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“How seriously to take the EFF is becoming the question of the year for a view on South African political risk”

As I listened to Pravin Gordhan’s budget speech I thought I would share with you an extract of my news commentary from Monday morning.

But I forgot to hit ‘publish’ as I was being torn between being slightly underwhelmed and moderately admiring that Gordhan could make so few populist concessions this close to May 7.

Thus, the EFF  and DA manifesto launches:

  • The Economic Freedom Fighters and The Democratic Alliance both launched their manifestos this weekend
  • The EFF will likely out-perform and its policies are the ‘sum of all fears’ for investors in emerging markets
  • In the longer term, however, the ANC is set free to pursue more growth orientated, investor friendly policies – and success or failure in this regard is the key question about South Africa’s future
  • The Democratic Alliance also launched its manifesto and is rapidly shifting its demographic appeal
  • By 2019 we could have a Goldilocks scenario where the ANC and the DA comfortably occupy the middle ground of South African politics, keeping at bay both the left and right-wing, and pursuing economic growth. Other scenarios are both possible and plausible, but I thought I would, just this once, hope for the best

EFF – radical left-wing populism of old (and marketing genius)

The EFF packed out the Mehlareng Stadium in Tembisa in Gauteng and launched a radical populist manifesto with great aplomb. Ambitious plans announced included free education up to tertiary level for all and double social grants paid for with the proceeds from nationalising 60% of the mines and banks. The party will build a state pharmaceutical company to produce medicines, scrap the tender system, ban the use of consultants while increasing civil servant salaries by 50% and it will subsidise the taxi industry and provide housing finance for middle-income earners. Mineworkers will take home a minimum wage of R12500.00 a month (undoubtedly designed to chime with current Amcu platinum sector strike) and other minimum wages would vary from R4500.00 for waiters and waitresses to R7500.00 for private security guards.

Yeah, right.

To get a sense of the scripting and impact of the launch here is Ranjeni Munusamy of The Daily Maverick describing the Marikana widows on the platform: “To make the point about the treachery of the ANC government, Malema had invited as his special guests the widows of the Marikana massacre, all clad in EFF t-shirts. They sang and spoke of the hardship, their heartbreak and the betrayal they feel at the ANC government killing their husbands on behalf of capital.”

So what?

The EFF is becoming the big story of this election. Previously in SA politics the ANC managed to encompass within itself the full spectrum of liberation ideologies including this radical populism. The expulsion of Julius Malema (paralleled by the pushing of Numsa out of the ruling alliance) has left the radical populists on the outside and unconstrained by previous alliances and loyalties.

The ANC ran a counter rally/concert aimed at a youthful audience not far from the EFF manifesto launch. While that concert/rally was well attended and festive, it didn’t appear to detract from the EFF launch. All it really indicated was that the ANC is taking the EFF threat seriously.

How seriously to take the EFF is becoming the question of the year for a view on South African political risk. The EFF is articulating the set of demands and occupying the political space that has always been of concern to investors in South Africa – characterised as it is by chronic unemployment, poverty and inequality with the racial underpinnings of apartheid. Previously markets had become convinced that the ANC by its size and reach and general authority, was able to mediate between the different and competing demands of the transition.

However, it is now clear that the ANC has either been forced to abandon the terrain of the radical populists and ultra-left and expel those factions – or it has chosen to do so for its own strategic objectives.

On the one hand this sets the ANC and government free to develop policy without the straitjacket that came from clinging to the populists and leftists. On the other, those groups are now free to compete for votes and the ANC is vulnerable to electoral shrinkage.

The EFF will undoubtedly grow, but the question for me is: ‘can the ANC, in the longer-term, now find policies to grow the economy that will allow it to regain ground in the 2019 election that it is likely to lose in the 2014 election?’

Meanwhile I think the EFF will do better in this election than expected …. and I am moving my expectation for its electoral performance up from 8% to 10% (a thumb suck, rough guide, purely for me to keep track) of the total vote on May 7th. I do, however, think that once the EFF gets to parliament the unworkability of its policies and the manipulations inherent in its campaigning will inevitably be exposed. Over the longer term it could be under pressure to hold onto its parliamentarians and its voters, especially if the ANC is pushed by the pressures from left and right into a process of internal renewal … and especially if the Cosatu unravelling results in a real labour/left party.

The Democratic Alliance

The Democratic Alliance also launched its manifesto this weekend – on Sunday in Polokwane in Limpopo Province. The launch was well attended – with an almost exclusively black audience, a feature which puzzled many commentators (but not you?- ed)

The party was at pains not to attack the pre-Zuma led ANC with Helen Zille saying of the ANC’s 2007 Polokwane conference ‘(t)hat was the moment when a great political movement lost its sense of direction. It was hijacked by leaders who care more about themselves than the people they are meant to serve … (the) good story ended in 2007.’

The economic aspects of the election platform emphasised job creation: ‘The manifesto we release today is a ‘manifesto for jobs’… Job creation is only possible if we cut corruption’.

The manifesto is worth reading and pushes all the right buttons balancing state encouraged redress with laying the conditions for private sector led growth. Catch Helen Zille’s speech, which is a useful summary of the manifesto, here.

So what

The DA appears to be on top of its game and performing optimally, given the limitations imposed by its origins as a largely white party. The ‘ethnic’ or ‘racial’ character of the DA is clearly in transition, with Helen Zille the only white person who took the stage and the cameras covering the launch having to search long and hard for the few white faces in the audience. These contortions are going to be difficult.

The DA has clearly decided to appeal directly to defecting ANC voters and much of the tone and approach was structured with this in mind – including being respectful of the pre-Zuma ANC history. However it is my impression that defecting ANC voters are (mostly) going to abstain from voting or will vote EFF (and maybe UDM/COPE leftovers). I think that while the DA might get a portion of these votes the ‘racialisation’ of our politics means it is too early for the DA to capture enough black votes to shake the ANC.

However, I think the political realignment’s now taking place could mean that it will be the ANC and the DA that occupy the middle ground of South African politics by 2019, a scenario that has many more positive than negative features. (I wrote that line on Monday morning. I am not sure I agree with it still. Nothing has changed except my mind.)

In passing I should note the strong convergence of two features of both the DA and the EFF. They have both identified Jacob Zuma as the key individual responsible for the ANC’s and the country’s failures. True or not, fair or unfair, the ANC must be under pressure to find ways of shifting this president into the side-lines – which is, in my opinion, one of the features necessary for the emergence of a process of renewal in the ANC.

This is a quick  aside before getting onto the more riveting topics of the May 7 elections, service delivery protests (and their search for a Gene Sharp handbook as well as the predictions of the Davies J-curve), the platinum strike, Julius Malema’s sequestration hearing in the North Gauteng High Court this morning (and the pressing matter of whether this could bar him from becoming a member of parliament in terms of section 47c of the Constitution) and the truly interesting Ipsos comparisons of the demographic characteristics of supporters of the ANC, the DA and the EFF.

Out of the mouths of babes and sucklings**

Over the weekend a young, close relative of mine wondered aloud why South Africans continued to vote for the ANC.

The child explained to me late on Saturday night that the ruling party was an institution so obviously bereft of redeeming features that only a person on drugs could possibly continue to vote for it.

“Why don’t they vote for another party?” asked the child in exasperation.

I have to admit that while I recognised the opportunity was begging for a cautious and loving Socratic exchange, I couldn’t raise the enthusiasm to give more than an exhausted ‘who’s they‘, followed by a quick retreat and request a continuation in the morning.

The next day, having completed the obligatory 52 hours (I think that’s about how long it takes?) of newspaper reading, I found myself sitting beside the same child watching Adventure Time on television.

When the charming, nuanced, off-beat and deeply intelligent (in comparison to other media I had been consuming that morning) cartoon was over, the child switched off the television, turned his angelic face towards me and asked: “so, about the ANC …?”

I cleared my throat and gathered my thoughts.

“White settlers from Holland” I began, gazing into the middle distance with a faintly sad expression on my face, as if watching the mournful parade of our history playing out in my mind, “first came to South Africa in 1652 and many bitter struggles were fought over land and cattle.”

