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I am on my way to London to speak to the funds that buy and sell South Africa’s corporate and government bonds i.e. the market that sets the price at which the world is prepared to lend us money.
Daily I become more convinced that the South African political economy is, like quick clay “so unstable that when a mass … is subjected to sufficient stress, the material behavior may transition from that of a particulate material to that of a fluid.”
The other metaphor I was fiddling with was: all the cards have been thrown in the air and where they will land, nobody knows. (I’m sure there is an elegant song or poem that says something like that, any help there would be appreciated … that request is the WordPress equivalent of a #twoogle - Ed)
But before I get onto the more lofty questions about the future of life, the universe and everything, I thought I would send you my latest news update – so you can see the gradually building case for my sense that everything has changed. (Thanks as always to BNP Paribas Cadiz Securities for generously allowing me to republish this – albeit a few days later – here.)
- A new socialist party appears on the horizon of South African politics … it’s not all good news, but nor is it all bad
- Murmurs about vote rigging – a leading indicator of political instability
- Mining policy meets with surprising levels of push-back from the private sector – in the Business Day at least
- The future push for the NDP, Hitachi and the ANC, final takes on the budget and why South African telecommunications infrastructure is a very fat golden goose
Numsa confirms it will launch socialist party
The biggest union in the country is effectively in the process of being expelled from the ANC- aligned Cosatu and has announced its intention to establish a party, provisionally to be called the United Front and Movement for Socialism.
“We need a movement for socialism,” general-secretary Irvin Jim told reporters in Johannesburg on Saturday.
He (Jim) continued on to argue that ‘leadership of the national liberation movement as a whole had failed to lead a consistent radical democratic process …’ (Jim paraphrased in numbing detail in SABC Online, Sunday, 2 March 2014, 17h49.)
Numsa has been given seven days (from last Thursday) by the Cosatu NEC to provide reasons why it should not be suspended from the federation. The main issues motivating the suspension are that Numsa has been openly critical of the ANC and the Cosatu leadership and that Numsa has begun competing with, especially, the National Union of Mineworkers, in defiance of Cosatu’ s one-industry-one-union slogan.
This is unfolding much as predicted. The ANC under Jacob Zuma has decided (or been compelled) to impose discipline on the ruling alliance and force a degree of compliance with the various policies of the ANC and its government. The discipline sought by the ruling group within the ANC is motivated by apparently divergent concerns. On the one hand, Jacob Zuma and his allies are attempting to get the left-wing to stop attacking them (Jacob Zuma and his allies) as corrupt and incompetent. On the other, Jacob Zuma and his allies are attempting to force a degree of support for the National Development Plan (NDP), a policy that the left-wing generally sees as ‘neo-liberal’, anti-poor, anti-working class and conservative in fiscal and monetary terms.
There is a fine tension here between positives and negatives (for the audience NB writes for … mainly fund-managers – Ed). The NDP has been widely welcomed in financial markets. But the corruption associated with the holding of high office in South Africa is becoming something of a crisis for investors of all stripes. It is as inaccurate to think of Jacob Zuma’s Nkandla faction as purely the champion of market friendly policy as it is to think that Irvin Jim, Zwelinzima Vavi and Numsa are purely the anti-corruption champions of South African politics.
For now, we need to watch for the formation of the socialist party, probably at or before the year-end. Such a party will have a multiplicity of impacts including (but not limited to) undercutting areas of ANC support and forcing the ANC towards finding policies that stimulate economic growth.
(By-the-way I feel it is likely that this new party will have more substance and longevity than the EFF and through a variety of possible mechanisms – including some kind of alliance or even amalgamation – could subsume much of the EFF support and intellectual leadership. But that sort of speculative concoction will follow this post some time over the next few days.)
UDM says beware of vote rigging
The Sunday Independent (2 March) reports that Bantu Holomisa of the United Democratic Movement claimed that ‘rogue elements’ in the Independent Electoral Commission will help rig the 7 May election to ‘facilitate the underperforming ANC’:
“The ANC is very concerned (about shedding votes), hence they are pinning their hopes that those rogue elements will run the elections, so rigging will be on the high. There is no doubt about that” – Bantu Holomisa in the Sunday Independent, 2 March 2014.
The effectiveness, reliability and constitutionality of the Independent Electoral Commission have been important guarantors of aspects of South African democracy. While Holomisa’s allegations are not substantiated (in the aforementioned interview), the fact that such allegations are made can be an important leading indicator of long-term political stability. People and political parties must trust the electoral system if they are to accept the outcome of elections.
(Holomisa’s ‘rogue elements’ probably refers to Pansy Tlakula, chairperson of the IEC, who was found last year by Public Protector Thuli Madonsela to be guilty of improper conduct and maladministration with regard to the R320 million lease contract for a new head office for the IEC. Tlakula is currently challenging Madonsela’s finding in courts. The IEC and the Public Protector are both institutions established in terms of Chapter 9 of the South African Constitution with specifies that they are designed to “strengthen constitutional democracy in the Republic” – Chapter 9 of the Constitution of the Republic of South Africa, 1996.)
Mining policy pushback – in the Business Day anyway
Today’s Business Day leads with a story claiming that there are ‘growing rumblings’ from the mining industry about the ‘once empowered, always empowered’ equity provisions in the Mining Charter. The issue in this case is that the government will this year audit the mining companies’ requirement to be at least 26% black owned. Neal Froneman, CEO of Sibanye Gold, is threatening to go to court to have Sibanye’s empowerment transactions counted in the audit, even if the black beneficiaries have since sold out of their equity.
Mining companies are issued licences pursuant to them meeting certain criteria with regard to Black Economic Empowerment, employment, social, community and labour obligations.
The series of stories in the Business Day about this matter smacks a little of a campaign by the newspaper – nothing wrong with that but then consume them tentatively. The story is worth reading just to catch the tone and tenor of Neal Froneman – who sounds fed-up to the point of rebellion. Catch it here.
The article quotes Mike Schroder, a portfolio manager of Old Mutual’s gold fund, at a mining conference last year: “One cost that I can’t chart is BEE (black economic empowerment). It doesn’t affect the bottom line or the EPS (earnings per share) or PE (price:earnings) ratios, but every time a BEE deal is done, our pension funds, our provident funds, our unit trusts have to chip in.”
I expect these legislative interventions by the government to strengthen not weaken over time. It is my initial impression that part of the ANC’s answer to the populist incursions onto its territory by the EFF will be to significantly strengthen ‘transformation obligations’ on the private sector – and in return the government will back the private sector against the labour unions. I think these trends will become visible before the end of the year and will be accompanied by greater emphasis on the NDP and by the axing of the ANC’s left-wing elements. Thus, the ANC will attempt to reconfigure South African politics, basing itself more tightly on the emerging property-owning and middle classes than previously, and in a loose alliance with the private sector. This feeds into my ‘hoping for the best’ view of last week – although we should be cautious, because these complicated trade-offs will as likely end in tears as smiles.
Bits and Pieces
- Last week, Helen Zille, leader of the opposition Democratic Alliance, became involved in an unseemly Twitter spat with City Press journalist Carien du Plessis. Actually, it was only Zille doing the spatting and (probably to Zille’s mortification) du Plessis wrote a calm and thoughtful defence of herself in the City Press on Sunday (2 March 2014). In the Twitter exchange, Zille essentially accuses du Plessis of apologising for being white (as far as I can make out). Zille is feisty and combative and there have been several ‘scandals’ around her phraseology and views. She definitely skirts the boundary of what is acceptable in the highly circumscribed and sensitive language of political debate in ‘post-apartheid South Africa’. Will this lose the DA any votes on 7 May? Will it gain the party any? I have no idea.
- Business Day editor Peter Bruce’s Monday morning column, ‘
The Cutting EdgeThe Thick Edge of the Wedge: The Political Basis for budgets (if he perchance comes to these lonely shores and find’s that error, I ask his forgiveness in advance) should be required reading for anyone interested in the speculative intersections between South African politics and economics. This morning, he claims that a normally reliable informant, someone “spectacularly close to the Presidency”, told him that Trevor Manuel will stay on in government as a super-minister in the Presidency in Zuma’s next administration, that other ‘left leaning ministers in the economics cluster’ (he probably means Ebrahim Patel in EDD and Rob Davies in DTI) will be shifted aside, that the ANC will hold its vote above 60% on 7 May, that the new administration will make “a big and forceful push after the elections to begin implementing the National Development Plan”, that the EFF and Numsa’s new party will not fly, and that Zuma will secure his safety from prosecution for fraud post his presidency by ensuring that his ex-wife and African Union President Nkosazana Dlamini-Zuma is his successor. (The argument in Peter Bruce’s article being: “She would not put the father of her children in jeopardy – which I don’t necessarily buy, but is interesting anyway). This view concurs quite closely with my view articulated last week that it appears, shorn of its ‘left’ and ‘right’ factions, the ANC will be obliged (and set free) to pursue vigorous economic growth if it is to win the 2019 election.
- Hitachi has bought back the ANC stake (held by investment company Chancellor House) in Hitachi Power Africa as the shareholding constituted ‘a conflict of interest’. You don’t say. Hitachi Power Africa won R38.5 billion of contracts from Eskom for the Medupi and Kusile power plants. Nuff said.
- The weekend press had a few ‘final takes’ on the budget. The two I found most interesting were Peter Bruce, in his aforementioned column, writing that it was “a budget of almost unsurpassable banality”, and Numsa’s Irwin Jim saying at his Johannesburg press conference on Saturday that the budget “more than anything else confirms the right-wing shift in the ANC/SACP government”. I won’t say anything.
- Telkom CEO Sipho Maseko wrote a paid-for ‘open letter’ in the Sunday Times yesterday accusing MTN SA and Vodacom of acting against the public interest (of expanding access to and lowering costs of a ‘modern communications infrastructure’) by opposing lower termination rates. Maseko claims that Telkom had subsidised Vodacom and MTM to the tune of R50bn over two decades. Professor Alison Gillwald of Research ICT Africa was quoted in today’s Business Day (by the excellent Carol Paton) as saying “Telkom is right. MTN and Vodacom had an extraordinary termination rate asymmetry with Telkom over 20 years.” She went on to say that, during the period of asymmetry, the private companies rolled out “enormous infrastructure that has improved access.” Finally, she says: “While one wouldn’t want to kill the golden goose, she was a very fat goose” … which I thought was a good enough turn of phrase to deserve republication anywhere.
* That is deliberately missing an apostrophe – the ‘*’ makes you think it might be there and you are forced back and forward between the noun and verb meaning. (Get a life! – Ed.)
This is a quick aside before getting onto the more riveting topics of the May 7 elections, service delivery protests (and their search for a Gene Sharp handbook as well as the predictions of the Davies J-curve), the platinum strike, Julius Malema’s sequestration hearing in the North Gauteng High Court this morning (and the pressing matter of whether this could bar him from becoming a member of parliament in terms of section 47c of the Constitution) and the truly interesting Ipsos comparisons of the demographic characteristics of supporters of the ANC, the DA and the EFF.
Out of the mouths of babes and sucklings**
Over the weekend a young, close relative of mine wondered aloud why South Africans continued to vote for the ANC.
The child explained to me late on Saturday night that the ruling party was an institution so obviously bereft of redeeming features that only a person on drugs could possibly continue to vote for it.
“Why don’t they vote for another party?” asked the child in exasperation.
I have to admit that while I recognised the opportunity was begging for a cautious and loving Socratic exchange, I couldn’t raise the enthusiasm to give more than an exhausted ‘who’s they‘, followed by a quick retreat and request a continuation in the morning.
The next day, having completed the obligatory 52 hours (I think that’s about how long it takes?) of newspaper reading, I found myself sitting beside the same child watching Adventure Time on television.
When the charming, nuanced, off-beat and deeply intelligent (in comparison to other media I had been consuming that morning) cartoon was over, the child switched off the television, turned his angelic face towards me and asked: “so, about the ANC …?”
I cleared my throat and gathered my thoughts.
“White settlers from Holland” I began, gazing into the middle distance with a faintly sad expression on my face, as if watching the mournful parade of our history playing out in my mind, “first came to South Africa in 1652 and many bitter struggles were fought over land and cattle.”
Jumping ahead somewhat I went straight to the nub: “On January 8th 1912, chiefs, representatives of people`s and church organisations, and other prominent individuals gathered in Bloemfontein and formed the African National Congress. The ANC declared its aim to bring all Africans together as one people to defend their rights and freedoms.”
Okay, I’m messing with you … that’s a cut-and-paste from ‘a brief history of the ANC’ on the organisation’s website.
