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Listening to the EFF be the rock against which Zuma’s blithe refusal to account finally dashed itself yesterday I felt briefly elated.

Gangsters! Bashi-bazouks! Yes, PAY BACK THE MONEY! PAY BACK THE MONEY! Billions of Blue Blistering Barnacles!

But after a moment’s reflection I pulled myself, by the ear, back into the vehicle.

“You irresponsible old twit!” I said, my mind drifting back to this blog post from August 24 2010:

Waiting for a saviour to rise from these streets*

Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go  for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?

“Franco”: General Francisco Paulino Hermenegildo Teódulo Franco y Bahamonde Salgado Pardo de Andrade – and yes, he did keep his armies up his sleevies

Is it a plane?

Is it a bird?

No, it’s … hmm, I’m not really sure.

When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.

I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.

This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.

Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.

The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.

Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?

This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was  a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.

I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.

But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.

There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.

Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.

Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.

Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s  bright, presentable, charming, good-looking and available – very available.

(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)

The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.

The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.

* The title of this post comes from the glorious “Thunder Road” by the inimitable  Bruce Springsteen (it doesn’t really fit the story … but I really love the song:

You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
That’s understood
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?

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

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

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

Employment equity – dead slow ahead

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

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

Politics1

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

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

Employment equity reports 2003 - 2013

Employment equity reports 2003 – 2013

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

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

Employment equity reports 2013

Employment equity reports 2013

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

Employment equity report 2003 – 2013

Employment equity report 2003 – 2013

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

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

So what?

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

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

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

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

Spoiled ballot campaign

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

So what?

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

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

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

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

Most interesting

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

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

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

Ronnie Kasrils, City Press 13/04/2014

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

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

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

So what

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

 

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

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

Excuse me?

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

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

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

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

Pravin (PW Botha) Gordhan

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

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

Political messaging and the medium-term budget – all good

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

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

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

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

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

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

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

Loud and widespread muttering about power struggles in the Democratic Alliance

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

So what?

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

Mozambique – Renamo rears its scarred and ugly old head

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

So what?

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

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

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

So what?

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

Jacob Zuma provides some light relief

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

Jacob Zuma provided a gem last week when he said:

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

(Gauteng ANC manifesto forum – October 21 2013)

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

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

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

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

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

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

(SABC interview with Dali Tambo August 19 2012)

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

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

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

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

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

 (Gauteng ANC special council – March 15 2004)

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

(Interview in The Star Newspaper – Feb 13 2012)

So what?

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

Bits and pieces

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

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.

So what?

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).

So what?

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.”

So what?

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.

So what?

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.

Lock-out

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.”

 

Alliance Summit

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

So what?

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.

So what

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.

So what

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.

Here are some bits and pieces of my latest commentary:

Vavi and Numsa – the underlying risks

Zwelinzima Vavi faces a special central executive committee of Cosatu meeting today to decide his fate following his admission that he had sex with a junior Cosatu employee in her office in the Cosatu headquarters. Numsa, the National Union of Metalworkers of South Africa (perhaps Cosatu’s largest union after the collapse of Num in the face of Amcu competition) characterises the attempt to discipline, and possibly shaft, Vavi as  “a  real rupture in the Alliance, and therefore in Cosatu, the ANC and the SACP between the forces of socialism and the forces of neoliberal capitalism”. There is widespread speculation that Numsa might exit Cosatu if Vavi is axed.

So what?

It would be a mistake  to dismiss Numsa’s position as just so much socialist babble and dissembling (although I did I see a  recent Numsa paper defending Vavi with this quote from the Communist Manifesto: “The proletarian is without property; his relation to his wife and children has no longer anything in common with the bourgeois family relations … law, morality, religion, are to him so many bourgeois prejudices” – tee hee ).

Numsa reads the pressure being placed on Vavi as rooted in Vavi’s criticism of the ANC leadership with regard to corruption and with regard to the ANC’s adoption of the National Development Plan. For Numsa and ‘the left’ in Cosatu/ANC/SACP,  Vavi’s sexual practices are irrelevant, the ‘real’ issue is that the Zuma-led ANC and its allies in Cosatu and the SACP are attempting to rid themselves of a strident critic before the 2014 election. The left is, implicitly, saying: ‘you are trying to get rid of Vavi so that you can continue stealing from state coffers and selling us to the global corporations in whose pockets you now reside.’

The strategic planners around Zuma probably did want to get rid of Vavi and saw the sexual misconduct as an opportunity to do so with the least cost to Alliance strength and unity. However a result that leads to Numsa splitting from Cosatu might end up being catastrophic for Zuma and his allies. Numsa is the best organised and most militant union in Cosatu. It already effectively competes with Num (at Medupi for example) and if it were to set itself up in competition to other Cosatu unions the platinum sector circa-2012 could, conceivably, end up looking like a labour-relations picnic. Such a split could also cause unforeseeable disruptions in the ANC’s electoral support, conceivably leading to a political realignment and possibly to the formation of a ‘left’ or ‘workers’ party.

However, the Zuma administration and the central ANC leadership is desperately trying to unite the constituent elements of the Alliance behind the National Development Plan – partly in an attempt to prove to global capital markets and other investors that the ANC is serious about creating a settled environment for investment, and partly because it appears to believe that plan is the right path to ensure increased levels of economic growth and employment. Numsa sees the NDP as a direct extension of the ‘neoliberal’ Growth, Employment and Redistribution macroeconomic policy.

To understand more fully what is at stake here it is interesting to examine how Numsa, in its own words, understands the NDP and GEAR and how it interprets the ‘real’ reasons the Zuma leadership is attempting to get rid of Vavi:

“The capitalist neoliberal trajectory which the ANC leadership had  adopted”, designed to “ deepened and entrenched South African capitalism” and “ it also laid the grounds for deepening imperialist domination in South Africa” … “allowed monopoly capitalism to evade expropriation“  … “thus in fact GEAR negated one of the fundamental objectives of any liberation struggle – the elimination of imperialism”.  Finally: “Inevitably, the rupture in Cosatu is between those who want to see a thoroughgoing implementation of the Freedom Charter …  and those who are consciously or unconsciously defending South African capitalism and imperialism by defending the NDP and not openly supporting the implementation of the Freedom Charter, especially its nationalisation demands.”

The stakes are high. The Zuma administration needs to prove to investors that these political positions are not represented in ANC policy making AND it has to keep the Ruling Alliance intact. The disciplining of Vavi today brings this to a head. The Zuma aligned faction probably wants to achieve a disciplining of Vavi with regard to his public utterances but to a degree that keeps Numsa in the tent. It’s a delicate balance and fraught with risk.

 

The Democratic Alliance – much talk of the possibility of taking Gauteng

The DA Electoral College decided late last week that Mmusi Maimane will head its campaign to take Gauteng from the ANC is 2014. Maimane stood against Jack Bloom for the position of ‘premier candidate’ for the DA in Gauteng. The election comes amidst increased media speculation that the Official Opposition could realistically pursue victory against the ANC in the economic heartland of the country.

So what?