Jumping ahead somewhat I went straight to the nub: “On January 8th 1912, chiefs, representatives of people`s and church organisations, and other prominent individuals gathered in Bloemfontein and formed the African National Congress. The ANC declared its aim to bring all Africans together as one people to defend their rights and freedoms.”

Okay, I’m messing with you … that’s a cut-and-paste from ‘a brief history of the ANC’ on the organisation’s website.

However, I find it significant that I had to open the web page and read some of the highlights from there. Somehow the essential story, the glorious history of the glorious struggle for freedom and democracy, the dead heroes, the banners, the flags and the songs, sounded tired and clichéd and faintly hackneyed as I ran through it without much real enthusiasm.

But I still argued the toss. It was not surprising that most black South Africans who were registered to vote would still be voting for the ANC (and, btw, ‘most black South Africans registered to vote’ was still probably ‘most South Africans of voting age’ given both our demographics and our 77% voter registration). The ANC led the fight against Apartheid. The ANC has presided over massive and ongoing redress in favour of black South Africans since 1994! A few bad eggs in the leadership do not change that.

The child raised a litany of objections: ‘Zuma’, ‘Nkandla’, ‘the arms deal’, ‘police violence’, ‘judicial – and other – appointments’, ‘the diversion of billions of rand into the coffers of fat cats and the party itself’, ‘governance failures’, ‘the Traditional Courts Bill’, ‘borderline homophobia’, ‘the impending Zuma/Putin nuclear caper’, ‘growing intra-ANC violence in contestation for increasingly lucrative political jobs’ and ‘increasing state sanctioned violence’ – duh! 

(I suspect the ‘child’ is imaginary, a clunky rhetorical device … also, ‘duh’ means ‘give me a break’, or ‘don’t waste my time with the stupid and obvious’ – Ed)

 The child’s arguments asserting the extremely putrid state of the ruling party became louder as did my insistence that the majority of voters were not brain-dead zombies acting out a destructive and unconscious impulse.

From the vantage point of this Monday afternoon I worry that I sounded a little like a master of ANC Apologetics ; but the child, delightfully, sounded like a shorter, skinnier, cleverer and more charming Wilmot James

I obviously didn’t answer the question why do the majority of South Africans still vote for the ANC? to the satisfaction of he who asked it – although I am equally satisfied that I can understand why a majority of normal, sane black South Africans, acting in their enlightened self-interest, might vote for the ANC.

However what I didn’t say in the argument with the child is that I am also sure that along the path down which the ANC is currently travelling, with Nkandla (the political/economic/security faction rather than the homestead) leading the way, awaits a place or a moment at which the ANC will lose the support of the majority of free thinking, free voting* South Africans. Of this I am convinced. I think that moment is some distance ahead – only conceivably first appearing in 2019.

But who walks blindly towards catastrophe, when it is visible, predicted by one’s own forecasting, evident in every stumble along the deteriorating path?

Think about the ANC as having a brand value. Think about the forces that operate within the ANC as a kind of political market. I am hopefully expectant that that market will automatically self-correct … that the  brand is so valuable that the threat of its loss will trigger a protective impulse, will mobilise the many who have much to lose if their asset continues to be led and used in the manner it is being led and used by its incumbent central leadership.

Obviously the incumbent leaders of the ANC will not willingly lose control. The consequences for this particular crew would be more negative and profound than, for example, a similar loss of control was for Thabo Mbeki. Also the incumbent leadership has a security/intelligence/street-fighter thing going that could make it a vicious and dangerous opponent of any serious movement for renewal within the party.

Finally, I imagine that the fewer votes the ANC receives in the May 7 election (which I don’t see being fewer than 60% of the total) the more likely and vigorous will be an attempt to change the organisation’s current trajectory and leadership.

(I am not going to run all of that passed the aforementioned child – he will, with some justification, roll his eyes and say whatever.)

* I use the “free thinking, free voting” qualification because it is not an eternal given that we will remain, as we have been (only briefly, since 1994) free, or relatively so, to think and vote as we please.

**’Out of the mouths of babes and sucklings’ comes from Matthew (21:16) recalling the words of Jesus, who was in turn referring to Psalm 8 –  from the King James Version, a widely admired (for its literary value) English translation of the Christian Bible … that’s for any readers in a geographical, cultural and/or technological location so remote that even Google cannot help them as it has helped me fake that I knew the full origin of the phrase before I sat down to write this morning.

I have been agonising over whether to keep this website going –  or to consign it to the wastelands of the interwebs there to wander mournfully, accumulating lurid advertisements for secret ways of getting rid of belly fat and invitations from young, beautiful and lonely people, in your area, waiting by their phones for a call from you.

After weighing matters too arcane to bore you with here I decided to gird my sagging loins (that’s long and loose clothing, not that other thing you were thinking – Ed) and once more into the breach … and all of that.

So … I have written various 2014 previews. One you may have seen was for the Mail & Guardian and titled ‘What I will be telling investors in 2014’. I would have liked to give it a better edit – and I think I don’t adequately deal with the issue of the corroding effects of the original arms scandal – but you may be interested in reading it anyway. Catch it here.

I also published in early January, as part of BNP Paribas Cadiz Securities’ 2014 Outlook, the overview below. (Thanks, as always, to my main contract holder for generously allowing me to republish a few weeks later here.)

(Remember, no-one has been to the future and returned with any useful information as far as I am aware … so treat the following with a healthy degree of scepticism – Ed)

Political outlook 2014: No safe haven in the storm


At least part of our sanguine view of South African politics has rested on the belief that the ANC had several more decades of 60%-plus support at the polls. We were of the view that while this could lead to corruption, complaisance and cronyism, it would also allow the party to keep the country, government and constitution steady while SA undertook a wrenching transformation from its apartheid past to whatever the future held.

However, several important fissures have appeared in the ANC’s support base that suggest this assumption of indefinite ruling party dominance may not be correct and, therefore, that the essentially benign shepherding of that transition is under strain.

Amcu: bridgehead in previously safe African working-class constituency

Firstly, the success of the Amcu (Association of Mineworkers and Construction Union) in the mining (particularly platinum) sector has led to the virtual collapse of a key ANC labour ally, the National Union of Mineworkers (Num). Amcu is important for a number of reasons, but in this section, the issue is that it has created a bridgehead in the ANC’s core constituency that has every possibility of linking up with new left-wing (or in other ways radical) political formations that will challenge the ANC politically in the next few years.

Julius Malema and the formation of the EFF

Secondly, the expulsion of Julius Malema from the ANC and his formation of the Economic Freedom Fighters (EFF) party damages the ANC in two important ways. It draws disaffected young black South Africans, who are experiencing unemployment rates of about 60%, out of the ANC. And it captures ideological terrain that the ANC was previously able to control and finesse, namely, the question of the nationalisation of mines and land.

A strong and confident ANC has, since 1994, essentially been able to tell its electoral constituency that patience is required for transformation and that constituency has, with mutterings, accepted the ANC’s moral authority on the matter. However, that consensus is collapsing. Mr Malema’s ‘red berets’ are attacking the president at every opportunity and arguing that the ANC has sold out the birth-right of Africans and has been bought off by the opportunity to loot the state and by juicy empowerment deals. The message has a natural resonance among poor urban and unemployed youth – but up until Mr Malema’s expulsion, the ANC was able to articulate both sides of this debate within itself.

NUMSA split: The unravelling of the ruling alliance

Thirdly, it appears that the long-standing split within Cosatu (Congress of South African Trade Unions) over its relationship with the ANC has been forced to a head by the suspension of Cosatu Secretary General Zwelinzima Vavi. A ‘left’ faction had, with a degree of discomfort, existed within Cosatu since the formation of the union federation in 1985. This faction has its roots in non-ANC liberation traditions and was concentrated mostly in Cosatu manufacturing unions, especially Numsa. The moves to get rid of Mr Vavi and close down Numsa’s criticism of the president and of ANC economic policy probably emanate from the hegemonic faction within the ANC itself, in other words, Jacob Zuma and his closest allies. Not unsurprisingly, Numsa has now formally called on Cosatu to leave the alliance with the ANC, has said it will not be supporting the ANC in the election in 2014 and has called for the immediate resignation of President Zuma.