However, I find it significant that I had to open the web page and read some of the highlights from there. Somehow the essential story, the glorious history of the glorious struggle for freedom and democracy, the dead heroes, the banners, the flags and the songs, sounded tired and clichéd and faintly hackneyed as I ran through it without much real enthusiasm.
But I still argued the toss. It was not surprising that most black South Africans who were registered to vote would still be voting for the ANC (and, btw, ‘most black South Africans registered to vote’ was still probably ‘most South Africans of voting age’ given both our demographics and our 77% voter registration). The ANC led the fight against Apartheid. The ANC has presided over massive and ongoing redress in favour of black South Africans since 1994! A few bad eggs in the leadership do not change that.
The child raised a litany of objections: ‘Zuma’, ‘Nkandla’, ‘the arms deal’, ‘police violence’, ‘judicial – and other – appointments’, ‘the diversion of billions of rand into the coffers of fat cats and the party itself’, ‘governance failures’, ‘the Traditional Courts Bill’, ‘borderline homophobia’, ‘the impending Zuma/Putin nuclear caper’, ‘growing intra-ANC violence in contestation for increasingly lucrative political jobs’ and ‘increasing state sanctioned violence’ – duh!
(I suspect the ‘child’ is imaginary, a clunky rhetorical device … also, ‘duh’ means ‘give me a break’, or ‘don’t waste my time with the stupid and obvious’ – Ed)
The child’s arguments asserting the extremely putrid state of the ruling party became louder as did my insistence that the majority of voters were not brain-dead zombies acting out a destructive and unconscious impulse.
From the vantage point of this Monday afternoon I worry that I sounded a little like a master of ANC Apologetics ; but the child, delightfully, sounded like a shorter, skinnier, cleverer and more charming Wilmot James.
I obviously didn’t answer the question why do the majority of South Africans still vote for the ANC? to the satisfaction of he who asked it – although I am equally satisfied that I can understand why a majority of normal, sane black South Africans, acting in their enlightened self-interest, might vote for the ANC.
However what I didn’t say in the argument with the child is that I am also sure that along the path down which the ANC is currently travelling, with Nkandla (the political/economic/security faction rather than the homestead) leading the way, awaits a place or a moment at which the ANC will lose the support of the majority of free thinking, free voting* South Africans. Of this I am convinced. I think that moment is some distance ahead – only conceivably first appearing in 2019.
But who walks blindly towards catastrophe, when it is visible, predicted by one’s own forecasting, evident in every stumble along the deteriorating path?
Think about the ANC as having a brand value. Think about the forces that operate within the ANC as a kind of political market. I am hopefully expectant that that market will automatically self-correct … that the brand is so valuable that the threat of its loss will trigger a protective impulse, will mobilise the many who have much to lose if their asset continues to be led and used in the manner it is being led and used by its incumbent central leadership.
Obviously the incumbent leaders of the ANC will not willingly lose control. The consequences for this particular crew would be more negative and profound than, for example, a similar loss of control was for Thabo Mbeki. Also the incumbent leadership has a security/intelligence/street-fighter thing going that could make it a vicious and dangerous opponent of any serious movement for renewal within the party.
Finally, I imagine that the fewer votes the ANC receives in the May 7 election (which I don’t see being fewer than 60% of the total) the more likely and vigorous will be an attempt to change the organisation’s current trajectory and leadership.
(I am not going to run all of that passed the aforementioned child – he will, with some justification, roll his eyes and say whatever.)
* I use the “free thinking, free voting” qualification because it is not an eternal given that we will remain, as we have been (only briefly, since 1994) free, or relatively so, to think and vote as we please.
**’Out of the mouths of babes and sucklings’ comes from Matthew (21:16) recalling the words of Jesus, who was in turn referring to Psalm 8 - from the King James Version, a widely admired (for its literary value) English translation of the Christian Bible … that’s for any readers in a geographical, cultural and/or technological location so remote that even Google cannot help them as it has helped me fake that I knew the full origin of the phrase before I sat down to write this morning.
I have been agonising over whether to keep this website going – or to consign it to the wastelands of the interwebs there to wander mournfully, accumulating lurid advertisements for secret ways of getting rid of belly fat and invitations from young, beautiful and lonely people, in your area, waiting by their phones for a call from you.
After weighing matters too arcane to bore you with here I decided to gird my sagging loins (that’s long and loose clothing, not that other thing you were thinking – Ed) and once more into the breach … and all of that.
So … I have written various 2014 previews. One you may have seen was for the Mail & Guardian and titled ‘What I will be telling investors in 2014′. I would have liked to give it a better edit – and I think I don’t adequately deal with the issue of the corroding effects of the original arms scandal - but you may be interested in reading it anyway. Catch it here.
I also published in early January, as part of BNP Paribas Cadiz Securities’ 2014 Outlook, the overview below. (Thanks, as always, to my main contract holder for generously allowing me to republish a few weeks later here.)
(Remember, no-one has been to the future and returned with any useful information as far as I am aware … so treat the following with a healthy degree of scepticism – Ed)
Political outlook 2014: No safe haven in the storm
At least part of our sanguine view of South African politics has rested on the belief that the ANC had several more decades of 60%-plus support at the polls. We were of the view that while this could lead to corruption, complaisance and cronyism, it would also allow the party to keep the country, government and constitution steady while SA undertook a wrenching transformation from its apartheid past to whatever the future held.
However, several important fissures have appeared in the ANC’s support base that suggest this assumption of indefinite ruling party dominance may not be correct and, therefore, that the essentially benign shepherding of that transition is under strain.
Amcu: bridgehead in previously safe African working-class constituency
Firstly, the success of the Amcu (Association of Mineworkers and Construction Union) in the mining (particularly platinum) sector has led to the virtual collapse of a key ANC labour ally, the National Union of Mineworkers (Num). Amcu is important for a number of reasons, but in this section, the issue is that it has created a bridgehead in the ANC’s core constituency that has every possibility of linking up with new left-wing (or in other ways radical) political formations that will challenge the ANC politically in the next few years.
Julius Malema and the formation of the EFF
Secondly, the expulsion of Julius Malema from the ANC and his formation of the Economic Freedom Fighters (EFF) party damages the ANC in two important ways. It draws disaffected young black South Africans, who are experiencing unemployment rates of about 60%, out of the ANC. And it captures ideological terrain that the ANC was previously able to control and finesse, namely, the question of the nationalisation of mines and land.
A strong and confident ANC has, since 1994, essentially been able to tell its electoral constituency that patience is required for transformation and that constituency has, with mutterings, accepted the ANC’s moral authority on the matter. However, that consensus is collapsing. Mr Malema’s ‘red berets’ are attacking the president at every opportunity and arguing that the ANC has sold out the birth-right of Africans and has been bought off by the opportunity to loot the state and by juicy empowerment deals. The message has a natural resonance among poor urban and unemployed youth – but up until Mr Malema’s expulsion, the ANC was able to articulate both sides of this debate within itself.
NUMSA split: The unravelling of the ruling alliance
Thirdly, it appears that the long-standing split within Cosatu (Congress of South African Trade Unions) over its relationship with the ANC has been forced to a head by the suspension of Cosatu Secretary General Zwelinzima Vavi. A ‘left’ faction had, with a degree of discomfort, existed within Cosatu since the formation of the union federation in 1985. This faction has its roots in non-ANC liberation traditions and was concentrated mostly in Cosatu manufacturing unions, especially Numsa. The moves to get rid of Mr Vavi and close down Numsa’s criticism of the president and of ANC economic policy probably emanate from the hegemonic faction within the ANC itself, in other words, Jacob Zuma and his closest allies. Not unsurprisingly, Numsa has now formally called on Cosatu to leave the alliance with the ANC, has said it will not be supporting the ANC in the election in 2014 and has called for the immediate resignation of President Zuma.
Over time, this will impact ANC electoral support, though not necessarily profoundly in 2014. How Numsa members and their dependants vote in next year’s election was probably a ‘done deal’ prior to Numsa’s defection decision at its special congress in late December 2013. Numsa may link up with ‘left’ or ‘workers’ parties (and may actually form a ‘socialist party’ that could challenge the ANC for support in the ANC’s key black working-class constituency), but this will likely impact more profoundly on electoral outcomes in the 2019 election.
ANC swelling in rural conservative areas and shrinking amongst urban sophisticates
Fourthly, the patronage and diversion of state resources as depicted by the Nkandla saga, combined with the vigorous pursuit of the rural vote in Kwazulu-Natal, has meant that the ANC is gradually appealing less to urban Africans (although this is by no means a majority trend) and more to rural and traditional poor black South Africans. This appears to mean that parties like the Democratic Alliance, AgangSA and the EFF are picking up a degree of unexpected traction in such constituencies.
After a catastrophic 2012 as far as the labour environment was concerned – especially the repeated waves of illegal and violent strikes in the platinum sector – 2013 saw stabilisation, albeit at still unacceptably high levels of unrest and strike activity.
In the platinum sector, the Amcu is ‘bedding down’, but likely to continue contesting with the Num in the gold sector. The next public-sector wage round is scheduled for 2015, so we have a breather before that storm hits (and we expected it to be a big storm when it does).
The formalisation of the Numsa split from the alliance probably means that this union will begin to actively contest with the Cosatu unions and in several other sectors of the economy. We are looking for the formation of new and smaller unions in sectors where the incumbent unions have grown too cumbersome or complacent to deal with the demands of specialist groups of workers. Unionism is a growth industry in South Africa, with annuity income for those who set them up. As Cosatu shudders, there are many opportunities emerging.
Labour unrest, poor labour productivity and inflexible labour markets (price, size, skills) are among the biggest negative domestic drivers of economic growth and we expect the figures to show a slight improvement in 2013 over 2012 and a significant deterioration in 2014 and 2015 – which may have significant negative implications along the lines of the BMW ‘disinvestment’ decision.
National Development Plan: The political rise of the Treasury and fall of Cosatu
The ruling party and the ruling alliance’s approach to the National Development Plan (NDP) has appeared highly conflicted since the adoption of the plan at the 2012 Mangaung national conference of the ANC.
While our view is that the NDP is little more than a shopping list (and not the miracle cure some ratings and multilateral agencies hope it is) in the areas of large infrastructure roll-out and a disciplining/training/focusing of the public service, we may be in for upside surprises. The important political leaders to watch here are ministers Lindiwe Sisulu (public service and administration) and Malusi Gigaba (state-owned enterprises).
In several different ways, the Zuma leadership of the ANC has, over the last few months, appeared to back with a degree of fortitude previously orphaned policy thrusts from the NDP that are generally ‘financial-market positive’.
The first of these is the foregrounding of the NDP itself – both at Mangaung, but also in the medium-term budget statement in October 2013. Minister of Finance Pravin Gordhan stated that that this budget statement and all future budget statements would be ‘the accounts’ of the National Development Plan, putting the plan at the centre of government policy.
The trade-union movement – especially the now defecting faction rooted in Numsa, but actually common to the whole federation – was outraged by this, as it sees the NDP as a capitulation by the ANC to (variously) ‘white monopoly capital’, ‘neoliberalism’ or ‘business interests’.
In conjunction with this foregrounding of the NDP, Jacob Zuma has recently signed into law two major policy thrusts that are bitterly opposed by the ANC’s labour ally.
The first of these is the Transport Laws and Related Matters Amendment Act, which allows for the implementation of ‘e-tolling’ on Gauteng highways and has been bitterly opposed by COSATU and other community groups in that province. Bond-market investors and ratings agencies have repeatedly said it is crucial that the ANC implement ‘e-tolling’ if the government is to maintain credibility on the global capital markets. It is significant that the Zuma administration has grasped this nettle, despite facing (by all accounts) a significant electoral challenge in Gauteng in 2014.
The second surprising nettle-grasping activity has been the promulgation of the employment tax incentive bill in the face of united Coatu fury. This is the ‘youth wage subsidy’ of yore, and the ANC under Jacob Zuma has obviously decided to accept thunderous criticism from its ally in the hope that longer-term employment growth benefits will weigh in its favour at the polls, in both 2014 and 2019.
Together, these initiatives are surprising positives and have probably come about because the Treasury has managed to persuade Mr Zuma and his cabinet that failure to take a stand on these various measures could lead to downgrades by the ratings agencies.
Policy and regulatory risks predominate
Thus, our view is that the Presidency, bereft of any real policy direction itself (because it is busy purely with rent seeking and hanging onto power) has been persuaded by Pravin Gordhan that the country is in trouble, that the deficit is looking genuinely threatening, that downgrades are a real possibility and that if this goes south, President Zuma might go with it. The National Treasury briefly has the reins, and this gives us a moment of respite.
