The Minister of Finance, unlikely hero and protector of the public purse, has slipped precipitously in public affections as he apologised for visiting the Guptas while Deputy Minister and his son appeared to be at the centre of a scandal at the PIC, the institution for which the Deputy Minister of Finance is responsible – here’s the not bad but turgid M&G on the son’s story and the sneering rejections of the apology from a Sunday Times contributor here.

So what we have here is THE hero of the fight against Zuma, the nuclear programme and the pillaging of SAA who was smashed out of the way by Zuma so he (Zuma) could get his hand on the national coffers. The rumpled guard who stood his lonely duty against impossible odds is now grist for the mill of the self-righteous press and the inane twittering of social media. For crimes and misdemeanors he may – or may not – have committed well before he took his vorpal sword in hand and did some snicker-snack, but not enough to kill the beast, he must be sent, besmirched, unworthy, into the outer darkness.

He’s a good metaphor if nothing else. Be careful of questions you ask, because the truth might not be what you want to hear.

We have set up the Zondo and Nugent commissions that will (hopefully) dig and dig until the slaughtered bodies and tortured truths of the Zuma pillage are dragged into the harsh light. I expect many heroes to be exposed to have old blood on their hands.

Zuma’s campaign with the Gupta’s was not the first attempt at state capture, only the best organised and most ambitious. From Sarafina II to the Strategic Defense Package the clay-footed heroes of our revolution are waiting in their serried ranks to be exposed. (Read Anthony Butler’s interesting piece, The Treasury has always been embattled, its ministers always horse traders.)

It looks like Zondo and Nugent will actually do their jobs, unlike the execrable Sereti, either a bumbler or a crook, and that means we have chosen a path entirely unlike the Sereti cover-up.

The Hawks and SAPS will have to follow the evidence. The wrongdoers will have to be punished.

If I had to guess I would say there were very, very few central leaders of the ANC who have not, at least, lifted a finger to help a friend or family member. And even if they are the best of the lot, they too face the inexorable processes that have been begun and will endlessly unwind the complex webs until the many secrets unravel and are visible gossamer in the wind.

Well good luck with that. It’s not as if there is a generation of ANC – or any other political party – leaders waiting in the wings, technocrats and professionals, to fill the hole that will be left in our political and administrative leadership.

If Nene is the standard for the kind of traitor the bright and clever twitterati believes should resign and be punished for his crimes – and they are right, the law says so, the constitution says so, nobody is above judgement and they are all, all honourable tweeters – then we might have a small human resources problem.

In the real world government, the ANC, the legislature, the executive and the judiciary – as well as the 4th, 5th, and 700th estate (which is about where social media lives) will have to find a way to draw a line, either in time of offence or quality of offense. Below the line you get a slap on the wrist, above the line you face fines, prison and banishment from public work. Without such a line – one that might be impossible to draw – the smallanyana skeletons will make everyone ineligible for office of any kind.

I don’t know how to solve this problem. My instincts are to make a “political solution”, which means my instincts are to sacrifice principle for workability. But I don’t know if that might do irreparable damage to our constitutional democracy. It’s either the iron law or its negotiable, I don’t know which is worse.

Nene reminds me of Boromir of JRR Tolkien’s Lord of the Rings. He’s a great warrior of Gondor, valiant and steadfast, but already corrupted by his temptation to use the One Ring in the war against Sauron and, unforgivably, guilty of trying to wrest it from Frodo. But now he stands facing the Uruk-hai, the sort of Orc spetsnaz. He dies as the hero he was, sprouting thick orc arrows and the bodies of the dead around him as he gives his friends a chance to escape.

Both Nene and Gordhan are plumpish and don’t really fit the image of swords and sorcery heroes gallantly protecting the public coffers from the Zuma Orcs sent in waves against them. But they stood fast and are standing still. South Africa will remember them in myth and song, fractured heroes who held the fragile line.

The counter revolution is not gonna headline the Sunday Times

That Sunday organ is a well established field of play for leaks from factions struggling for power in and around the ANC – and, just as an aside, proved itself most obliging to the whole State Capture initiative by assisting the decimation of SARS through its exclusive reports on the Rogue Spy Unit. See one of those despicable stories here and here for coverage of one of the ST’s deeply inadequate and belated apologies.

Hey but they said sorry and changed some editorial staff. No use dwelling on the past, or crying over spilt milk. Time to move along, look to the future. Can’t stay a victim forever … ahem, sounds familiar. And anyway, it is probably the ‘better’ Sunday read so ya gotta do what ya gotta do.

You can imagine my Sundays are not shining beacons of light in my work week. I consume the weeklies that day the same way as experts at eating elephants accomplish their mammoth task: by taking very small bites. I also eat with long teeth, as my Afrikaans brethren idiomatically suggest is the correct manner one chews food of questionable provenance.

Anyway.

I read the lead Sunday Times story first thing Sunday morning. It was written by award winning journalist Qaanitah Hunter; who by reputation and in my experience of her work is without blemish or at least no blemishes I know about. I have never heard (or read) her to be fast and loose with the truth, or to be in the service of any of the many nefarious forces that compete for journalists’ attention.

But that story was very iffy. So, Zuma had a “clandestine” meeting with ANC secretary-general Ace Magashule, former North West premier Supra Mahumapelo, ANC Women’s League secretary-general Meokgo Matuba, and ANC Youth League KwaZulu-Natal secretary Thanduxolo Sabelo at the Maharani hotel in Durban on Thursday last week.

The day before, and sans Zuma according to the story, a comparable meeting took place at the Beverly Hills Hotel in Umhlanga Rocks and was “believed” (by whom, one might dare ask)  to have been attended by Magashule, Mahumapelo and former SAA board chair Dudu Myeni.

The allegation at the heart of the story is contained in the following paragraph:

The meeting is believed to have discussed a fightback strategy that involved court action to challenge the outcome of last year’s ANC national conference at Nasrec, where Ramaphosa was elected president.

Hunter was later sent a picture of a gun from the phone of the charming Ms Meokgo Matuba of the ANC Youth League.

Tiffany Blue and White Pearl

(The Smith & Wesson gun pic Matuba’s phone mysteriously sent to Hunter. I did a reverse image search and found this description which I thought I would share with you to brighten up a dull news day and remind you how classy the ANC Youth League  has become since Julius ‘AK 47’ Malema has left (oops – Ed): “This Smith & Wesson M&P .40 has been coated in Tiffany Blue and White Pearl Coat. Top it off with a little custom graphic work, and this is a great look. Get this pistol into the right light and the Pearl Coat really comes to life! Customize something for yourself today at http://www.tzarmory.com” Get it into the right and Ms Matubu is unlikely to be showing Ms Hunter how things come to life. {Don’t be snide, it’s unattractive – Ed}.)

 

Meetings were denied. Magashule met his colleagues in the Top Six and then went on TV to say: yes, I did, in fact, as it turns out, have a meeting with Mr Zuma. No, it was not a conspiracy. There was much clever finessing about who was in which meeting but, ‘it was part of my job as Secretary General of the ANC’ asserted the worthy Ace Magashule. See that interview – here (the links on the eNCA pages seem to be the most stable).

 

So what?

I have little doubt and absolutely no proof that Ace Magashule and Jacob Zuma and a range of other State-Capture-implicated-individuals are starting to quake in their boots at the fine and implacable grinding of the processes that will  hopefully lead to them receiving their just deserts.

Likewise, I have little doubt and no proof that they are plotting like mad to get rid of Cyril Ramaphosa sooner rather than later. I think the Nasrec thing is a non-starter and they should be focussing attention on getting a NDZ win in December 2022, so Cyril Ramaphosa can be a one-term-wonder and they can go back to the unambiguous state capture festival and continue to avoid the legal consequences.

My view is that they are weakened but still dangerous – as a faction throughout the ANC but with particular provincial and organisational strengths. I argue elsewhere that their future, like the reformists gathered around Ramaphosa, depends to some degree on how the ANC performs in the national election in mid-2019 and how this feeds through into the national conference in December 2022.

The thumb-suck heuristic I am using is an ANC above 58% is good for Cyril Ramaphosa – and therefore, indirectly, good for lowered levels of political risk and investment. An ANC below 53 percent, especially one that slips below 50% in Gauteng or even Eastern Cape would leave Ramaphosa vulnerable. (Although thinking about it again, the latter set of results is so catastrophic for the ANC, the party could well disintegrate … but I will have to argue that out in a later post.)

(Note: I realise I am arguing that a stronger ANC victory is better than a weaker one next year, and I realise how controversial that is. It is not a view I have had since the mid-2000’s, but has re-emerged with the narrow victory of Cyril Ramaphosa in December. It is also not a view that I hold with strong confidence. I am aware of many weaknesses in the assumptions … but it is my view for now and I will attempt to defend it here over the next few months.)

I am interested as to why the story was published, why it was given so much prominence and why it made the allegation quoted above (that this was a meeting to plot to collapse the Nasrec result). If there is ‘information’ to be gleaned here it is more in the fact of the story and its publication, and less in its contents.

Greetings.

I have decided to resume updating this WordPress site. Mostly with commentary based on news coverage about South African politics and investment risk. Occasionally with articles that I think someone following South African politics may find interesting.

Land ho

Cyril Ramaphosa’s announcement on the land question as president of the ANC has been thoroughly dissected and responded to in the weeklies and online newswires. The statement was delivered late night Tuesday 31st of July after a 2 day ANC NEC lekgotla. There are two linked and slightly discordant payoff lines.

Firstly:

There is also a growing body of opinion, by a number of South Africans, that the constitution as it stands does not impede expropriation of land without compensation. (Emphasis added).

Secondly:

Accordingly, the ANC will, through the parliamentary process, finalise a proposed amendment to the Constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected.

Read the whole statement here or watch it here.

There was much muttering about the ANC using the national broadcaster to address the nation, the lateness of the hour (after 10pm) and the fact that the ANC was preempting an established parliamentary process. However I don’t think these were matters of key importance.

So what?

There are a number of noteworthy points about this announcement.

  • It had previously been assumed that the parliamentary committee would report back in September this year, and that this would be the point that financial markets responded to the manner and content of a motion regarding Section 25 of the constitution.
  • The statement does not deviate significantly from this rhyming couplet from the Nasrec Conference resolutions:

15. Expropriation of land without compensation should be among the key mechanisms available to government to give effect to land reform and redistribution.

16. In determining the mechanisms of implementation, we must ensure that we do not undermine future investment in the economy, or damage agricultural production and food security. Furthermore, our interventions must not cause harm to other sectors of the economy.

  • The Ramaphosa statement does however break with the past by agreeing that the ANC will support an amendment to the Constitution – even though this paragraph is one away from a paragraph that says the Constitution is not the problem.
  • The implicit conclusion is that the statement is primarily ‘political’ as opposed to ‘principled’ – for want of a better way of describing the obvious tension.
  • The ‘land hunger’, apparently identified by the ANC’s own polling and its observation of the public consultation process by the constitutional review committee refers to both rural land for farming purposes as well as urban land for housing purposes. Also the ANC polls indicate a significant portion of its potential voters, particularly highly motivated voters, are strong supporters of this change. Such a category could swing an election.

So what?

The politics can be read at a number of levels. The ANC leadership agreed that it needed to get out from under the EFF dominance of the land reform issue – especially before the Joint Constitution Review Committee reports back to parliament with a possible recommendation that the constitution be changed and before the next national election. The last thing the ANC needs it to be seen to be being dragged kicking and screaming behind what its own research indicates is a stance that enjoys significant and motivated support.

At another level, the fact that the ANC President rather than the Secretary General (Ace Magashule) delivered the announcement could be interpreted as the Ramaphosa aligned ‘reformists’ getting out from under, and ahead of the Jacob Zuma aligned RET (Radical Economic Transformation) group. It may however be that it was considered a matter of such gravity that only the ANC president could deal with it.

However, this is not an optimal strategy for Ramaphosa or his reformist agenda. His allies fought the RET faction on the issue at Nasrec in December, and lost. (Although in all cases we must remember that the ANC statements on this matter are hedged by the conference declaration: “we must ensure that we do not undermine future investment in the economy, or damage agricultural production and food security … our interventions must not cause harm to other sectors of the economy.”)

What we are seeing is Cyril trying to make the best of an imperfect situation.