Over time, this will impact ANC electoral support, though not necessarily profoundly in 2014. How Numsa members and their dependants vote in next year’s election was probably a ‘done deal’ prior to Numsa’s defection decision at its special congress in late December 2013. Numsa may link up with ‘left’ or ‘workers’ parties (and may actually form a ‘socialist party’ that could challenge the ANC for support in the ANC’s key black working-class constituency), but this will likely impact more profoundly on electoral outcomes in the 2019 election.

ANC swelling in rural conservative areas and shrinking amongst urban sophisticates

Fourthly, the patronage and diversion of state resources as depicted by the Nkandla saga, combined with the vigorous pursuit of the rural vote in Kwazulu-Natal, has meant that the ANC is gradually appealing less to urban Africans (although this is by no means a majority trend) and more to rural and traditional poor black South Africans. This appears to mean that parties like the Democratic Alliance, AgangSA and the EFF are picking up a degree of unexpected traction in such constituencies.

Labour environment

After a catastrophic 2012 as far as the labour environment was concerned – especially the repeated waves of illegal and violent strikes in the platinum sector – 2013 saw stabilisation, albeit at still unacceptably high levels of unrest and strike activity.

In the platinum sector, the Amcu is ‘bedding down’, but likely to continue contesting with the Num in the gold sector. The next public-sector wage round is scheduled for 2015, so we have a breather before that storm hits (and we expected it to be a big storm when it does).

The formalisation of the Numsa split from the alliance probably means that this union will begin to actively contest with the Cosatu unions and in several other sectors of the economy. We are looking for the formation of new and smaller unions in sectors where the incumbent unions have grown too cumbersome or complacent to deal with the demands of specialist groups of workers. Unionism is a growth industry in South Africa, with annuity income for those who set them up. As Cosatu shudders, there are many opportunities emerging.

Labour unrest, poor labour productivity and inflexible labour markets (price, size, skills) are among the biggest negative domestic drivers of economic growth and we expect the figures to show a slight improvement in 2013 over 2012 and a significant deterioration in 2014 and 2015 – which may have significant negative implications along the lines of the BMW ‘disinvestment’ decision.

National Development Plan: The political rise of the Treasury and fall of Cosatu

The ruling party and the ruling alliance’s approach to the National Development Plan (NDP) has appeared highly conflicted since the adoption of the plan at the 2012 Mangaung national conference of the ANC.

While our view is that the NDP is little more than a shopping list (and not the miracle cure some ratings and multilateral agencies hope it is) in the areas of large infrastructure roll-out and a disciplining/training/focusing of the public service, we may be in for upside surprises. The important political leaders to watch here are ministers Lindiwe Sisulu (public service and administration) and Malusi Gigaba (state-owned enterprises).

In several different ways, the Zuma leadership of the ANC has, over the last few months, appeared to back with a degree of fortitude previously orphaned policy thrusts from the NDP that are generally ‘financial-market positive’.

The first of these is the foregrounding of the NDP itself – both at Mangaung, but also in the medium-term budget statement in October 2013. Minister of Finance Pravin Gordhan stated that that this budget statement and all future budget statements would be ‘the accounts’ of the National Development Plan, putting the plan at the centre of government policy.

The trade-union movement – especially the now defecting faction rooted in Numsa, but actually common to the whole federation – was outraged by this, as it sees the NDP as a capitulation by the ANC to (variously) ‘white monopoly capital’, ‘neoliberalism’ or ‘business interests’.

In conjunction with this foregrounding of the NDP, Jacob Zuma has recently signed into law two major policy thrusts that are bitterly opposed by the ANC’s labour ally.

The first of these is the Transport Laws and Related Matters Amendment Act, which allows for the implementation of ‘e-tolling’ on Gauteng highways and has been bitterly opposed by COSATU and other community groups in that province. Bond-market investors and ratings agencies have repeatedly said it is crucial that the ANC implement ‘e-tolling’ if the government is to maintain credibility on the global capital markets. It is significant that the Zuma administration has grasped this nettle, despite facing (by all accounts) a significant electoral challenge in Gauteng in 2014.

The second surprising nettle-grasping activity has been the promulgation of the employment tax incentive bill in the face of united Coatu fury. This is the ‘youth wage subsidy’ of yore, and the ANC under Jacob Zuma has obviously decided to accept thunderous criticism from its ally in the hope that longer-term employment growth benefits will weigh in its favour at the polls, in both 2014 and 2019.

Together, these initiatives are surprising positives and have probably come about because the Treasury has managed to persuade Mr Zuma and his cabinet that failure to take a stand on these various measures could lead to downgrades by the ratings agencies.

Policy and regulatory risks predominate

Thus, our view is that the Presidency, bereft of any real policy direction itself (because it is busy purely with rent seeking and hanging onto power) has been persuaded by Pravin Gordhan that the country is in trouble, that the deficit is looking genuinely threatening, that downgrades are a real possibility and that if this goes south, President Zuma might go with it. The National Treasury briefly has the reins, and this gives us a moment of respite.

However, hostile mining regulations, a fiddly and interventionist Department of Trade and Industry, an overly ambitious Department of Economic Development, a hostile Department of Labour, liquor legislation, more and tighter empowerment legislation and deepening regulations on all fronts, but especially in the credit markets, mean that, on the whole, government in 2014 will be an unreliable financial-market ally.

State finances: The deeper risks are fiscal

The country’s increasing dependence for stability on social grants and other forms of social spending is a real and deepening political risk. While the social grant system has lifted millions of South Africans out of poverty and the public sector has employed hundreds of thousands of others, it has also created a culture of dependency and paternalism and is an unsustainable expense that the government will at some stage be forced to reduce. This is definitely going to be accompanied by severe social turmoil, although as mentioned previously, the real ‘fiscal cliff’ is still some way ahead of the forecast period dealt with in this report.

Election 2014

The election results will be important, but in ways that are difficult to predict.

If the ANC’s share of the national vote plummets to the low 50% range, will this force the party into a process of renewal, or will it be panicked into populist measures? It probably depends on which parties take up the slack.

If the ANC gets 65% of the vote, will it be ‘Nkandla business’ as usual – an unhealthy rural populism à la the Traditional Courts Bill, combined with activities like the significant public resources (ZAR208m) spent on building the president’s Nkandla compound and accusations of corruption?
If Mr Malema’s Economic Freedom Fighters get 10% of the vote, will that mean ANC policymaking is paralysed until 2019 as the party attempts to appease the angry and disenfranchised youth? Will it mean legislation relating to mining and land ownership swerves into uncertain and dangerous territory?

If the Democratic Alliance wins 27% of the national vote (which we think unlikely) and if it is able to form a provincial government in alliance with other parties in Gauteng (which we also think unlikely), how might that cause the ANC to behave? Better? To continue to allow the Treasury to set the tone of probity and effectiveness, concentrate on fixing education and focus on economic growth as the only guarantor of electoral success in 2019? Will this kind of threat cause the ruling party to attempt to make opposition strongholds ungovernable? We suspect different impulses are already at war within the ANC and investors should watch how that battle plays out.

Below, purely as a way of presenting our latest ‘guesstimates’, are our ‘most likely’ electoral outcomes for 2014 (these may change as campaigning performance changes before the election and as various crises emerge, eg, the booing of Jacob Zuma at the FNB Stadium commemoration for Nelson Mandela in December 2013).


BRICs and the uncertain rise of the SACP

A relatively new and difficult-to-unpick issue is the growing confidence the South African Communist Party (SACP) has in shaping the national agenda. The inappropriate focus on BRICS speakers at the FNB Mandela memorial (over Africans and European Union speakers, with Obama the inevitable exception) is probably evidence of the Communists having very significant influence.

We think this could have fed through into the announced Zuma/Putin ZAR 100bn nuclear deal.