However, hostile mining regulations, a fiddly and interventionist Department of Trade and Industry, an overly ambitious Department of Economic Development, a hostile Department of Labour, liquor legislation, more and tighter empowerment legislation and deepening regulations on all fronts, but especially in the credit markets, mean that, on the whole, government in 2014 will be an unreliable financial-market ally.
State finances: The deeper risks are fiscal
The country’s increasing dependence for stability on social grants and other forms of social spending is a real and deepening political risk. While the social grant system has lifted millions of South Africans out of poverty and the public sector has employed hundreds of thousands of others, it has also created a culture of dependency and paternalism and is an unsustainable expense that the government will at some stage be forced to reduce. This is definitely going to be accompanied by severe social turmoil, although as mentioned previously, the real ‘fiscal cliff’ is still some way ahead of the forecast period dealt with in this report.
The election results will be important, but in ways that are difficult to predict.
If the ANC’s share of the national vote plummets to the low 50% range, will this force the party into a process of renewal, or will it be panicked into populist measures? It probably depends on which parties take up the slack.
If the ANC gets 65% of the vote, will it be ‘Nkandla business’ as usual – an unhealthy rural populism à la the Traditional Courts Bill, combined with activities like the significant public resources (ZAR208m) spent on building the president’s Nkandla compound and accusations of corruption?
If Mr Malema’s Economic Freedom Fighters get 10% of the vote, will that mean ANC policymaking is paralysed until 2019 as the party attempts to appease the angry and disenfranchised youth? Will it mean legislation relating to mining and land ownership swerves into uncertain and dangerous territory?
If the Democratic Alliance wins 27% of the national vote (which we think unlikely) and if it is able to form a provincial government in alliance with other parties in Gauteng (which we also think unlikely), how might that cause the ANC to behave? Better? To continue to allow the Treasury to set the tone of probity and effectiveness, concentrate on fixing education and focus on economic growth as the only guarantor of electoral success in 2019? Will this kind of threat cause the ruling party to attempt to make opposition strongholds ungovernable? We suspect different impulses are already at war within the ANC and investors should watch how that battle plays out.
Below, purely as a way of presenting our latest ‘guesstimates’, are our ‘most likely’ electoral outcomes for 2014 (these may change as campaigning performance changes before the election and as various crises emerge, eg, the booing of Jacob Zuma at the FNB Stadium commemoration for Nelson Mandela in December 2013).
BRICs and the uncertain rise of the SACP
A relatively new and difficult-to-unpick issue is the growing confidence the South African Communist Party (SACP) has in shaping the national agenda. The inappropriate focus on BRICS speakers at the FNB Mandela memorial (over Africans and European Union speakers, with Obama the inevitable exception) is probably evidence of the Communists having very significant influence.
We think this could have fed through into the announced Zuma/Putin ZAR 100bn nuclear deal.
This is a matter of growing tension within the ANC, with a previously dominant (under Mandela and Mbeki) group of ‘progressive Africanists’ having lost power to the Communists, who are now in an alliance with a patronage-seeking, provincial elite with strong links to state-security apparatuses and rent-seeking business interests (‘the Nkandla crew’.)
This struggle could play into succession issues and might be a driver of attempts to impeach Jacob Zuma (a strategy unlikely to succeed, in our view) over the next few years.
Succession and a ‘rescue mission’ in the ANC?
While this matter probably lies beyond the 2014 scope of this report, within the ANC, the possibility of a rescue mission is taking shape (driven, in part, by growing commentary about how many public resources are ending up on and around Jacob Zuma’s person and his tight control of security agencies). A group now on the outskirts of the party, and in very general terms representing the ‘old guard’, appears set to begin working on securing a succession process that reverses the decline (moral and in popularity) over which Jacob Zuma appears to be presiding.
This move has not yet taken shape, nor is it properly manifest, but in our view the important people to watch are previous President Thabo Mbeki, Lindiwe Sisulu, Nkosazana Dlamini Zuma, Cyril Ramaphosa and Zweli Mkhize.
I will make a decision on the caption competition soon, but meanwhile here is my latest news update and summary – the Madonsela story continues to grow and, frankly, should be encouraged to.
The Public Protector clashes with Zuma’s security chiefs
On Friday state security agencies abandoned their urgent interdict in the North Gauteng high court attempting to prevent the Public Protector Thuli Madonsela from a limited release of her report into the R206 million upgrade of Jacob Zuma’s Nkandla private residence. However Nathi Mthethwa (Minister of Police), Siyabonga Cwele (Minister of State Security) and Thulas Nxesi (Minister of Public Works) have indicated that they still expect Madonsela to bow to their various ‘security concerns’ – something the feisty Public Protector is unlikely to do. (She was speaking a few minutes ago, bemoaning the fact that she ever handed the report to this cluster of … securorats? … catch a preliminary reports of that here.)
Madonsela has used the security cluster intervention to ensure that a new key piece of evidence becomes public, namely that Jacob Zuma privately appointed Minenhle Makhanya Architects (who had no security clearance) to run the Nkandla project, but that the company was paid (upwards of R18 million) by the state. It will be increasingly difficult for Zuma’s security chiefs to sustain the argument that their ‘real’ concern about the report relates to whether it (the report) compromises the president’s security or, in fact, that the upgrade was essentially or mainly about the president’s security.
Jacob Zuma might be the quintessential survivor, but in the lead-up to a national election the strong indication that he and his family have personally and directly been the recipients of irregularly redirected state resources could be a serious problem for him and his party. The Sunday Times (17/11/2013) lead editorial is headed: “A suspect president and his questionable lieutenants” … the degree to which Jacob Zuma’s excesses make the ANC look bad is the degree to which he is vulnerable.
The EFF – running out of red berets just as Julius Malema goes on trial for fraud and corruption
The dilemma faced by Julius Malema’s new Economic Freedom Fighters (EFF), is that while the new party appears to be performing well there is a real possibility that some of the leadership could be in prison before the 2014 election. City Press, in its front page lead story (17/11/2013) reports of the growing EFF support: “(t)hey can be seen wearing their red berets on street corners, in public places, hangout spots and even at funerals where they go to recruit new members”. The Sunday Independent, however, points out that Julius Malema will go on trial for fraud, corruption, money-laundering and racketeering at the Limpopo Magistrates Court today – and that 3000 EFF supporters were expected outside the court.(Julius’s case has since been postponed till September next next year – which means he will be firmly in the running next year.)
I have had to constantly upgrade my estimates of how the EFF might perform in the 2014 election. I previously indicated my rough forecasts and promised that from time-to-time I would update my view. Well, here is my latest guesstimate:
To do as well as I indicate here the EFF would have to pick up previous ANC defectors (from Cope and the UDM) as well as a significant number of first time youth voters. The EFF remains the part of the story about which I am least confident – although strictly none of these figures can pretend to any scientific validity. A strong performance by the EFF (built as that party is around a rejection of Jacob Zuma and a rejection of the economic status quo) could set off a shockwave in the ruling party.
Cyril Ramaphosa on a ‘social compact’
Cyril Ramaphosa gave an interesting address to the Mapungubwe Institute for Strategic Reflection (dated November 17 and available as a pdf on Mistra’s website) where he usefully summarised government’s and the ANC’s position on economic development – namely that ‘a social compact’ is required.
The full address is well worth reading, but the essential point (from a financial market perspective) is the statement that:
“Significantly, perhaps most importantly, business needs to focus on building an economy that delivers sustainable returns to all stakeholders over a longer term, eschewing the chase for high profits in the next quarter.”
Earlier, he says:
“The commitment to greater capital investment demonstrated by government needs to be matched by a similar commitment from the private sector to invest in productive capacity and to contribute to employment creation.”
Ramaphosa’s ‘social compact’ is another, perhaps more sophisticated, version of mining minister Susan Shabangu’s comments during an exchange with Gold Fields CEO Nick Holland at a recent conference in Australia:
“Investors must realise they have a responsibility to the country and cannot work to a bottom line that has no heart or soul at all … They have to understand there are various socioeconomic needs of the various partners … If investment will not improve the quality of lives — and recognise that workers also need to live decent lives — it will not be able to bring stability in South Africa … We are a country that, in the past, saw investment coming in that never contributed to ensure that the future of workers would be better.”
Shabangu’s and Ramaphosa’s comments indicate an economic strategy that consists primarily of insisting that private business surrender up the investment, employment and social spending that it is, supposedly, withholding. It indicates a poverty of economic understanding in government and the ANC that is deeply unsettling.
Bits and Pieces
- Next weekend the Democratic Alliance meets in a special federal council during which the party is expected to attempt to deal with tensions around support or otherwise for the Employment Equity Amendment Bill. As the DA’s black membership grows the party will come under ever greater pressure to support both employment equity and black economic empowerment more generally. It is my view that this is a baseline assumption in South African politics – and the DA either will not break through its racial ceiling or it will shift on this policy matter.
- Winnie Mandela, in an interesting interview in the Sunday Independent (17/11/2013), claims that Nelson Mandela has lost his voice – and is only able to ‘communicate with facial gestures’. She also said “the “poorest of the poor are seething with rage and whether our government is aware of the anger of the people, I do not know.” She also said: “I can’t blame Julius for what he has done because we, the ANC, are responsible for that … we would be foolish to think he is not a player or that he is not changing the political landscape … these are very dangerous and worrying times.” Winnie Mandela’s political affiliations are a good weathervane of the degree to which the ANC is – or isn’t – fragmenting. She is likely to stay within the ANC, at least while her ex-husband lives.
- The Business Day today (18/11/2013) reports that moves are afoot in Cosatu to suspend or expel the National Union of Metalworkers of SA (Jacob Zuma’s key critic in Cosatu and Zwelinzima Vavi’s key ally). If the Jacob Zuma aligned faction achieves the objective of getting rid of Numsa and Vavi it is likely to precipitate the formation of a competing union federation and, possibly, a new political party of the left. The moves against Numsa seem like the actions of a weak and authoritarian core and are unlikely to achieve a unified and strong ‘ruling alliance’. In fact I suspect that the opposite will be the case.
Some of my recent news coverage and commentary:
E-tolling and the DA’s cruel billboards
Last week Jacob Zuma signed into law the Transport Laws and Related Matters Amendment Bill – meaning the unpopular e-tolling can begin on certain Gauteng highways.
I was impressed that the President did the necessary – despite the fact that this will cost the ANC votes in the 2014 poll especially in the closely contested Gauteng and especially amongst the class of people the ANC is, supposedly, at risk of losing to opposition parties.
Of course failure to sign the law might have led to downgrades by rating agencies and an even more hostile report from the IMF … but good for him anyway!
The interesting aside is that last week huge billboards sprung up along those highways saying things like: “E-tolling – Proudly brought to you by the ANC”.
Of course that campaign is funded by the Democratic Alliance snapping with its sharp little teeth at the ruling party’s heals .
Or perhaps it is more like being savaged by a duck?
Whatever, it’s all part of the razzmatazz that is going to be seriously tiring in about four months’ time but for the moment is mildly entertaining.
Election 2014 – the Zuma swings and the Zuma roundabouts
The major weeklies continued their faintly mindless coverage of Election2014.
City Press ran with two stories about how the ANC had decided to put Jacob Zuma delivering 50 specific and successful infrastructure projects at the centre of the ruling party’s election campaign. Not quite the shock the screaming headlines claim it to be.
All the Sunday Papers covered the fact that last weekend’s National Executive Committee of the ANC nullified the previous week’s Provincial General Council of the ANC in Gauteng. At issue was that the ANC in Gauteng is clearly not delighted to have to front itself with this particular president and believes its supposedly more urbane, sophisticated urban voters would be better wooed by Thabo Mbeki, Cyril Ramaphosa and/or Kgalema Motlanthe.
Deep behind the chatter is the growing view that the Zuma-face of the ANC is unlikely to charm the middle classes. The basic reasons, according to feisty City Press editor Ferial Haffajee, are made explicit in the Gupta wedding scandal cover-up:
“(it was not) the first time the party has been damaged by our president’s careless ways and friendships, which morph too easily into cronyism and patronage. There is a long line of infractions, stretching from the arms deal and his relationship with Schabir Shaik, to the rape trial he faced (the president was acquitted), the news of a child born out of wedlock with Sonono Khoza, the splurge at Nkandla and the game-playing with the courts around the spy tapes.” (Said the delightful, clever and middle-class Ferial Haffajee in her column in City Press on 06/10/2013)
The rumour mill is constantly hinting that in certain constituencies the ANC will lose votes because of perceptions about Jacob Zuma’s cronyism and his traditionalist lifestyle choices. The hints usually suggest that the ANC’s own polling information confirm the view.