The only way this works is if the policy and constitutional change is accompanied by a massive social programme to implement all three pillars of the established but failed land reform programme: restitution, redistribution and tenure reform. This will require something of a Berlin Airlift i.e. a costly and complicated intervention, with tight deadlines, that require high levels of commitment and organisation. The ANC government has never got its act together on anything like this scale previously, and there are grounds for skepticism that it will do so now – especially as a close reading of the statements suggests that Ramaphosa and his allies do not believe this is the apex priority to set the conditions for higher potential growth, and in fact the very opposite may be true.

Speculative

The ANC government either delvers on land, and on economic growth and on a successful election (‘success’, purely to indicate my thinking, means closer to 60% and failure indicates closer to 50%) or Cyril Ramaphosa will face a serious challenge for party leadership at the next national conference in 2022.

Almost any other configuration of the top ANC leadership (aside from the exit of Ace Magashule and DD Mabuza) will cause heightened anxiety in financial markets and be negative for investment.

The successful delivery of land reform is not the terrain on which Ramaphosa would have chosen to fight, but he has been forced onto this battlefield. For him, and perhaps the ANC, this battle might be a decisive driver of outcomes of the Ramaphosa presidency, the ANC’s electoral performance and GDP growth.

The last two weeks have been given over to overoptimistic outpourings of happiness. Here is the grumpy note I put out on April Fool’s Day as the aforementioned came out skipping into the park, hope reliably triumphing over experience:

JacobZuma

Do you feel lucky, punk? Well, do you?

 

The Constitutional Court ruling against Jacob Zuma yesterday is another significant blow to his credibility and will reflect negatively on the ANC. However he (Zuma) remains in control of his party (even if slightly weakened) and with a significant degree of electoral popularity, especially in rural areas and KwaZulu-Natal. For now I maintain the position that he is most likely not to be recalled before his terms of office ends in 2017 (as ANC President) and 2019 (as country President) – although a recall remains a reasonable possibility. I  outline the arguments for and against this view.

Does Jacob Zuma face a recall?

A flurry of speculation about a possible recall of Jacob Zuma has followed the ruling against him and the National Assembly by the Constitutional Court yesterday.

So what?

The Financial Times yesterday pointed out in an article sub-headed “Real and Ibovespa[1] shine as president’s prospects darken” that “Brazil’s left-leaning president, Dilma Rousseff, probably will not miss when she leaves office … the tendency of markets to loudly applaud her every misfortune” – FT online on March 31 2016 at 08h35.

A similar dynamic is emerging around the apparent fortunes of Jacob Zuma – at least since his unexpected and unexplained firing of widely respected Finance Minister Nhlanhla Nene on 09/12/2015.

So will Zuma be recalled before his terms of office expire?

As an ‘uncertain future event’ question, I am obliged not to give a ‘yes or no’ answer – after all, how can I know?

In the normal course of events Jacob Zuma would be replaced at the ANC’s National Conference in 2017 (probably in December of that year), and as country President after national elections in 2019.

However the damaging scandals that are accumulating around him – the Nkandla scandal and now the humiliating ConCourt ruling, his raid on the National Treasury that underlay his firing of Nene, the widespread criticism of his apparently crony relationship with the Gupta family businesses, the serious deterioration of the State Owned Enterprises and other areas of the state, partly as a result of corruption that directly implicates his (Zuma’s) patronage networks – must in turn be damaging his ANC party.

AGAINST RECALL

  • The ANC’s political history will favour an instinctive taking of a protective stance towards its leader and attempting to present a united external front.
  • The ANC is facing a major electoral challenge in national municipal elections in (probably) August this year. It would be extremely difficult for the party to deal with the recall of a still popular and powerful (however bizarre that might seem) president and fight an election at the same time.
  • The ANC was badly damaged and riven after the recall of Thabo Mbeki by the ANC’s National Executive Committee (NEC) in September 2008 and is likely to be cautious about undergoing a similar process against Zuma.
  • Zuma remains powerful within the ANC, having bound the majority of members of the NEC and many powerful provincial leaders into loyalty networks based primarily on patronage and the threat of the loss thereof. His power is slipping but my guestimate is that support is still comfortably above the 50% mark.
  • Zuma remains popular in large sections of the electorate, particularly in the majority province of KwaZulu-Natal and in most rural areas. He has lost significant support in urban areas and amongst the emerging black middle-classes, but this ‘loss’ is still a minority of the ANC’s electorate.
  • The ConCourt ruling essentially affirmed something Zuma’s counsel had already admitted to in the original hearing on Tuesday 9th of February and was surprising primarily for its clarity and depth, its additional criticism of the National Assembly for not holding Zuma to account and its clear list of corrective measures to be taken. This is to say it shouldn’t have come as a surprise to the markets or the public.
  • If Jacob Zuma loses control of the ANC and of the succession process the chances of him becoming swamped by serious corruption allegations after his term of offices ends increases significantly. His and his cronies’ backs are to the wall and they will fight vigorously – and with proven skill – to prevent a loss of control of the ANC.

 

FOR RECALL

  • Jacob Zuma has brought much scandal to the Presidency that we believe has damaged the party’s support – although not yet to a degree that puts the ANC in danger of getting below 50% in a national election. (Again a thumbsuck – Ed.)
  • The growing scandals have finally led to the emergence of an internal opposition (internal to the ruling ANC) that showed itself with Jacob Zuma being forced into an almost immediate recall of Des van Rooyen as the replacement finance minister after the Nene firing and the appointment of a previous finance minister, Pravin Gordhan. Since then significant cracks have begun appearing in Zuma’s previously impervious hold on the party, particularly around his apparently corrupt relationship with the Gupta family, whereby he may have handed his exclusive obligation to appoint cabinet ministers to the Gupta brothers. Again, these are setbacks, but have not yet left Zuma isolated. (A lot has happened since I wrote that … amazing that it was only 14 days ago).
  • If the ANC does particularly badly in the coming municipal elections it is likely that pressure for some kind of recall will increase in the party.
  • As Zuma moves closer to the end of his term – and the end of his ability to dispense patronage – it is likely that more distasteful aspects of his support will begin to dissipate, leaving him more vulnerable to an early recall.

On balance …

I think it is most likely that Jacob Zuma serves out his full term of office in both the ANC and the country. Additionally I think it is most likely that as we move closer to the end of his terms of office he will agree to take a step back and play more of a ceremonial role – probably in exchange for some form of promise of immunity. (We are not confident that such a “promise” has any value, but will examine this in later posts – Ed).

A recall is not impossible – or a resignation due to ill health, for example – but I consider this a lower probability than the alternative. It is important to point out I am not ‘married’ to this view and we will change it if and when circumstances and the facts change.

Lame duck – or at least limping slightly

What is clear, and should be considered good news, is that Zuma and his allies are fully taken up with fighting a defensive action. This significantly will lower their confidence and ability to engage in untoward activity with regard to state expenditure, also in the expenditure of State Owned Enterprises, or in undertaking any major cabinet reshuffles to achieve these ends. This may also apply to the proposed nuclear programme.

For example any form of follow-through on the December 2015 raid on the National Treasury or attempts to undermine Pravin Gordhan in his role as National Treasurer are likely to retreat (or at least be deprioritised) in the agenda of the Zuma clan and its business allies.

Thus the impunity with which Zuma and his allies have acted in ransacking aspects of the state is collapsing through hubris and overreach. His support is, as I have argued previously, brittle: hard, unyielding but likely to shatter when it breaks.

[1] Ibovespa is the benchmark stock index of the São Paulo Stock Exchange (Bolsa de Valores, Mercadorias & Futuros de São Paulo).

You might be surprised at how carefully some people who’ve never set foot on these shores, people who are mostly blindingly clever at maths and informed to a scarily deep level about our politics and history and whose job includes trading our currency and bonds, have asked me that headline question in the last week.

I have a stock answer that is true to myself but provides cold comfort to those whose fingers must hit one or other button to ‘short‘ SA relative to Russia, or vice versa, or Turkey or Brazil or the Philippines or offer up a financial instrument more exotic than I, for one, can understand, an indecipherable instrument that hedges all the angles but still takes a bet that has within its algorithms a call as to whether South Africa sucks completely or sucks less than the market has priced.

That answer begins: “well it’s complicated …”

Zuma as a president and the various cabals and gangsters that have kept him in place have had free policy and patronage range since 2008.

Nhlanhla Nene’s axing was the worst and most damaging – and exposing – decision Zuma and his cronies have taken since Zuma was elected ANC president in late 2007 (and I would include Mbeki’s recall in that comparison.)

Nene’s summary and unexplained axing and Van Rooyen’s appointment showed astonishing depths of either ignorance, cronyism or hubris – but I am tending towards ignorance, seasoned by the other two.

Only an extremely ignorant man, advised by people whose basic stupidity or grandiosity (undoubtedly a perfect combination of the two ) could have shat on the doorstep of global capital markets, of the people, countries and institutions that lend us money, those who own our banks and those who rate the quality of our government debt – and thought they could walk away from their malodorous mess.

We hear all this blather in ANC discussion documents about the crisis of capitalism, the unstable ‘casino economy’ and the glorious rise of China and Russia (India is occasionally mentioned) and this self-serving internal jabbering has left Zuma surrounded by coterie of people who think sentiment and a rain of Chinese dollars has relieved us of the brutal disciplines of global capital markets? Are these not lessons we learned in 1994 – 1996?

What? China will lend/give us money to bail us out as our currency crashes and the bond yields spike? Dream on morons. The markets aren’t everything you know, I hear him bleat, and this is what I have learned, Zuma proudly asserts, from my week at Focac and the visit of Premier Zi Jinping, my new best friend. The rise of China means ‘western’ markets have lost their power to take away our sovereignty.” Yay! Lets fire that neo-liberal sell-out Nene and get along with the business of taking back what is ours.

… and the awful retribution of the implacable, cold and thoughtless ‘markets’ crushed us under its heel, without even noticing.

Okay so a group of ANC leaders managed to slap him (Zuma) and his handlers down and have appointed Gordhan (again) who is going to deliver up some brutal lessons to this crew (I cannot wait!) … you will see in previous posts why I think that Gordhan’s appointment is not only a good idea, but leaves us in a position even better (politically) than when Zuma fired Nene (although it is a close call) – that is the answer I finally give to those who ask the question in the first paragraph … but only after long and probably boring but stern admonishments that complex systems do not yield up easy, dualistic answers.

But I want you to think about our core political leadership … or rather think about what they think about. Who are they? I assume it’s Zuma and his myriad sons and daughters and cousins and wives, it’s obviously the Guptas, the increasingly awful Lindiwe Zulu and others scattered about the differentially abled ANC Youth League, the Woman’s League and the Premier League with Ace Magashule neck and neck with Zulu in the running dog, protect-the-President-at-all-costs, Joseph Goebbels’ cup.

Jacob Zuma gave a perfect explanation (in terms of his logic) and defence of why he axed Nene in the speech he gave after the announcement. Rian Malan, journalist and author, nailed the problem by closely examining the unscripted words Zuma delivered after announcing that Nene was out and Van Rooyen was in.

You must read Malan’s article (here) but the long and the short of it is Zuma said “I am rebelling against (the idea that) what determines the value of a commodity is the law of supply and demand … The value of a commodity is the labour time taken in production …”

Do you know what that means? Do you realise how dire the consequences that flow from this being the view of our President?

Having been in reading groups in the early 80’s where we poured over and over “Capital: Critique of Political Economy” and several of Karl Marx’s other texts, I know exactly what Zuma thinks he means when he incoherently refers to Marx’s  Labour Theory of Value.

In the intellectual vacuum that Zuma and whatever advisers he used when he fired Nene and appointed Van Rooyen there could only have been a complete absence of the knowledge that most of those who lend us money, buy our financial equities or trade our currency base their decisions on the reliability, predictability and respect of the Minister of Finance. It doesn’t  matter if the traders and fund-managers are wrong or right in using this Cabinet Minister as the touchstone of policy credibility, it only matters that they do and the actions and inactions of the head of the National Treasury are scrutinised and combed with ruthless thoroughness by those who sell or buy our currency or debt (and in this case our bank’s equity as well).

We have a President surrounded by a coterie of what I am tempted to describe as imbeciles – and I don’t mean the Cabinet. Do they really think that  (the interrupted) rise of China will free us from the dictates of markets? Our debt, equity and currency are traded on markets where prices are set by how many buyers or sellers there are, not some sentimental, half baked understanding of Marxist theories from the mid-to-late 1800s. When those markets ‘think’ the politicians are clearing obstacles (Nene) so they (those politicians) and their clients can loot the public purse they (the traders) will unsentimentally sell the financial instruments that are the backbone of our economy and we will crumble. And this time we came that close.