This is a matter of growing tension within the ANC, with a previously dominant (under Mandela and Mbeki) group of ‘progressive Africanists’ having lost power to the Communists, who are now in an alliance with a patronage-seeking, provincial elite with strong links to state-security apparatuses and rent-seeking business interests (‘the Nkandla crew’.)

This struggle could play into succession issues and might be a driver of attempts to impeach Jacob Zuma (a strategy unlikely to succeed, in our view) over the next few years.

Succession and a ‘rescue mission’ in the ANC?

While this matter probably lies beyond the 2014 scope of this report, within the ANC, the possibility of a rescue mission is taking shape (driven, in part, by growing commentary about how many public resources are ending up on and around Jacob Zuma’s person and his tight control of security agencies). A group now on the outskirts of the party, and in very general terms representing the ‘old guard’, appears set to begin working on securing a succession process that reverses the decline (moral and in popularity) over which Jacob Zuma appears to be presiding.

This move has not yet taken shape, nor is it properly manifest, but in our view the important people to watch are previous President Thabo Mbeki, Lindiwe Sisulu, Nkosazana Dlamini Zuma, Cyril Ramaphosa and Zweli Mkhize.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Herewith some comments on the latest political news. Apologies that I have posted so seldom here of late. I see a New Year’s resolution coming on. I see a New Year’s resolution exiting stage left.

Numsa, Cosatu and the SACP … and Jacob Zuma

During this past week the National Union of Metalworkers of South Africa (Numsa) shifted closer to exiting the ruling alliance (and possibly Cosatu). The matter will be decided at a special Numsa congress from 13-16 December.

Meanwhile several distinct forces entered the fray.

Gwede Mantashe, the powerful ANC secretary general, argued that if pursuing Zwelinzima Vavi split Cosatu, then that strategy should be reconsidered. His general approach was supported by the President of the National Union of Mineworkers Senzeni Zokwana calling for sober heads and for the two main factions in Cosatu to ‘swallow their pride and solve their ideological and political differences’ (Business Day 3/12/13)

In complete contrast to this attempt to mend fences, Blade Nzimande, wearing his South African Communist Party secretary general’s cap on Sunday attacked the Numsa leadership, using strong and unbending language saying a “clique” within the union is manipulating rank and file members for  personal gain and should account for their personal wealth … that Numsa general secretary Irvin Jim and deputy general secretary Karl Cloete should submit themselves to independent lifestyle audits and that Mr Jim should explain his role in chairing the Eastern Cape tender board and should come clean on the work of the union’s investment arm.” (News24 02/12/13)

The Numsa leadership meanwhile continued with its formulation of a detailed criticism of the ANC performance in government – only parts of which have been announced – but will form part of the discussion about whether to stay in Cosatu and in the alliance at the special congress in mid-December.

The Eastern Cape provincial executive committee of Cosatu (PEC) has strongly criticised the Cosatu president Sdumo Dlamini for failing to arrange the special Cosatu conference designed to address all the issues bedevilling the federation, including the suspension of Vavi and the relationship with the ANC. The Eastern Cape PEC was also strongly critical of the Communist Party’s attack on the Numsa leadership.

So what?

This is not only the untidy squabble it appears.

Jacob Zuma came to power backed by the SACP, by Cosatu, by the ANCYL, by disparate regional power-blocks and business groups who saw an opportunity to get the benefits of being at the high table, and by democrats within the ANC who believed Mbeki had become authoritarian and/or unresponsive to the changing requirements of the situation (with his failure to grapple with the HIV/AIDs question his most obvious failing.)

This alliance of interests and groups has long since fragmented (with the trajectories of Malema and Vavi the most visible signs of this), but the SACP remains up close and personal with Zuma, his family, his business friends and the security agencies he keeps firmly under his wing. That it is the SACP who has said: ‘let’s chase these Numsa fellows out’ is not a surprise, as the SACP is one of the main beneficiaries of the rise of Jacob Zuma … an attack on Zuma is an attack on the SACP.

(My implicit assumption, which might be wrong, is that the SACP probably has some socialist explanation or justification for what it is doing in bed with Zuma. However I must confess I cannot imagine a version of politics in which the struggle for socialism is best served by allying oneself with a corrupt, regional elite – with ethnic overtones – that makes free use of the state security apparatuses to secure its dominance. If you lie down with dogs you should expect to get fleas.)

Thus, the SACP appears to be pushing for radical intrusive surgery on Cosatu and Numsa. They hope to cut out the cancer and, supposedly, slowly repair the healthy body left-behind.

The most obvious dangers are inherent in the metaphor: namely that the cure could kill the patient. But the bigger danger is that what the SACP, and the faction within the ANC that backs the radical surgery option have, perhaps wilfully, mistaken ‘democratic criticism’ (albeit of a damning sort) for cancer. This was precisely the warning that Mantashe and Zokwana were giving when they were brutally cut short by Blade Nzimande wielding a meat-cleaver.

So Nzimande and the communists have an agenda tied much more closely to the narrow version of the Nkandla Crew (that nexus of commercial interests, regional Kwazulu-Natal politics, state-security agencies and crime intelligence that are all pushed up tight against their principal, Jacob Zuma). More closely, that is, than, for example, Gwede Mantashe

Where this is leading is uncertain. It seems likely that Numsa will split from (or be driven out of) the alliance and perhaps from Cosatu. Numsa might more explicitly move towards establishing  a ‘labour’ or ‘workers’ party, perhaps in alliance with existing left-wing parties and trade unions. Numsa itself  may split in this process, so that a vestige of its former self is left behind in Cosatu.

Numsa freed from the constraints of belonging to the alliance and Cosatu has strong growth potential, particularly in the mining sector and can be expected to flourish there. It is not inconceivable that a defected Numsa will continue to lobby Cosatu unions and will grow as structures and regions of Cosatu unions also defect.

It is always possible for the ANC aligned leadership to stop this process, but that would entail having to give free rein to Jim and Numsa’s brutal criticism of ANC corruption and economic policy. The Nkandla Crew have obviously decided this is no longer an option – especially in the lead-up to an election where their principal is already under attack for public resources being lavished on his Nkandla home. Time will tell if they are strong enough to hold the smaller fort they have built against the growing number of enemies they are createing.

Meanwhile we must remember that Numsa is the most radical and best organised union in Cosatu – and many businesses would find them significantly less playable than the unions to which they are accustomed.

The next step will be the Numsa special conference. I expect Numsa to resolve to insist that Cosatu holds a special congress before elections next year. It is not impossible that that Cosatu special conference does take place and that the pro-Vavi faction secures his return – although there are almost endless practical difficulties in making this happen. However, any return of Vavi and and outbreak of peace in Cosatu will be temporary – unless there are radical changes in the ANC as well.


Draft of the Public Protectors report on the Nkandla build was leaked by the Mail & Guardian

The leaked report states that Jacob Zuma derived “substantial” personal benefit from the Nkandla upgrade that went way beyond ‘security features’ and that he would be liable to pay back this money to the public purse. The features Madonsela identified as unrelated to security spending was a swimming pool, visitors centre, amphitheatre, cattle kraal, marquee area, extensive paving and new houses for relocated relatives. Public Works allowed Zuma’s architect ‘uncontrolled creep’ to broaden the project until another 4 firms that Zuma had privately engaged were effectively carrying out the Public Works’ security upgrade but without having tendered for the job  – and reporting back into Zuma and his architect (Mail & Guardian 30/11/13)

So what?

Mandonsela has come out strongly against the Mail & Guardian for having published the draft report. She says the confidential circulation of draft reports from her office is designed to allow interested parties to argue points and correct substantial errors. The Mail & Guardian argues that the public interest outweighed the internal processes of the Public Protector – given that the security cluster of government had regularly threatened to stop the report being published.