Frankly it would hardly be a big surprise if certain middle class constituencies are not enamoured with Jacob Zuma. Previous elections strongly indicate that the president is wildly popular in poorer and rural communities, so things are likely to balance out for the ANC.
What would be a surprise is if government got its act together with regard to infrastructure delivery in any meaningful way before Election2014. While a burst of energy can only be a good thing, do not expect a miraculous improvement in infrastructure delivery to result from the ANC’s election campaign.
Microlending falls from favour
Microlending as a business took a number of hits this past week. Nobel Peace Prize winner and founder of the microcredit lender Grameen Bank, Muhammad Yunus, warned that microlending to finance consumption could lock the poor into a life of poverty.
More importantly from a local perspective, Futuregrowth Asset Management’s Andrew Canter was quoted in the Business Times (06/102013) saying the company would “wind down” its exposure to microlenders, including Capitec, African Bank and other unsecured lenders on “moral grounds” (unfortunately the story doesn’t specify if Canter was purely referring to Futuregrowth’s SRI funds – which would be my expectation.) Canter, according to the paper, said: “We have always backed the responsible firms, but the industry structure has provoked industry behaviours that are not good for consumers, or in our view, the nation” … but, he said, Futuregrowth would not make a “panic exit”. “If industry practices improve, or particular players create more sustainable lending products, we will look to back them.”
The microcredit industry has always been controversial and becomes more so when consumers are struggling to make repayments in declining economic conditions. With the link having been drawn between the Marikana tragedy and the extent to which the strikers where in dire straits with regard to loan repayments, it was only a matter of time before sentiment towards the lenders would sour. With sentiment this negative, government is likely to further tighten regulatory control of the sector, especially in an election build-up.
The judiciary – it’s that Jacob Zuma problem again
In a matter almost as impenetrable as it is serious, a judicial tribunal appointed to probe Western Cape Judge President John Hlophe’s alleged attempt to influence two Constitutional Court judges to rule in President Jacob Zuma’s favour when he was fending off serious allegations of corruption got under way last week.
Amongst the complicating factors is that the two judges Hlophe allegedly tried to influence, Chris Jafta and Bess Nkabinde, have indicated they do not wish to proceed with the complaint.
I am not going to pretend to be able to analyse adequately what is going on here. Follow Pierre De Vos at his excellent blog Constitutionally Speaking for all matters relating to politics and the constitution. There is going to be a lot of complex legal argument around this matter but most constitutional experts suggest that the judiciary will be harmed almost no matter the outcome.
The point we unfortunately have to keep uppermost in our minds is that politicians, and especially their machinations in internal struggles within the ruling party, have damaged our systems of law and the institutions that are important to our democracy – from the judiciary, to the prosecutorial authority and including all state sectors directly concerned with national security (including the SAPS, crime intelligence and National Intelligence Service.) And further, such damage continues unabated as powerful groups in the ruling alliance war against each other.
I have been on the road without respite for close to 4 weeks … so here is brief selection of some of my news commentary over the last few weeks, just to show that I am alive and working, albeit a little frenetically. Apologies for the out of date bits and the bits that history has caught up on already.
- Terror attack in Nairobi is the leading-edge of an expanding band across West, North and East Africa
- The conflict in Cosatu is serious for financial markets for several reasons, and while there are some narrow paths out of the quagmire it is increasingly unlikely that these will be the roads travelled by the incumbent leadership of the Ruling Alliance
- The mining regulatory instability is the tip of an iceberg of hostile policy that investors need to start putting at the centre of their vision.
Nairobi terror attack part of a developing African front
The death toll in an attack on a shopping mall in Kenya’s capital city, Nairobi, rose to 59 by the time of writing this morning. The attack began on Saturday morning and appears to have been carried out by an international unit affiliated to Somali’s al-Qaeda linked al-Shabaab movement and is retaliation for Kenya deployment of 4000 troops to back the Somali government against the rebel army. On the same weekend 80 people were killed in Northeast Nigeria in a series of Boko Haram attacks.
al-Shabaab, joins Mali’s AQIM (al-Qaeda in the Islamic Maghreb), Nigeria’s Boko Haram and similar movement in Tunisia and Algeria in a thickening arc (across the whole of West, North and East Africa) of a specific al-Qaeda franchised brand of jihadist rebellion linked to the Wahabi or Salafi traditions that have their origin in Saudi Arabia. This arc of organisations is likely to play a significantly destabilising role, pushing both North and South in the years ahead. The jihadists will be looking for equivalents of Chechnya and Afghanistan as safe ground on which to train and equip international brigades (as they did in Mali up until the French intervened in January this year but might be still doing in territory outside of government and French control) and world powers will be looking to stop them. This will become an increasingly important element of investment decision across the whole band of countries affected. Kenya, Nigeria and Uganda are not necessarily mortally injured by events like the one at the Westgate Mall in Nairobi (that is still on-going as I write this) but the signal is that we need to have this matter more central in our assessments of the region.
Cosatu ructions have potentially serious implications for investors
The trade union ally of the ruling African National Congress continues to suffer a debilitating leadership struggle. Cosatu’s Central Executive Committee has received letters from the requisite quorum of unions insisting that a special congress of the federation be held. The weekly newspapers are full of speculation as to whether such a congress would reinstate Zwelinzima Vavi and get rid of Cosatu president Sdumo Dlamini, deputy secretary general Bheki Ntshalintshali; and Cosatu’s second deputy president Zingiswa Losi – who are Vavi’s main foes and Zuma’s main friends (simplification alert) amongst Cosatu’s NOBs (National Office Bearers).
It is possible that Sdumo Dlamini will attempt to block the special congress by arguing that several administrative and technical barriers (time, money and the upcoming national elections) make it too difficult to hold. This is what is at stake:
- Based on previous voting patterns a special congress of Cosatu is likely to reinstate Vavi and it is conceivable that such a congress could expel the ANC and SACP loyalists from the federation’s top structure.
- However an alternative outcome could be the reinstatement of Vavi, and the recovery of a fragile unity in the federation prior to next year’s election. This would require the top ANC leadership and its allies in Cosatu backing off their attempts to shaft Vavi. It appears this requirement would be difficult for the Zuma leadership of The Alliance to meet. Zuma’s leadership is increasingly characterised by a (essentially weak) reliance on force and the driving out of critics – as opposed to (an essentially strong) ability to provide leadership and establish hegemony over an unruly and contested alliance of forces.
- Thus if the ruling group fails to find an accommodation with Vavi it is a real possibility that Vavi and his allies will be forced out of Cosatu. This result could be catastrophic for both the ANC and for industrial relations stability as a whole. Numsa would go with Vavi and Numsa would have the capacity to compete successfully with a host of other Cosatu unions, particularly the National Union of Mineworkers (Num). The disastrous consequences of the contest between Num and Amcu could be a template for similar contests between Numsa and several other Cosatu unions.
- A split Cosatu could conceivable lead to the formation of a new ‘worker’ or ‘left’ political party or alliance that could, ultimately, challenge the ANC at the polls. There are a number of reasons why The Alliance has maintained its integrity for so long – and generally those who have been expelled or who have left of their own volition have shrivelled in the cold. However this conflict in Cosatu, driven as it is by the Zuma leadership’s attempt to supress criticism of corruption and dissent about policy, is changing the equation.
- Vavi and his allies accuse the Zuma leadership of attempting to make Cosatu into a ‘labour desk’ of the ANC. It seems to me that this accusation is essentially correct and that the solution that would work best for the ANC and for industrial relations (in the short to medium term) would be to allow Cosatu to make its own decision about leadership at a special congress.
Mining regulatory instability is the tip of an iceberg of hostile policy
To understand how increasingly hostile is the stance of government towards business in South Africa, listen to the words of Chamber of Mines head Bheki Sibiya talking about the proposed mining law amendments after public hearings on the matter ended last week (in the Sunday Times, 22/09/2013 and Business Day of 20/09/2013).
He points out that the Mineral and Petroleum Resources Amendment Bill of 2013 intends to significantly empower the minister to intervene in the sector – specifically with regard to ownership and pricing. “Mining is long term. Once one is not so sure about one’s rights in the long term, one would rather say let’s cut our losses now. This is what investors will do … If pricing is not going to be decided by the markets but by some individual, then when you do your projections you’re shooting in the dark” he said.
Sibiya specifically bemoans the recent process of business engagement in various amendments to the Labour Relations Act and the Basic Conditions of Employment Act. In those cases years of proposals were essentially ignored by government and it (government) went ahead with what it wanted and what its alliance partner Cosatu wanted.
Business Day took these observations a little further this morning when it republished a quote from last week by Thami ka Plaatje, head of research at the ANC and an adviser to Public Service Minister Lindiwe Sisulu: “We are still wresting control from the white capitalist economy. We still reel under the oppressive yoke of all-pervading oligopolistic and monopolistic forms of the white economy.”
Regulation and policy in a complex, modern, small and open economy like South Africa’s requires a degree of sophistication that seems increasingly absent from this government. Policy and political risk is inevitably escalating as a government with a diminishing capacity develops an expanding agenda.
…. and then, from even further back, for those with an interest in ancient history …. like 4 weeks ago:
- Strike wave breaks across the country – there are both normal and abnormal drivers
- Alliance Summit – ANC’s inevitable schizophrenia on economic policy is leaving everyone dissatisfied, The tension is evident in mining minister Shabangu’s comments in Australia versus deputy president Motlanthe’s efforts at the Mining Lekgotla in Johannesburg
- The criminal justice system is ever more appropriately named
- Editor in hiding from GuptaTV – comic relief tinged with embarrassment
Strikes – turbulence as the cycle hits the secular trend
Num (the National Union of Mineworkers) has served notice on the Chamber of Mines (COM) of its intention to strike across the gold sector, beginning with the Tuesday night shift this week. Num represents 72,000 of the country’s 120,000 goldmine workers. The Chamber made a final offer of a 6-6.5% wage increase, while Num is holding out for 60%. Amcu, which is also represented in the gold sector (now 19% of workforce according to the COM, but probably as high as 30% according to Adrian Hammond, gold analyst on the BNP Paribas Cadiz Securities) wants a 150% increase but has not announced that it intends to strike, and nor have Solidarity and Uasa.
There are ongoing strikes by workers in auto manufacturing, construction and aviation services and threatened strikes among textile workers and petrol station employees – but these strikes are, at this stage, part of the normal cycle.
We have mentioned previously:
“South Africa has a predictable strike season, the timing of which coincides with the expiration of bargaining chamber agreements in different sectors of the economy. Every year it appears that a wave of strikes is enveloping the country, but at some time during the gloom, journalists twig to the fact that this happens every year – much of the flurry in normal and predictable” – SA Politics, April 29 2013.
Several such ‘predictable’ strikes are happening or about to happen as I write this.
However, the gold sector breakdown is outside of the normal cycle both in how far the negotiating parties are away from each (6-6.5% versus 60-150%) and in the complex game being played between Num and Amcu. Amcu has quietly welcomed the impending strike as a chance to prove that, in fact, Num does not represent the majority of workers at key mines. On Friday, Amcu president Joseph Mathunjwa said Num’s strike would “qualify” its official representivity of more than 60%. He urged that everyone should: “watch this space”.
Business Report in the Sunday Independent argues that South Africa’s four biggest gold producers are hoarding cash and lining up access to more in preparing for an industry wide strike. “If we are, let’s say, bullied into a situation that we don’t like, we can ride out the storm for a very long period of time,” said Sibanye chief executive Neal Froneman in the Bloomberg sourced story.
The essence of the gamesmanship between Num and Amcu is Num must demand and win an increase via strike action that is satisfactory to its membership, and Amcu must try and undermine the strike action and argue that, anyway, the ‘demand’ in the Num led strike is inadequate. On mines where Amcu dominates (in the Carletonville region at AngloGold, Harmony Gold and Sibanye Gold, according to Adrian Hammond BNP Paribas Cadiz Securities gold analyst – see his note “Wage Negotiations – The Final Round? August 28 2013) Amcu must attempt to force mines out of the central bargaining process by ensuring that no central agreement can achieve a sustainable settlement at the local mine or company level.
An interesting discussion in today’s Business Day by the always excellent Carol Paton suggests that employers with large Amcu membership, specifically at Amcu strongholds at AngloGold Ashanti’s Mponeng mine; Harmony’s Kusasalethu and Sibanye’s Driefonteing favour a lock-out because they believe Amcu will sit out the Num strike and then strike themselves once that is settled. Paton’s story suggests that by locking workers out employers force all workers into one camp. “By declaring a lockout, employers would get around this problem, through forcing Amcu into the dispute now and exhausting workers’ resources to endure a strike.”