The peculiarly South African ‘coded’ relevance of this story, is that Maimane is black and Bloom is white – and therefore the DA electoral college’s choice of Maimane over the more experienced Bloom is seen as indicative of the DA’s decision to ‘go all out’ to win a greater share of the black vote, especially in the region where it is assumed that ‘urban African professionals’ are both most abundant and most likely to be disaffected with corruption and ANC failures of governance.

At this distance out from a national election any definite prediction about results should be taken with a mountain of salt. Parties are either trying to talk up their chances or are predicting dire results to scare their members and supporters into campaigning mode. In the 2009 election the Democratic Alliance won 16.6% of the vote in Gauteng and it is vanishingly unlikely that the party will win a majority in the province in 2014. It is conceivable that the DA could find itself in a position to lead an alliance of parties to victory over the ANC in the province next year. However the parties themselves and their expensive private polling consultants possess the only real ‘scientific‘ (probably ‘empirical’ is better) – ed) data. Any hints that emerge into the public domain that come from those party contracted polling agencies are probably designed to serve specific party objectives, rather than the truth – and should be treated with maximum scepticism.

 

Zuma expected to tell SADC ‘our work in Zimbabwe is done’

It is unlikely that the 15 member SADC Heads of State meeting scheduled to take place on August 17 will call for a coalition government in Zimbabwe – as the body did after the disputed 2008 elections. City Press reported on Sunday that a source close to the South African mediation effort has said: “As far as South Africa is concerned, we have ended mediation in Zimbabwe”. It is likely that the regional body will vote to accept the election result (although not unequivocally and not without polite reservations) and further, that the body will call for the UK and the US to drop sanctions against Zimbabwe as part of an economic recovery plan.

So what?

The SADC is likely to err on the side of order if the trade-off is between political/economic stability and electoral fairness in the region. In 2008 the body assessed that the election was so unfair that accepting Mugabe’s refusal to acknowledge an MDC victory would be an unstable result. Thus the body forced Mugabe and his party into a coalition government. The estimation appears, this time around, to be that accepting a Zanu-PF victory is the more stable of the possible outcomes – and that stability is rooted in Zanu-PF having performed better and the MDC having performed worse this time around.

There is an interesting account in the Mail & Guardian of how Zanu-PF won Harare from the MDC that bears testimony to a real shift in voter sympathies in Zimbabwe – as opposed to purely cheating and skullduggery on Zanu-PF’s part (catch that story here). It is impossible to make a serious estimation of how much Zanu-PF’s victory was legitimate and how much a result of the aforementioned skullduggery. However, it is my opinion that the SADC will conclude that enough of the victory is ‘legitimate’ to declare it so, and thereby help make it so.

The outstanding questions, it seems to me, are:

• Will the party implement the indigenisation programme in a way that further drives foreign investment out of the economy?
• Will the party implement catastrophic monetary and fiscal policy?

It is probably a correct response to be ‘optimally cautious’ rather than ‘cautiously optimistic, given Zanu-PF’s serious mismanagement of the economy post-1999. However, it is also important to think of Zanu-PF and Mugabe as conscious and politically aware players in their game. Zanu-PF is likely to be cautious about policy – it is no longer necessary to implement ‘panic’ measures and any incumbent administration is likely to want to seek a degree of economic stability. This does not mean Zanu-PF will back-off ‘indigenisation’ – it appears to have worked for the party up to a point. But it does mean that Mugabe and his party are unlikely to implement indigenisation that further (i.e. any worse than it already has) breaks international norms and standards about property or in a manner that causes a stampede out of the economy. (Important qualification: One of my colleagues who specialises in analysing platinum companies has suggested that the indigenisation ‘deals’ that were struck prior to the election are actually coming ‘unstuck’ because Zanu-PF appears to believe it can get more favourable terms now that it has won such a divisive victory in the election. If that is, in fact, the case then it would be appropriate to be less confident of my formulation that  “Zanu-PF is likely to be cautious about policy”.)

Additionally, a serious and high-risk ‘unknown’ is what might happen if and when Mugabe (finally) dies. My own assumptions about how history works is that individuals rarely make a huge difference to outcomes. However, through careful manipulation and a clever ruthlessness Mugabe has become the lynchpin of Zanu-PF power and I am uncertain as to what might happen if a vacuum suddenly appears in the space he currently occupies, but I think it is unlikely to be pretty.

 

Pravin Gordhan – mutters at The Treasury

“Finance Minister Pravin Gordhan’s leadership style has been called into question as treasury employees accuse him of taking a unilateral decision to cut performance bonuses by more than half, while failing to condemn publicly the expenditure on the multimillion-rand upgrade of President Jacob Zuma’s compound in Nkandla” – Mail & Guardian.

So what?

Aggrieved staff members are not necessarily the most reliable critics of the bosses for whom they toil. However, successive ANC governments have relied on the Department of Finance being a centre of excellence that consistently trains and/or attracts top, highly motivated and effective officials – so any signs of serious stress in the organisation is worthy of consideration. The article, from the ‘quality weekly’, quotes a ‘senior official’ in the following manner: “Since he [Gordhan] was appointed as minister, things have never been the same in the national treasury. He brought a management style that is foreign to the team of the national treasury. He sometimes speaks to the management team like they are kids. His leadership style has seen many of the senior treasury employees, including former director general Lesetja Kganyago, leaving … All he is focusing on is making sure that he is reappointed as the minister of finance after next year’s election. People here say that this is one of the reasons he does not condemn the enormous amount of taxpayers’ money that was spent on the president’s residence”

In the same story, the Democratic Alliance finance spokesman Tim Harris claims that recent replies by the Treasury to the party’s parliamentary questions revealed a ‘significant’ vacancy rate at senior levels within the department, “in particular, 25 senior employees have left the department in the past year,” he said.

We have to take this from whence it comes (aggrieved employees and the official parliamentary opposition) but the status and functioning of the previously above reproach Treasury is important enough to consider even the fruit of this tainted tree.

 

Julius Malema seeks spiritual guidance

City Press reported on Sunday that Julius Malema and his colleagues in the Economic Freedom Fighters left South Africa on Friday for a week’s visit to a massively popular Nigerian preacher in Lagos who has ‘prophesied’ a huge and bloody revolt in South Africa – presumably one led by Malema. The EFF said in a statement that this is a “spiritual visit to meet and create friendship with this son of Africa and his congregation, and ask for blessings on the journey ahead”.

So what?

Nothing really … it’s just that Malema’s antics are endlessly entertaining. Of course this lighthearted approach is based purely on the belief that Julius and cronies are never going to get anywhere in their political party endeavours. If the EFF ever looked like it was a real threat I would probably not be sniggering up my sleeve at their tormenting of the ANC …

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.

So what?

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).

So what?

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.

So what?

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.

Herewith is an extract from my weekly news summary/analysis of what I thought was important in the main weeklies.

Freedom Day, April 27 – nineteen years on from the first democratic election … a good story by-and-large

City Press has a useful op-ed page by the always excellent Ferial Haffajee (who is also the editor) based on the South African Institute of Race Relations (SAIRR) handbook 2012. Interestingly, while SAIRR has become an ever stronger critic of the ANC, CEO Frans Cronje acknowledges that “the last 20 years have seen a revolutionary improvement for all South Africans” – a fact that is apparent from the graphic representations (each one manually scanned from the City Press … so apologies for the quality) below.