The more important question is how Jacob Zuma comes out of this. It is now impossible to avoid the fact that significant state resources were used on the President’s private residence and more and more details will surface as we head towards the elections in 2014. Leaks are appearing from the major party’s polling processes that suggest that the ANC is vulnerable around the Nkandla upgrade. If the ANC were to suffer electorally from the appetites of its president, and if it knew that its suffering was linked to those appetites, then we must assume that Jacob Zuma would be vulnerable. But vulnerable to impeachment or vulnerable to having his wings-clipped? It’s a big difference, but both should be items on our long-range screens.

I will make a decision on the caption competition soon, but meanwhile here is my latest news update and summary – the Madonsela story continues to grow and, frankly, should be encouraged to.

The Public Protector clashes with Zuma’s security chiefs


On Friday state security agencies abandoned their urgent interdict in the North Gauteng high court attempting  to prevent the Public Protector Thuli Madonsela from a limited release of her report into the R206 million upgrade of Jacob Zuma’s Nkandla private residence.  However Nathi Mthethwa (Minister of Police), Siyabonga Cwele (Minister of State Security) and Thulas Nxesi (Minister of Public Works) have indicated that they still expect Madonsela to bow to their various ‘security concerns’ – something the feisty Public Protector is unlikely to do. (She was speaking a few minutes ago, bemoaning the fact that she ever handed the report to this cluster of … securorats? … catch a preliminary reports of that here.)


Madonsela has used the security cluster intervention to ensure that a new key piece of evidence becomes public, namely that Jacob Zuma privately appointed Minenhle Makhanya Architects (who had no security clearance) to run the Nkandla project, but that the company was paid (upwards of R18 million) by the state. It will be increasingly difficult for Zuma’s security chiefs to sustain the argument that their ‘real’ concern about the report relates to whether it (the report) compromises the president’s security or, in fact, that the upgrade was essentially or mainly about the president’s security.

So what?

Jacob Zuma might be the quintessential survivor, but in the lead-up to a national election the strong indication that he and his family have personally and directly been the recipients of irregularly redirected state resources could be a serious problem for him and his party. The Sunday Times (17/11/2013) lead editorial is headed: “A suspect president and his questionable lieutenants” … the degree to which Jacob Zuma’s excesses make the ANC look bad is the degree to which he is vulnerable.

The EFF – running out of red berets just as Julius Malema goes on trial for fraud and corruption

The EFF cannot keep up with demand for its  signiature red berets, according to City Press

The EFF cannot keep up with demand for its signature red berets, according to City Press

The dilemma faced by Julius Malema’s  new Economic Freedom Fighters (EFF), is that while the new party appears to be performing well there is a real possibility that some of the leadership could be in prison before the 2014 election.  City Press, in its front page lead story  (17/11/2013) reports of the growing EFF support: “(t)hey can be seen wearing their red berets on street corners, in public places, hangout spots and even at funerals where they go to recruit new members”. The Sunday Independent, however, points out that Julius Malema will go on trial for fraud, corruption, money-laundering and racketeering at the Limpopo Magistrates Court today – and that 3000 EFF supporters were expected outside the court.(Julius’s case has since been postponed till September next next year – which means he will be firmly in the running next year.)

So what?

I have had to constantly upgrade my estimates of how the EFF might perform in the 2014 election. I previously indicated my rough forecasts and promised that from time-to-time I would update my view. Well, here is my latest guesstimate:


To do as well as I indicate here the EFF would have to pick up previous ANC defectors (from Cope and the UDM) as well as a significant number of first time youth voters. The EFF remains the part of the story about which I am least confident – although strictly none of these figures can pretend to any scientific validity.  A strong performance by the EFF (built as that party is around a rejection of Jacob Zuma and a rejection of the economic status quo) could set off a shockwave in the ruling party.


Cyril Ramaphosa on a ‘social compact’

Cyril Ramaphosa gave an interesting address to the Mapungubwe Institute for Strategic Reflection (dated November 17 and available as a pdf on Mistra’s website) where he usefully summarised government’s and the ANC’s position on economic development – namely that ‘a social compact’ is required.

The full address is well worth reading, but the essential point (from a financial market perspective) is the statement that:

“Significantly, perhaps most importantly, business needs to focus on building an economy that delivers sustainable returns to all stakeholders over a longer term, eschewing the chase for high profits in the next quarter.”

Earlier, he says:

“The commitment to greater capital investment demonstrated by government needs to be matched by a similar commitment from the private sector to invest in productive capacity and to contribute to employment creation.”

So what?

Ramaphosa’s ‘social compact’ is another, perhaps more sophisticated, version of mining minister Susan Shabangu’s comments during an exchange with Gold Fields CEO Nick Holland at a recent conference in Australia:

“Investors must realise they have a responsibility to the country and cannot work to a bottom line that has no heart or soul at all … They have to understand there are various socioeconomic needs of the various partners … If investment will not improve the quality of lives — and recognise that workers also need to live decent lives — it will not be able to bring stability in South Africa … We are a country that, in the past, saw investment coming in that never contributed to ensure that the future of workers would be better.”

Shabangu’s and Ramaphosa’s comments indicate an economic strategy that consists primarily of insisting that private business surrender up the investment, employment and social spending that it is, supposedly, withholding. It indicates a poverty of economic understanding in government and the ANC that is deeply unsettling.


Bits and Pieces

  • Next weekend the Democratic Alliance meets in a special federal council during which the party is expected to attempt to deal with tensions around support or otherwise for the Employment Equity Amendment Bill. As the DA’s black membership grows the party will come under ever greater pressure to support both employment equity and black economic empowerment more generally. It is my view that this is a baseline assumption in South African politics – and the DA either will not break through its racial ceiling or it will shift on this policy matter.
  • Winnie Mandela, in an interesting interview in the Sunday Independent (17/11/2013), claims that Nelson Mandela has lost his voice – and is only able to ‘communicate with facial gestures’. She also said “the “poorest of the poor are seething with rage and whether our government is aware of the anger of the people, I do not know.” She also said: “I can’t blame Julius for what he has done because we, the ANC, are responsible for that … we would be foolish to think he is not a player or that he is not changing the political landscape … these are very dangerous and worrying times.” Winnie Mandela’s political affiliations are a good weathervane of the degree to which the ANC is – or isn’t – fragmenting. She is likely to stay within the ANC, at least while her ex-husband lives.
  • The Business Day today (18/11/2013) reports that moves are afoot in Cosatu to suspend or expel the National Union of Metalworkers of SA (Jacob Zuma’s key critic in Cosatu and Zwelinzima Vavi’s key ally). If the Jacob Zuma aligned faction achieves the objective of getting rid of Numsa and Vavi it is likely to precipitate the formation of a competing union federation and, possibly, a new political party of the left. The moves against Numsa seem like the actions of a weak and authoritarian core and are unlikely to achieve a unified and strong ‘ruling alliance’. In fact I suspect that the opposite will be the case.
  • Important defection from the ANC to the EFF, and the DA launches robust campaign in Soweto – but it is probably not yet enough to scare the ANC
  • Appropriate concern grows at the Promotion of Investment and Protection Bill
  • Stunning victory in eastern DRC is becoming a feather in Zuma’s cap … 
  • … while the chaos in the SAPS and crime intelligence is a serious indictment of South Africa’s political leaders – and is threatening the investment environment

Herewith my latest news summary and analysis.

As I have mentioned previously, I write these updates very early on Monday mornings for the paying clients of BNP Paribas Cadiz Securities. So thanks to those good people for allowing me to republish a few days later here (and thanks to them for giving me a fairly loose rein as to the style I am allowed to use).

Dali Mpofu announces defection from ANC to EFF
Dali Mpofu, advocate of the miners who were killed by the police in Marikana and a former CEO of the SABC, announced over the weekend that he was leaving the ANC and joining the Economic Freedom Fighters. While this is not completely unexpected (he represented Julius Malema in the ANC disciplinary hearings against the former ANCYL chairperson) Mpofu is perhaps the most mainstream figure to formally defect from the ANC and declare for the EFF.

So what?

This is my ‘shifting target’ predictions for the 2014 national election as of Friday November 1 (click on the graphic to see the details … and note the cute child sucking her thumb which is a graphic metaphor indicating I am making this up as I go along):


Some of you who saw those estimates in September might notice that I have massaged the EFF upwards and AgangSA downwards.