We have a steely new Finance Minister who I believe has more reason than ever to stand up to the ignorant and incoherent policy coming from the centre – although growth and our place in the world will make his job intolerably hard.

We have seen that the centre can be countermanded when its decisions are so bad that they could have a real chance of pushing the country into penury.

However the centre is still the centre, and it is still strong and dominant in the ruling party anyway. We are not home and free while Jacob Zuma occupies the driving seat. It doesn’t really matter if he is a crook or a fool -he has shown unequivocally poor judgement, and this looms over us as an ever present risk.

 

 

For those who were tortured by my somnolently incoherent post last night, here is the follow up. Hopefully a little clearer.

  • The flip-flops around the Minister of Finance leave Jacob Zuma looking weak and vulnerable. There are grounds to begin questioning whether he will see out his full term.
  • The appointment of Pravin Gordhan is a victory on a number of different fronts and should be celebrated.
  • We can expect the process of fiscal consolidation to continue on track.
  • It really is the season to be jolly.

Gordhan’s shock reappointment as Finance Minister – positive

Jacob Zuma fired the increasingly widely respected Minister of Finance, Nhlanhla Nene, on Wednesday December the 9th. He gave no reasons but there had already been wide speculation that:

  • Nene decisively blocked a nonsense SAA deal to lease some Airbus planes upon which Zuma associate SAA board chair Dudu Myeni had set her sights;
  • That Nene was pushing important investigations into corruption or mismanagement at SABC that were getting uncomfortably close to Zuma’s close personal friend Hlaudi Motsoeneng and
  • Most importantly Nene was blocking the (approximately) ZAR1-trillion nuclear deal that was the pet project of Jacob Zuma and his close business associates the Guptas – who had appeared to prepare for the deal by investing heavily through Oakbay investments in several uranium mines

Almost immediately the ZAR tanked, the bond yields spiked and everyone with a voice screamed blue murder at the irrationality of the axing.

Zuma then, perhaps more mysteriously, appointed the relatively unknown and unqualified David Van Rooyen to the post, despite there being many highly qualified candidates available (South Africa has made a point of putting its highest quality ministers into the National Treasury position.) The widespread assumption was that Nene was being replaced by someone who would be more compliant to the President’s wishes, and more importantly, to the wishes of those who are in business with the President.

Then …

Then, even more shockingly, late last night (13/12/2015) Jacob Zuma did an about turn, dropped Van Rooyen and reappointed Minister of Co-Operative Governance, Pravin Gordhan, as Finance Minister (a post he – Gordhan – held prior to Nene’s appointment 18 Months ago.)

Jacob Zuma has had his wings closely clipped – which is a good thing

The decision to axe Nene bordered on the criminal but most analysts thought that Zuma could get away with anything he wanted within the ANC – even as the ANC lost support amongst the electorate. Well it appears they were wrong. A powerful enough group of leaders have got together, sat Zuma down and forced him to make a humiliating climb down. The financial market response might have helped and the bleating of the opposition and the press would have given some support, but the ANC prides itself of being impervious to the shallow swings of public opinion (which is no bad thing). This was an internal leadership revolt against Zuma, the Holy Grail that many had been hoping for as the country went from the healthy constitutional democracy of 2007 to this damaged (in many of its most important institutions) country, almost overwhelmed by rent-seeking and corruption.

We out here in the public realm don’t know anything for sure, except Zuma was given a ‘warm klap’ (warm slap – colloquial Afrikaans) and we can hope that this might begin the unravelling of his negative influence on the country and its politics. The admonishment and humiliating climb-down must have been caused by ANC heavyweights who have finally found their voice and power enough to put Zuma in his place.

Pravin Gordhan will be a better Minister of Finance – even than he was before

Gordhan has all the credentials and had a close to faultless term as head of the National Treasury. (If memory serves, like all heads of the NT his slips concerned the public wage sector bill and desperate attempts to avoid public sector strikes.) His only weak point is he tends to run an unhappy office … it was widely speculated that the staff at the National Treasury were unhappy with his dictatorial style of leadership. This we can live with.

Of interest is that since Gordhan had left the Treasury a witch hunt has been conducted in Gordhan’s previous posting, the South African Revenue Service, SARS. The witch hunt has been against an alleged “rogue spy unit”. The fact is the special investigation units, established by Trevor Manuel and Pravin Gordhan were an essential part of investigating complicated tax avoidance and fraud cases, especially those involving heads of large criminal networks and powerful politicians. It is a small step to see who might have been the obvious targets of the special investigative units. And an even smaller step to see why and who has stimulated the witch hunts and slander against the loyal SARS investigators involved in these units – calling them rogues and criminals, and ensuring their dismissal or buyout.

Thus this is going to be a Finance Minister that nobody is going to push around – especially not Jacob Zuma and his cronies – against whom Gordhan has good reason to feel ill-disposed. It’s a win-win.

My only faint worry is I am not sure of Gordhan’s attitude to the nuclear programme. I am sure he will not do anything to threaten the process of fiscal consolidation, but as an old style ANC securocrat he might have an over-attachment to nuclear power (an affliction of those who grew up in the ANC in the 70’s mostly because of the USSR’s warm embrace of that technology).

Having been woken by my children to tell me we had a new, new finance minister I blundered out of bed and scribbled this for my paying clients – forgive the blurriness it is essentially the sleeping pill that’s doing most of the world work.

There were 7 more errors in this paragraph. I just fixed the ones that jumped out and bit me on the nose – and left the crazier ones visible so you too can learn not to write when on sleeping medication. There rest cans stay in the farmyard.

Dear All

Don’t call me stupid, stupid

  • Pravin Gordhan appointed Minister of Finance – 5 days after the obscure Dave Rooyen’s appointment (It’s 10 p.m. on  Sunday evening so this is a bit late and bit rushed).
  • The only possible good side is that Zuma responded well to universal criticism from prices and the press and the commentariate.
  • The truth is policy is in free-fall and Zuma clearly does not know what he is doing.
  • This is a scary time and it would be appropriate to be as cautious as possible

Jacob Zuma has just announced that after ‘careful consideration’ he had decided that he was rescinding the appointment of David Van Rooyen as Minister of Finance and appointing instead, previous Minister of Finance Pravin Gordhan. It could be that with the ZAR falling  out of bed, that condemnation of Nhlanhla Nene’s unexplained removal was almost universal and our bond and currency markets were in chaos … whatever it was, it was a deeply embarrassing and  chaotic act redolent of uncertainty and panic.

Even though this is a “good” decision, from Zuma’s perspective it is “clutching” at straws, it looks weak, it look like the centre cannot hold. Expect serious political instability in the palace of power. Zuma must be back against the wall, making a decision that makes him look  so  weak, so foolish.

I will try and deal with this in more detail in the morning.

Nic Borain

 

 

Business Day  this morning published an article suggesting that Nhlanhla Nene was on the verge of being shuffled out of his Minister of Finance position to some face-saving backwater.

I wrote early last week in a client note: “It is widely held that the National Treasury and Minister Nhlanhla Nene have come under hostile pressure for investigating close Zuma allies and an axe in the form a threatened Cabinet shuffle hangs over Nene’s head to keep him compliant with Zuma’s own spending priorities and plans for SOE’s and nuclear power roll-out (to which Nene is widely believed to be opposed in its current ZAR1-trillion form).”

However I have repeated to several of my clients that I believe that while Zuma might axe Nene is might be a step too far, the moment the great leader overestimates his greatness and fails to understand his Ozymandian limitations.

Nene is the first black African Minister of Finance and he is at least as steely and technically competent as any of his post 1994 predecessors. Last week be brought the meat-clever down on the plan of SAA board chair Dudu Myeni (widely suggested to be an intimate of Jacob Zuma) to place a mock-up company in an already done leasing deal between the national carrier and Airbus. The company would have been nothing other than a rent extraction tool – and added hugely to the costs of the deal. Myeni’s reprehensible argument was that it was all for the purpose of transformation – proving that the political elite uses the practice to loot the SOE budgets as much as it ever does to promote real BEE.

Nene has also been going after the SABC’s Motsoeneng (another person who brags widely about his relationship with the President and his untouchable status) and he (Nene) has been widely assessed to be dragging his heals on Jacob Zuma’s pet nuclear deal that in its current form  would beggar the country and state finance for many years to come.

So Nene has apparently got in Zuma’s face and he is facing the axe – according to various stories including the one linked above.

When Nene was first appointed on May 24 2014 I expressed concern about his seniority in the party and questioned whether he would be able to stand up to the fiscal pressures that would be placed on him – especially in relation to his predecessors in the position and especially in our declining growth environment.

I was wrong – if anything Nene has been both stronger and more tactical in his attempts to meet the increasingly difficult targets of fiscal consolidation – given the endlessly lower levels of growth. The rating agencies, those who grade South African government debt and have recently moved us closer to non-investment grade (i.e., junk) have come to rely on the dependability of the head of the National Treasury. We have a tradition of putting some of our best ministers in the position and Nene has risen to the challenge.

The Business Day story quoted above (which might be rubbish, but chimes with several of our initial views) suggests that some “malleable” nobody by the name of Des van Rooyen from the Parliament’s finance committee could replace Nene (the closest information I could find on a web search for this character was this smarmy speech on the ANC website).

I have no idea if this is true, but have concluded elsewhere for a range of reasons and from a range of sources that Nene is vulnerable and that ‘an axe hovers over his neck’ because he has stood up to Zuma.

If Zuma gets rid of Nene, because the head of the NT has offended Zuma’s friends and he is showing opposition to Zuma’s nuclear retirement plan or legacy project he (Zuma) would be making a grave mistake – a mistake leaders who have come to overestimate their power often make.

Axing Nene will be read by the capital markets and rating agencies in exactly the terms I have described above – Nene has been exemplary in his job except when forced to concede to political pressure from the top – and even then he has skilfully manoeuvred to lessen the damage.

If Nene is axed I will be unsurprised to see us downgraded to junk by the end of 2016.

I will also be unsurprised to see political shifts against the leader (Zuma) who has finally overstepped the mark, who has heaped damage upon damage on the South African political economy, especially as regards to its reputation for probity, but who has especially damaged the reputation of the ANC.

I see from the Business Day story that the rumour is the Guptas “let the cat out of the bag” (read “announced”) the impending Cabinet reshuffle. Excuse me! This more than anything suggests (if it is true), not for the first time, that Zuma has sold our sovereignty to these shady interlopers for something a lot more than a mess of pottage.

My underlying point is that Zuma’s power is becoming more brittle and his lines of support stretched thinner and thinner. He is engaging in actions that parts of his party find repulsive and there is a point beyond which a system under stress can quickly unravel as the connections snap and the nodes pop.

 

 

 

 

… but it’s difficult to know who to back

Thank you Mail and Guardian for publishing the story we all wanted even though you have probably broken the whole cannon of ethics in journalism.

The story to which I refer, titled “Ramaphosa starts fight for top job”, was published in the print edition of the aforesaid newspaper on November 13, it was written by Mmanaledi Mataboge & Matuma Letsoalo and leads with that treasured line: “ANC deputy president Cyril Ramaphosa has declared his intention to stand for the ruling party’s presidency in 2017, sources say.”

Yes, we all know that sources say “Space pumpkins stole my baby”, “Jesus was an astronaut” and “Jacob Zuma has no relationship whatsoever with SAA chairperson Dudu Myeni”, but in the M&G case referred to above I am prepared not only to forgive them because they took one on the chin for the team but I honour, respect and encourage them through the difficult times that lie ahead for them and other similarly esteemed organs.

So …   Cyril Ramaphosa is the presidential candidate for a slate including Gwede Mantashe, is (probably) backed by Gauteng and Eastern Cape provincial ANC’s, is also backed by Limpopo but unreliably and incoherently.  They (this camp) will fight on every terrain where votes are up for grabs in 2017 – which includes KwaZulu-Natal that they narrowly lost to the opposition at the provincial conference last weekend. They will obviously try to win Western Cape, Northern Cape and seem confident that the ‘premier league’ provinces (Free State, Mpumalanga and North West under the the charming patrons, Ace MagashuleDavid Mabuza, Supra Mahumapelo) should yield votes in their favour too.

The other camp, let’s call it the Nkosazana Dlamini-Zuma Camp, is backed by the ‘premier league’, the ANC Women’s League, the ANC Youth League, the winning faction in Kwazulu-Natal (and that is big cheese in ANC internal national votes) and all the premier league provinces. So they are ahead, in case you missed that.

