & Guardian: “The report exposes the president as a ‘kept politician’ – a financial freeloader who accepted money and favours on a routine and increasingly extravagant basis not only from his so-called financial adviser, Schabir Shaik, but also from other benefactors, including Nelson Mandela.” The report was prepared for Zuma’s now cancelled corruption trial, and has thus never been contested in court. Mac Maharaj, spokesman for Mr Zuma, said: “Much of the information that is being headlined seems to have been in the public arena already, from the Schabir Shaik trial. I’m finding it strange that it is coming up now, in this fashion.” Here for M&G report and here for the full 490 page report.

So what?

The report should not derail Zuma’s re-election at Mangaung because, as Maharaj so clearly points out, only a few details within the 400-page document are ‘new’. The ANC elected Zuma as its president at Polokwane in December 2007 at the height of public interest in the details of the recently withdrawn corruption charges against him. These details did not stop the ANC then and are unlikely to influence the Mangaung outcome now. The report does add to the gloom around the apparently out of control cronyism at the heart of the ruling party – leaving us with low levels of confidence that Zuma and his government might be able to address the serious challenges facing the country and the economy.

Economic policy is where Mangaung action is – and most of that will be about resources

You had to be watching carefully, but the top ANC leadership signalled over the weekend that economic policy will shift at Mangaung and, further, that too much attention on the leadership struggle will cause observers to miss what’s important. In the Sunday Times, Gwede Mantashe argued the toss in a story headed “Mangaung is all about the economy”; in the Sunday Independent, Jesse Duarte did the same under a headline “Mangaung will clear all confusion over ANC policy”; and in the Mail & Guardian, Jeff Radebe wrote “Mangaung turns on economics”.

In all of these stories (coordinated in line, length, content and ordering, but presenting themselves as independent pieces by these top ANC leaders), it is argued that the National Development Plan co-ordinated with the New Growth Path is central to what “needs to be done”, that state intervention is the key to job rich and equitable growth, that mineral policy is the central area of change that can be expected at Mangaung, that BEE needs review, that land reform needs radical intervention, and that the ANC must be rebuilt to guide these processes.

City Press looked more closely at the State Involvement in the Mining sector document and pointed out that private sector companies were lobbying hard against the ANC’s intention to add a resource rent tax and to control the price of mineral inputs into the domestic economy – but that they (private sector companies) are unlikely to stop or significantly curtail the ANC’s plans.

So what? As we have stated (perhaps repetitively), the ANC is likely to recommend a rise in taxes in mining (or rather a shift to a resource rent tax regime that will have the same impact) and it (the ANC) is likely to decide on taxes on “unbeneficiated” mineral exports to secure supplies for domestic manufacturing combined with price controls as a stimulus to domestic manufacturing. And this is just in relation to the mineral sector. There are plans for state intervention across several sectors and we believe these will have serious impacts on investment in South Africa – many negative, some positive, but generally different across sectors.

 

Cyril Ramaphosa versus Kgalema Motlanthe

All the newspapers reviewed here (and several online sources) discussed in detail the fact that the Zuma camp has essentially nominated Cyril Ramaphosa for deputy president – making him a dead certainty for president in 2017 (if it plays that way).

So what? The Mangaung presidency issue is settled and the only interesting bit (as far as the electoral process is concerned) is the election of the deputy president.

The Zuma camp is entirely in control of the president/deputy choice, so when we analyse what might happen we have to ask: what is the imperative of the Zuma camp?

Well, that’s an easy one: to ensure that the corruption charges do not return and that the candidate and his continued ownership of his (and his camp’s/family’s) acquired assets remains secure even after Zuma has left office.

So which deputy choice could better ensure this outcome?

Would a President Ramaphosa eventually, following the logic of the Constitution and the law, and impelled by some hope for his own legacy, end up allowing Zuma to be charged for the original corruption charges?

Would Motlanthe?

I think Ramaphosa might, although I would not feel entirely confident that the Zuma camp could not construct a deal that keeps him (Ramaphosa) beholden long enough to ensure the achievement of the imperative stated above.

And Motlanthe?