My Democratic Alliance results are probably too generous, although the pictures published in Afrikaans weekly Rapport on Sunday (11/03/2013) of the DA’s Gauteng premier candidate Mmusi Maimane’s launch of his campaign in the Walter Sisulu Square in Kliptown, Soweto on Saturday indicate a surprisingly robust start.


My caution about the upside for the DA is based on the history of outcomes in the four national elections since the advent of democracy in South Africa in 1994 (again click on the graphic for a version large enough to read … note DA at 16.66% in 2009 and ANC at 65.9% … hmm):

Elec history

One would have to suggest that the DA has set itself too difficult a task in declaring that it hopes to achieve 30% of the national vote and be in a position to form a provincial government in Gauteng in an alliance with other opposition parties after elections in 2014. The EFF and AgangSA are likely to eat into ANC support but the challengers have a mountain to climb and the incumbent has to fall a long way before the climbers even catch sight of their objective.

Concern grows at the Promotion of Investment and Protection Bill

Legislation designed to replace a number of bilateral investment treaties that South Africa has maintained with over a hundred trade and investment partners was published in the government gazette on Friday and is starting to raise concerns among investors. Already Minister of Finance Pravin Gordhan has angrily blamed “lawyers serving the private sector” for increasing uncertainty in South Africa’s investment environment with regard to this legislation (in a deeply unhelpful statement he made on the side-lines of the African Economic Conference at Montecasino in Johannesburg last Monday – Business Day 28/03/2013).

So what?

At the height of the campaign for the nationalisation of mines during 2012 (by Julius Malema and the ANC Youth League) it was South Africa’s myriad bilateral investment protection treaties that were the strongest argument of reassurance for foreign investors. The problem is less the new legislation, and more that fact that existing treaties will not be renewed. Business Day in its front page lead story this morning says the decision not to renew the treaties has been criticised “by a range of groups, from foreign business to credit agencies for causing uncertainty over the security of future foreign investment”.  An informed legal opinion would be a requirement for the proper assessment of the risk here, but it is appropriate to approach this policy and legislative shift with caution.

Jacob Zuma attempts to fill the Great Lakes power vacuum

In the light of a stunning and quick Congolese army (FARDC) victory over the occupying M23 rebels last week, Jacob Zuma has moved quickly to reinforce South Africa’s apparent sovereign advances in the region. Today he will host a joint summit of southern African and Great Lakes leaders in Pretoria to seek ways of consolidating this week’s victory by the FARDC and its Southern African allies … and on Tuesday he will chair another summit designed to kick-start an African Union plan for volunteer governments to form “coalitions of the willing” to tackle continental conflicts – Sunday Independent 03/11/2013.

So what?

The contending interests in and around the Eastern Congo are extraordinarily complex, but from a South African perspective the apparent defeat of the M23 is a success for the SADC Force Intervention Brigade (FIB) to which South Africa has contributed more than 1 300 troops alongside 1700 from Tanzania and Malawi. The M23 is backed by Rwanda which in turn is an ally of the US and the UK in the region. Crucially, those Western powers have warned Rwanda’s President Paul Kagame to back off supporting the M23 – which is probably what left the rebels vulnerable last week (Sunday Independent and other several other sources).

There are significant mineral resources in the region and the Inga hydroelectric projects might become decisive to economic development in several southern African countries. Stability in the eastern DRC impacts on Uganda, Tanzania, Rwanda, Sudan and even Angola, Zimbabwe and South Africa. Jacob Zuma has managed to shift significant obstacles out of the way of reformatting alliances in the region – an objective that eluded Thabo Mbeki. The situation is delicate and tentative but Jacob Zuma’s decisive follow-up indicates he is seizing the historical moment and the initiative in a manner that we would have thought unlikely a year ago.

The DRC is a Zuma plus but Crime Intelligence and the SAPS is deepening minus

The main domestic weekly newspapers (Mail & Guardian, Sunday Times, Sunday Independent and City Press) all attempted (unsuccessfully) to make sense of the damaging disarray and conflict in various aspects of the South African security services, most importantly in Crime Intelligence, the Hawks and the top echelons of the South African Police Services itself.

Last Monday the national police commissioner Riah Phiyega issued a suspension letter to the acting Crime Intelligence head, Chris Ngcobo (on the basis that there is some unspecified problem with Ngcobo’s qualifications).  Almost immediately afterwards a spy tape emerged and was leaked to the press that indicated Riah Phiyega was guilty of a crime by having “tipped off Western Cape police boss Arno Lamoer about a crime intelligence investigation linked to him” – Mail & Guardian.

So what?

You have to go to the source code for what is happening here because the details of each claim and counter-claim are impossible to follow. Essentially the police, and particularly Crime Intelligence, have been profoundly damaged by having been drawn into high-level political contests, particularly those between former president Thabo Mbeki and then challenger Jacob Zuma. Significant parts of these apparatuses have become semi-criminal and out-of-control, pursuing sometimes arcane political (and worse) agendas. The top echelons of our political establishment are directly implicated in and linked to this chaos – having deployed these institutions in their internecine battles. No individual institutional failing in South Africa is more serious and more threatening for those seeking stability and certainty in the regulatory and institutional environment.

Forgive the dearth of postings here … I was brought low by some late winter dreaded lurgy and as a result my life came to grinding halt for almost two weeks.

The big story (which I will deal with later today or tomorrow)  is the astonishingly decisively manner in which the ANC and its government is blocking Cosatu on a whole range of policy issues … immediately prior to an election.

Later today I will  attempt to assess whether the medium-term budget policy statement holds the same line, particularly with regard to the public sector wage bill. If it does then I am going to have to start reassessing whether Jacob this-isn’t-some-African-shithole Zuma is quite as soft-in-the-middle on policy as I have previously asserted. The implications of the putatively shifting position are huge and, I suspect, driven by a complex and contradictory set of factors.

Meanwhile here is an excerpt from my weekly news commentary describing the rising decibels and pitch of the moan coming from business and its representatives (and from financial markets in general) around policy, especially policy related to the labour market. The ascending pitch and loudness of the whine are undoubtedly two of the factors pushing Zuma’s showdown with Cosatu – but I think it would be premature to think of the president’s actions as primarily about bowing down to business and the diktats of global capital markets.

South Africa deteriorating investment destination

Complaints about South Africa’s hostile policy environment are getting louder.

Pepkor chairman Christo Wiese added his voice to a chorus complaining about a hostile investment environment in South Africa. In other African countries “infrastructure is improving, border crossings are becoming easier, more property development is taking place and, in some cases, they are offering more opportunities.” But in South Africa government is “certainly not cooperative” and “one is left with the impression that government sees business as the opposition, not as a partner … you can’t have German rules because we can’t administer them,”

The wizened and iconoclastic Christo Wiese held up Angola, Nigeria and, especially, Rwanda as improving business destinations. South Africa’s labour regime, according to Wiese, is becoming one of the greatest inducements to invest in other African countries. (Wiese was quoted in an interesting interview with Chris Barron in the Sunday Times 22/10/2013 – here’s a link to the republished article in Business Day … Barron is always interesting and not to be missed in your weekly news read.)

Wiese’s comments came soon after Moody’s Investor Services said in a credit opinion on 12 October that South Africa’s elevated strike activity continues to affect the investment climate. “BMW’s announcement that South Africa has been removed for consideration for the new car is tangible evidence of the negative impact that the increase in work days lost to strikes in the past two years is likely to pose for the medium-term outlook of the economy … Such decisions are likely to be repeated by other companies when such significant losses are incurred -” Bloomberg and Moody’s Credit Opinion 12/10/2013.

In the same week Amplats CEO Chris Griffith said (after the company was again battered by strikes) that it “is not possible that we can continue with these kinds of strikes, which are having an effect not only on the mining sector but all sectors of the economy. It’s hurting the economy … It is impacting jobs” – Business Day 16/10/2013.