The African National Congress, the South African Communist Party, the Congress of South African Trade Unions and the South African National Civics Organisation met in a long postponed summit over the weekend to discuss and agree upon economic policy. The premise of the discussion was “unless we make significant inroads in addressing the challenges of poverty, inequality and unemployment, the democratic constitutional gains of the first phase of our transition will themselves be eroded” – from the Summit Declaration
The Declaration situated the discussion by arguing that
“… stagnation continues to characterise the developed economies, there has now been a significant slowing of growth in key developing economies, including China, India and Brazil. The commodity super-cycle of the recent past is now over. This has had an impact on economies dependent upon the export of industrial minerals and coal. The attempts to refloat growth in the US with a loose money policy have created further turbulence in many developing economies like SA.”
The Summit went to some lengths to defend against the accusation that poor economic performance was in any way related failures of “the South African government, or the labour movement”. Instead, the summit declaration lists achievements in infrastructure build, land reform and youth and labour market reform.
On macroeconomic policy the summit called for:
“bold forms of state intervention, including through:
- Financial regulation and control;
- Progressive and redistributive taxation
- Wage and income policies and progressive competition policies that promote decent work, growth and address poverty and inequality.
- A well-resourced state-led industrial and trade policy
- Increased state ownership and control in strategic sectors, where deemed appropriate on the balance of evidence,
- and the more effective use of state-owned enterprises
The Alliance Summit used all the right language to keep the different elements of the alliance together but said nothing that might reassure spooked investors. The opposite is probably true. Just look at the words: “progressive and redistributive taxation”, “well-resourced state-led industrial and trade policy”, “increased state ownership” and “wage and income policies … that … promote decent work, growth and address poverty and inequality.” This is not the language that Kgalema Motlanthe used as he attempted to pacify investors at the presidential mining lekgotla in Johannesburg last week, but it is precisely the atmosphere of mining minister Susan Shabangu’s words at the Africa Down Under mining conference Perth, Western Australia, where she said investors had to “moderate” the rates of return they expected to earn on their investments so as to allow for the social expenditures that need to be made (Business Day August 28). The ANC and government are increasingly schizophrenic in their attempts to keep everyone (constituents, allies and investors) happy. In trying to keep everyone happy the ANC and the government seem more likely to achieve generalised dissatisfaction.
Criminal justice system appropriately named
The lead stories in the Weeklies were indicative of a growing anxiety about the criminal justice system. The Sunday Times led with “Magistrates: drunks, thieves and killers” and the other papers all discussed National Police Commissioner General Riah Phiyega’s embarrassment after she announced the appointment of a Major-General Mondli Zuma and then quickly reversed that when she was told that Zuma (whose relationship to the President is unknown to me) was being tried for driving under the influence of alcohol, failing to comply with a traffic officer’s instructions to stop at a roadblock, escaping lawful custody, defeating the ends of justice and refusing to have a blood alcohol sample taken.
This might look like a circus but there is a darker element to the state of the criminal justice system than is not immediately obvious in these comical stories. In the Sunday Independent, journalist Nathi Oliphant writes about the security and justice sector: “President Jacob Zuma has unflinchingly stuck to his guns in promoting ‘his own ’into key positions”. The security apparatuses and the criminal justice system more generally has been profoundly weakened by political interference and the dismaying newspaper headlines about criminality amongst magistrates and senior police generals is just the visible tip of the problem of Thabo Mbeki’s and Jacob Zuma’s serious fiddling in the security and justice clusters and institutions.
Editor flees from Gupta TV
“Visibly terrified and hiding in a Johannesburg hotel room, the former consulting editor at ANN7 has made explosive claims about visits by channel bosses to President Jacob Zuma, where Zuma made editorial recommendations and was ‘given assurances by the Guptas this channel was going to be pro-ANC’” – reads the lead story in City Press.
Nothing, really. ANN7, or GuptaTV as it has been named in much of the South African media, continues to provide comic relief and excruciating embarrassment, in about equal measures. Jacob Zuma’s relationship with the Gupta brothers is probably no laughing matter, but I wouldn’t hold my breath waiting for the criminal justice system to test whether Zuma’s relationship with the Gupta brothers is in anyway similar to his relationship with the Shaik brothers.
He (Jacob Zuma) didn’t threaten me with the red lightsaber or catch me in a honey trap. My natterings, fortunately, are not impactful enough to draw the attentions of the Dark Lord (Darth Vader, dah! – ed) or his stormtroopers.
The compulsion comes from watching, slack-jawed, as Jacob Zuma skips happily across the backs of starving crocodiles - on his way, off towards the welcoming horizon.
Surely the world was an intrinsically hostile place for a black baby boy, born to a single-parent mother (who was also a domestic worker) in the South Africa of 1942? Surely when he received no formal education any chance of success in life would have become vanishingly small – in the estimation of a wandering actuarial statistician, perhaps?
When Jacob Zuma went to prison and then later was repeatedly caught with his hands in all sorts of cookie jars I imagine the hypothetical actuary would have confidently predicted a life of ignominy and poverty.
But instead Jacob Zuma is picking up an honorary Doctorate of Leadership from the Limkokwing University of Creative Technology (who writes the script of the world? … no ordinary mortal would dare make this shit up – ed) and rubbing shoulders with the great and the good and undoubtedly stashing bits of his loot in safe houses in Malaysia.
My second post on this website in mid-2009 titled The Accidental President (catch that here) argued that Zuma’s rise was pure chance and contingency. But when the same random set of things happens over-and-over (Jacob Zuma escapes danger with a sack full of cash) you have to start questioning whether this is purely the shambolic interactions of events, people, history and the world.
Politics is about power (yes, I know, we have heard that somewhere before). Power is agency, the ability to make stuff happen, to make people do your bidding and to make situations turn out in a particular way. Political analysis is the analysis of how (and why) power is exercised.
Which brings me back to Machiavelli.
I read The Prince when I was about 17 and, clearly, I didn’t understand a bleeding word.
I vaguely remember being outraged and confused by the book. Bertrand Russell is widely quoted as having said The Prince is a handbook for gangsters (which is a great line but there is much debate as to whether the great logician himself actually said it).
However, I am now kicking myself that I haven’t been reading and rereading The Prince every year – and in the flush of my transient enthusiasm, I promise myself I will do so from now on until I die … or perhaps I will stop a little before.
(As an aside: I was halfway through the book when the Syrian nerve gas story broke. I was glad to have Machiavelli as a companion to think about how those with agency might cause, or allow, such things to happen and why they might do so.)
So, anyway … Jacob Zuma is the Prince and I doubt he ever needed a Machiavelli to tell him how to be what he is and how to do what he does.
Here is the opening dedication. It’s quite compellingly mysterious to those among us who are a little thin on our Florence-during- the-Renaissance, but it is also a good explanation of the work that follows:
Dedication: To the Magnificent Lorenzo Di Piero De’ Medici
It is customary for such as seek a Prince’s favour, to present themselves before him with those things of theirs which they themselves most value, or in which they perceive him chiefly to delight. Accordingly, we often see horses, armour, cloth of gold, precious stones, and the like costly gifts, offered to Princes as worthy of their greatness. Desiring in like manner to approach your Magnificence with some token of my devotion, I have found among my possessions none that I so much prize and esteem as a knowledge of the actions of great men, acquired in the course of a long experience of modern affairs and a continual study of antiquity. Which knowledge most carefully and patiently pondered over and sifted by me, and now reduced into this little book, I send to your Magnificence. And though I deem the work unworthy of your greatness, yet am I bold enough to hope that your courtesy will dispose you to accept it, considering that I can offer you no better gift than the means of mastering in a very brief time, all that in the course of so many years, and at the cost of so many hardships and dangers, I have learned, and know.
This work I have not adorned or amplified with rounded periods, swelling and high-flown language, or any other of those extrinsic attractions and allurements wherewith many authors are wont to set off and grace their writings; since it is my desire that it should either pass wholly unhonoured, or that the truth of its matter and the importance of its subject should alone recommend it.
Nor would I have it thought presumption that a person of very mean and humble station should venture to discourse and lay down rules concerning the government of Princes. For as those who make maps of countries place themselves low down in the plains to study the character of mountains and elevated lands, and place themselves high up on the mountains to get a better view of the plains, so in like manner to understand the People a man should be a Prince, and to have a clear notion of Princes he should belong to the People.
Let your Magnificence, then, accept this little gift in the spirit in which I offer it; wherein, if you diligently read and study it, you will recognize my extreme desire that you should attain to that eminence which Fortune and your own merits promise you. Should you from the height of your greatness some time turn your eyes to these humble regions, you will become aware how undeservedly I have to endure the keen and unremitting malignity of Fortune.
I know how Niccolò feels. Sometimes these humble regions are just that little too humble. However, I would have been more cautious about calling for the Prince’s attention if I was Machiavelli. If the Prince read the little book, then the Prince would know that Machiavelli had the Prince’s number and that Machiavelli had rewritten the handbook. Which I can’t imagine would have charmed the Prince.
I will attempt a ‘highlights package’ of The Prince and possibly some learned comments (which are unlikely to be as good as you will find in this interesting article and interview). For the keenest among you, there are several places on the internet where The Prince is downloadable for no charge – I am sure the copyright has long expired … or rather I hope so. My copy, which is in electronic form on my laptop, originates at: http://www.feedbooks.com.
Finally, Jacob Zuma still has a few crocodiles to hop on before he reaches safety. I still think that the odds are against him, but I am not an actuarial statistician, wandering or otherwise . I draw comfort purely from the certainty that no-one, ultimately, gets out of this alive.
Herewith an extract from my weekly news commentary* as of 06h30 yesterday.
‘A minefield of obstacles for Motlanthe’ – Sunday Independent
The Presidency, in the person of Deputy President Kgalema Motlanthe, launched the “Draft Framework Agreement for a Sustainable Mining Industry” on Friday. The document is based on an initial process of discussion with all interested parties (including, amongst others, Amcu, Num and the Chamber of Mines) and each party is expected (hoped) to ratify the agreement by June 26. The document essentially acknowledges the importance of the mining sector for investment, economic growth and employment. If it is ratified, all parties would be formally accepting the need to re-establish law-and-order in the sector, improve labour relations and address the housing and community needs of workers and their families, both near the mine and in the labour sending area. The document commits the government to ensuring “that the legislative and regulatory programmes provide predictability and certainty for the industry” including with regard to “tax policy” – those quotes from 6.1.4 and 6.2.1 of the draft document.
This initiative is no more than the minimum of what has been demanded of government, especially of the commanding heights of government, by most of those affected by the industrial relations crises in the platinum sector that began in early 2012. Thus, Jacob Zuma, and his deputy, Kgalema Motlanthe, are looking busy and engaged with the crises and that will come as a welcome relief after what has appeared to be endless dithering and mixed messages.
However, there should be no expectation that the initiative will miraculously resolve the deep conflicts, both within government and ruling party policy and between the contesting trade unions. The Sunday Independent correctly points out that there is a tension in the government and ANC policy and the newspaper ascribes (or personifies) the tension as being between Finance Minister Pravin Gordhan (concerned about investment, profitability and revenues) on the one hand and Minister of Mineral Resources Susan Shabangu as well as ANC Secretary General Gwede Mantashe (concerned that mining companies owe South Africa, particularly black workers, a historic debt).
It is neat (but only partly accurate) to think of the policy conflict as being about the views of different powerful politicians within the government and the ruling party. The reality is that the ANC (and therefore, government) is, and has been since 1994, fundamentally torn between the economic necessity to reassure (mining and other) investors and the political imperative to demand redress and redistribution for its aggrieved constituents. Does the Motlanthe fronted attempt to negotiate a new understanding and modus operandi between the different interest groups in the mining sector represent a qualitative reassessment of where the ANC’s priorities lie? I doubt it, especially not 10 months before a national election where the ANC is starting to feel beset on several fronts but clearly (from a purely numeric perspective) has the most to win and the most to lose in the majority constituency of poor black South Africans.
It is tempting to see Kgalema Motlanthe’s role in the efforts to settle the sector as preparation for him to replace Susan Shabangu in the Minister of Mineral Resources post. Shabangu has gained a reputation as being instinctively suspicious of resource companies – although, again, I would suggest that this is more a characteristic of the ANC itself than of any particular individual. Motlanthe is perceived as ‘a good guy’, a person open to compromise, a peace-maker and a humble and loyal public servant. That would probably be a good thing for sentiment in the sector, but it would be important not to confuse form with content.
Julius Malema to party on down?