I don’t think Motlanthe would pursue the corruption charges. He is a man who hates having to take decisions that “divide the house”. Taking down Nkandla is going to require something even more invasive and destructive than taking down Polokwane. I cannot see Motlanthe as the author of such a story.

As things stand, the nominations indicate that Ramaphosa will be elected as Zuma’s deputy. However, a last-minute ‘unity’ compromise might easily allow the Zuma camp to appoint the probably more pliable Motlanthe as deputy.

I am not encouraged, in my professional life, to be too colourful in what I write or say.

This morning I reviewed the weeklies – as I do before 06h30 every Monday morning – and found myself having to strip more metaphor and vitriol than usual from what I had to say.

For example – still right here in my clipboard, recently cut from the document I sent to clients – is this little piece of over-the-top contemptuous bitterness: “it paints a picture of an engorged elite sitting atop piles of treasure they will defend at all and any cost.”

I remember vaguely from 04h00 this morning a picture lurking somewhere in my head: there are about fifty fat dragons uncomfortably sprawled over their separate piles of loot in a disgusting, dank cave somewhere far below the smoking and ravaged surface. These beasts are  dangerously fanged in a mean, cowardly way and entirely without the pretty iridescence of most dragons I have encountered – and they hate and fear each other and anyone else who might take their stuff …

… but obviously I never went down that route.

Last Friday’s Mail & Guardian had particularly excellent – and depressing – stories about the the Nkandla looting. See here for the memorable editorial that sums up the ugly story; here for the alleged Maharaj arms deal link, here for the Gupta’s further bankrolling of the Zumas’ excessive domestic costs … and here, from the Sunday Times, a clear view of how significant public funds were diverted to the Zuma coffers and asset base, but also that much of that money did not actually arrive because it was creamed off by cronies before it even got spent on the Zuma friends and family.

The point, I think, is that the African National Congress is fast resembling sets of competing patronage networks – and little else. This is revealed in the violence and vigour in its internal contests for position. There is zero evidence of ideological division; all claims to the contrary, to my mind, are, sadly, often revealed to be false fronts: sheep’s clothing for wolves trying to sneak up on their prey.

Anyway, if it is all too exhausting and depressing to read in the original here is an extract from my morning summary:

  • The ANC nomination process draws to a chaotic and sometimes violent close – with Jacob Zuma achieving something of a Pyrrhic victory
  • Out of this might come one result welcomed by financial markets: the election of Cyril Ramaphosa as Zuma’s deputy and, hence, his (almost) automatic rise to the presidency in 2017
  • The body of the news commentary was a painful forensic tracking of the corrosive flood of money pouring over the ruling family from some worrying sources
  • The Gold Fields’ unbundling was portrayed as a straightforward vote of no-confidence in the country and its leadership – despite the clear and coherent denials by the company itself
  • The death of two much loved and respected South Africans seemed to increase the anxiety about the present and the future

ANC nominations close

City Press counts 2,256 implied votes for Zuma (slightly more than 2,251 he needs to win at Mangaung) emerging out of the nomination process. Table 1 below is what we get as a running total,  including the Leagues. (Note: the votes are ‘implicit’ from the nominations;  where branches-nominated candidates at the provincial conferences we have made the fairly safe assumption that most of these branches would vote for that candidate at the National Conference in December.)

Table 1: Zuma has it – and the 986 outstanding from Limpopo, Western Cape and Northwest is not enough to make a difference

Province/League Zuma Motlanthe
Eastern Cape 392 211
Northern Cape 160 23
Limpopo Conference delayed – violence etc.
Western Cape Conference delayed – disputes etc.
Mpumalanga 427 17
Free State 249 0
Northwest Conference delayed – shots fired etc.
Gauteng 173 238
KwazuluNatal 856 0
Women’s League 45 0
Youth League 45
Veterans league 45 0
  2307 538

So what?