From extensive plans to cut 230,000ozs of achievable platinum as well as 14 000 jobs announced in January this year, Amplats appears to have been steadily successfully bullied back by unions, government and the ANC from doing what it initially intended.

Read against South Africa’s scores in the recent WEF Global Competitiveness Report 2013 – 2014 (click here for a full copy) some of this anxiety seems justified. While South Africa is ranked 53rd this year out of 148 countries, the quality of the educational system is very poor at 146th, as was labour market efficiency at 116th – and ‘hiring and firing practices’ and ‘wage flexibility’ at 147th and 144th respectively. The ability of the employer to respond quickly to changing production needs for skills and size of workforce is called ‘labour market flexibility’- and aggregating our performance in these categories suggests a serious deficit compared with our peers.

Okay, so that sets the background for a follow-on post (today or tomorrow) dealing with the now unavoidable conclusion that Zuma’s government appears to be risking the wrath of its left-wing allies with regard to a range of policy measures. The important question to answer is ‘why’ is the ANC drawing the line? And why now?


Some of my recent news coverage and commentary:

E-tolling and the DA’s cruel billboards

Last week Jacob Zuma signed into law the Transport Laws and Related Matters Amendment Bill – meaning the unpopular e-tolling can begin on certain Gauteng highways.

I was impressed that the President did the necessary – despite the fact that this will cost the ANC votes in the 2014 poll especially in the closely contested Gauteng and especially amongst the class of people the ANC is, supposedly, at risk of losing to opposition parties.

Of course failure to sign the law might have led to downgrades by rating agencies and an even more hostile report from the IMF … but good for him anyway!

The interesting aside is that last week huge billboards sprung up along those highways saying things like: “E-tolling – Proudly brought to you by the ANC”.


Of course that campaign is funded by the Democratic Alliance snapping with its sharp little teeth at the ruling party’s heals .

Or perhaps it is more like being savaged by a duck?

Whatever, it’s all part of the razzmatazz that is going to be seriously tiring in about four months’ time but for the moment is mildly entertaining.

Election 2014 – the Zuma swings and the Zuma roundabouts

The major weeklies continued their faintly mindless coverage of Election2014.

City Press ran with two stories about how the ANC had decided to put Jacob Zuma delivering 50 specific and successful infrastructure projects at the centre of the ruling party’s election campaign. Not quite the shock the screaming headlines claim it to be.

All the Sunday Papers covered the fact that last weekend’s National Executive Committee of the ANC nullified the previous week’s Provincial General Council of the ANC in Gauteng. At issue was that the ANC in Gauteng is clearly not delighted to have to front itself with this particular president and believes its supposedly more urbane, sophisticated urban voters would be better wooed by Thabo Mbeki, Cyril Ramaphosa and/or Kgalema Motlanthe.

Deep behind the chatter is the growing view that the Zuma-face of the ANC is unlikely to charm the middle classes. The basic reasons, according to feisty City Press editor Ferial Haffajee, are made explicit in the Gupta wedding scandal cover-up:

“(it was not) the first time the party has been damaged by our president’s careless ways and friendships, which morph too easily into cronyism and patronage. There is a long line of infractions, stretching from the arms deal and his relationship with Schabir Shaik, to the rape trial he faced (the president was acquitted), the news of a child born out of wedlock with Sonono Khoza, the splurge at Nkandla and the game-playing with the courts around the spy tapes.” (Said the delightful, clever and middle-class Ferial Haffajee in her column in City Press  on 06/10/2013)

The rumour mill is constantly hinting that in certain constituencies the ANC will lose votes because of perceptions about Jacob Zuma’s cronyism and his traditionalist lifestyle choices. The hints usually suggest that the ANC’s own polling information confirm the view.

Frankly it would hardly be a big surprise if certain middle class constituencies are not enamoured with Jacob Zuma. Previous elections strongly indicate that the president is wildly popular in poorer and rural communities, so things are likely to balance out for the ANC.

What would be a surprise is if government got its act together with regard to infrastructure delivery in any meaningful way before Election2014. While a burst of energy can only be a good thing, do not expect a miraculous improvement in infrastructure delivery to result from the ANC’s election campaign.

Microlending falls from favour

Microlending as a business took a number of hits this past week. Nobel Peace Prize winner and founder of the microcredit lender Grameen Bank, Muhammad Yunus, warned that microlending to finance consumption could lock the poor into a life of poverty.

More importantly from a local perspective, Futuregrowth Asset Management’s Andrew Canter was quoted in the Business Times (06/102013) saying the company would “wind down” its exposure to microlenders, including Capitec, African Bank and other unsecured lenders on “moral grounds” (unfortunately the story doesn’t specify if Canter was purely referring to Futuregrowth’s SRI funds – which would be my expectation.) Canter, according to the paper, said: “We have always backed the responsible firms, but the industry structure has provoked industry behaviours that are not good for consumers, or in our view, the nation” … but, he said, Futuregrowth would not make a “panic exit”. “If industry practices improve, or particular players create more sustainable lending products, we will look to back them.”

The microcredit industry has always been controversial and becomes more so when consumers are struggling to make repayments in declining economic conditions. With the link having been drawn between the Marikana tragedy and the extent to which the strikers where in dire straits with regard to loan repayments, it was only a matter of time before sentiment towards the lenders would sour. With sentiment this negative, government is likely to further tighten regulatory control of the sector, especially in an election build-up.

The judiciary – it’s that Jacob Zuma problem again

In a matter almost as impenetrable as it is serious, a judicial tribunal appointed to probe Western Cape Judge President John Hlophe’s alleged attempt to influence two Constitutional Court judges to rule in President Jacob Zuma’s favour when he was fending off serious allegations of corruption got under way last week.

Amongst the complicating factors is that the two judges Hlophe allegedly tried to influence, Chris Jafta and Bess Nkabinde, have indicated they do not wish to proceed with the complaint.

I am not going to pretend to be able to analyse adequately what is going on here. Follow Pierre De Vos at his excellent blog Constitutionally Speaking for all matters relating to politics and the constitution. There is going to be a lot of complex legal argument around this matter but most constitutional experts suggest that the judiciary will be harmed almost no matter the outcome.

The point we unfortunately have to keep uppermost in our minds is that politicians, and especially their machinations in internal struggles within the ruling party, have damaged our systems of law and the institutions that are important to our democracy – from the judiciary, to the prosecutorial authority and including all state sectors directly concerned with national security (including the SAPS, crime intelligence and National Intelligence Service.) And further, such damage continues unabated as powerful groups in the ruling alliance war against each other.

Herewith an extract from my recent political news update.

Strikes – turbulence as the cycle hits the secular trend

Num (the National Union of Mineworkers) has served notice on the Chamber of Mines (COM) of its intention to strike across the gold sector, beginning with the Tuesday night shift this week. Num represents 72,000 of the country’s 120,000 goldmine workers. The Chamber made a final offer of a 6-6.5% wage increase, while Num is holding out for 60%. Amcu, which is also represented in the gold sector (now 19% of workforce according to the COM, but possibly as high as 30%,) wants a 150% increase but has not announced that it intends to strike, and nor have Solidarity and Uasa.

There are ongoing strikes by workers in auto manufacturing, construction and aviation services and threatened strikes among textile workers and petrol station employees – but these strikes are, at this stage, part of the normal cycle.

So what?

I mentioned previously:

“South Africa has a predictable strike season, the timing of which coincides with the expiration of bargaining chamber agreements in different sectors of the economy. Every year it appears that a wave of strikes is enveloping the country, but at some time during the gloom, journalists twig to the fact that this happens every year – much of the flurry in normal and predictable” – April 29 2013.

Several such ‘predictable’ strikes are happening or about to happen as I write this.

However, the gold sector breakdown is outside of the normal cycle both in how far the negotiating parties are away from each (6-6.5% versus 60-150%) and in the complex game being played between Num and Amcu. Amcu has quietly welcomed the impending strike as a chance to prove that, in fact, Num does not represent the majority of workers at key mines. On Friday, Amcu president Joseph Mathunjwa said Num’s strike would “qualify” its official representivity of more than 60%. He urged that everyone should “watch this space”.