Graph above – number of people living on less than $2 a day

Graph above – number of people living on less than $2 a day

Graph above – the (not so gradual) roll-back of Bantu Education – the number of Blacks passing matric grows more in response to changing economic requirement of the labour force.

Graph above – the (not so gradual) roll-back of Bantu Education – the number of Blacks passing matric grows more in response to changing economic requirement of the labour force.

Graph above – enrolment in tertiary education – significant changes but a long way to go. Notice the growth in African share.

Graph above – enrolment in tertiary education – significant changes but a long way to go. Notice the growth in African share.

Graph above shows wealth distribution patterns – everyone getting wealthier, although demographics have a strong (even reinforced) apartheid structure

Graph above – the middle class has grown (as far as I can make out from the poorly phrased explanation, this is LSMs 1-10 and how they have fared (grown or shrunk) since 1994 – indicating growth of middle class: bars six and seven.

Graph above – the middle class has grown (as far as I can make out from the explanation, this is LSMs 1-10 and how they have fared (grown or shrunk) since 1994 – indicating growth of middle class: bars six and seven.

Graph above: the demographics of wealth ownership improve as everyone gets richer – whites still streets ahead in the stakes and foreign ownership is an interesting outlier.

Graph above: the demographics of wealth ownership improve as everyone gets richer – whites still streets ahead in the stakes and foreign ownership is an interesting outlier.

So what

Worries about an Arab spring, and social unrest are often based on the assumption of intractable negative social trends. Haffajee, a strong social and political critic of government herself, says: “Over the years of covering South Africa’s freedom, I’ve come to learn this about us: We don’t count our lucky stars often enough, nor do we give ourselves credit for the things we do well. Why this is, I am not sure. But the answer probably lies inherent in the way power was peacefully transferred, but not decisively won.” These graphs run counter to popular wisdom in a number of ways, perhaps the most important one to point out for domestic consumption is that the idea that whites are the new oppressed, and the losers in the last 19 years (as argued in powerful sections of the media and Solidarity trade union, for example) is obviously, even elaborately, wrong.

Businesses unanimous in condemning draft Licensing of Business Bill

A proposed bill will force small businesses and traders to register with, and be licenced by, local councils and municipalities (“every greengrocer, car dealer, pharmacy, and livestock seller … it includes every service provider, from lawyers to hospitals and hotels, car parks, airports, freight carriers and advertising agencies” – Free Market Foundation quoted in Business Report, the Sunday Independent’s business section). The report links the bill to the latest Global Entrepreneurship Monitor that shows SA entrepreneurship levels to be the lowest in sub-Saharan Africa.

So what?

The entrepreneurship survey is deeply disturbing – although not wholly surprising and we agree with Business Unity South Africa when it says (as quoted in the same story) that the bill “will … retard the growth and development of SMEs and further harm a sector which is presently struggling with a high business failure rate.” However, we understand the real target of the Department of Trade and Industry which is floating the legislation is to restrict illegal hawking, particularly of the flood of cheap, illegally imported manufactured goods. Legislation often has unintended consequences, which is the reasons there is extensive public consultation before laws are placed on the statue books. The DTI’s instincts are to fiddle in the economy, but its intention here is undoubtedly correct, it just needs to find the best mechanism.

Wage bargaining and the strikes season is upon us

The City Press business section says “major wage talks scheduled for the mining, motor manufacturing and chemical industries haven’t even begun properly.”

“A full blown teachers’ strike is now on the cards after teachers’ union Sadtu last week presented President Jacob Zuma with a 21-page mix of labour and political demands” – City Press (those demands include the removal of Basic Education Minister Angie Motshekga and her director-general Bobby Soobrayan.

The Motor Industry Bargaining Council (MIBC), where Numsa dominates sets wages for 160 000 workers in the sector and this year will open with a demand for a 20% across-the-board increase, an industry wide minimum of R6000.00 a month and a ban on labour brokers – later this week.

The Chemical Industry also starts next week (sectors involved are “fast moving consumer goods, glass, industrial chemicals and pharmaceuticals” – City Press.)

The most widely anticipated talks are those coming up in the Chamber of Mines for the gold mining industry (and concurrently in the coal sector) – the first since illegal strikes rearranged the labour landscape and ushered in a plethora of worker committees refusing to work through unions. “The handsome increases some of the mining strikes won last year, by bypassing the formal system, will exercise the minds of everyone at the table …” City Press.

The article also says “the Chamber of Mines is meeting with Amcu again this week to try and arrange its place in the forum … where Amcu will have to share Num’s mandate for the populous lower bands.”

“The plan for a new platinum forum echoing the gold and coal forums at the chamber has not made any progress. This while mining companies will see their standing wage agreements expire this year” – City Press.

So what?

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. Strike action during these times can appear to cascade through the economy and we need to be clear what is ‘normal’ and what is ‘abnormal’.  The platinum and agriculture strikes last year were abnormal and have, to an important degree, contributed to destabilising the system – by creating unrealistic base expectations and by encouraging workers to bargain outside of the unions and structures of the central bargaining system. This does lay the grounds for serious uncertainty this year. Adding to the tension is the apparent attempt of Zuma and his strategist and allies in Cosatu to get rid of popular Secretary General Zwelinzima Vavi. As we discuss below, this could contribute to serious disturbance in industrial relations this year – disturbances that are distinctly not part of the normal cycle.

The growing tension in the ruling alliance is putting Cosatu under intense strain

The Sunday Times says it has seen and analysed Cosatu’s schedule of rallies and official speakers for May 1 and argues: “May Day celebrations will once again expose the deep division in Cosatu” – a significant part of the tension concerns Num leaders refusing to address rallies in the Eastern Cape, an important labour sending area for platinum mines and likely strongholds of Amcu where Jacob Zuma’s Num allies are might to be embarrassed, heckled or driven from the stage.

City Press attempted to tote up the “for and against Vavi” unions indicating membership numbers – using figures drawn from the Cosatu 2012 national conference official ‘organisation report’- and it’s own insights into which groups of union leaders are Zuma allies/Vavi critics. It is not an extremely useful exercise because each union has for-and-against sections, with only Numsa and Num being large and significant unions with more clearly defined “for and against” positions. However the forces against Vavi appear to have the numbers if they need them, although it is not clear that this translates directly into votes in the forum that will make the decision.

Pro-Vavi

Membership Numbers

Anti-Vavi

Membership Numbers

Unclear

Membership Numbers

Numsa

291025

Ceppwawu

80658

CWU

18666

Fawu

126930

Num

310382

Sama

7758

Denosa

74

Nehawu

260738

Pawusa

17146

Popcru

149339

Sadnu

8655

Satawu

159626

Safpu

593

Sadtu

251276

Sasawu

67402

Sasbo

7074

Sactwu

85025

Total members

418029

 

820979

 

212319

So what?