If that’s all plain sailing for you up till now, here comes the confusing bit: the SACP is under vigorous attack by most of the elements supporting the Dlamini-Zuma camp and we must assume the SACP is backing the Ramaphosa/Mantashe ticket.

I would prefer things to be neater. I haven’t argued this point in these pages in enough detail – or with enough vitriol –  but in my private pantheon of villains of South African post liberation politics the SACP has pride of place. In about 2005, facing a probable ousting from the ruling alliance by Mbeki, the SACP pulled off a tactically brilliant but deeply unprincipled counter stroke by riding the debauched, corrupt, amoral, untrustworthy, deceitful, disreputable, tribal, traditionalist, sexist, shameful and scandal-ridden – but still saleable to the populist masses – Jacob Zuma back to power in December 2007 – later ensuring Mbeki’s early removal from the presidency. (Can I say that on my blog? No, you’re fine. That’s all true. I took the illegal stuff out; it halved the length of the story – Ed).

The SACP was lavishly rewarded in the Judas coin of cabinet posts and general status and influence and continued to act as Jacob Zuma’s strength and shield through the myriad scandals that were to follow.

It is my belief that the impact this party’s control of industrial policy has had on our national economy has been little short of ruinous, and its top leadership has shown arrogance, contempt and self-aggrandisement on a scale I would never, ever, have predicted from the party I idealised throughout the 1980’s.

So what happened? Why did groups I assume are close to … or proxies for … Jacob Zuma begin attacking the SACP. (Lets leave the #FeesMustFall for the moment as a stroke of luck for those pushing this line … and get back to it when we are being more conspiratorial.)

Slight rumours of criticism of Jacob Zuma’s various excesses and the SACP’s culpability in its stance in relation to the president filtered into the public domain from discussions internal to the SACP in the lead up to its 3rd Special National Congress in July 2015. Perhaps that self criticism was a lot harsher and the party realised that sticking with Zuma, his policies, his patrimonial and clientelist style, his absence of a plan would lead the country, the ANC and the SACP towards catastrophe?

I do think the SACP has been a restraining hand on the worst excesses of corruption and patronage … so it is not inconceivable that in contrition (and lack of other choices) they have joined the good guys.

I have discussed in detail in the past why Ramaphosa will always be treated with caution by the exiles, Robben Islanders, and the those who worked primarily in the underground military and security apparatuses of the banned ANC. I will get back to this question as I think the conclusion I drew might be changing.

Three last small points

I think  both candidates would be more than adequate to fill the positions they are competing for. A significant portion of Dlamini-Zuma’s support is coming from groups that are characterised by the words I used to describe Jacob Zuma six paragraphs above this one. If there is a large centrist group of progressive Africanists, waiting to show their hand for Dlamini-Zuma, let them do so soon. And they should learn from the SACP that unprincipled alliances can end up doing you much harm.

The ‘woman for president’ argument is basically rubbish. Interestingly it was Thabo Mbeki in his struggle against the rise of Zuma that brought up this facile and distracting little trick. At least Mbeki had made the right noises about the role of women throughout his presidency so that when he suggested Phumzile Mlambo-Ngcuka (then deputy president), alternatively Nkosazana Dlamini Zuma, it could not as easily be dismissed as a dishonest ploy.

The argument being advanced in 2015 that Nkosazana Dlamini-Zuma should be president because it is time for a woman president, is being advanced by the most backward, traditionalist, dare I say misogynistic, elements of the ANC. Dismiss the argument out of hand – even if the appointment of a women president, perhaps of the highly experienced Nkosazana Dlamini-Zuma, might be something of which we could all be justifiably proud. The argument has been advanced purely for factional reasons – which doesn’t necessarily mean it won’t get support from those who believe it would be inherently a good thing.

Finally this is all being played out in the public realm (which basically means it is being cobbled together out of hints and rumours by analysts and journalists) extremely early.

Remember this is a contest that will only be formally resolved in 2017 (probably in December of that year) at the ANC elective National Conference and only lead to a change in the country’s government and president in 2019. I assume it is a sign of desperate desire for change (for the better) and fear of change (for the worse) that has caused these issues to assume such a central public focus so early.

 

 

 

 

 

I wanted to discuss something called heuristics, which refers to the way we make decisions or reach an understanding about something, especially when the matter under consideration is complicated.

The word (heuristics) can mean the short cuts we take but the general field also deals with the many errors of thinking to which such short cuts can and do lead.

There was a particular line from a client note I wrote earlier this weak as I was considering the matter of Dianne Kohler Barnard’s booting from the Democratic Alliance that I thought about afterwards and wondered on what basis I had reached the conclusion.

The line was : “If I had to take a wild, but still informed, guess, I would say the DA is likely to pick up stragglers from this defection but the EFF will get the lioness’s share, and apathy the lion’s” (this being in relation to ANC losing support in urban black middle-class and DA attempts to keep its current support and also win some of the new.)

But then I thought I might as well show you the note before I went onto a discussion about heuristics to give myself something to use as a basis for the discussion. The version of my note below had some of the ruder but funnier bits pulled by those who have better judgement than me. But seeing as this is my website I thought I would leave in the the silly jokes as I wrote them.

SA Politics – 3 November 2015

  • Kgalema Motlanthe says the alliance is dead… and the ANC respectfully nods its head. The SACP and Cosatu look increasingly as if they will be on their own soon.
  • The Gauteng ANC and the Gauteng government fighting to bring the ANC as a whole back to the black middle class (and the middle classes generally).
  • The DA uses the meat cleaver against supposed racist sentiments in its ranks – but a rose is a rose is a rose.
  • Drought and failing infrastructure raises risk that water shortages will be the new load-shedding.
  • … and in other news, ideal candidate Tokyo Sexwale stands for FIFA presidency and the ANC Women’s League marches on the Union Buildings in heroic defence of Jacob Zuma’s dignity.
Ex-President Kgalema Motlanthe says the unsayable truth that everybody knows and a calm and respectful ANC welcomes his intervention … the pigs have indeed taken flight

In an exclusive interview with Business Day yesterday (catch it on YouTube here but the whole – extremely interesting – text here), the widely admired and respected ex-ANC deputy president and ANC secretary general and ex-country president (from 25 September 2008 to 9 May 2009) said things about the ruling alliance that everyone knows but few have dared say.

The alliance is dead, Motlanthe declared. The three organisations have become one organisation. In so becoming, Cosatu expelled 350,000 workers by expelling its largest affiliate, the National Union of Metalworkers of South Africa (Numsa) as well as the leadership that had criticised the failure of Cosatu to take a stand independent of the ANC. The ANC would now meet as opponents those workers and shop stewards in Nelson Mandela Bay Metro and other areas of the Eastern Cape in local government elections next year.

He said a number of other things that were stern – if coded – attacks on the current leadership of the ANC:

  • Rising debt is fast approaching 50% of GDP. “We have a crisis and people who understand that are the people in Treasury because every week they have to go and borrow money in order to manage the current account… and they are raising this money in markets where political sentiment counts for naught”.
  • “Nuclear, for instance, it’s going to cost trillions,” he said. “If you have no regard for public debt… and it’s public debt… not government … it would affect each of us, each individual South African” – Business Day 02/11/2015.
  • He stood against Zuma at Mangaung party elections knowing he would lose because he refused to be part of a leadership where “it would be a constant battle just to get them to operate on the basis of the (ANC) constitution” – Business Day 02/11/2015.
  • He thought the decision to expel Julius Malema was part of the rise of unethical and factional decision-making. Now “(what) the EFF is saying resonates with their (young people’s) own feelings.”
  • The bullying tactics of the ANC in the National Assembly alienated people from minority groups – for example Afrikaners were “drawing back into their laager”.

The ANC put out a media statement, to the astonishment of many, on 2 November saying: “The African National Congress wants to affirm Comrades Kgalema Motlanthe as a leader and a voice reason” – and went on in the same vein – see here.

Cosatu diplomatically trashed him: “we find it regrettable that, he has ignored all the facts,” said the official statement. “Cde Kgalema was part of the leadership collective in government and in the ANC that defended labour brokers and e-tolls …” etc., etc. See here for the whole whine.

The SACP is, for the moment, maintaining a stunned silence.

So what?

Motlanthe is seen, in my opinion correctly, as an impeccably honourable man and representative of the ANC’s best instincts – which is largely why the Zuma machine had to squeeze him out after Mangaung in 2012. But there are new winds blowing through the ANC. Zuma is either on the retreat or happily edging towards retirement. The SACP and Cosatu are closer than ever to exiting (probably by being pushed) the ruling alliance.

While opposition is growing everywhere, it does not yet threaten the ANC’s overall and powerful majority. However, anyone with an eye on 2019, 2024 or 2029 – for example Motlanthe – the implacable consequences of the current trends are obvious. Defections from the ANC are closely linked to perceptions of corruption and the nepotistic behaviour associated with the Nkandla gang, perceptions that are most strongly held by the urban middle classes.

The ANC can either start or make visible a process of renewal at its National Congress in 2017 or a gradual decline, shift into rural areas and the defection of the urban middle classes is inevitable. This is precisely the road Zanu-PF took when it started losing ground in its most educated urban constituencies. That Zimbabwean journey is on-going and unhappy.

Gauteng – trying to seize the ANC by the scruff of its neck and pull it towards modernity and the urban middle classes

Look at this full page advertisement in Sunday Independent 1/11/2015:

Capture

… and this:

Front page advertisement in same newspaper

Front page advertisement in same newspaper

So what?

We have written extensively (here for the most detailed example) about the ANC losses in the Gauteng metropolitan areas in the May 2014 election and how this is applying pressure on the ANC to move back towards its urban middle class base.

The above advertisements are an almost perfect example of the marketing – and governance – campaigns the ANC Gauteng provincial government is conducting, undoubtedly with its eye on the 2016 local government and 2019 national elections.

As the link to our research above indicates, the ANC is vulnerable in its most sophisticated urban constituencies (Tshwane, Ekurhuleni and the Greater Johannesburg Metro in this case) and is least vulnerable in the poorly educated and poverty stricken rural areas.

(Some analysts interestingly believe that this is a ‘perverse incentive’, linked to this defecting black middle-class, for the ANC to underfund tertiary education. See the inimitable Johnny Steinberg argue this case, with all the requisite subtlety and disclaimers, in Business Day 10/30/2015 here.)

The Desperate Alliance

Ms Dianne Kohler Barnard, (now ex) shadow minister of police, was axed from the Democratic Alliance over the weekend after she was found guilty of misconduct, bringing the party into disrepute and contravening its social media policy.

What she had done was share a Facebook post that argued some aspects of government were better managed under apartheid strongman PW Botha than they are today. She claims not to have read the post properly, and immediately deleted it and apologised when she realised what it said. She was initially suspended but a disciplinary committee decided to expel her from the party.

So what?

On the face of it this appears to be a harsh and hurried sentence – unless the disciplinary hearing discovered that, in fact, Barnard did have apartheid sympathies and is an admirer of PW Botha. I find this unlikely – but that her re-posting of the article was careless and insensitive is beyond doubt. However, the punishment probably has more to do with DA desperation to woo suspicious black voters than any previously hidden demonic impulses in Barnard.

The DA has to make whatever strategic choices it feels are necessary, but we doubt that expelling Barnard or, in fact, electing Mmusi Maimane, will be enough window dressing to tempt the mass of voters into the shop. Risk is always highest as one steps from a safe ledge to another. The DA is stuck in a peculiar conundrum of needing to take care of its “racial base” in its ‘safe’ white and coloured constituencies (apologies for the casual South African terminology – we use these terms because they had precise historical/legal meanings under apartheid and they have on-going consequences and meanings in the present) while reaching out to the ANC’s fragmenting urban middle-class base.

If we had to take a wild, but still informed, guess, we would say the DA is likely to pick up stragglers from this defection but the EFF will get the lioness’s share, and apathy the lion’s.

Kidnap and MTN – risky business

City Press 11/01/2015 argues that the size of the proposed MTN fine for tardiness in deactivating millions of improperly registered SIM cards despite numerous warnings and fines, is because the matter “stopped being a purely regulatory issue and became a matter of national security” when unregistered MTN SIMs were used by kidnappers to negotiate a ransom for a former Nigerian finance minister in September.

The Nigerian Communications Commission has imposed a fine of N1.04 trillion, the equivalent of ZAR70b (a number of different estimates are given, but this is the general region). Read the full article here and another take here.