Malema has been explaining his decision to launch a new, yet to be formed, opposition party, the Economic Freedom Fighters. He yesterday described the ANC as “on a downward spiral ideologically, politically and morally” and under Zuma, as being characterised by “tribalism, regionalism, factionalism and corruption”, essentially “an association of careerists and neo-liberal bureaucrats whose sole mission and role was protecting the interests of white monopoly capital” – see what essentially looks like his draft manifesto on Politicsweb.co.za. At the heart of the expressed policy of the proposed new party (announced in the run up to June 16 Youth Day commemoration) is the demand (that Malema was central to codifying as President of the ANC Youth League) for the nationalisation of mines and the expropriation of white owned farm land.
Can Malema tap into the constituency of young black South Africans who feel abandoned by (or angry with) the ANC over its failure to affect more radical redress and redistribution measures? Can he win, as he promised last week, 5 million votes and thereby replace the Democratic Alliance as the official opposition? (Can he stay out of prison? – ed) Malema has an almost preternatural ability to identify, frame and play into the sense of disaffection amongst the most marginalised young black South Africans and he has the energy and charisma to at least make a go of forming a coherent opposition party. All his significant previous allies who have remained within the ANC (including Minister of Sport Fikile Mbalula and Limpopo Premier Cassel Mathale) came out strongly against of the former Youth League president over this last weekend. Whether or not Malema manages to form the proposed Economic Freedom Fighters in time for it to have an impact in national elections next year, he will probably succeed in creating a gravitational pole that will keep the ANC from drifting towards business and financial markets. This will not be a new role for him.
Zimbabwe elections – Mugabe agrees to seek short delay
A South African Development Community (SADC) extraordinary summit met in Maputo, Mozambique on Saturday and Robert Mugabe acceded to the pressure to attempt to shift-out the July 31 date that had been set for the election in Zimbabwe that will bring to a close the current power sharing arrangement with the opposition Movement for a Democratic Change. Jacob Zuma is the SADC facilitator attempting to radically reform the regulatory, governance and security framework that allowed widespread repression and cheating in the failed 2008 election. None of the parties are ready for an election (including Zanu-PF which, amongst other problems, is riven with division at a central level and in key provinces Masvingo, Bulawayo and Manicaland).
The key reforms that must be in place for an election to succeed in Zimbabwe relate to control of the security apparatuses and to ensuring impartiality of those apparatuses and to establishing the impartiality of the state-owned media. Also, voter registration and various administrative issues need to be completed or rectified before the election takes place if it is to be ‘free and fair’. Zimbabwe is experiencing the beginnings of an economic recovery. This might benefit the incumbents (Zanu-PF) but the opposition hopes that the growing spirit of optimism will lead voters into their fold. There are no reliable opinion polls, so we will have to wait and see. The significant natural mineral assets, the exceptional tourism possibilities and the fact that a huge but uncounted Zimbabwean diaspora is in South Africa are amongst the issues that make the outcomes of what happens in Zimbabwe important.
Bits and pieces
- City Press led with ‘War for Gaddafi billions’, based on the premise that two competing Libyan groups are in the country attempting to recover a fortune in gold, cash and diamonds that he (Gaddafi) allegedly stashed here – including a sizeable chunk “in gold bars in safe storage at OR Tambo International Airport” and in cash pallets held in the Reserve Bank. The story claims the Libyan factions are attempting to dangle the promise that the money will be used to buy South African manufactured armaments and that recovery of the many billions of dollars’ worth of assets would earn a 10% finder’s fee. The payload of the story comes in this paragraph: “According to Erasmus (a ‘controversial South African arms dealer’), Mphafudi (‘an ANC connected businessman’) and Maleka (‘the ANC security head’) were working with two Libyan investigators …. (Erasmus) claims that both South Africans accompanied the Libyans to see President Jacob Zuma at his Nkandla homestead.” (The Sunday Times reported that Zuma was accompanied by his cousin Deebo Mzobe during the meeting). Hmm. (Clarifications and emphasis in that quote from the City Press article added by me – ed).
- Telkom’s bid to sort out its ‘legacy issues’ – by the “write-off of R12 billion in defunct assets” and by the settlement of its various cases with the competition authority – got headline coverage in City Press. “Our key shareholders are frustrated, our customers are frustrated and I can promise that we will not repeat the same mistakes of the past,” said new broom CEO Sipho Maseko last week. Don’t hold your breath.
- Tina Joemat-Pettersson (Minister of Agriculture, Forestry and Fisheries) was directly accused on the front page of the Sunday Times of receiving a kickback of R100 000 in 2006 for her efforts in closing the purchase of Sunset Game Lodge, outside Douglas, while she was provincial minister in the Northern Cape. The allegation is serious, but as the story points out she is ‘the Teflon Minister’ and it is by no means clear that she will ever meet her comeuppance, no matter what she does or how badly she performs.
- “Waterkloof scapegoat on warpath” – reports the Mail & Guardian. Lieutenant Colonel Christine Anderson, the movement control officer at Waterkloof airbase who was accused of being one of two key rule breakers that allowed the now infamous Gupta wedding party to land and be ferried from the strategically important military base, is approaching the public protector for relief. The Gupta’s of Sahara Computing are friends and funders of Jacob Zuma and his family and it is widely assumed that there was tacit pressure placed on Anderson and other officials to let the friends of “Number One” pass. This is an ugly affair where the real wrongdoers, the powerful and abusive politicians and their friends, get off scot-free and loyal and faithful officials take the fall.
- Nelson Mandela’s health remains a key media topic (he’s still in hospital) and the symbol of the man is already deeply contested, especially between the ANC and the DA in the lead-up to next year’s elections. Mandela is an almost life-long ANC member and leader, but the DA is attempting (not altogether successfully) to argue that they are the true inheritor of his mantle while the ANC has drifted into a wilderness of incompetence and corruption. If Nelson Mandela dies between now and the national election next year, the essence of this contest would play itself out on perhaps the largest global stage in the history of human-kind.
* I write this news summary for clients of BNP Paribas Cadiz Securities and send it to them at 06h30 Mondays (Tuesday this week) and I occasionally republish it here a few days later if I think it might be of more general interest. I am, of course, grateful to BNP Paribas Cadiz Securities for allowing me to do this.
Herewith an extract from my weekly news summary and analysis.
The big question of the week was the degree to which Zuma’s Thursday morning briefing helped or hindered our economic decline.
I know I cringed as he was speaking, especially during the twinkly admonishment at the end urging journalists present to report favourably on South Africa. I wanted to shout at the TV and call out to my president (and he is my president, however much I might wish it otherwise): “Don’t be cute! This lot is ready to crucify you – and us – don’t you get it!?”
Well, I didn’t say anything … I have not yet sunk to shouting at the TV, but I do find myself switching channels to avoid those excruciatingly embarrassing moments our politicians seem to bless us with on an ever more regular basis. I am embarrassed at my embarrassment – it is such a childish response, but I find it gets worse not better as I get older.
The fact is I think Zuma’s attempt to talk up mining wage negotiations was the right thing to do. The problem, as others have pointed out, is his credibility is so shot that almost anything he says is dismissed by financial markets and the mass media out of hand.
So herewith, from early Monday morning, my analysis of the previous weeks news:
Rand and GDP growth down – the drivers are complicated, but at least some of this is about politics
Last week the Rand hovered around R10 to the dollar as Stats SA released figures that showed South African GDP had grown an unexpectedly low 0.9 % in the first quarter of 2013 (seasonally adjusted, annualised). Then on Thursday Jacob Zuma held a surprise press conference during which he announced that Deputy President Kgalema Motlanthe, Finance Minister Pravin Gordhan, Mineral Resources Minister Susan Shabangu and Labour Minister Mildred Oliphant would hold talks with parties involved in the coming bargaining season in the mining sector – in the interests of reaching settlements with a minimum of production losses.
During the course of the next forty hours the Rand continued its significant decline and the media, not unexpectedly, busied itself with blaming Zuma’s performance for the country’s economic woes. “Zuma sinks Rand” – The Star, “Rand takes a dive after Zuma pep talk” – Mail & Guardian, “Rand talking cure off to a rocky start” – City Press, “South Africa’s Zuma takes a drubbing for run on rand” – Reuters and “Zuma not only reason for rand fall” – together these headlines probably give an adequate summary of the media’s take on the week’s economic turmoil.
Drivers of the price of the ZAR are complex and varied as Business Report (the Sunday Independent’s business section) points out in perhaps the best press economic analysis of the week. Ethel Hazelhurst (Sunday Independent) argues that the rand is primarily being driven by a “cocktail” of uncertainty about US quantitative easing, a continuing slowdown in the Chinese economy, falling commodity prices, a strengthening US dollar and volatility in global markets – and more, that several currency strategists are likely to be recommending ‘buys’ on the rand at this level (which has proved true as the ZAR was at 9.88/$ a few minutes ago). The Sunday Times quotes Finance Minister Pravin Gordhan supporting this view: “We are very confident that the rand will recover in time, that the markets have overreached themselves.”
However, it is my view that the rand’s idiosyncratic behaviour (compared with the basket of currencies from emerging market resource dependent economies) requires further explanation. Traditionally it has been adequate to argue that the ‘idiosyncrasy’ is due to the fact that the rand is particularly liquid and therefore overreacts to more general exits from that group of currencies. However, so called “structural features” that relate to issues as varied as our ‘outlier’ current account deficit, insecurity of the electricity supply, risk of labour unrest and unrealistic labour demands in the mining sector, policy paralysis as a result of the unwieldy ruling alliance, poor governance as a result of preoccupation of political leaders with patronage extraction, corruption, escalating service delivery protests and the permanent risk of instability related to high levels of unemployment and inequality are combining to make for a particularly gloomy South African story at this beginning of winter.
Vavi lives to fight another day
Zwelinzima Vavi, the Cosatu secretary general, has survived the latest attempts to remove him from his position. However an accounting firm will investigate if there was any impropriety in his involvement in the sale ‘the old Cosatu building’ and the purchase of ‘the new Cosatu House’. More importantly there will be various commissions to investigate Vavi’s political loyalties in the light of his failure to adequately articulate Cosatu support for Zuma in the lead-up to Mangaung (Mail & Guardian, City Press, Sunday Times, Sunday Independent and various online news sources … although be cautious, at least some of these outlets have reported factional rumours about Vavi in the past).
The deep fracture in Cosatu is assuming a clearer ideological and political character with unions clustered around the Num attacking Vavi especially for disloyalty to Zuma and the ANC and unions clustered around Numsa defending Vavi and asserting that his criticism of the ANC leadership for corruption and policy meandering are correct and appropriate. The issues are complex – as I have repeatedly discussed before – but it is probably true to argue that Zwelinzima Vavi and Numsa have become the most significant source of opposition to Zuma’s government and leadership of the party, outweighing even that coming from opposition parties in parliament. No matter what happens with the investigation into Vavi there is likely to be a widespread belief that Vavi is the victim of a ‘stitch up’ (slang for framing someone for a crime or misdemeanour).
National Prosecuting Authority – further evidence of structural negatives
Last week senior state prosecutor Glynnis Breytenbach was cleared of 15 disciplinary charges brought against her by the National Prosecuting Authority. The subtext of all of the coverage in the weeklies is contained in the summary analysis by constitutional expert professor Pierre De Vos: “It will strengthen the increasingly widely held perception that senior NPA leaders are appointed because of their political loyalty to the dominant faction inside the ANC (and especially to President Jacob Zuma and his campaign to stay out of prison) and not because of their personal integrity, independent attitude and ability to act without fear, favour or prejudice (as required by the Constitution)”. The charges against Breytenbach related to her alleged failure to act impartially when she was investigating the Kumba Iron Ore, Arcelor Mittal SA, Sishen and Imperial Crown Trading mining rights issue but was also widely interpreted as motivated by the her insistence on pursuing several other Jacob Zuma allies including suspended crime intelligence boss Richard Mdluli and Nomgcobo Jiba, the person Jacob Zuma has appointed acting head of the NPA.
Ever since the suspension of Vusi Pikoli, the National Director of Public Prosecutions by Thabo Mbeki in 2007 (probably because Pikoli was pursuing then Mbeki ally Police Commissioner Jackie Selebi on corruption charges) and then his firing by Kgalema Mothlanthe (probably because Pikoli was pursuing corruption charges against newly elected ANC president Jacob Zuma) the National Prosecuting Authority has been in a precipitous state of decline. The institution has been used increasingly as an instrument to favour or retard various factional interests in the ruling alliance and with this has come a predictable decline in its effectiveness. The functioning of the prosecutorial authority is intimately tied up with the functioning of the South African constitution and can become a determining factor in investment decisions. The decline of the NPA should be seen as a not insignificant deterrent to investment in the country.