Nothing much. It is going as expected – ever since the Julius Malema campaign was defanged with him (Malema) facing gradually escalating criminal charges related to his alleged ‘tenderpreneurial’ activities it was all over for the Anything But Zumas (ABZs). The interesting dynamics are in the side-lines, with the Zuma camp having backed Cyril Ramaphosa for deputy – partly because their first choice, Kgalema Motlanthe, refused to say he wouldn’t stand against Zuma for president and refused to campaign as part of any slate. Motlanthe’s meticulously principled position may get its just rewards in the fullness of time, but for now he seems to have abandoned the field to those with no qualms  about the tactics they use to secure the ever richer prizes that come with controlling the ANC patronage network.

 

Nkandla, Gupta, Duduzane, arms deal, Maharaj, Mrs Bongi  Ngema-Zuma and Baroda Bank

If anyone was wondering why the ANC battle for power is so intense and bloody, at least one major set of explanations can be found in the incredibly complex (and rich) web of transactions between those at the centre of power and various groups and companies that flood money towards them – presumably because they are such a good investment.

Headlines like: “Zuma’s Home Economics 2 – Guptas ‘bankroll’ wife’s mansion”, “Did arms firm pay Mac’s bill?” ,  “Living in the lap of luxury”, “Bankrolling their way to the top” and “Private deals that demand scrutiny” (Mail and Guardian); “Nkandla: who will take the fall?”, “Joemat-Pettersson flew back for Zuma’s wedding (at R400 000 cost to taxpayer)” (City Press); “Millions stolen from ANC Elders’ (Sunday Independent)  … and just too many more to list here.

So What? The fact that weekly, the tone and intensity of the popular press is becoming more explicitly accusatory of those within the financial web around the Zuma family, and that there has been no significant attempt by those accused of very considerable impropriety to defend themselves has, to my mind, two possible explanations. The first is that the accusations are so overblown, inaccurate and sensationalist that the Zuma family, the presidency, the Gupta family and Mac Maharaj (among a host of implicated others) expect the accusers to choke on their own excess and overstatement. The other possibility is the Zuma camp learned during its effective defence against a myriad corruption, bribery and money laundering allegations that if they can hold out long enough the prosecuting authority will eventually be forced to back off – or be replaced by new prosecutors.

“Gold Fields: who is next?” (Business Times) versus “We will not follow split” (Business Report)

The weeklies were full of anxiety about Gold Fields’ unbundling of some of its local assets – and concern that this might be the start of a wave of similar unbundling and ring-fencing. More importantly, the press was unanimous in rejecting Gold Fields’ denial that this was a vote of no-confidence in South Africa: “…it is one of the strongest votes of no-confidence in domestic investment to date. Its share price jumped 7% after Thursday’s announcement …” (Business Times).

Peter Major (Cadiz Corporate Solutions) is quoted in Business Report as saying “Soon shareholders will tell companies like AngloGold, Ashanti and Harmony Gold that if they don’t unbundle they’ll sell their interests.”

So What? The Sunday Times ran its main editorial on this issue. Saying it is clear why Gold Fields has done what it has done. “The company’s output dropped by 11% in the third quarter as the strikes took their toll. Its managers have been buffeted by unrest, uncertainty and the ever-shifting sands of policy pronouncements. On the horizon is some form of nationalisation of ‘strategic’ resources and more labour unrest as the government fails to lead the country back to the sanity of proper collective bargaining.” We can’t really fault that, although Gold Fields may have had a host of others issues to consider when it made the decision it did.

Changing the guard

The deaths of two respected South Africans who played important roles in the transition away from apartheid and towards democracy continue to raise anxiety about other impending deaths of great South African leaders and about the quality of the incumbent crew. Professor Jakes Gerwel (18 Jan 1946- 28 Nov 2012), Nelson Mandela’s first Director General (among a myriad other achievements) and Arthur Chaskelson (24 Nov 1931-1 Dec 2012) former Chief Justice and architect of much of the South Africa’s judicial system were mourned in all of the weeklies.

So what? Nelson Mandela appointed both of these men to play the crucial roles they did in the young South African democracy in the mid-1990s. It is inevitable that the popular press will hold leaders like these up against the individuals and processes overwhelming the ANC and government as we write this. As Nelson Mandela’s death moves ever closer, the anxiety about the Nkandla improprieties and the violence in the ANC’s internal contests in the lead-up to Mangaung are held up to a (perhaps) mythical standard of the past. The comparisons, fair or not, sentimental or realistic, makes the tone of much of the news and commentary in the weeklies angry, fearful and condemnatory.