This morning an opinion column written by this analyst exploring attempts by the Zuma allies to get rid of Zwelinzima Vavi will be published in the online newspaper The Daily Maverick. Here is an extract that contains the most salient “so what?” for financial markets:

 “Shafting Vavi could conceivably split Cosatu – and even lead to the formation of a new left or worker-based political party. Take Numsa, all the other trade unions and bits of trade unions that support Vavi and add the individuals and organisations Vavi has been accused of flirting with (in the National Anti-Corruption Forum and earlier in the Civil Society Conference – October 27 2010) and dig out all those leftists long ago alienated from the ANC (think the brilliant and creative Zackie Achmat and those connected to him); go wild and add Amcu and some not yet indiscernible political formation emerging around Amcu or even around Agang … and you have the grounds for a real and serious challenge to the ANC. At the very least shafting of Vavi might not equal clearing Cosatu of his influence. It might equal clearing the ruling alliance of Cosatu … leaving Zuma Incorporated clinging to a fading Num and a few cronies.… it is a risky game. One of the by-products could be another catastrophic year on the industrial relations front. If Cosatu splits, it won’t be a neat division between different unions … the fault lines will run through individual unions and the disturbances generated by the Amcu/Num contest could become a model for the whole economy.”

The SACP joins criticism of the National Planning Commission – final nails in Trevor Manuel’s coffin

To add to the general factional confusion in the Ruling Alliance, close Zuma allies, the SACP has published a discussion paper that has a “sharp, pointed and nuanced interrogation” of the NPC (which produced the much vaunted, in financial markets and by business, National Development Plan).  “We cannot have a free-floating NPC, with an apparent presidential endorsement and using the budget of the presidency” says the SACP discussion document.

So what?

Actually, to my surprise, I agree with the main SACP criticism: the plan “does not have a strong organic link into government and its diverse planning apparatuses and processes.” Without such links, the NDP was always going to be a fig-leaf covering up the paucity of any actually strategy for economic development in the Zuma administration. The SACP can’t hide the fact that what it mostly dislikes about the NPC or the NDP is business’ participation in the formulation of the ideas and that Cosatu is starting to come out ever more critical of the document. I expect the NDP to go the way of a myriad similar (although never quite as thoroughly and carefully wrought) such plans from South Africa’s recent past.

Bits and pieces

  • City Press spent a day in the DRC’s Eastern Region with the M23 guerrilla movement, meeting them in Bunagana on the Rwanda border. The UN is deploying a brigade as a result of UN resolution 2008, which accuses the M23 and other rebels of mass rape, murder sprees and of recruiting child soldiers. The M23 insisted to City Press that Khulubuse Zuma (a nephew of the president) won valuable oil concession on the shores of Lake Edward and in exchange Jacob Zuma has committed “elite troops and top-drawer fire power to the UN force to smash M23.” The M23 guerrilla movement is trying to play into South African politics by accusing Zuma – sounds like one group of wolves trying to accuse another to cover up their own predatory behaviour. I have seen no evidence to back the idea that the troops are being sent to protect the Zuma family’s interests.
  • The Dina Pule saga continues to become ever more deeply incomprehensible. City Press claims Dina Pule  has alleged that famous soccer club owner Jomo Sono is behind a smear campaign against her to attempt to blackmail her into awarding his (Sono’s) company a the multi-billion rand set-top-box decoder contract. Pule is due to appear before Parliaments ethics and member’s interests committee on Thursday or Friday and the sooner political clarity comes to the telecommunications sector, the better.
  • Regional leaders are expected to hold a summit soon to discuss Zimbabwe’s readiness to hold elections, amid warnings that time is running out to ensure the poll is free, fair and credible – Sunday Independent. Lindiwe Zulu, President Jacob Zuma’s foreign policy adviser and a key member of his facilitation team in Zimbabwe confirmed that Zanu-PF had recently thrown up obstacles to ‘proper monitoring’ of the Zimbabwe negotiations. “But she said her team had persuaded Zanu-PF that as SADC was supervising negotiations, it had the right and obligation to attend whatever Jomic (Joint Monitoring and Implementation Committee) meeting it chose to. Zanu-PF conceded the point” – Sunday Independent.
  • Senior managers at PetroSA have been accused in the Mail & Guardian of conspiring to loot billions from the national oil company. It is a big story, dense with details and looks extremely damaging to those who stand accused. I will be monitoring the implications.

In high anxiety at my failure to publish here for several weeks (what with 12 days visiting fund managers in the UK and Europe and new commitments to the Daily Maverick – see here and here for the first two of those) I have decided to again post a modified version of my usually bespoke  ‘SA Political news commentary’ … to show willing; to demonstrate that I am not entirely unembarrassed that my last post, which was also a news commentary, was on March 18.

Perhaps I am edging towards closing down this blog … but I am not quite done yet, and for those who have stuck with me this long, I thank you.

So here,  written to a deadline of 06h30 yesterday, slightly modified for my hanging-by-a-thread website:

SA Political News update 23/04/2013

Cosatu and the ruling alliance: corruption claims and counterclaims

According to the Mail & Guardian (April 19-25), the battle for control of Cosatu is becoming ever more vicious. The article states that behind the noise is an apparent attempt by the ANC to close down a powerful left faction in Cosatu that has been critical of both corruption and the alleged adoption of ‘pro-business’ policies by the ANC and government. The main issues over which the battle is playing out are:

  • Allegations made (according to the M&G) by “an informal caucus … of senior leaders from Nehawu, the NUM, Popcru, Sadtu, Cepawu [they mean CEPPWAWU, I think – ed], the SACP and the ANC[1]” that Zwelinzima Vavi, the popular Cosatu Secretary General, has engaged in corrupt activity and is disloyal to the ANC-led alliance, including by failing to adequately support Jacob Zuma for re-election at Mangaung.
  • A flood of accusations made through the Cosatu linked NGO Corruption Watch that many of the leaders of unions involved in attacking Vavi are themselves corrupt – Mail & Guardian in a story that works more by insinuation rather than actual content – see here  for the story that was later denied by Corruption watch here).
  • The proposal made by Fawu (Food and Allied Workers Union) for a special Cosatu congress to resolve this issue, opposed by the group named in the first bullet, but supported by Numsa, Samwu and several smaller unions[2].
  • Support for and against the National Development Plan.

So what?

Business might be tempted to fold its arms and sit back and delight that the old ‘thorn in the side’ Cosatu is being riven by tension. However, it is worth recalling that some industrial relations consultants also delighted in the emergence of Amcu in the platinum sector as a counter to Num for similar reasons – and look how that played out. The serious political conflict in Cosatu could as easily result in higher levels of labour unrest, with higher levels of unpredictability, in a wide variety of industries than in a generally more compliant labour movement. Several multi-year wage agreements are coming up for review before the end of this year (including in the automobile, chemical, gold mining, coal mining, retail motor industry and tyre sectors – which historically have been trendsetters – Business Times). Add to this my uncertainty as to whether the tight three-year public sector wage agreement set last year will hold under strain caused by a combination of:

  • the (welcome) reforming zeal of Public Service and Administration Minister Lindiwe Sisulu,
  • government’s apparent attempt to roll back the power of the South African Democratic Teachers Union, and
  • the generally difficult economic circumstances for union members,
  • the successes of the wildcat strikes, particularly in the platinum sector last year, perhaps having established a new baseline for increase expectation throughout the economy

and it is not inconceivable that we could have another year of potentially devastating labour unrest.