So what?

Regulatory and political risks are rising throughout the world, as sovereigns assert their power over markets, globalised or otherwise, partly in response to the Great Recession and partly in response to terrorist threats (and often to protect their own ‘national’ enterprises against foreign competition). It has now become common for massive fines to be imposed by governments on companies that are not necessarily domiciled in the jurisdictional area under that government’s control.

Drought and failing infrastructure raise risk that water shortages will be the new load-shedding

KwaZulu-Natal and Free State provinces have been declared disaster areas due to drought conditions that are worse than they have been for 24 years. Minister of Water and Sanitation Nomvula Mokonyane said 170 water schemes (that usually means dams) in the country are currently affected by the drought – Eye Witness News 02/11/2015.

Water utilities are also under pressure after years of under-investment while having had to expand connections to millions previously denied access by discriminatory legislation under apartheid.

“Water shedding will take the form of pressure reduction to manage leaks in the system and an overall loss of assurance of supply,” said Anthony Turton, a professor at the Centre for Environmental Management at the University of Free State.

So what?

Food security, food price inflation and a multitude of industrial processes are water dependent. Water clean enough for human and animal consumption is also, obviously, important. The predicted length of the drought and the state of our increasingly rickety water and sewerage reticulation systems represent increasing risks in South Africa.

And in other news …
  • Tokyo Sexwale, ex-Robben Islander, businessman, ex-Premier of Gauteng and ex-Minister of Human Settlements (and ex-too-many-other-things-to-name) has announced he will be making himself available to replace Sepp Blatter as FIFA president. Sexwale has very little football administrative experience and I cannot think of anyone better qualified to run FIFA … it’s a perfect fit.
  • The ANC Women’s League marched on the Union Buildings last Friday in the high priority cause of ‘defending Jacob Zuma’s dignity’. Some commentators have argued that it was a last ditch attempt. “That horse has bolted,” said one analyst who preferred not to be named Elspeth. Almost 300 members of the League were engaged in the mass march which was peaceful and well ordered.

So … my intention is to use bits of that to discuss heuristics, for those of you who are clamouring to hear more about that.

There were several times last week when I felt admiration for the protesting students, including those who crashed through the gates of parliament and, quite bravely in many cases, stood up to the SAPS’s counter attack, stun grenades and all.

I admit to some brief, irresponsible, trickster elation – Loki let loose upon the world – good for them … ha ha, let it all burn … that will show the fat bastards inside the building.

I didn’t lose my sense of judgement to the degree that I never felt sorry for some of the SAPS members who were woefully unprepared and overwhelmed, just as I felt disgusted with others for the unnecessary violence against the initially peaceful, if somewhat over-boisterous, students.

But by the time the Sunday papers rolled out I was becoming slightly nauseated by the ridiculously laudatory and pompous language being used to describe the protesting student of the #FeesMustFall and #shutdown campaigns.

I am not giving examples because these were mostly hyperbolic aberrations from commentators and journalists I otherwise admire (read City Press, the Sunday Independent or the Sunday Times of the 25th of October 2015 and the point will clearly and quickly be made). In general the pitch and tenor was thus:

Eugène_Delacroix

… which is Eugène Delacroix ‘s “Liberty leading the People”, 1830 – the French Revolution before it ate its children.

Well, this week the #FeesMustFall movement is also eating its children – although it’s a much smaller snack than the French feast after 1830.

However the students have banked the partial victory of the 0% fee increase for 2016. And can there be anyone in the SA news-consuming-public who has not considered the many accounts of black students shaving their nutritional intake so they can send part of their National Student Financial Aid money back to their parents and siblings?

This is what I wrote in a client note earlier this week:

Student protests – expect splits, fragmentation, radicalisation, isolation, ill-discipline and loss of momentum – but they kept it together long enough to change the game.

The student protests against fee increases have begun to wind down and fragment after the sometimes violent clashes at the Union Buildings on Friday where President Zuma acceded, in a closed meeting with student leaders,  to the 0%-increase-for-2016 demand.

In parliament Minister of Higher Education (and General Secretary of the SACP) Blade Nzimande had a torrid time defending his handling of the protests and explaining where the money for a 0% increase would come from. His main proposal was: “My view is that the government must have the political will to tax the rich and wealthy to fund higher education” – quoted in Business Day 28/10/2015.

So what?

The student revolt has deepened the opposition to government in general and increased disillusionment with party politics amongst students throughout the country. On balance the ANC has probably lost more ground than it was losing in this constituency anyway. However, the ruling party retains a variety of youth allies that operate on the campuses (including several SRCs, the ANC Youth League, the South African Students Congress – SASCO – and the Young Communists League – YCL.)

There will be fiscal implications that we will be exploring in the next few weeks as we examine the problem of funding for education generally and higher education in particular.

Zuma’s government must feel beset from all sides but the more focussed political attack is on the South African Communist Party – coming from within the ANC. Prior to its special national congress in July the SACP let it be put out that it wasn’t quite as gung-ho about Zuma’s increasingly corrupt and incompetent presidency than it appeared from its slavish defence of the man from Nkandla for the last 6 years. This in turn has led to Zuma’s most ardent (and patronage driven) supporters in the ANC Youth League (and the so called premier league) to escalate an attack on the SACP and its leadership. The student revolt against fee increases was a opportunity welcomed by these groups to join an attack on Nzimande.

It is still too early to predict with high levels of confidence a final collapse of the ruling alliance but the possibility is probably higher than it has been since 1994. An exit of the SACP (and probably Cosatu) from their formal ‘governing alliance’ status with the ANC might lead to ‘financial market positive’ changes in industrial and labour policy, but as likely might remove some of the constraints on corruption the SACP and Cosatu have brought to government and the alliance.

Okay, enough of all of that.

What I really wanted to say was that while watching the student and police confrontations my thoughts went back to the many protests and clashes  my ‘comrades’ and I had with with the police and army in the 1980’s.

On the ‘white’ campuses it was largely just teargas and beatings with shamboks or quirts – although I remember the panic and fear as much as I do the elation.

In the townships it was a different matter – shotguns, R5 rifles and necklacing  – excitement, yes; but also horror and terror.

I was explaining some of the differences between then and now to a close family member who is a student at a ‘previously white’ campus.

As I spoke I gradually came to realise something – funny at first, but then embarrassing. I was starting to sound remarkably like the Four Yorkshiremen.

The 1980’s was not worse than Marikana; and I am forced to remind myself that this, too, hovered over those students last week as the possible consequences of their actions.

So to lighten it slightly and to own up to my own pomposity, I sent that family member a copy of the famous Monty Python piece.

Four well-dressed men sitting together at a vacation resort.

Michael Palin: Ahh.. Very passable, this, very passable.

Graham Chapman: Nothing like a good glass of Chateau de Chassilier wine, ay Gessiah?

Terry Gilliam: You’re right there Obediah.

Eric Idle: Who’d a thought thirty years ago we’d all be sittin’ here drinking Chateau de Chassilier wine?

MP: Aye. In them days, we’d a’ been glad to have the price of a cup o’ tea.

GC: A cup ‘ COLD tea.

EI: Without milk or sugar.

TG: OR tea!

MP: In a filthy, cracked cup.

EI: We never used to have a cup. We used to have to drink out of a rolled up newspaper.

GC: The best WE could manage was to suck on a piece of damp cloth.

TG: But you know, we were happy in those days, though we were poor.

MP: Aye. BECAUSE we were poor. My old Dad used to say to me, “Money doesn’t buy you happiness.”

EI: ‘E was right. I was happier then and I had NOTHIN’. We used to live in this tiny old house, with greaaaaat big holes in the roof.

GC: House? You were lucky to have a HOUSE! We used to live in one room, all hundred and twenty-six of us, no furniture. Half the floor was missing; we were all huddled together in one corner for fear of FALLING!

TG: You were lucky to have a ROOM! *We* used to have to live in a corridor!

MP: Ohhhh we used to DREAM of livin’ in a corridor! Woulda’ been a palace to us. We used to live in an old water tank on a rubbish tip. We got woken up every morning by having a load of rotting fish dumped all over us! House!? Hmph.

EI: Well when I say “house” it was only a hole in the ground covered by a piece of tarpolin, but it was a house to US.

GC: We were evicted from *our* hole in the ground; we had to go and live in a lake!

TG: You were lucky to have a LAKE! There were a hundred and sixty of us living in a small shoebox in the middle of the road.

MP: Cardboard box?

TG: Aye.

MP: You were lucky. We lived for three months in a brown paper bag in a septic tank. We used to have to get up at six o’clock in the morning, clean the bag, eat a crust of stale bread, go to work down mill for fourteen hours a day week in-week out. When we got home, out Dad would thrash us to sleep with his belt!

GC: Luxury. We used to have to get out of the lake at three o’clock in the morning, clean the lake, eat a handful of hot gravel, go to work at the mill every day for tuppence a month, come home, and Dad would beat us around the head and neck with a broken bottle, if we were LUCKY!

TG: Well we had it tough. We used to have to get up out of the shoebox at twelve o’clock at night, and LICK the road clean with our tongues. We had half a handful of freezing cold gravel, worked twenty-four hours a day at the mill for fourpence every six years, and when we got home, our Dad would slice us in two with a bread knife.

EI: Right. I had to get up in the morning at ten o’clock at night, half an hour before I went to bed, (pause for laughter), eat a lump of cold poison, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad would kill us, and dance about on our graves singing “Hallelujah.”

MP: But you try and tell the young people today that… and they won’t believe ya’.

ALL: Nope, nope..

To those who noticed, apologies I disappeared without so much as a by-your-leave or hint of explanation.

Two pressures and one anxiety drove my precipitous descent into silence.

The first was increasing time constraints that led me to be largely republishing here bespoke material a few weeks after those who had paid for it had seen it. And it was, as a result, quite stodgy and formal – and constrained by myriad compliance regulations that govern what can and can’t be passed off as ‘research’ in the financial markets.

The second was the legitimate concern that almost universal cost cutting would cause some of those who pay for my research or writing to do the calculation and conclude: “ah, what the hell, lets wait two weeks and then we can get it for free anyway.”

The third issue is a more generalised anxiety I have with social media, celebrity and this golden age of narcissism. Who cares, or more strongly: who should care, about the passing fancies and non-peer reviewed musings about SA politics from someone you might not even have met and whose credentials are not obvious? The easy ‘unsubscribe’ button has helped me put this worry behind me.

I think it was Samuel Johnson who said: “No man but a blockhead ever wrote, except for money” and aside from private letters, shopping lists and work that adds value to our literary inheritance, l agree with him.

I am unlikely to be adding to our ‘literary inheritance’ any time soon, however I do intend to start writing, mostly about SA politics, here again, even if it is occasionally.

Why?

The need to market my wares is one reason I am happy to acknowledge  – and I hope Johnson would approve.

But there are other reasons that are slightly more difficult to explain. I think it was  Michael Ondaatje who wrote in one of his poems something along the lines: ‘I never know what I love till I write it out’. (I promise to find this quote and this poem).

Well, I never know what I know until I write it out. Or even stronger: I never understand what is happening until I can write an explanation that is not full of lies or incoherence. Many posts, especially if they are rushed and poorly edited, will contain ‘lies’ – I mean the kind I am not aware I am telling. But the joy and terror of writing here is lies expose themselves to me, and to anyone else who cares to see them, as soon as I hit the ‘publish’ button.

Finally, of course, it’s important for citizens and those who care about the country to discuss politics. It’s either everyone’s business or it’s the business of those who have stolen it and practice it in secret.

Issues of the day

Unsurprisingly I am right now consumed with the NGC, the SCA ruling on the Public Protector’s powers, the Premier League, the titanic battle in the ANC in KwaZulu-Natal, succession, the shifting fortunes of the SACP, the potential of opposition parties, the 2016 municipal election, the collapse of our resources sector and the awful oncoming wave of lay-offs, the chaos in organised labour, the hard swings in the ANC’s foreign policy … and the possible impacts of any and all of these matters on economic development and economic policy in the future.

I will publish something that strikes me as particularly interesting here in the next … week (I almost said ‘weekend’, but ‘under-promise and over-deliver’ is the new trite management mantra to which I hope to subscribe soon).

(The SCA ruling link is to Pierre De Vos’ Constitutionally Speaking, obviously.)

Greeting … and compliments of the season to you all.

I was too busy to post here during the last few months of 2014.