Bits and pieces
- Num officials faked stop orders to hide the degree to which it has lost ground to Amcu according to reports in City Press business section. Eight of Num’s full-time shop stewards have been ‘expelled’ by Lonmin due to alleged fraud around union membership. “Full-time shop stewards are employees of the company who do only union work, but receive a salary – usually equivalent to relatively high grade jobs.” Num has until July 15 to regain members or lose its offices at the mine. According to the report the “offices have long doubled as the branch offices of the ANC” – as is the case with the hundreds of Num offices across the country. “Amcu represents roughly 74% of the 18 000 employees and 9 000 contractors at Lonmin” – City Press.
- Most of the weeklies ran stories about talk show host Dali Tambo’s People of the South television programme due to be broadcast in two halves on state broadcaster SABC last night and Sunday next week. The show is an intimate and warm interview with Robert Mugabe at home with his family.
- “Gaddafi billions found in SA” was the lead story in the Sunday Times but over to the right on the front page was the bigger surprise: “It’s official: Pule lied about lover.” The Sunday Times claims it has seen documents that prove Dina Pule, Minister of Communications, has repeatedly lied about her relationship with businessman Phosane Mngqibisa. Failed telecommunications policy is a structural constraint to growth in the country and Pule, who is being investigated by a parliamentary ethics committee about whether she directed business towards Mngqibisa, has proved to be part of the problem. Her removal will come as a welcome relief, but policy uncertainty in the sector is a bigger problem than just this minister.
- The Sunday Times argues that Cyril Ramaphosa is going to be used to “win support from the middle class and professionals in next year’s election”, while Jacob Zuma “will still be the face of the campaign in working-class communities” – (duh). The weekly has an interesting quote from an ANC leader supporting this assertion: “(w)e realised that the majority of our people love the president, but there are also these negative perceptions about him. What we identified was the issue of his associations, controversies about his children and family using their name to get business and the millions spent in Nkandla … So we will make sure that the DP (Ramaphosa) is visible in campaigns” (my emphasis added). All parties are intensively polling opinions in the electorate in the lead-up to elections and it is refreshing to hear ruling party leaders speak about the obstacles they face with such candour.
- The Sunday Times also interestingly reports that the national leadership of the ANC is likely to bypass the structures of the party in Gauteng to reach voters in 2014 because the provincial executive (PEC) of the ANC has “not accepted the Mangaung outcome”. This is code for the assertion that the Gauteng ANC does not support the presidency of Jacob Zuma, which certainly squares with the position of the ANC in that province prior to Mangaung.
The appropriate comparison for J Arthur Brown’s visit to Khayelitsha yesterday is Jacob Zuma’s visit to Eldorado Park a few weeks ago – the president’s vist conducted ostensibly to free that neighborhood from the tyranny of crystal meth and tik.
Watching the visuals on eNCA (catch those here) of the white fraudster’s visit to the Cape township yesterday was surreal. Brown, louche, handsome and relaxed in tatty jeans and gelled hair being warmly welcomed by the community meeting; the elderly African audience in their Sunday best, anxious to please, respectful and sitting up straight in their seats. Brown lounging like a rock star being interviewed by Rolling Stone.
Afterwards outside: the crowd greeting him with Amandla! – everyone taking a turn to hug their last hope for the return of the money, the man who the state accused of stealing it in the first place.
Zuma’s trip to Eldorado Park is the same species of manipulation. It was supposedly prompted by an eloquent request by resident Dereleen James describing her desperate efforts to get her 17-year-old son off crystal meth. See that moving letter here.
Both these incidents have the classic elements of ‘big man’ politics and the worst features of populism.
What you do is take an issue that absolutely no-one could disagree with and then you march in as the good and heroic saviour. Even those who suspect your motivations are forced into silence. The poverty-stricken victims need all the help they can get, even if it is coming from people who are motivated by the need to repair their public image.
I don’t buy that, in exactly the same way as I don’t buy it when repressive governments argue that the internet needs censoring because of child pornography.
Anyone who argues against the populist measures is immediately cast as the villain: so what, are you in favour of drugs, child pornography and poverty? You are prepared to let these victims suffer just to satisfy some political principle of your own?
Julius Malema, Jacob Zuma and Winnie Mandela had one thing in common. They understood perfectly that you shouldn’t waste your time with actually solving the housing crisis, poverty, drug addiction (choose your perfect and sanctified issue.) All you need to do is go into the impoverished area and give someone a house. Do it with fanfare and praise singers. The community will come out, awed at your power and generosity, clear that you are the source of the goodies that make life possible, full of hope that their turn might come some time soon.
So maybe J Arthur Brown is going to stump up a few million rand, perhaps set up a fund for the people who have been robbed. Surely that is a good thing?
No, it’s not if it means that pressure is relieved on the more pervasive looting of pension and investment funds by people like J Arthur Brown.
How can we be anything but horrified when the fox volunteers to police the hen-house? Not for some vague political principal, but because our desire to save one chicken has endangered them all.
A few years ago it would have been the SACP and the ANC making these arguments and far more eloquently than I have here (catch an excellent interview with Jeremy Cronin several years ago doing precisely that – push through till he gets to the ‘big man’ and populism bit, it will be worth your while). Of the many things I regret about the present, the loss of that perspective from our politics is the one I feel most keenly.
Zuma’s visit to Eldorado Park is indistinguishable, in its deeper architectural structure, from J Arthur Brown’s visit to Khayelitsha. In both cases there will be immediate changes to local people’s lives, but changes that purely result in a displacement of the problems and temporary relief. Like the distribution of food parcels by politicians just before elections the temporary relief provided the hungry does not balance the harm done the society by the successful hoodwinking of the electorate by the ‘big man’.
Various commentators, politicians and analysts have attempted to characterise Mangaung, to define the moment’s essential nature. Below are two takes I found interesting with some words from me on why I found them thus. After that I include a more general summary of what happened with the voting results for the Top Six and the National Executive Committee.
M&G: will the scandal prone authoritarian traditionalist and the constitutionalist businessman lick the platter clean together?
Nic Dawes – editor of the doughty Mail & Guardian suggested (on December 21 2012) that Zuma has moved the ANC “dangerously away” from the urban and middle classes and is starting to overtly exhibit rural, patriarchal and authoritarian values inimical to the middle classes. He suggests that Cyril Ramaphosa’s election at Mangaung is (ultimately) an attempt to woo urban and middle class voters back to the ANC – with Zuma having secured traditional and rural support. But, asks Dawes, “can the constitutionalist businessperson avoid contamination by association with a scandal prone, authoritarian traditionalist?”
Good question … except that I am starting to realise that Zuma would never have appointed Ramaphosa if he posed a potential threat in any way at any stage no matter how far they (the Zuma camp) are looking into the future. Ramaphosa is in the house … the Nkandla house … it’s too late for decontamination.
Dawes also makes the useful formulation that Motlanthe’s challenge was a principled attempt to “confront the ANC with the enormity of its Jacob Zuma problem”. I think Dawes is right – or at least that the Motlanthe strategists he spoke to had this conception of what they were up to. However the whole Motlanthe endeavour feels much more like the foolish (but strangely attractive) arrogance of Don Quixote tilting at windmills, or, more tragically, this stupid and noble rush onto heavily defended enemy positions:
Half a league, half a league,
Half a league onward,
All in the valley of Death
Rode the six hundred.
Read the brilliant, awful, manipulative (in my admittedly limited estimation) Tennyson poem and its glorification of cruel and stupid military and administrative incompetence here – ok, glorification of those acting as a result of such incompetence . (You will see from voting patterns at the end of this post that it was closer to 1000 than 600, but aside from that I thought the Tennyson metaphor held up rather well?)
The nationalists, anti-nonracial, populist versus the … who?
If I was on one of those TV or radio programmes that specialise in asking stupid questions right at the end, and I was asked: which South African political analyst do you rate highest? Then “Steven Friedman” is the answer that would most likely trip off my tongue.
With that disclaimer, I am forced to take issue with an aspect of his characterisation of what happened at Mangaung (published in the Business Day – 27/12/12 – here for that link).
Friedman characterises the Anyone But Zuma or Forces For Change (that is the defeated faction at Mangaung) as “the nationalist group, which wants a bigger black share of business … and whose members use radical-sounding language to pursue that goal.” No quibble from me there.
But then Friedman goes on to characterise the group that opposed ‘the nationalists’, that is the group that was victorious at Mangaung, as “a loose alliance stretching from the left to centrist business people who believe the nationalists threaten the ANC’s commitment to nonracialism and are corrupting the movement because they are too close to the wealthy.”
The implicit injunction, one I believe we should resist, is: choose a better devil.
Break it down (and I paraphrase what I imagine the argument would have to entail – and I am taking this much further than is implicit in Friedman’s article, but his argument leads inevitably to this point):
We support both Jacob Zuma (the patriarchal and authoritarian traditionalist with rigid and ruthless control of the security establishment and the ANC – and we support him despite his family and friends having become fabulously wealthy since his winning to high office) and Cyril Ramaphosa (the billionaire ex-unionist who has effectively used the black economic empowerment imperative to accumulate his wealth and will occupy his office with zero power and purely at the beck and call of the Nkandla Crew).
… because …
… they are a whole lot better than the nationalist, anti-nonracial Julius Malema, Tokyo Sexwale, Mathews Phosa, Fikile Mbalula and ANC Youth League?
I think not.
Extract from my summary as of last week
- The leadership and policy results of the African National Congress National Conference was a strongly status quo outcome and a victory for the incumbents (the Zuma camp) and their political and economic policies
- The leadership challenge to Zuma (with Kgalema Motlanthe the unwilling champion of that challenge) was routed, as was the policy platform most closely associated with the challengers (the nationalisation of mines). The extent of the victory is clearly and accurately revealed in the leadership election results detailed in Addendum 1.
- Cyril Ramaphosa’s election as deputy president has been heralded in much of the financial and popular press as a market-friendly outcome and, in some versions, a salvation of the ANC. It should be pointed out, however, that whatever qualities Ramaphosa possesses (and in my experience he possesses many excellent qualities) these will be exercised as the deputy to an extremely confident and powerful (in party and state terms) president, a president at whose behest Ramaphosa will serve and as a result of whose political influence Ramaphosa was elected. To further dampen any untoward enthusiasm it should be pointed out that Ramaphosa has no base in any constituency within the ANC or within the ruling alliance.
- Because the National Conference of the ANC is not the kind of forum in which decisive interventions or radical new directions can be formulated (it takes place over 5 days, has a long and complex agenda, entails many rounds of voting by 4000-plus branch delegates who are often unskilled in policy matters and who are generally organised into large voting blocks by contending factions for leadership) there were no such interventions and (no unexpectedly) new policy directions.
- However, the full policy platform of the incumbents, which does entail significant new state intervention in the economy (described and assessed by me in interminable detail elsewhere) was accepted in full (but in a very broad, vague, poorly attended and poorly discussed commission process at the conference.) The ANC is yet to publish the full policy resolution of the conference and I expect it to be a carefully phrased call for more state intervention, but in a language unlikely to alarm financial markets. The details here are important but I will have to postpone further analysis until the ANC decides it has crafted the resolution carefully enough.
The less expected
- Mangaung did only confirm policy and political trends that were already extant – and widely known. However the extent of the dominance of the Zuma camp and the weakness of the challengers took some commentators by surprise – see Addendum 1 for the details of the election results.
- The total failure of the political factions aligned to the ANC Youth League to make any impact on the conference policy-making process did come as a surprise to me – I would have thought there would be a rear-guard action around the ‘nationalisation of mines’ call, but none appeared (to me, anyway).
- It would have been politic for the Zuma camp to allow some of those who challenged for the top six positions (and their allies) to be represented on the 80 person National Executive Committee. It seems that either the desire to demonstrate total dominance won the day, or the Zuma strategists lost control of the popular mobilisation against the challengers. Either way it leaves a huge internal constituency of the ANC (roughly 25%) without representation at any leadership level within the party – an obviously destabilising outcome. However the Zuma camp is likely to invite some of the excluded individuals back into leadership positions, on terms satisfactory to the victors.
(Post Scrip reminder: outstanding is the ANC National Conference resolution on policy. The resolution that emerged out of the June Policy Conference took several months to formulate and be published. I do not expect the Mangaung Resolution to take things much further than the resolution from the policy conference. Much of the detail will be dealt with in the New Year and largely in Cabinet and government departments, rather than in party structures.)
… the results below are culled from various news sources and people who attended the conference (I found the full NEC results at Politicsweb).
A – Voting and results for the top six
(Interesting things to note: Zuma got the least votes of all contested positions and Gwede Mantashe the most – an observation I borrowed from Steven Friedman’s previously discussed Business Day article.)