First off, let me admit, that I have no choice but to believe that the answer to the question in the title is: yes.

It’s an article of faith.

Who can live in a world where the bullies and thugs, the greedy and manipulative, the powerful and the arrogant have won so decisively that it is pointless to hope – and perhaps work – for an alternative?

Who would dare raise children in such a world?

Or bother to get up in the morning?

In a post titled “A church so broad belief is optional” I two years ago argued that the ANC’s huge electoral support and attempt to straddle every social divide had an upside (as well as several downsides).

Here’s a (slightly edited) quote from that post:

Our society has a number of real and urgent fault-lines along which clashing currents are difficult to manage:

  • White versus black (versus Indian versus Coloured)
  • poor versus rich;
  • the employed versus the unemployed;
  • Zulu versus Xhosa versus Pedi versus Ndebele versus Sotho versus Tswana versus Venda;
  • Western versus African;
  • Urban, modern and fast versus rural, traditional and conservative.

The fact of the matter is that these divisions are not adequately represented in the formal political processes of parliament and government. There is no one party on one side of any of these divisions and mostly no one party on the other.

We are a society in which the formal institutions of democracy are new and tentative – and the divisions are threatening and profound. As many groups and interests as possible need to find expression in the national political debate - and the formal institutions do not yet adequately represent them.

As a second prize, an overwhelmingly dominant ruling party that attempts to play the role of a parliament of all the people, that attempts to speak with the cacophony of the thousand arguing tongues, is not all bad.

It’s just loud, noisy, confusing and unsettling.

This argument came to mind as I picked through the weekly English language press (Mail & Guardian, City Press, Sunday Independent and the Sunday Times) this morning.

I do an exhaustive/exhausting reading of the English language weeklies every Sunday afternoon/night to produce a summary analysis for my main clients by Monday morning. It is an extremely painful task and I am always tempted to quote that famous Punch magazine cartoon from November 9 1895 by George du Maurier to describe what I really think of these newspapers. A bishop is dining, in a formal setting, with a junior curate:

Bishop: “I’m afraid you’ve got a bad egg, Mr Jones”;

Curate: “Oh, no, my Lord, I assure you that parts of it are excellent!”  

But I never actually say that, because there are always a few articles, features and editorials in all four of these newspapers that are truly excellent: well researched, well written and insightful; and it would be untrue and unjust – and a little arrogant – for me to suggest they all stink by virtue of being surrounded, as they are,  by rotten, ill-informed and sensationalist rubbish.

So back to the title question.*

The Sunday Times has Motlanthe rejecting Zuma’s deal of the deputy presidency in exchange for him (Motlanthe) not standing in the presidential race.

It’s a particularly poorly structured story (trying to get away with suggesting a whole range of things without actually saying any of them) although it is full of tantalising tidbits.

So lets take the hints (from all four of the mentioned newspapers) as real possibilities:

  • Motlanthe stands against Zuma;
  • Unraveling patronage networks, especially in eThikwine, open(s?) the possibility of driving a wedge in Zuma’s Kwazulu-Natal support base;
  • To strengthen his ticket against Motlanthe, Zuma offers Cyril Ramaphosa the deputy presidency;
  • Gauteng suggests Joel Netshitenzhe as part of the Motlanthe challenge – essentially to stand against Gwede Mantashe (who’s a cornerstone of the SACP support for Zuma);
  • Winnie Madikizela-Mandela comes out more explicitly anti-Zuma (especially of his handling of Julius Malema) and supportive of  the putative Motlanthe challenge.

So what do we have there?

A Zuma, Ramaphosa, SACP ticket versus a Motlanthe, Netshitenzhe, Winnie, Malema ticket?

Oh Lord, give me strength.

Can’t we have a Joel Neshitenzhe, Cyril Ramaphosa ticket supported by Motlanthe and opposed by the ANC Youth League, Winnie Mandela and an unholy alliance of the Kwazulu-Natal and Mpumalanga patronage networks? (I have written previously about Joel on this website here,  here and here.)