I had been writing and then road showing (here and abroad) an argument that suggested pressures acting on the ANC might, ultimately, save the organisation from its slow-motion collapse into what can best be described as a kind of criminal conspiracy.

On the whole, as they say, it was a deliberately positive counter to the life draining wails of despair that were starting to keep me from my sleep.

In the ANC there are thousands of pockets of resistance, but the overall character of the organisation and the way it has embedded itself with the state is deeply reminiscent of a huge wasp I watched yesterday stun an even bigger spider, implant it’s eggs in the juicy arachnid abdomen, stuff the bundle in a piece of dry cane, where the baby wasps will soon hatch and begin eating the spider in a precises way that keeps the host alive long enough for the new crop of wasps to fly off to carry on the business for which they were born. I believe some of such wasps are able to mess with the spider’s DNA in such a way that the spider will spend its last dying moments protecting the baby wasps.

This is an almost perfect metaphor for the behaviour of the hijacked centre of the ANC.

But I don’t think that is the whole – or even main – story, and below is the introduction to a longish report I wrote in October last year with my colleagues, Joan Tshivhinda (quantitative analyst) and Jeff Schultz (economist), that argues we have a better than even chance of being in a much improved situation by …. about 2020. That the pressures acting on the ANC could powerfully reshape the organisation for the better.

This is purely the introduction to the document. Joan did lots of quantitative work on the 2014 elections and Jeff did the same for the definition and class structure of SA society – so I think I am going to need more direct permission from BNP Paribas Cadiz Securities to publish the whole thing, but I hope to do so soon.

But for now:

Introduction – Against a Dark Background

(That title was made up purely for the blog post … the original title was “SA Political, Quantitative & Economic Research – emerging middle class lights up the gloom.)

There are significantly more important forces shaping our politics than the bad behaviour of our politicians.

  • Deep within the electorate a rapidly growing black African middle class is beginning to shape political and economic outcomes more profoundly than the size of the group implies.
  • We believe this group will determine many major outcomes for our politics and economics in the next few years.
  • Emerging from our analysis is a first (and best) case scenario in which the ANC goes through a process of renewal and recalibration over the next few years, powerfully reclaiming the defecting black African middle class and rolling out economic policies that will be optimum for financial markets and business.
  • However, we also describe several significantly threatening alternative scenarios, including further splits in the ruling party, the African National Congress (ANC) slipping below 50% of the national vote and losing the major metropolitan areas, the centre of opposition shifting toward some combination of the Economic Freedom Fighters (EFF) and the emergent socialist party… and even more gloomy potential paths we could, with a low probability, travel down.

Many institutions of political representation in South Africa (most obviously political parties and trade unions) are undergoing turmoil – within themselves, in competition with each other and in rapidly changing levels of popularity.

here are various methods we can use to seek to explain the turmoil. Much of the mass media focus has been on the character and integrity of the President (of the ANC and the country) Jacob Zuma, and his allies – and we attribute much of the turmoil to the Zuma camp’s alleged attempts to capture a lion’s share of available rents and patronage – and to keep their principal out of the courts. While we do not deny the role of individuals (as heroes or villains) in shaping history, we think it obligatory to examine changes in the deep structural features of society, especially in processes of class formation, and the changing needs of production, to seek explanations for the changing face of our politics.

Our basic premise is that ‘class formation’ among black Africans was held back by apartheid, and the legislation and state that defined that system. But in the 1960s and 1970s the global economy began to shift in its character, and in its requirements of the function of labour, goods and capital markets. In South Africa the economy shifts toward services and manufacturing and requires a more settled, urban, educated workforce, the members of which are able to purchase the goods and services being produced by the new economy.

For the first time in almost 100 years, black South Africans could realistically aspire to be urbanised, settled, housed, better educated and able to afford the goods and services of the new economy. And this set the emerging class powerfully against the political system of apartheid that understood its survival and the survival of white dominance depended on the defeat or diversion of these aspirations.

It is more useful and has more explanatory power, to understand that underlying the campaigns of resistance and repression and the attempts by the apartheid government to rejig its systems that controlled the movement, work prospects and political aspirations of black people were the reasons for the inexorable rise of the black African middle class.The 1976 uprising, the formation of the UDF in 1983, the formation of Cosatu in 1986 and its clear alignment with the still banned ‘Congress Movement’, the strikes, the school boycotts, the growing campaign for international isolation, the rapid reappearance of ANC symbols, leaders and flags in South Africa in the mid-1980s, the escalation of the ‘armed struggle’ and then the unbanning of the liberation movements, the release of leaders, the tricky negotiations at Codessa (Convention for a Democratic South Africa) 1 and 2 and finally the first democratic election in 1994 – could be seen to have been caused, orchestrated and guided by wise leaders and clever tacticians from both sides. And we don’t believe that statement is wrong, but we do think it misses the main point.

The apartheid state tried everything to head off the rise of the Africa middle class:

  1. the ‘hearts and minds’ campaigns in black communities – which only at its most trite consisted of giving out copious amounts of sweets and propaganda from the top of armoured vehicles;
  2. the attempt to establish a Tricameral Parliament to give political representation to Coloureds and Indians and the vigorous attempts to build the Bantustan[1] administrations and promote the system of local black councils[2] – attempting to ensure that ‘the oppressed’ would not find unity in opposing the regime – and ensuring that black African aspirations were diverted to stony ground and
  3. the campaigns of repression, including raids into neighbouring states, troops deployed into townships and state-funded assassinations squads and other ‘dirty tricks’ campaigns.

The not so subtle point we are trying to make was this was all actually driven by the African middle classes struggling to come into being (led and ridden by various political formations) and held back by the apartheid state and legislative regime. Thus, the emerging black middle class was both the engine and the prize of the contest between the liberation movement and the apartheid regime.

We draw theoretically on both the Weberian and Marxist definitions of class. With the defeat of the apartheid state, long suppressed class formation and differentiation has exploded in black communities. We attempt to describe and characterise the black African middle class (possibly classes) using a mixture of methods:

  1. Our classification has a minimum per capita income threshold which will be significantly above the middle of the income distribution for black South Africans;
  • We will show the group is the fastest growing segment of the Living Standards Measures (LSMs) table since 1994 and we will argue that it is politically influential and powerful beyond its numbers, consumption power and voting preferences;
  • Finally our definition will include the fact that members of the group will be more likely to have tertiary education (or professional or technical qualifications) and be more likely to live in Gauteng.

If we conceive of our political parties, electorate and the interplay of powerful other interests as part of a complex ecology with eco-niches and selective Darwinian pressures, then much of the turmoil in the ecosystem (the formation of the EFF, the torturous debates about affirmative action in the Democratic Alliance (DA), the splitting off from Cosatu of the National Union of Metalworkers of South Africa (Numsa) and the formation of some form of socialist alliance, the details in the drop in support for the ANC in this last election, the extreme anger about Jacob Zuma’s alleged diversion of public assets, his attempts to avoid the law and avoid various forms of constitutional curtailment) can best be explained by the growing assertiveness of the class we describe.

We overlay these categorisations with a close examination of the fact that the African National Congress lost approximately 11% of the national votes it won previously from across the geography of the urban black African areas of South African industrial heartland of Gauteng in the May 2014 general elections. We point out that in areas that were more representative of the middle class we defined above, these losses were greater.

We conclude that the pressures being brought to bear

  • could split the ANC further;
  • could drive the party further toward its flirtation with a sort of rural populism driven by patronage and traditional patriarchal authority;
  • could drive the party further into the hands of the South African Communist Party which has been the main beneficiary of the rise of Jacob Zuma; and
  • could provide space for the EFF, the DA and Numsa’s in potentia socialist party to grow to the point that the ANC drops below 50% vote.

We hope/predict that the middle classes and the Gauteng ANC, as the part of the party most exposed to the middle classes to which we refer, is already in the process of preparing to draw the party back from the brink it is approaching. The Zuma faction is entrenched, but it is our belief that the brand value being lost under his leadership will inevitably lead to a correction.

In general, our conclusion will be that the negative political consensus about South Africa is overdone, because attention is not being given to the deep, underlying structural drivers of change in the country, namely the coming into its own of the black African middle classes.

How history works – the origins of the black African middle class and what really caused apartheid to fall

Change in the structure, priorities and labour processes of the global economy began to accelerate in the 1960s and 1970s with a relative shrinking of primary resource extraction and heavy industry. South Africa, like much of the rest of the world, experienced relative growth in the manufacturing and services sector.

Nicslondonslides2

Thus the economy began to require a settled, better educated and skilled labour force, and one that could procure the goods and services produced by the new economy.

Black South Africans could, for the first time, realistically aspire, as a group, to be more settled, housed, better educated and be the consumers of certain goods and services to which their parents had had no possible access. Thus their interests melded with the similar interests of the already existing black African middle class that had managed to take root in the stony apartheid ground.

This nascent middle class had long been deliberately stunted by the apartheid state – and certainly segregated – to keep it from competing with its white counterparts, but in the views of Nzimande[3] (yes the very same one[4]) quoted in Southall[5], the group could be broken down into the following categories:

  1. The bureaucratic petty bourgeoisie – basically officials tied closely to the central apartheid state, but also town and city administrators and in the Bantustans (reliable allies of the apartheid state in Nzimande’s view);
  2. The civil petty bourgeoisie – civil servants and state employees like teachers, nurses and clerks – and from whose ranks Nzimande argues was drawn much of the leadership of the national liberation movement (clearly entirely unlike the bureaucratic types mentioned above);
  • The trading petty African bourgeoisie – which Nzimande eccentrically orders into several groups based on their ability to align with the liberation movement, but concluding that those belonging to the National African Federated Chamber of Commerce (NAFCOC), while clearly pro-capitalist, were useful allies to the liberation movement.
  1. The corporate petty bourgeoisie – basically black employees in major companies which, since the early 1970s, had “sought to legitimise capitalism through the discourse of the ‘free enterprise system”. In Nzimande’s views (as summarised by Southall) this group was “simultaneously hugely frustrated by limited opportunity and white managerial racism, uneasily situated as it was between capital’s attempts to create a black middle class and white management’s defence of its own class interests”.

The point of all of this is that almost all academic research agrees that there had been an “enormous increase in the African middle class between 1960 and 1970” Harold Wolpe in Southall 1977) “indicating the growing upward mobility of blacks into clerical, technical and non-manual jobs and of Africans into skilled employment”. (Southall) [6]

There are two observations that are worth making:

  1. The group definitions in the literature do not distinguish between skilled and upwardly mobile workers and the classes of traders and small business owners and civil servants.
  2. Because the definition is loose the group appeared almost impossible to count, with Samuel Nolutshungu (1983) estimating 121,948 members of the black middle class by 1970 and Wolpe (1974) putting the number at 1,315,800 for roughly the same time.

However, for our purposes here these are not problems because our argument is that, under the heel of apartheid, was growing a class of people whose expectations were realistically rising and this led to rapidly heightening political resistance.

At the height of apartheid, the oppression faced by all black South Africans, and especially Africans, was the political basis for downplaying growing class differences and it appears to us that the sense that change was possible, that the aspirations were realisable, was a multiclass phenomenon among all black South Africans.

It would be equally difficult to describe the sophistication, brutality; or give a proper timeline of the apartheid state’s attempt to survive the onslaught – and the consequences of its failure to do so.It would be impossible here to adequately describe the growth and momentum of resistance in the 1970s and 1980s. From the massive strikes in Durban in 1973 through the 1976 uprising, the campaign to defeat the Tricameral Parliament from 1983, the strikes, the bombs, the stay-aways, the States of Emergency from July 1985 and the growing criminalisation of any form of opposition – the profound growth of international solidarity for South Africans who were living under apartheid – and rising costs of resisting and defending the system.

However, for our purposes, it is interesting to examine one aspect of the state’s reaction when it realised how rapidly and powerfully black expectations were rising in the 1970s with the changing requirements of the domestic and global economy.

The Wiehahn Commission submitted an interim report to Parliament in May 1979 which recommended:Under pressure from South African and global businesses, especially after the Durban strikes in 1973 and the uprising in 1976, the National Party government made a serious attempt to reform the industrial relations system and the linked system that governed the rights of black Africans to move from place to place (influx control).

  1. Legal recognition of Black trade unions and migrant workers
  2. Abolition of statutory job reservation
  3. Retention of the closed shop bargaining system
  4. The creation of a National Manpower Commission, and
  5. The introduction of an Industrial Court to resolve industrial litigation[7]

The Riekert Commission reported at about the same time and recommended:

  1. Black workers already in urban areas with the ‘requisite permission’ to be there should receive ‘preferential treatment’ in finding employment – and thus create a stable labour force and encourage a “Black urban middle class”[8]
  2. Other Black workers could be removed after 72 hours of looking for work in an urban area and influx control would be tightened.