- President – Jacob re-elected with 2983 votes to Kgalema Motlanthe’s 991 votes.
- Deputy President – Cyril Ramaphosa elected with 3018 votes to Mathews Phosa’s 470 and Tokyo Sexwale’s 463.
- Secretary General – Gwede Mantashe re-elected with 3058 votes to Fikile Mbalula’s 901.
- Deputy Secretary General – Jessie Duarte elected unopposed.
- Chairperson – Baleka Mbete re-elected with 3010 votes to Thandi Modise’s 939.
- Treasurer General – Zweli Mkhize elected with 2988 votes to Paul M Mashatile’s 961.
B – Voting and results for the National Executive Committee
(Note that no challenger to the Zuma camp in the top six election was elected to the National Executive Committee. Note, as well, that the only prominent member of the anti-Zuma camp, Winnie Mandela, just scraped onto the list, having topped the poll for the NEC election at Polokwane in 2007.)
|1||Dlamini-Zuma, Nkosazana Clarice||F||2921|
|11||Sisulu, Max Vuyisile||M||2442|
|12||Dlamini, Bathabile Olive||F||2423|
|13||Jordan, Zweledinga Pallo||M||2407|
|16||Ndebele, Joel Sibusiso||M||2379|
|24||Cwele, Siyabonga C||M||2245|
|25||Mokonyane, Nomvula Paula||F||2240|
|27||Dlamini, Sidumo Mbongeni||M||2213|
|29||Bhengu, Nozabelo Ruth||F||2195|
|32||Masetlha, Billy Lesedi||M||2161|
|33||Ramatlhodi, Ngoako Abel||M||2156|
|42||Oliphant, Mildred N||F||2019|
|43||van der Merwe, Sue||F||1992|
|44||Capa-Langa, Zoleka Rosemary||F||1984|
|45||Mthembi-Mahanyele, Sankie Dolly||F||1930|
|48||Xasa, Fikile D||M||1881|
|49||Majola, Fikile (Slovo)||M||1872|
|54||Cele, Bhekokwakhe Hamilton (Bheki)||M||1736|
|58||Mmemezi, Humphrey M Z||M||1679|
|59||Dlulane, Beauty N||F||1674|
|65||Yengeni. Tony Sithembiso||M||1570|
|70||Ntwanambi Nosipho, Dorothy||F||1450|
|71||Semenya, Machwene Rosinah||F||1449|
|73||Moloi- Moropa, Joyce C||F||1396|
|75||Ntombela, Sefora Hixsonia (Sisi)||F||1348|
|79||Mandela, Nomzamo Winfred (Winnie)||F||841|
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.
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.
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?
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.
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.
By the way “deep blue” in the headline was not meant to be a riff on IBM’s chess playing supercomputer.
Rereading Part 1 I can see how someone might accuse me of being a little too certain about the shape of the future. I am not running “deep blue” regressions and algorithms, modelling South Africa and the world, generating predictions x of y % accuracy with z % error margins … South … Africa … will … be … peachy … in …2021 … bidledeebidledee beep.
I have no real idea of what is going to happen in the future – and only the bare bones of an idea of the internal processes I go through to develop the views I advance here.
From time to time I investigate how we predict outcomes, and how we asses risks. I am interested in how our evolved systems (honed against sabre-toothed tigers and uncertain rainfall patterns, for example) apply in the kind of technology driven mega-societies we now inhabit – or, specifically, don’t apply i.e. that our ‘instinctive systems’ need to be suppressed or countermanded if we hope to get it right in certain situations. But that is not what I am doing in these quick pre-Mangaung notes.
The “deep blue” of the headline was actually a reference to being bleak, sad, cold and lonely.
Which leads me to:
Who are the demagogic populist, proto-fascists* now?
The ANC will (initially) combat the threat of losing support by becoming more ‘demagogic populist’, rural conservative and based in the lumpen classes – basically, by drifting to the right
In December 2010 I wrote an article in GQ Magazine under the headline: “Can you hear the drums?” with a concluding paragraph that read:
In the year 2010, anger and resentment … bubbled over … The winners still have their stuff, but they are clutching it more tightly to their chests, and for the first time in 16 years they are straining for the hint, a sound or a smell, of what might be coming for them out of the night.
Read the whole story here.
Two ‘crises’ (or warnings) that occured this year are the equivalent of the scary sound of drums in the night for the incumbent ANC elite. The first warning is Marikana and the second, linked, warning is the traction Julius Malema’s manipulative populism was able to achieve amongst some sections of the disenfranchised youth.
I made some of these links in my coverage of Marikana here.
I think the ANC will ride out the gradually escalating social and industrial unrest by becoming the “proto-fascist” and “demogogic populist” movement that Zuma’s SACP ally accuses Malema of representing (here for the context of that). This ANC, under this president is being drawn inexorably, by the logic of its own politics, into the territory of rural patriarchy with its natural links to the fear and hatred of education and any form of gender equality. (I am not going to argue this out here … just take a glance at the saga around The Spear, the Traditional
Leaders Courts Bill and various comments about women and about “clever blacks” and appeals to African ways of doing things over foreign ways of the same – see TrustLaw’s Katy Migiro’s excellent takes here and here.)
Thus (forgive the leap) the ANC begins to lose the urban industrial working class (on the road to becoming much more like a classic middle class and deeply opposed to the looting of the state), the professional classes (already at that destination), the productive and rule based businesses, local and global, and it eventually begins to lose the pirates looking to launder their money and ‘go straight’ (as I argued in Part 1).
This leaves the ANC with the rural poor, the marginalised unemployed, a bureaucratic elite within the state (those last three dependent on state spending through the public sector wage bill and social grants) and global resource privateers who powerfully thrive in countries like this with leaders like these.
Initially the ANC might get even higher turnout at its rallies (especially with free food and t-shirts and sexy young people dancing between the rabble-rousing and the singing of Umshini wami). But eventually the class and demographic changes of the society impact upon the party – reformat it, split it, renew it … change the political ecology in which it moves and feeds.
You will see from my next post that I do not only think the ANC is a useless bubble of foul smelling gas buffeted on the sea of history. The ANC, in my analysis, has become a most significant and material influence for and against my upbeat scenario … a sort of deranged midwife at the happy birth.
* The term “demagogic populists, proto-fascist” is from various SACP documents and was code for Julius Malema (and, I suspect, in slightly early versions, a code for Tokyo Sexwale). This is what the SACP had to say about it:
The “new tendency”
It was the SACP at the 2009 Special National Congress that first identified clearly the ideological and underlying class character of what we called the “new tendency”. We described it as a populist, bourgeois nationalist ideological tendency, with deeply worrying demagogic, proto-fascist features. It was the SACP that pointed out the connections between the public face and pseudo-militant rhetoric of this tendency and its behind-the-scenes class backing. It was a tendency funded and resourced by narrow BEE elements still involved in a rabid primitive accumulation process, based on a parasitic access to state power. It was a bourgeois nationalist tendency that sought to mobilize a populist mass base, particularly amongst a disaffected youth, to act as the shock troops to advance personal accumulation agendas.
The SACP must feel free to pat itself on the back, but the reality is that party took on the straw man of Kebble/Malema/Sexwale and backed – to the hilt – the real demagogic, proto-fascist tendency – the one with real power … and the one with real patronage to dispense. (That last bit explaining why this SACP has backed the Nkandla Crew)
This has undoubtedly been the worst year for South Africa – at too many levels to name – since 1994. There is much I have wanted to say here but couldn’t find the time. So I am going to rapidly fire off a series of posts, as my professional duties tail off towards the end of the year.
That probably means potential readers will soon be on holiday and lounging on a beach somewhere.
So let me be cheery to start:
I am positive about South Africa in the medium to long-term … but it’s complicated
My first-case long-term view on South Africa is somewhere between hopeful and good. I don’t think societal outcomes are primarily about the choices made by politicians and their parties – if they (societal outcomes) were (dependent on the choices made by politicians), my view would be significantly more negative.
Instead I think societies change in response to shifts of deep structural features – in themselves and in the ‘global world’ within which the society and country exists. South Africa – its institutions, politics and economy – is being buffeted by the flood emanating from the unwinding of the distortions of the past, interacting with the ‘flooding-in’ of elements of the global society and economy previously locked out … or previously just less ‘globalised’ as was the case in the world of the 80′s and before.
The most obvious domestic feature of this is the rapid growth of a class of South Africans who have ‘emerged’, settled and accumulated assets. They have done this because they can i.e. as a result of the removal of political and legislative obstacles created by Apartheid. Alternatively they have emerged because such settled and skilled groups are a requirement of newly globally integrated labour and consumer goods’ markets. It works both ways – one as a push the other as a pull. Either way the black middle class is growing and on the move to become the prime determinant of much of what lies ahead for South Africa.
The overwhelming numeric majority of this class is a normal middle-class (public and private sector workers, teachers, artisans, skilled workers and other professionals) previously denied by law and repression the chance of improving their lot (to accumulate assets and get ahead). But along with this classic middle-class has come a slurry of individuals and groups who have more specifically seized the opportunities to extract a rent, opportunities created by the legal and political imperative to transform patterns of ownership and control. Again, most of these are rational individuals who have seized the legal opportunities that the imperatives for transition have presented them with. However, and this is the important bit, a very large (in terms of accumulated assets and power) part of this group includes those who have successfully harnessed political power with the specific intentions of diverting public resources and/or other resources available for redistribution (the assets of private companies, for example) into their own hands.
The point of all of this is that once through the door, once securely established, that elite, its children, its family networks will attempt to re-establish the basic economic rules that allow for the formal and ordered regulation of property, the appropriate separation between the public and the private and the establishment of the rule of law – an imperative that already characterises the ‘classic middle-class’ that has emerged alongside this elite. In short, once inside the enclosure, the new elite will attempt to lock the door and secure the perimeters. It’s part of normal capitalist development and we will get through it in about 10 – 20 years. Meanwhile we are going through what Karl Marx would have called a form of “primitive accumulation” – with all the attendant threat and chaos.
Once this class has formed, emerged and assumed its central place in South African society – and Census 2012 suggests this is in process – our politics, parties, structures of governance will be forced to adapt to the imperatives of the new underlying configuration. This is the kind of tectonic force that effortlessly shuffles and cuts and pastes our politics and our parties to suit itself.
In 12 years’ time we are going to look around and remark at how surprising it is that South Africa has settled down and become such a productive and cooking hub, that corruption and nepotism has retreated so far and so quickly, that the political certainties of the past have so quickly and radically changed for the better.
Or that’s the outcome I have bet my meager resources on …. and before you follow my lead, remember; there is a reason those resources are as meager as they are.
I am positive about South Africa (or at least about reduced volatility) in the immediate post-Mangaung period
Once the political contest for the presidency is resolved and once the platinum sector strikes settle, the deep uncertainties driven by these interacting cycles will recede.
But that is enough sunshine for now … because what has driven the intensity of those cycles is still very much present and will feature prominently in the South African investment and operating environment in the next 5 – 10 years, revealing itself in crises at least as serious and awful as the Marikana Massacre and the Mangaung contest. (Much of this will be the subject of the next few “deep blue thoughts” posts.)
Motlanthe or Ramaphosa?
At Mangaung the presidency issue is settled and the only interesting bit (as far as the electoral process is concerned) is the election of the deputy presidency and in the general balance that is achieved within the NEC.
I will leave the NEC for a later discussion.
I think 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: stay out of prison after you have left office and keep your loot forever. That’s the thing and the whole of the thing.
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 sent to prison?
I think Ramaphosa might. I would have trusted the younger version to do the right thing a lot more than I do this older one. This man has done a lot of complex dealing with “the cold realities”, he has supped with with a Dark Lord or two along the way … and I would not feel entirely confident that the Zuma camp could not construct a deal that keeps him (Ramaphosa) beholden until long after Nkandla Incorporated has broken free of the threat of justice and been laundered till it shines like a blue chip.
And Motlanthe? I am grinding my way through “Kgalema Motlanthe: A Political Biography” by Ebrahim Harvey (there’s more than one medicine measure of hagiography in there, but despite that I am starting to believe that KM might just be a seriously good person). However, I don’t think that means he would send Zuma to jail. He seems like 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 Polokwane. I cannot see Motlanthe as the author of such a story.
It would be a relatively easy matter for the Zuma camp to claim the imperative of unity, and decide to accept Motlanthe back into the fold – instead of Ramaphosa – and therefore as the successor president in 2017.
Enough for now.
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
|Limpopo||Conference delayed – violence etc.|
|Western Cape||Conference delayed – disputes etc.|
|Northwest||Conference delayed – shots fired etc.|
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.