If the government’s (and the ANC’s) intention was to have a showdown with organised labour over economic growth and stability that would be one thing. But I suspect that the evident intervention in Cosatu is based on the sectarian interests at the ruling faction of the alliance rather than in any real desire to pursue the national good. If that faction faction successfully expels Vavi they might precipitate a split in Cosatu and the long awaited formation of a new ‘left’ political formation … and just by the act of pushing, through what appears to be a dirty tricks campaign, for this outcome the ruling faction risks rapidly escalating labour unrest.

The DA and the ANC try on their best dresses (or maybe not)  for Election 2014

The DA has launched a campaign attempting to burnish its anti-apartheid credentials, including publishing a pamphlet with a picture of Nelson Mandela embracing deceased party stalwart Helen Suzman under the caption: “We played our part in opposing apartheid”.

At the same time, the Mail & Guardian has published excerpts of what it calls ‘draft DA election material’ which explicitly compares the ANC to the National Party. The M&G’s quotes from the draft document include the arguments that under Zuma’s ANC there is a “rise of Zulu nationalism and racist rhetoric” and “as was the case with apartheid, the ANC is using the police to suppress criticism of its government”.

In the City Press and Sunday Independent, the ANC secretary general Gwede Mantashe has separate opinion pieces that argue that the DA’s attempt to appropriate Nelson Mandela is “an abuse of the human and humble character of this icon”. He adds that the DA “remains a brazen advocate for white domination and privilege, and for elaborate schemes for its retention in the guise of liberal policies”.

So what?

The general election next year is likely to be messy and disruptive – sustaining the apparently endless flow of unsettling news coming out of South Africa. From this far out it appears possible that the ANC will be arguing that the electoral issues are essentially identical to what they were in 1994 (white domination and the legacy of apartheid) and that the DA will be arguing that that is just an excuse for delivery failure – it would be difficult to conjure up a more divisive and unhelpful framing of the issues 20 years after the first democratic election.

The unravelling of the Mandela legacy

The weeklies have a flood of stories that pick away at the fabric of the Mandela story. A reality TV show “Being Mandela” is reviewed in the Sunday Times under the heading “Opening up the canned Mandelas – comic kugels[3] help deflate the myth”. The show “unveils the vacuous, pampered lives of two of Nelson Mandela’s grand-daughters, Zaziwe Dlamini-Manaway and Swati Dlamini” – Sunday Times.

The Sunday Independent leads with a review of “struggle stalwart” Amina Cachalia’s new book “When Hope and History Rhyme” in which, among many other matters, she reveals aspects of her own alleged romantic relationship with Nelson Mandela post his marriage to Graça Machel.

All of this comes as a bitter fight among Mandela’s children (with, among others, Nelson Mandela nominees George Bizos and Tokyo Sexwale) for control of various trusts that Nelson Mandela set up on his children’s behalf comes to a head in the Johannesburg High Court – The Sunday Tribune.

So what?

There may be some inherent advantages to the exposing of myths and legends as … myths and legends – but there really appears to be no upside to this depressing deflation. None of these stories changes the reality of the 94 year old South African former president’s contribution to the South African democracy and state-craft in general, but the incessant exposure does add to the gathering gloom around the South African story.

Bits and pieces

  • The Youth Employment Accord has finally been signed after three years of squabbling in the National Economic Development and Labour council (Nedlac). Not unexpectedly, it does not include a youth wage subsidy in the form of a tax-break for companies employing first time youth workers. Frankly, at first glance, the accord, as reported in the Sunday Independent, Sunday Times and City Press appears vague enough to leave some confusion as to how it might result in its proposed creation of 5 million jobs for youth by 2020. No real surprises there.
  • The weeklies were full of scholarly – and not so scholarly – debate about the resignation of Judicial Services Council member Izak Smuts. The debate boils down to whether there is a tension between the quality of judicial appointments and the need to make the judiciary more demographically representative. This is an intrinsically South African debate that cuts across every sector of society and will likely be with us for many years to come – for better or for worse.
  • ANC MP, Ben Turok, explains in the Sunday Times the terms of reference and limitation of the nine member “inquisitorial” panel appointed by parliament to investigate the “ethical conduct and conflicts of interest, potential or otherwise” of Communications Minister Dina Pule with regard to the various allegations that she has allowed her romantic partner to make significant capital out of her ministerial post. That parliament is investigating this matter can only be a good – albeit long overdue – thing.

[1] In order in which it appears in the quote, and supposedly constituting an anti-Vavi, pro-NDP, pro Zuma  faction: the National Education Health and Allied Workers’ Union, the National Union of Mineworkers, the Police and Prison Civil Rights Union, the Chemical Energy Paper Printing Wood and Allied Workers Union, the South African Communist Party and the African National Congress

[2] And this group, supposedly constituting the pro-Vavi, anti-NDP faction, anti Zuma faction: National Union of Metal Workers of South Africa and the South African Municipal Workers Union (plus a host of smaller unions including the Food and Allied Workers union).

(Note for both footnotes 1 and 2 – it is undoubtedly more complicated than this, but we need to start somewhere to attempt to make sense of the chaos.)

[3] Wikipedia (accessed 22/04/2013) explains the use of this term in South African slang as follows: “Amongst South African Jews, the word “kugel” was used by the elder generation as a term for a young Jewish woman who forsook traditional Jewish dress values in favour of those of the ostentatiously wealthy, becoming overly materialistic and over groomed, the kugel being a plain pudding garnished as a delicacy. The women thus described made light of the term and it has since become an amusing rather than derogatory slang term in South African English, referring to a materialistic young woman.”

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

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

Thus …

Summary:

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

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

Main body text:

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

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

So what

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

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

Cosatu – 3 commissions to investigate Vavi

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

So what?

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

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

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

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

 

Zuma approval rating among city dwellers drops to all time low

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

%

Apr

‘09

Jun

‘09

Sep

‘09

Nov

‘09

Feb

‘10

May

‘10

Sep

‘10

Nov

‘10

Feb

‘11

Mar

‘11

Sep

‘11

O/N

‘11

Feb

‘12

Apr

‘12

Aug

‘12

Feb

‘13

Approve

52

57

53

58

43

51

42

49

49

48

45

55

55

46

48

41

Disapprove

29

13

19

23

41

33

44

34

35

38

41

38

35

46

44

51

Don’t know

19

31

28

12

17

16

15

17

16

14

14

14

10

8

8

9

Net positives

+23

+24

+34

+35

+2

+18

+2

+18

+2

+15

+14

+1

+20

0

+4

-10

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

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

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

So what?

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

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

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

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

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

Bits and pieces

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

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

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

Think of the various interests of classes and groups in our society as constituting an ecology in which political parties and organisations find niches to graze, hunt and be sustained.