That desire is the moral and intellectual equivalent of arm-chair sports selecting. It would be nice … as would a leadership consisting of a young and vigorous Nelson Mandela, Oliver Tambo, Walter Sisulu …

So quickly, before I go back to picking my way through the odorous wreckage of the four weeklies spread out on my table and floor (the soul-crushing banality of etv’s Sunday afternoon offering in the background and the Cape Town winter sun finally beckoning outside):

What happens at Mangaung will not decisively determine the character of the ANC.

Polokwane was billed as a major rescue attempt – saving the ANC from the dead hand of Mbeki and rolling back the power of the narrow BEE elite which was allied to the most predatory forms of global monopoly capitalism.

Polokwane was going to reinstill the movement with idealism, energy and enthusiasm and channel it into ‘a pro-poor strategy’.

Well, we know how that played out.

Mangaung, like Polokwane, was a result of a complex interplay of forces and contests that go deep into South Africa’s past.

I cannot honestly argue that Jacob Zuma is a better or worse candidate for the ANC or the South African presidency than Kgalema Motlanthe – although I accept that some people can and do (with a lot of enthusiasm).

However, politics is a matter of contingency. It really is the art of the possible … in this sense it is full of difficult compromises.

Any individual who finds him or her self in an ANC branch or region or leadership position, will be faced with choices that, when aggregated, will shape the future of the ANC and, quite possibly, the country. (The same is, of course, true for any South African, inside or outside the ANC.)

Those choices might be circumscribed – by history, by existing power structures and alliances, by the momentum invested by those who control the patronage networks and by wherever it is that the individual finds him or her self.

But if you are not going to throw up your hands in despair and retreat to your bed forever, if you are unable to cut and run, then you have an obligation to make some kind of decision and choice.

I do believe that what the ANC becomes matters – although what it becomes is not going to be determined at Mangaung or as a result of it being led by Kgalema Motlanthe or by Jacob Zuma.

(Note added a few hours later. On reflection, I might have empasised that the cartoon is even more apt for the ANC than it is for the English language SA weeklies … it was meant to be suggested, almost by my omission … but on reflection, I think I will spell it out … which I have now done.)

I have been interviewed several times this week about the Cosatu strike.

Is this an irreparable breakdown between the ANC and Cosatu?

Does this have implications for Zuma’s bid for re-election at Mangaung?

How stable is the ANC/Cosatu alliance?

What do I think of Jackson Mthembu’s response to Vavi’s claim that the ANC says “Cosatu is exaggerating poverty of workers in South Africa”? (… or whatever … If you can’t follow the subjects and objects in that sentence check out the ANC statement here - or not.)

Where is the SACP in all of this … and is Cosatu split between its president and secretary general?

Where is all this leading … what is going to happen … what does it all mean?

I’ll give those of you who are interested a kind of answer to those questions in a separate post, but I first wanted to say:  it’s a peculiar business this being a ‘talking head’, someone whose views are sought on something as slippery as what’s really happening in our politics, where it’s all leading and why.

This is not (only) an idle existential question to while away a windy Cape Town Saturday morning … it is brought on by a perilous attempt at humour by that leading bastion of irony and satire, the South African Communist Party and their laugh-a-minute, Umsebenzi Online – and more particularly the March 8 “Red Alert” that you can catch here.

(Perhaps only start reading from the “Succession battles at leading newspaper” headline. That way you might still be open to that old Marxist quip: history repeats itself “first as tragedy, then as farce” – here for Wikipedia’s sketch of the source of that quote, Karl Marx’s excellent The Eighteenth Brumaire of Louis Napoleon - something I find it difficult to believe the writers of Umsebenzi Online have actually read or understood … but that is just by the by.)

Anyway …

The SACP’s satire is a teasing poke at … well, at people and institutions that do what I do for a living.

The premise is that Umsebenzi Online has come into possession of “dramatic new evidence” of a deep factional split at 195 Jan Smuts Avenue … which is the address of the Mail & Guardian newspaper.

The premise is that editor Nic Dawes is being challenged by “the ring-leader of the Young Turks” Matuma Letsoalo.