It is not our purpose and beyond our ability to explain the complex mechanism by which the apartheid legislative regime and its state pursued its ends but what is noteworthy for our purposes here is that National Party strategist and securocrats understood what was happening and they attempted to accommodate and divert the force that was coming at them, namely a rapidly growing group of politically marginalised, controlled and subjugated people who had seen the possibility of a better life and were prepared to struggle for it.

What happened in the 1970s and 1980s and in South Africa would have been strongly predicted in a piece of academic work presented by US sociologist James C. Davies in 1962: Toward a Theory of Revolution” in the American Sociological Review, (27)1 5-9.

We have deliberately left out the role played by individuals, organisations and leaders in building political and military resistance, in mobilising the majority into defiance and then in skilfully negotiating a peace, a new constitution and democratic country.Simply put Davies argues that in societies where expectations of improvement in the conditions of life begin to rise, they inevitably outstrip the real improvement. Finally daring to hope for the removal of influx control and the right to live and work where they chose, black South Africans instead got the mean-spirited liberalisations of the Wiehann and Ricket commissions – and the revolts driven by an unacceptable gap between expectations and reality followed as night follows day.

Nicslondonslides

It is our contention that what broke apartheid, with its laws, its state, its political parties, its cultural institutions, its security apparatus and its ideology was precisely its attempt to dam the flow of people’s rising aspirations – and we are still in the catastrophic flood of that dam having burst.We have done this because we want to emphasise that the deep and powerful historical forces of class formation and economic change tend to drive politics, not the other way around. The best politicians are those who realise these limits, who really understand that their profession is the art of the possible. One may slightly divert and shape the torrent but one’s power is strictly limited.

The Black African middle classes today – an introduction

In this sense the pressures that built up against the apartheid edifice are the same, and the same energy is driving South Africa into the future. It is the long suppressed black African middle class, having steamrolled apartheid out-of-the-way and now moving through our politics and economy with the same irresistible power… and its expectations continue to rise.But again, while we think these programmes have obviously had a major impact – and are likely to be tightened up – the real ‘explosion’ and driving force have been the aspirations of ordinary people who have long been denied the opportunity to seek to the good life, to educate their children to higher levels than was open to them and to accumulate assets. The ANC government has opened the doors, but it is impossible for those doors to be opened wide enough and it is essentially a market force that causes people to push, shove, clump and burst through the crumbling entrance as fast and as far as possible.The formal removal of apartheid legislation in the 1990s, the deliberate and vigorous and largely successful attempts to change the demographics of the state and civil service, including that of the major parastatals, a host of legislation designed to pressure private companies to put equity in black hands and to appoint black senior managers, the use of licensing in the minerals sector and, importantly, the use of state expenditure to promote black entrepreneurial activity have been important pillars of government policy and have undoubtedly been major forces in promoting a black African middle class.

Apartheid, among its myriad impacts on the shape of South African society, suppressed ‘normal’ class formation and segmentation among the black population. It was, in fact, and for a long time, a systematic attempt to do just that – so as to protect whites from the competition.

We have described in the previous section how various black African middle-classes as well as upwardly mobile sections of the working class emerged despite the best efforts of the apartheid system.

[1] A Bantustan was the cornerstone of the system: black people were allocated (often arbitrarily) to one of 10 territories where they would live and be politically represented. The idea was to concentrate members of particular language or ‘ethnic’ groups in these places and black people would eventually only be in ‘South Africa’ as migrant workers from these homelands. Four of the homelands, Transkei, Bophuthatswana, Venda and Ciskei were declared independent, but this was never recognised outside South Africa.We concluded, however, that the apartheid system was destined to fail as soon as the economy required something different from black South Africans and black South Africans could therefore realistically aspire to something different.

[2] A major social project defined in the Black Administration Act 38 of 1927 – endlessly amended to promote the co-optation of influential individuals in the black community – that in turn led to the burnings and killing of such councillors, most notably through the infamous ‘necklacing’ (placing a burning tyre around the victim’s neck).

[3] Nzimande, B. (1990). ‘Class, National Oppression and the African Petty Bourgeoisie: The Case of African Traders’, in Robin Cohen, Yvonne Muthien and Abebe Zegeye (Eds), Repression and Resistance: Insider Accounts of Apartheid. London; Melbourne; Munich; New York. Hans Zell Publishers: 165-210.

[4] Blade Nzimande is General Secretary of the South African Communist Party and has been since 1998.

[5] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[6] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[7] From the excellent South African History Online, a non-profit resource: http://www.sahistory.org.za/dated-event/wiehahn-commission-report-tabled-parliament (accessed 10/24/2014 19h54)

[8] http://www.sahistory.org.za/dated-event/recommendations-riekert-commission-investigate-employment-conditions-black-workers-are-t (accessed 10/24/2014 19h54)

I have been completely taken up with a project (now completed) that argued that the black African middle-class was our single biggest asset and the workings of the interests of that class in the world would save our politics and help our economics. Yaay!

The basic argument looked at the defection suffered by the ANC in the May elections from its most sophisticated constituency and went on to argue that things were going to turn out rosy in the end. (There are hundreds of tables and graphs and other clever financial market type number crunching that was mostly done by my brilliant colleagues …. but I will only publish a version of that when I have had a chance to chat to them and get their permission).

Not everyone bought our story, but soon you will be able to make up your own mind if our grounds for optimism (that the ANC self-corrects) have an adequate basis.

The ‘black African middle-class saves South Africa’ project (which is what we started calling as a sort of shorthand … the report is LONG so trust me that really is shorthand) has held me back from completing my promised comments about the SACP. The further we went with the ‘middle-class’ project, the more disturbed I have become about the the role the SACP played in engineering the end of Mbeki’s presidency and it’s iron protection of Zuma through the chaos he has brought upon us over the last 4 years.

So as promised I will write that out here and publish it before year end … that’s the SACP story … so 2 promises so far.

Meanwhile here is an extract of my bespoke comments (now too dated to remain bespoke) on the Numsa split (written on the trot) a week ago. My brilliant editor friend in London suggested it be titled:

South African politics: Love’s labours lost

Numsa expulsion … if you love it let it go, if you hate it pray for its demise

The central Executive Committee of Cosatu expelled the largest member of the trade union federation at an extended weekend meeting of the special Central Executive Committee (CEC). Irwin Jim, Numsa general secretary gave a 3 hour long spirited defence of Numsa and attack on those trying expelling the union – but to no avail. It has always been a foregone conclusion, but what Numsa was doing was contesting the terrain, trying to stay as long as possible to take as many members and individual with them. The strategy has probably worked and they have come out, if not smelling of roses, then not badly damaged.

So what?

Numsa’s ideological position reaches back in an unbroken line to a strong and independent left faction (referred to as Workerists) which at the formation of Cosatu in 1985 were still strongly critical of the over-close relationship with the ANC. They  believed that the ‘national liberation agenda’ of the ANC would swamp the more limited agenda of the pursuit of workers’ rights – and the more expansive pursuit of socialism – and that therefore the unions need to be wary of this ally and always fight for their independence.

As it turns out Cosatu did pretty well out of its relationship with the ANC – getting much of the labour market structured in their favour – to the point that it has done some real damage to our economy. However, the tension between the ANC and Cosatu has continued to rise. Cosatu didn’t like the National Development Plan (too pro-markets), Cosatu didn’t like e-tolling (who in Gauteng and outside The Treasury does?), Cosatu didn’t like the Treasury setting the limits of public sector wage increases, Cosatu didn’t like the youth wage subsidy, believing it to be the short end of segmentation of the labour market into more and less protected (cheaper and more expensive) workers.

And of late the ANC, at the end of its tether about the losses of revenue from the platinum and Numsa strikes, at the violence that accompanied the platinum strikes, at the damage done our investment image by strikes, at the damage done the limping infrastructure programme plagued by strikes, has finally started talking about amendments to the Labour Relations Act that would make it a lot more difficult for Cosatu to strike (make secret balloting compulsory) and make it difficult for nationally damaging strikes (like Amcu’s strike in the platinum sector) to go on indefinitely (make some form of forced independent mediation obligatory after a certain time of being on strike.)

Numsa, and Irvin Jim – and Cosatu general secretary Zwlinzima Vavi – have gradually come into more and more serious conflict with the ANC and the SACP over these policies – and the relationship has finally broken. It must be said that Vavi and Jim have also been on the side of the angels on a number of different issues as well; Corruption Watch, abuse of ministerial car allowances, various human rights issues, including the Dalai Lama visit, the Right to Know Campaign, the Treatment Action Campaign, the protection of the Public Protector, the getting of Zuma to pay back the money, the Gupta wedding, horror at the proposed done Russian nuclear deal … the list is too long, but, in general (and with one or two notable exceptions), Cosatu under Vavi and Jim have defended the defensible – unlike their erstwhile comrades in the ANC and SACP

The expulsion of Numsa, which might quickly be followed by the exit of its closest allies the South African Commercial Clothing and Allied Workers Union (Saccawu), Communication Workers Union of South Africa (Pawusa), Democratic Nurses Organisation of South Africa (Denosa), and South African Football Players Union (Safpu) will leave Cosatu much weakened and with an over preponderance of public sector unions.

Numsa – the world is its oyster

For Numsa, the world is its oyster. It has announced intention to set up forums of some form of ‘socialist alliance’ – which we must assume will evolve into a political party, perhaps testing the waters of some constituencies in Nelson Mandela Bay and Johannesburg (where it has pre-existing strong union organisation that could easily be redeployed as party structures in the 2016 municipal election.

Numsa can also now freely pursue its strategy for vertical integration into mining, processing, construction, energy, and manufacturing, including light manufacturing and food processing. Numsa sees these whole value chains of particular metals (and possible other minerals) as natural pillars through which they can exert more power over employers and employer organisations. Up until now Cosatu’s slogan of “One Industry, One Union, One Federation” has prevented Numsa realising its full ambitions (although several unions, especially Num have complained for years that Numsa has poached its members.)

Cosatu?

This leaves Cosatu with the heavyweight public sector unions as its dominant component (and, officially, remember it is still bigger, if not more vigorous, than the bits that have been expelled or might leave in sympathy with Numsa). However the public sector unions are about to embark on a do-or-die wage negotiation in the Public Service Co-ordinating Bargaining Council. Keep in mind that Numsa fought to stay in Cosatu primarily because it believed it could pull the heart of the federation with it, that in each of the unions, large and small, there were branches and sections and individuals who supported Numsa and supported Numsa’s decision to not back the ANC in the last election. Including significant parts of the public sector unions.

Strikes are a testing time – in fact, wage negotiation are a testing time – and even more so when you have on the other side of the table representatives of a state, so absolutely constrained by the fiscal ledge to which it is clinging that is unlikely to shift towards your bargaining position. The MTBF issued by Finance Minister Nhlanhla Nene last month was as close as we have come to the austerity of Trevor Manuel’s first few budgets in the mid 90’s. This was the heart of the Cosatu (and South African Communist Party) attack on Mbeki’s government, with ‘the left’ arguing it was a form of Kowtowing to the Washington Consensus. ‘The left’ then and now believe the way to economic growth is by state spending as a stimulus that creates the virtuous circle. Nene’s budget was the heart of the “1996 Class Project” that Zuma and his allies supposedly defeated at Polokwane in December 2007, which takes the decidedly opposite view of growth: that the state needs to make room for investment and that government needs to create an environment maximally attractive to the same. And part of doing that is keeping borrowing and therefore spending strictly within the bounds acceptable to global capital markets.

Cosatu is now dominated by unions that are not involved in the productive economy. It’s basically the South African Democratic Teachers Union (Sadtu) and the National Education, Health and Allied Workers Union (Nehawu) and the burned out cinders of the likes of the National Union of Mineworkers and other bits and pieces. More than anything these unions are dependent on state spending … but from a state that seems to be all out of resources. We do not think that while Sadtu and Nehawu are ostensibly close to the Zuma faction of the ANC that this is going to take any of the sting out of the coming public sector wage round. Which trade union loves the boss enough to tell its members to back off because he is in political trouble? None that we have ever heard of. And anyway these unions all face a myriad splits, including towards Numsa … they have to show their members they can win them a decent deal.

SACP?