The system can change and niches shift, narrow or broaden –  and in response the denizens that live in each niche must adapt or become extinct.

Alternatively, major fauna can begin to change for other systemic (or extra-systemic?) reasons and new spaces and niches close or open in response.

And a shockwave goes through the ecosystem and a number of species appear and/or rabidly (oops) rapidly evolve, while others disappear.

Like all metaphors this one is going to break down the closer it gets to the real world, but I think something like this is happening to our political ecosystem – as the ANC’s DNA drifts towards the lumbering, complacent and patronage-networked side of the spectrum.

The gaps that are opening are in the middle classes, in the cities and amongst urban professionals – niches which (that?) are being vacated by the ANC as it settles its rump into the comfort of a sort of conservative, patriarchal, kleptocratic, bureaucratic and ethnic politico-ecological pouf-cushion.

I make  this observation as I watch (on eNews channel) the DA marching on Cosatu’s head-office in Johannesburg in a historical reversal of roles that I am struggling to get my head around.

I saw a Twitter post from Ranjeni Munusamy last night in which she said: “After the #DAmarch tomorrow, maybe nuclear powers will march to Greenpeace offices. Will make just as much sense”.

I get her dismay completely, but I suspect that is just my old assumptions about the shape of our political ecology dominating my brain.

Why shouldn’t the DA be going up directly against Cosatu?

They are, increasingly, competing for exactly the same constituency – the constituency recently, in effect, vacated by the ANC.

That is what all this business about Zille attempting to recruit Vavi into the DA has been about.

They have been flirting – because they feel how close they are to each other – and now they are fighting, for exactly the same reasons.

On Sunday Ferial Haffajee wrote an extremely interesting piece in her City Press, pointing out that Cosatu is increasingly dominated by public sector unions  – and therefore increasingly represents “a middle”, rather than “a working” class.

The story uses this graphic:

… which I think comes from a Uasa Federation study by economist Mike Schussler that points out that the employed in south Africa enjoy relatively good living conditions with an average salary of R13 200 and further that public sector workers are significantly better off than their private sector counterparts.

Haffajee writes:

Cosatu has created a middle class where one did not exist in the 18 years of democracy. That it is funded by the public purse (funded in turn by you and I, the taxpayers) is neither here nor there. What is remarkable is how a federation that started as decidedly blue collar has altered the identity and social position of its members so quickly and so effectively that it could turn the public policy of tolling on its head.

So what is happening right now?

There is an inevitable frisson in the relationship between Cosatu and the DA.

Cosatu and the Democratic Alliance border the niches vacated by the ANC, namely the unemployed and the middle classes. (The unemployed and the middle classes, perhaps more than any other groups, have  the most to lose from the ANC’s, at best squandering, at worst looting, of societal resources available for growth and relief.)

As the opposing crowds gather in the streets of Johannesburg, the blue DA marchers versus the red Cosatu defenders – those for the youth wage subsidy and those against it – we might be expected to conclude that these are bitter class enemies.

I still think not – to my eyes I cannot distinguish them ethnically or class-wise … (but I accept that I might just not have cracked those codes).

The ANC – as well as agents of the state, I think – will strive mightily to prevent Cosatu from finding the DA – and vice versa.

As romantic literature suggests, love and hate lie alongside each other like geological strata – always in the process of metamorphosing, one into the other.

(Note – I think my various metaphors here don’t adequately take account of the differences in Cosatu – and ultimately break down on that point. I do think the public sector side of the federation is more middle-class and the private sector side more radical and competitive. However it is easier for the ANC to keep the public sector unions – the DA’s natural allies in class terms – on side because, ultimately, those unions are dependent on the state budget over which the ANC has control. Obviously there is a cost involved in the ANC buying off those middle class unions, and it is a cost ultimately borne by the unemployed … but that is an argument for another post. I am not sure if the DA will be able to capitalise on this contradiction, but it is not impossible that is precisely what the party is trying to do in Johannesburg as I write this.)

I occasionally publish slides that I have used for clients as part of my attempt to examine political and investment risks to them.

Below are 3 from a presentation I delivered soon after the ANC NGC.

See if you can identify all the people concerned – a sort of politics general knowledge test ( you know the ones: if you score 10 you are probably a CIA/MI5 agent; if you score 9, then get a life and stop obsessing about politics …. if you score 2 you are living in a special care facility etc.)

As an aid here is a link to Stalking horses at the NGC – the blog I posted at the time. To help refresh your memory ‘the NOM’ was meant to describe the group that had coalesced around the ANC Youth League’s call for the nationalisation of mines.

I have been sickly and trying to pay the bills.

All my ‘paid for’ commentary on the NGC is done and I can finally get back to home ground where I feel more comfortable to make some wild accusations – and I will, finally, be more explicit in this post about who I think the bad guys are and who I think the less bad guys are.

At the outset, forgive me; this is long and requires a degree of effort to plough through. I believe your efforts will be rewarded in the end – but I would think that, wouldn’t I?

The NGC, just like the world itself,  becomes a cacophony, impossible to follow and impossible to interpret, without a guiding theory or a framing shape to look through.

The “theory” I am going to use here is that the NGC was the terrain on which two broad factions in the ruling alliance clashed. How you slice-and-dice a thing, conceptually, is always important for what you conclude, so much of what appears below is an attempt to unpick what and who those ‘factions’ consist of.

To think that what was happening at the NGC was “about” the nationalisation of mines call will lead to ‘error’ (you can see Lenin in my heritage when I use terms like that). Instead the NGC was “about” a more fundamental and complex power struggle.

The picture is additionally complicated when we consider that there were over 2000 delegates at the NGC (1500 from branches, 500 from the leagues/Cosatu/SACP/SANCO/PECs and 800 deployees/non-NEC ministers/DGs/premiers/CEO’s of SOE’s) and the interplay was vast and varied.

So instead of trying to cover everything I am going to look through the prism of an alleged power struggle between two broad factions or groups of interest.  This will ultimately be another attempt to “follow the money”.

Here then is the prism through which I believe it is most useful to look:

  1. The ‘nationalisation of mines’ (NOM) call was always a “stalking horse”. The term “stalking horse”  refers originally to  “a horse behind which a hunter hides while stalking game” (WordNet) and is defined in Wikipedia as “a person who tests a concept with someone or mounts a challenge against them on behalf of an anonymous third-party … if the idea proves viable and/or popular, the anonymous figure can then declare their interest and advance the concept with little risk of failure … if the concept fails, the anonymous party will not be tainted by association and can either drop the idea completely or bide their time and wait until a better moment for launching an attack.”  Oh yes, I love the language.
  2. The ‘nationalisation of mines’ call (hereafter called NOM because in fact, it has less do with policy and more to do with power) is best understood as the political platform of a particular alliance of groups and individuals and interests that has as its objective the winning  to power in the commanding heights of the ANC and the South African State. The NOM is therefore something more (and less) than a policy proposal. It is a contingent strategy for winning power – and getting the ANC to nationalise the mines would be a desirable side-affect for some of the participants.
  3. The first part of the NOM is the Youth League’s own specific ambitions, which have most obviously been expressed as a campaign to elevate Fikile Mbalula to the position of Secretary General of the ANC – the position currently occupied by Gwede Mantashe. Mantashe is despised by the League for a number of reasons, but mainly because he is part of those who believe the ANC Youth League is part of an ambitious rent seeking agenda. The League considers itself to be a “king maker” in ANC electoral processes and the organisation has energy and mobility and time to move quickly around the country to influence decisions at a branch and provincial level – a feature it demonstrated successfully at and in the lead-up to Polokwane.
  4. The second part of the NOM are those mining tycoons who want their BEE deals bailed out by the taxpayer. Who could have failed to notice the unified voices of those gleaming billionaire siblings Patrice Motsepe and Bridget Radebe as well as Minister of Housing Tokyo Sexwale backing the NOM in the lead-up to the NGC or at the conference itself?
  5. The third part of the NOM is the election campaign of Tokyo Sexwale to succeed Jacob Zuma. Has he specifically funded and backed the ANC Youth League so that it can be deployed in its traditional role of “king-maker” on his behalf – or because he wants his BEE deals bailed out … or both? It is impossible to prove – either that he has passed money/business/tenders the way of the League or why he might have done so – but that he has done so – with the intention of becoming president – is clearly the view of most of “the left” in the tripartite alliance.
  6. The clearest unifying principle behind the NOM and the most distinct characteristics of its participants is that they are first in the queue to gouge a rent out of the ANC’s economic transformation agenda. The nationalisation of mines call is tailor-made for the broader agenda of the NOM:  there are real material benefits for the backers, it allows the policy bereft Youth League to appear radical and pro-poor – and anti-white capitalist – to its potential supporters; it forces the current top leadership under Zuma (for the sake of investment and economic stability) to deploy itself to defend against something that would naturally appeal to the rank-and- file’s populist instincts.
  7. So who is the NOM challenging? Essentially “the incumbents”, which at one level just means Jacob Zuma, but at another level means everyone who has assumed a leadership role in government, party and the Tripartite Alliance as a consequence of Jacob Zuma’s elevation as well as the ideas and policies that have come to be crafted by that incumbent group.
  8. The “incumbents” should also be conceived of as including all those tenderprenuers, Nkandla hangers-on and Zuma family members whose fortunes are linked to the fortunes of the incumbent leadership.
  9. Do the members of the NOM even know who they are or what they are part of? Mostly they do – because there is an increasingly bitter conflict, for example, between the ANC Youth League and the SACP. When powerful factions clash, they strengthen themselves, make themselves more defined; they force anyone and any issue into the framework of their clash. We saw this in the Cold War, but more recently and specific to the groups here, we saw this in the struggle to stop Mbeki and elevate Zuma. eventually everyone knew whether they were “for” or “against” the motion. Attempts to stay sane, principled and above the fray are inevitably MIA in this kind of overblown factional dispute.

Given that framework, what actually happened?

NOM preparation

Firstly, the NOM did extensive (but insufficient) spade work around the policy that fronts their agenda. Julius Malema and Floyd Shivambu have been on an extended road trip, selling the idea for over a year. They have written for newspapers and addressed conferences. Malema threatened to withdraw Youth League support from any leader who did not support the call. The Youth League attended all provincial preparation conferences for the NGC and was successful in getting its view represented in every delegation from every part of the country. There are extensive reports that members were instructed to infiltrate ANC branches and emerge later as NGC delegates. The style associated with “winning” this view at various conferences was a combination of exclusive focus on the issue and heckling, booing and threatening any opposition – in the now time-honoured traditions of the League and its members.

What the financial backers of the NOM and members of the broader NOM agenda were doing in the lead-up to the NGC should not be underestimated. Individual backers of the NOM have extremely extensive resources. Such wealth and power gives individuals the ability to reach people and process far from themselves – and snap them like a twig.

Incumbent preparation

It is difficult to say how much work the incumbents did. I have made the assumption that securing the Tripartite Alliance was key to the incumbents preparing for the onslaught they knew was coming at the NGC. In this context the brokering of the ending of the public sector strike and the carefully worded apology from Cosatu to the Zuma/government for the language workers and their leaders had used during the strike was, in part, an attempt to establish the ground for a united front against the NOM agenda at the NGC. Comprises and certain concession were probably made to “the left” – but I will discuss this in the conclusion.

The NGC opening – political and organisational reports

Jacob Zuma’s Political Report and Gwede Mantashe’s organisational report were interesting for a number of important reasons but what is relevant for this post is both reports were correctly interpreted as a significant shot across the bows of the NOM. We can all delight in the fact that Winnie Mandela had to physically comfort the distraught Julius Malema after the dressing down he received during Jacob Zuma’s opening Political Report and take to heart her now immortal words ” … every parent is allowed to talk to their children … Every organisation is like a parent.”

Commission 5 victory and then plenary defeat

The sighs of relief ‘the incumbents’ might have breathed after the NOM’s early humiliation were soon replaced by anxiety when the NOM decided to put all of its eggs in one basket (this is one time that cliché is justified) by sending 45 of the Youth League’s 66 delegates to the Wednesday economic transformation commission. It appears that all supporters of the NOM including Tokyo Sexwale and several other BEE mining tycoons flooded the commission to ensure a particular outcome. The best article in the public domain I have seen about the commission is by Moipone Malefane and Caiphus Kgosana in The Sunday Times of September 26 – catch it here.

Joel Netshitezhe , Lesetja Kganyago  (DG in the Treasury),Trevor Manuel, Enoch Godongwana (Deputy Minister Public Enterprises) and old stalwart on this issue, Jeremy Cronin, were amongst the key ANC intellectual and economic thinkers who tried to hold the line at the meeting. Their appeal for thoughtfulness and care around an issue likely to costs government hundreds of billions of Rand were reportedly overwhelmed with bullying, heckling and unthinking repetition of the demand: adopt the call, as we have defined it, as policy!

Without having seen the exact statement that emerged from this commission it is clear that the Youth League (and everyone else present) was under the impression that they had scored a clear victory and the inner cabal reportedly headed off to the Hilton Hotel to celebrate victory in the style to which they had become accustomed.

The ANC Youth League’s (and the NOM’s) celebration was premature. The next day at the plenary session of the NGC Minister Geoff Radebe (husband of Patrice Motsepe’s sister, Bridget, and someone who had expressed support for the basic premise of NOM earlier) delivered a watered down version of the results of Commission 5 – and the ANC Youth League leaders exploded, ultimately sealing their fate by appearing to storm the stage in an aggressive manner.

Conclusion

Ultimately, through the support of delegates from across the alliance at the plenary, a watered down version of Commission 5 carried – essentially calling for thorough cross-country comparison and analysis of nationalisation as part of government’s ability to influence economic growth patterns in favour of the poor and unemployed. This study was mandated to report back to the 2012 Bloemfontein/Mangaung 100th centenary elective National Conference.