And the issue over which they are divided?

Whether to stick with the fading Julius Malema as the leading character in the soap opera the M&G produces or replace him with “the unions” as the new villain.

Umsebenzi Online then seeks the views of “two well-known, dial-a-quote, soap opera specialists – Aubrey Habib and Eusebius Mashele”* who proceed to pontificate incoherently about the split at the M&G.

There is a whole cast of villains in Umsebenzi Online’s slightly stilted (hardly unexpected that – Ed) attempt at humour.

And all the villains are ‘talking heads’ … people who have come to make their primary living from giving their views on the South African political soap opera.

I think there is a real question to be answered about political analysts – poorly asked and answered in this pinkish satire

Are the views of ‘political analysts’ any more reliable than anyone else’s? It’s not like there is a professional association that erects barriers to entry and puts in a whole lot of quality controls. And anyway such associations are usually just a gang hierarchy that protects the turf from competition.

My own answer – and I have to have one, or my tongue would shrivel up and drop out of my head and my fingers fuse uselessly to this keyboard – is that political analysts are to politics what critics are to art and literature. The critics don’t have to be artists or writers themselves – in fact, that might well be a drawback to them performing their function.

Critics come to be what they are through a market mechanism – their views are sought out and some consumer ends up paying for them. The art consuming public is looking for confirmation, information or rebuttal; they are looking for a view against which they can balance their own view, or learn something from – or just to think about.

The best critics are a mirror for the artist – trusted or hated by the practitioner, it doesn’t necessarily matter.

Rubbish critics can find an oppulent home in rubbish publications and TV stations – because mediocrity does so often rule the mass market mechanism.

Fine critics can quietly go about their business and eke out an interstitial existence of quiet excellence and the small comfort of professional respect.

Or the other way around.

I am all in favour of communists using satire to further their aims – it is so much more desirable than the dystopian bureaucratic terror which appears to be the default instrument – when available – of this vanguard of leading intellectuals.

But I wish this satire had been more … well, funny … and clever – basically, more thoughtful. We are bludgeoned daily by the views of “experts” – and it might not have escaped you that I both bludgeon and am bludgeoned in my turn.

How and why political analysts come to be part of our lives and part of the cultural and public intellectual process is an important question – one we should think about before consuming the sometimes suspicious fruits they offer.

* Those fake names are a melding of the real Professor Adam Habib:

Aubrey Matshiqi:

Prince Mashile:

and Eusebius Mckaiser

(Right you four, you can send donations to The Association of Professional Standards in Political Analysis for the free publicity – Ed)

As the cannonade and sharp retorts of the Municipal Election become deafening, it strikes me how alike are elections and wars.

Both these human endeavours are faced with comparable technological, communication, infrastructural and personnel challenges.

Generals preparing for war and political leaders for elections have this in common:

  • They must have a game plan and clear objectives, including a realistic view of the chances of success and the costs involved in achieving objectives.
  • There must be lots of money available.
  • They must have a clear understanding of the enemy and the enemy’s resources and capabilities.
  • They must have precise information about the terrain upon which the battles will take place and the loyalties of the citizens who inhabit that terrain.
  • They must have a complex and balanced organisation at their disposal which contains the full capabilities and capacities that might be required – from senior management down to foot-soldiers, and encompassing every specialist skill that might be applicable to the proposed campaign as well as the most varied arsenal possible.
  • They must have systems of supply and replenishment – allowing funds and resources to flow to where they are needed.
  • They must have a system of communicating to every level of the force and auxiliary services;
  • They must have a system of communicating to the world and general public not directly involved in the war.

I suspect one could search for more complex similarities, but the issue of interest to me is how both elections and war require – or cause, I am not sure which -  propaganda and distortion of the truth.

We have all heard the notion: “The first casualty in war is the truth” – (Aeschylus 525 BC – 456 BC) and it is apparent listening to what  the principal players in our election say of themselves and each other that “the truth” seems infinitely elastic and vague.

The most obvious contravention of the rules of engagement have been Julius Malema’s comments in Kimberly over the weekend: “We must take the land without paying. They took our land without paying. Once we agree they stole our land, we can agree they are criminals and must be treated as such.”