The SACP backed, to the hilt, with everything it had, Jacob Zuma’s rise to power at Polokwane. It did so because its main task was to stop Mbeki and the political programme he represented. Mbeki was increasingly basing ANC policy on promoting the rising black middle-classes and he was doing so at the expense of the trade unions and the SACP for whom he seemed to express ever greater public contempt – and in my opinion would eventually have moved out of the ruling alliance … essentially by collapsing it. The is no question in our minds that Mbeki was making sure that both the SACP and Cosatu had less and less power over ANC policy making. Obviously Mbeki overplayed his hand, not believing his enemies would stoop to backing Jacob Zuma for president. Well he certainly called that one wrong and the rest is history.

The SACP still sits as Zuma’s main backer. Cosatu has essentially collapsed under the pressure of trying to keep its unity and back this president at the same time. The ANC Youth League was expelled along with Julius Malema because Zuma became so tarnishing that it was impossible to stand by him … and it now (the ex-ANCYL) exists as a vigorous and challenging opposition party, the EFF.

So the SACP is sitting there in the Kraal with Jacob Zuma, defending him to the hilt on his myriad transgressions, trying to explain to the world how it (the SACP) is the true representative of the working class as the millions follow Numsa out of the alliance – and it is impossible to avoid the fact that Numsa’s most virulent criticisms are for the SACP.

The ANC

The ANC is looking particularly forlorn. They fought this split, understanding that the loss of Numsa would lead to other losses and would make the 2016 municipal election a myriad-sided fight in which the ANC was likely to get a bloody nose. The ANC still has way to fall. It got just over 62% of the vote in the national election in May this year and just under 62% in the municipal election in 2011. The trajectory is downwards (the party does worse in municipal polls) and there is much fear (if you support the ANC) and much anticipation (if you don’t) of catastrophic results for the ANC in 2016.

As it happens part of our ‘upside surprise’ scenario, is one in which the ANC, freed from the constraints of its alliance with organised labour, recognises the errors of its ways, elects a clean, reforming and effective leadership in 2017 (the National Conference), shuffles the current crew off to the safe retirement and comfortably wins the 2019 elections with a decent development plan at the helm. But this precisely requires the ANC getting a serious shock in the 2016 election. It sounds like a fantasy and probably is. But it is unavoidably apparent that the conditions are looking increasingly hostile for the ANC.

It does appear that if the ANC doesn’t do something radical and soon, it could be in serious electoral trouble. Of course it might chase the EFF and Numsa’s socialist policy in the belief that this would win the party votes. We think there are other and better options the ANC is considering but they are not on the table yet and all we can hear is the repeat of “welcome to the second, more radical phase, of the transition” – which doesn’t actually mean anything, but sounds vaguely (distinctly?) threatening to investors.

I will get on to the weighty question of whether Jacob Zuma might retire before his term of office is completed momentarily, but first let me mention that I have been busy with what started as an idle rumination about the South African Communist Party.

But has turned, inevitably perhaps, to “become persistent and recurrent worrying or brooding” (from the third meaning for ‘rumination’ given in the link above.)

I am at a serious disadvantage when assessing the SACP. Unlike many of my readers I was always an admirer of the party – well, certainly in the bad old days of the struggle against apartheid.

Slightly more difficult to explain is that I am still moved by Billy Bragg singing The Red Flag, and the pleasure I once took at the same artist (or perhaps another, even Google can’t nail it for me) singing a song that went something like “Stalin wasn’t stalling, when he told the Beast of Berlin, that we’d never rest contented, till we’d driven him from the land.”

So I am hard wired, deep in my political DNA, to not think ill of the SACP – which is why the party riding Jacob Zuma to power, its dogged defence of the President’s most unsettling activity and much of the threatening sloganeering and bullying that gets published as Red Alerts on Umsebenzi Online have had me at a real analytical loss.

I have provisionally titled the post: “O SACP, SACP! wherefore art thou SACP?” It wanders around a bit, speculating wherefore, actually when you get right down to it, art the SACP? There are various asides of a semi-personal, even light hearted, nature – but the path of my meander has definitely darkened and right now I feel I am, metaphorically speaking, in a gloomy forest and the growing stench suggests there is a poisoned well somewhere up ahead.

So I have decided to take a bit more time and care on that.

Meanwhile here are some of my recent comments (sent to clients on the 3rd of this month) about the increasingly widely discussed matter of the future of Jacob Zuma.

Jacob Zuma – will he stay, will he go and does it matter? 

My basic view of the question in the title is:

  • Jacob Zuma is more likely to retire early that I have considered previously.
  • There is wide variation in the quality of South African politics, administration and government, with awful, mediocre and excellent aspects. This variation will not be overwhelmed or overdetermined by whether Zuma stays or goes – although it would also be incorrect to suggest it doesn’t make a blind bit of difference.
  • In general I would assert that Jacob Zuma is as much a symptom of the problems as he is a cause of them – although I would, if someone held a gun to my head, go with 60% symptom, 40% cause (I had it the other way around when I sent this out initially, but that was just my dyslexia playing havoc: Zuma is less the architect of history than history is the architect of Zuma – no Nkandla pun intended).
  • Additionally, Jacob Zuma’s term of office would end in 2019 anyway and his replacement would be elected ANC President at the 2017 national conference. We are, at most, not much more than a year off knowing (or having a pretty strong idea) who the likely replacement of Jacob Zuma will be even if he (Zuma) serves out his full second term.
  • However, unexpected transitions can be destabilising, especially if the incumbent has much to lose if he loses (like going to prison, losing some of his and his family’s accumulated assets and having his powerful political network’s continued asset accumulation threatened – just to take a few arbitrary and hypothetical example of why such a persons going might be a messy business).

However, I am of the opinion that the question is worth considering, but we need to get some of our methodology right first:

This is a future event and as such it is uncertain and unpredictable. There is no acceptable methodology (that I understand or can use)  that can reliably (academically, empirically, scientifically) give a probability estimate as to the potential outcomes.

It is crucial to avoid the trap of predicting a particular outcome and then assembling the evidence to support it – and, further, attempting to defend the prediction over time as ‘the facts’ move against it.

We need an adequate reason to believe the outcome is important, not important or somewhere in between – or all of these things at once , with this last choice being the one I would probably go for.)

The past (Zuma’s survival against the odds up until now) is not a predictor that he will survive the confluence of events. If that argument held weight, then we should argue that nobody alive today will die because they haven’t died up until now – I attempt to fill-out this assertion under “Jacob Zuma, the survivor” below.

Normative reasoning is acceptable, but we need to be conscious of doing it when we do it. In this case my ‘normative’ assumption is that a successful and calm succession completed before Zuma’s term of office expires in 2019 would be a ‘good thing’, perhaps even a precondition for the reestablishment of political stability and financial market trust in the bona fides of government (and lower risk levels in the geography and assets administered by the South African state). However, as I mentioned previously, I think this is a necessary not sufficient condition for such improvements.

Jacob Zuma, the survivor

It is being argued repeatedly   that Zuma is the quintessential survivor, that he has the ANC and its National Executive Committee wrapped up, that he demonstrated this again at Mangaung in December 2012 (see here for a persuasive  example). I do not disagree with these assertions. But to accept that argument as complete we must establish that there are no new facts or new elements that might impact upon that assumed outcome.

Much has changed (both in fact and in my interpretation of the facts) over the last 18 months:

  • The alliance of forces that backed and defended Zuma’s rise to power at Polokwane has disintegrated. Crucially Julius Malema is now heading a hostile opposition party energetically represented in parliament and Cosatu is undergoing an on-going collapse – and it’s biggest union Numsa is in the process of setting up a socialist political movement that has as one of its founding principles that Jacob Zuma is the epitome of the corrupt and disastrous leadership cadre that have hijacked the ANC and the country (this is Numsa’s – and Malema’s/EFF’s – oft expressed view, not mine.) These are the very people and institutions that where the centre of the campaign that brought Zuma to power. (The SACP is pretty much ‘the last man standing’, which is what has led me to look more  closely at the whys and wherefores of that phenomenon.)
  • I am under the impression, but am unable to ‘prove’, that key elements and individuals of Jacob Zuma’s support base in Kwazulu-Natal are starting to  hedge their bets and keeping open the possibility of shifting their support to either Zweli Mkhize (ANC national treasurer and previous KZN premier) or Nkosazana Dlamini-Zuma (Current AU chair with too many other credentials in SA politics and government to begin to list). Both these candidates would be acceptable to the powerful (dominant?) KZN ANC. I cannot be certain if this is “true”, but this is my impression.
  • There are signs (rapid apparent weight loss, increased ‘time off’) and widespread speculation that Jacob Zuma’s health is an issue in play. Again I cannot ‘prove’ this – that would require his confidential medical records, amongst other things – but there are many circumstantial supporting elements that I have discussed several times elsewhere.
  • The linked controversies around Jacob Zuma, the allegation that he has improperly allowed the Gupta brothers to capture important aspects of the state and government, that he has abused public finances to build his Nkandla home, the various allegations around the Arms Deal scandal, with reference to convicted fraudster Shabir Shaik, (and the attendant ‘spy tapes’ scandal), the infiltration and destruction of the National Prosecuting Authority, the similar damage and modality of damage done the various structures of national intelligence as well as crime intelligence – all apparently in an attempt to protect Zuma from the legal consequences of his actions are starting to cause serious strain for the ANC.
  • The losses of 11% of voting support in the ANC’s most sophisticated middle class electoral constituency in the economic heartland of Gauteng in May this year and the serious worry by the Gauteng ANC that this damage might deepen in the 2016 local government election. The assumption (that I share) is that at least part of this is because of the myriad scandals surrounding Zuma.
  • The noisy disruption of Parliament by the EFF in an attempt to get Zuma to account to the public and to Parliament for Nkandla expenditure … and the degree of national embarrassment that surrounds this.
  • There has been a coup (which has now degenerated into a volatile stalemate) against the Lesotho government which had just issued the Gupta brothers with diplomatic passports. This both exposes the degree to which the Guptas have captured key political institutions in South and southern Africa, but also that that capturing is being exposed and challenged all over the place and the most significant person most publicly connected to the Gupta brothers is Jacob Zuma.
  • Jacob Zuma has just visited Russia, alone and forlorn, and in a manner and context that appears to me that he is the supplicant – when logic dictates that Putin should have been the supplicant.

The future, scenarios and consequences

  • Zuma may well survive to see out his term but the facts suggest that the possibility of outcomes different from that are rising, and must be seriously considered.
  • Zuma’s health could deteriorate and he could be forced out of office (this is a risk with any leader at any time but is raised with regard to Jacob Zuma for the reasons discussed previously)
  •  The ANC, suffering the myriad consequences of Jacob Zuma’s myriad failings, might be finally moved to attempt to move him out. The ruling party could do this by promising him security in Nkandla and immunity from prosecution. It is by no means clear that the ANC could summon the leadership capacity to undertake such a manoeuvre and it is unlikely that the National Executive Committee of the ANC, for now completely beholden to Jacob Zuma for jobs, position and access, would be the instrument that could initiate such a manoeuvre. But just because I can’t come up with a mechanism which might bring about such a change does not mean that that change will not happen (although I do accept that the arguments here would be more interesting if I was able to give a plausible and new mechanism for such a change.)
  • If there were a sudden ‘run’ on Zuma, if his apparent weakness suddenly became more visible, his supporters would vanish like the morning mist. There is no cadre of leaders and supporters waiting in the wings to set up a version of the Cope political party that Mbeki’s supporters established after Mbeki was fired.
  • There are a number of potential successors to Jacob Zuma, the prospects of whom I have assessed on a number of different occasions. To the two I have mentioned earlier in this note, add Cyril Ramaphosa, Lindiwe Sisulu, Baleka Mbete – and, as a safe pair of hands, stalwart stand-in Kgalema Motlanthe. Any of these candidates would be acceptable to the electorate, to the ANC and to financial markets, although each group, and probably each individual within each group, might have his or her specific preference.
  • Power vacuums and unexpected transitions can be destabilising and risky and can be accompanied by wild swings in financial markets. It is important to keep the possibility of this in mind. This is not the same as saying: ‘this is happening’ … or even: ‘this is more likely to happen than not’. It is purely saying this is more likely to happen than I previously thought and it is worth keeping in mind.

A useful critique of thinking around this issue was published by a senior ex-intelligence officer Andre Zaaiman a few days ago. Catch that here … you might be able to see that we spoke about the issue over a cup of coffee before either of us wrote about it.

 

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

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