In the end it was not ‘the incumbents’ that were overwhelmed by the “shock and awe” campaign of the NOM. In the end it was the NOM that lost the skirmish – they overestimated the efficacy of their own preparation and they underestimated the coherency of the opposition – as well as degree of anger that is now widespread towards the ANC YL and its leaders.

The paucity of facts in the public domain does not relieve us of the obligation to think about what may be going on and develop a view as to the potential risks involved in any situation. Wile E Coyote might have said ‘what we don’t know can’t hurt us’, as he wandered over another cliff, but in the real world what we don’t know can sometimes be deeply threatening. So the explanations I have given here are my best attempts to muster an explanation for as much of the story as possible. I am sure that at some point in the future some of the guesswork and necessary assumptions might prove misguided – but that is life in the threat analysis business.

Three final points;

Firstly, it is okay to delight in the set-back of a particularly voracious self-enrichment agenda at the ANC NGC. But it is important not forget that the conference left unscathed similar agendas in many other places in ANC and affiliated ranks, including in the Zuma family itself.

Secondly, the defeat of the NOM is a tactical, tangential issue. Like the Governator, they’ll be back.

Finally, the victory was bought at the expense of some kind of compromise with “the left”. I expect the upcoming Cabinet review of a New Growth Path to be more sympathetic to a host of issues traditionally seen as part of an SACP or Cosatu platform (including Rand policy, inflation targeting, downward pressure on interest rates, nationalisation of the SARB, tax on short-term capital flows, industrial policy, National Health Insurance and the establishment of a state-owned bank.) The consensus within “the incumbents” is inexorably moving towards a rejection of some of the basic tenants of the Growth, Employment and Redistribution Macro-Economic Policy as defined by Mbeki and Manuel.

Our future is full of as yet undefined state intervention. I wouldn’t feel so bad about this if I didn’t agree with Cosatu that this state, in this place and time, is rapidly becoming a predator.

Ruling alliance in happier times

Commentators and politicians are outdoing themselves announcing either the end or the permanence of the ANC/SACP/Cosatu alliance.

This is Jacob Zuma on the subject – at the Kwazulu-Natal ANC General Council on Friday:

I have read so many alliance obituaries. If leaders express their views, people think that we are fighting … The alliance will be with us for a very long time. (Catch that here)

And this is my (humble) opinion on the subject:

This strike –  as a culmination of other things but also in and of itself – is the death knell for the ruling alliance. (Catch that here)

This business about claiming that the alliance is about to break or will last until the Second Coming is something of a secret code for insiders in the political analysis business. “Insiders” are smugly convinced that the tripartite alliance benefits its constituent elements and these constituents will therefore never leave – and we love to use the analogy of a marriage where the couple fights endlessly but is bound by children, finances and habit so tightly that the partners will be together until death parts them.* I discuss some of the ties that bind here.

“Outsiders” – including those who have never belonged to any of the organisations concerned, as well as foreigners and supporters of parliamentary opposition parties – listen to the noise coming out of  ‘the alliance’ and they take the noise-makers at their word: the alliance is heading for the rocks; it is obvious to anyone with eyes and ears.

The “outsiders” have it.

Philosophically, I am one of those who believes we are what we do. Thus, it is not what Zuma, or Malema or Nzimande or Vavi claim, it is what they, and their organisations, do that counts.

The ruling alliance is not, primarily, a name. It is a description of a shared history, set of values and, most importantly, an accepted set of policies and an agreed upon process for deciding about such policies; and is also the formal forums and organisational structures through which such decisions are taken and implemented.

The only thing of significance that “the ruling alliance” did was throw Mbeki out of office and replace him with Jacob Zuma. Everything that has happened since needs to be seen through the “you are what you do” prism. The constituent organisations have done nothing together except violently disagree, actively try to undermine each other (and each other’s leadership ) – and they have agreed upon nothing and done nothing in concert.

Except for the media appeals tribunal (catch my criticism of Jeremy Cronin’s defence of that here) which, bizarrely, is the single thing that the ANC, the SACP and Cosatu have agreed upon – although Cosatu is wavering even on this as the damage done by the public sector wage strike to their relationship with the ANC deepens and intensifies.

It is as if they are saying: “We (as ‘the alliance’) have nothing to offer – but we have a plan to slap anyone down who point that out.” Frankly, I am not surprised.

* (note) What the “Insiders” are actually referring to is a sense of identity invested in the struggle against Apartheid under the broad leadership of the ANC and, crucially,  that traces its ideological lineage through to the “Congress Movement” – from the United Democratic Front, the Natal Indian Congress, South African Congress of Trade Unions, the South African Communist Party, the Congress of Democrats, the Transvaal Indian Congress and the African National Congress.

(Hmm, I am adding this half an hour after posting the above, just to make myself as clear as I am able, and in case anyone missed the point: If the structures don’t exist, if the decisions are not taken or implemented, if there is real and intense conflict over policy then ‘the alliance’ has already ended – and it makes no difference what the various leaders and commentators say. This is the de facto situation, even if it is still possible to argue that, de jure, the alliance continues on and on.)

Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go  for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?

"Franco": General Francisco Paulino Hermenegildo Teódulo Franco y Bahamonde Salgado Pardo de Andrade - and yes, he did keep his armies up his sleevies

Is it a plane?

Is it a bird?

No, it’s … hmm, I’m not really sure.

When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.

I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.

This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.

Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.

The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.

Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?

This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was  a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.

I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.

But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.

There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.

Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.

Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.

Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s  bright, presentable, charming, good-looking and available – very available.

(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)

The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.

The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.

* The title of this post comes from the glorious “Thunder Road” by the inimitable  Bruce Springsteen (it doesn’t really fit the story … but I really love the song:

You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
That’s understood
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?

In a rush on my way from Namibia to the Garden Route – it’s a hard life, but someone has to live it.

The big stories are:

  • the continuing decline in employment numbers;
  • the National Working Committee’s decision not to charge Zwelinzima Vavi but to criticise him for alleging that Minister of Telecommunications Siphiwe Nyanda is corrupt.

StatsSA’s Quarterly Employment Survey released on Monday showed that the formal sector had lost 79 000 jobs between December and March – or that the number of people employed in the first quarter of this year dropped 1% from the previous quarter. The point is simple: unemployment is a deep systemic threat to long term stability in this country and – to some degree – we are experiencing the removal of the short term stimulus associated with World Cup infrastructure build. That doesn’t make the World Cup a bad thing, but it does mean we need to moderate our expectations.

Vavi’s “let off” comes as no surprise. The core of Tenderpreneurs that have risen in the balance of power through clever play post the Polokwane Putsch would dearly love to shaft their irritatingly principled previous allies on the left but the time is not yet right. The ANC and government is not yet purely a device for extracting rent out of the economy. A luta continua.

And then, just because this Reuters picture lends itself so well to a previous line from these posts:

Sepp Blatter and Jacob Zuma were like twinkly old non-English speaking train robbers still dashingly on the run all these years later. They can’t speak English – or any kind of sense – but their delight at how much money they have managed to stash away is infectious.

I tag it on here – with my own caption:

For those who remember the gangster penguins in the wonderful "Madagascar": "Smile and wave boys, just smile and wave."

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

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

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