But Malema is just a weapon that gets deployed in the battle, and I doubt any one army in this conflict is innocent of the impulse to use every single weapon in its arsenal.

And we shouldn’t be surprised.

For the strategists and generals are up to their necks in the campaign, it is all they think about, all day and all night, sleeping, eating and on the toilet. As the final day comes closer, every possible advantage, every weakness of the enemy, every inch of ground, every weapon in the arsenal … becomes important and worthy of exploitation.

A kind of frenzy takes over the leadership and all caution or higher feeling gets brushed aside.

It’s win at all costs … and that is pretty much where we are right now.

And that is the problem.

In nine days time we are all going to look up from the carnage and find a world very slightly changed by the battle that has been fought.

It is only myopic politicians and generals who could possibly believe their little war/election justified the distortions and propaganda they have deployed.

What happens when we define ‘the enemy’ in terms that would justify shooting them down like mad dogs in the street?

I have often felt that the terms of our political debate are too extreme – from all sides of the political spectrum.

The idea or assertion that the government, the state and the ruling party is made up of an undifferentiated herd, squealing and grunting at the trough, might be rhetorically satisfying, but it’s wrong and not designed to foster our democracy.

But a more serious problem is emerging as the a Ruling Alliance, feeling threatened and burdened, has started characterising all forms of opposition as driven by white capitalists full of nostalgia for Apartheid.

The best example I can find is contained in Blade Nzimande’s Chris Hani Memorial Lecture.

Nzimande makes explicit something that is being articulated from every part of the Ruling Alliance – and it is important not to dismiss his words as part of a “loony left” view.

Nzimande defines two enemies of freedom, democracy, national liberation and “our revolution and its objectives”. These enemies are:

  1. The new tendency including tenderpreneurship and the general danger of business interests within our broad movement overrunning and defeating the revolution
  2. The anti-majoritarian liberal tendency

The first one is clearly ‘the enemy within’ – tenderpreneurs and similar – and in this he might be supported by the DA.

But in the lead-up to the municipal election, it is the second enemy and how “it” is defined that is of interest to me.

This is the essence of it pulled out as quotes and paraphrasing from the lecture:

Firstly, the Democratic Alliance and the print media are the organised representatives of the enemy.

Thus: … there is a “liberal offensive against the majoritarian character of our democracy” that with “growing arrogance and strident nature” is “pushed by the likes of the DA” but mainly conducted by its “principal ideological platform and mouthpiece … South Africa’s mainstream print media”.

Secondly, the enemy consists largely of previous beneficiaries of Apartheid:

In fact the (anti-majoritarian) liberal agenda seeks to defend, protect and advance the interests of the white capitalist class and the petty bourgeoisie, without explicitly saying so like during the era of the racist apartheid regime; and yet in a manner not different from white minority rule, but in conditions of black majority rule!

Finally, the main strategy of this enemy is to get the state to stop supporting the poor and instead make it (the state) an instrument for making capitalists richer still.

At the heart of the liberal offensive is the objective of weakening the capacity of the state to act in the interests of the overwhelming majority of the workers and the poor … In addition such state intervention in favor of the capitalist or local ruling elites … undertake(s) further measures (like repression and destruction of the trade union movement, especially its progressive components) in order to ensure that the conditions for the reproduction of capitalist relations of production are strengthened.

Believing your own propaganda

Like all effective propaganda these characterisations by the Ruling Alliance -  here expressed in the mostly pseudo-intellectual terms of Marxist Leninism – rely on packaging elements of truth with confirmations of  people’s lived experience – at the same time confirming their prejudices and fears.

In this universe a Media Appeals Tribunal or the disruption of a DA rally in Mamelodi are minor acts of resistance against an evil and dangerous invader.

The lie that the DA only represents Apartheid nostalgia equals the lie that the ANC is only a platform for pillaging the state.

Both characterisations leave the protagonists stranded on their high horses beyond the frontiers, with no roads back and no options but to push forward into the night.

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.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 5,078 other followers

My twitter tweets

Follow

Get every new post delivered to your Inbox.

Join 5,078 other followers