Business Report in the Sunday Independent argues that South Africa’s four biggest gold producers are hoarding cash and lining up access to more in preparing for an industry wide strike. “If we are, let’s say, bullied into a situation that we don’t like, we can ride out the storm for a very long period of time,” said Sibanye chief executive Neal Froneman in the Bloomberg sourced story.

The essence of the gamesmanship between Num and Amcu is Num must demand and win an increase via strike action that is satisfactory to its membership, and Amcu must try and undermine the strike action and argue that, anyway, the ‘demand’ in the Num led strike is inadequate. On mines where Amcu dominates (in the Carletonville region at AngloGold, Harmony Gold and Sibanye Gold) Amcu must attempt to force mines out of the central bargaining process by ensuring that no central agreement can achieve a sustainable settlement at the local mine or company level.


An interesting discussion in today’s Business Day by the always excellent Carol Paton suggests that employers with large Amcu membership, specifically at Amcu strongholds at AngloGold Ashanti’s Mponeng mine; Harmony’s Kusasalethu and Sibanye’s Driefonteing favour a lock-out because they believe Amcu will sit out the Num strike and then strike themselves once that is settled. Paton’s story suggests that by locking workers out employers force all workers into one camp. “By declaring a lockout, employers would get around this problem, through forcing Amcu into the dispute now and exhausting workers’ resources to endure a strike.”

Alliance Summit

The African National Congress, the South African Communist Party, the Congress of South African Trade Unions and the South African National Civics Organisation met in a long postponed summit over the weekend to discuss and agree upon economic policy. The premise of the discussion was “unless we make significant inroads in addressing the challenges of poverty, inequality and unemployment, the democratic constitutional gains of the first phase of our transition will themselves be eroded” – from the Summit Declaration.

The Declaration situated the discussion by arguing that:

“… stagnation continues to characterise the developed economies, there has now been a significant slowing of growth in key developing economies, including China, India and Brazil. The commodity super-cycle of the recent past is now over. This has had an impact on economies dependent upon the export of industrial minerals and coal. The attempts to refloat growth in the US with a loose money policy have created further turbulence in many developing economies like SA.”

The Summit went to some lengths to defend against the accusation that poor economic performance was in any way related failures of “the South African government, or the labour movement”. Instead, the summit declaration lists achievements in infrastructure build, land reform and youth and labour market reform.

On macroeconomic policy the summit called for:

… bold forms of state intervention, including through:

  • Financial regulation and control;

  • Progressive and redistributive taxation

  • Wage and income policies, and progressive competition policies that promote decent work, growth and address poverty and inequality.

  • A well-resourced state-led industrial and trade policy

  • Increased state ownership and control in strategic sectors, where deemed appropriate on the balance of evidence, and the more effective use of state-owned enterprises.

So what?

The Alliance Summit used all the right language to keep the different elements of the alliance together but said nothing that might reassure spooked investors.

The opposite is probably true. Just look at the words: “progressive and redistributive taxation”, “well-resourced state-led industrial and trade policy”, “increased state ownership” and “wage and income policies … that … promote decent work, growth and address poverty and inequality.”

This is not the language that Kgalema Motlanthe used as he attempted to pacify investors at the presidential mining lekgotla in Johannesburg last week, but it is precisely the atmosphere of mining minister Susan Shabangu’s words at the Africa Down Under mining conference Perth, Western Australia last week when she said investors had to “moderate” the rates of return they expected to earn on their investments so as to allow for the social expenditures that need to be made (Business Day August 28).

The ANC and government are increasingly schizophrenic in their attempts to keep everyone (constituents, allies and investors) happy. In trying to keep everyone happy the ANC and the government seem more likely to achieve generalised dissatisfaction.

Criminal justice system appropriately named

The lead stories in the Weeklies were indicative of a growing anxiety about the criminal justice system. The Sunday Times led with “Magistrates: drunks, thieves and killers” and the other papers all discussed National Police Commissioner General Riah Phiyega’s embarrassment after she announced the appointment of a Major-General Mondli Zuma and then quickly reversed that when she was told that Zuma (whose relationship to the President is unknown to me) was being tried for driving under the influence of alcohol, failing to comply with a traffic officer’s instructions to stop at a roadblock, escaping lawful custody, defeating the ends of justice and refusing to have a blood alcohol sample taken.

So what

This might look like a circus but there is a darker element to the state of the criminal justice system than is not immediately obvious in these comical stories. In the Sunday Independent, journalist Nathi Oliphant writes about the security and justice sector: “President Jacob Zuma has unflinchingly stuck to his guns in promoting ‘his own’ into key positions”.

The security apparatuses and the criminal justice system more generally has been profoundly weakened by political interference and the dismaying newspaper headlines about criminality amongst magistrates and senior police generals is just the visible tip of the problem of that, in part, originates in political fiddling in the security and justice clusters and institutions.

Editor flees from Gupta TV

“Visibly terrified and hiding in a Johannesburg hotel room, the former consulting editor at ANN7 has made explosive claims about visits by channel bosses to President Jacob Zuma, where Zuma made editorial recommendations and was ‘given assurances by the Guptas this channel was going to be pro-ANC’” – reads the lead story in City Press.

So what

Nothing, really. ANN7, or GuptaTV as it has been named in much of the South African media, continues to provide comic relief and excruciating embarrassment, in about equal measures (although I know a few professionals doing an honest day’s work there and I feel faintly protective of them). Jacob Zuma’s relationship with the Gupta brothers is probably no laughing matter, but I wouldn’t hold my breath waiting for the criminal justice system to test whether Zuma’s relationship with the Gupta brothers is in any way similar to his relationship with the Shaik brothers.

Niccolo MachiavelliJacob Zuma has forced me to reread Niccolò di Bernardo dei Machiavelli’s The Prince, published 500 years ago this year.

He (Jacob Zuma) didn’t threaten me with the red lightsaber or catch me in a honey trap. My natterings, fortunately, are not impactful enough to draw the attentions of the Dark Lord (Darth Vader, dah! – ed) or his stormtroopers.

The compulsion comes from watching, slack-jawed, as Jacob Zuma skips happily across the backs of starving crocodiles – on his way, off towards the welcoming horizon.

Surely the world was an intrinsically hostile place for a black baby boy, born to a single-parent mother (who was also a domestic worker) in the South Africa of 1942? Surely when he received no formal education any chance of success in life would have become vanishingly small – in the estimation of a wandering actuarial statistician, perhaps?

When Jacob Zuma went to prison and then later was repeatedly caught with his hands in all sorts of cookie jars I imagine the hypothetical actuary would have confidently predicted a life of ignominy and poverty.

But instead Jacob Zuma is picking up an honorary Doctorate of Leadership from the Limkokwing University of Creative Technolog(who writes the script of the world? … no ordinary mortal would dare make this shit up – ed) and rubbing shoulders with the great and the good and undoubtedly stashing bits of his loot in safe houses in Malaysia.

My second post on this website in mid-2009 titled The Accidental President (catch that here) argued that Zuma’s rise was pure chance and contingency. But when the same random set of things happens over-and-over (Jacob Zuma escapes danger with a sack full of cash) you have to start questioning whether this is purely the shambolic interactions of events, people, history and the world.

Politics is about power (yes, I know, we have heard that somewhere before). Power is agency, the ability to make stuff happen, to make people do your bidding and to make situations turn out in a particular way. Political analysis is the analysis of how (and why) power is exercised.

Which brings me back to Machiavelli.

I read The Prince when I was about 17 and, clearly, I didn’t understand a bleeding word.

I vaguely remember being outraged and confused by the book.  Bertrand Russell is widely quoted as having said The Prince is a handbook for gangsters (which is a great line but there is much debate as to whether the great logician himself actually said it).

However, I am now kicking myself that I haven’t been reading and rereading The Prince every year – and in the flush of my transient enthusiasm, I promise myself I will do so from now on until I die … or perhaps I will stop a little before.

(As an aside: I was halfway through the book when the Syrian nerve gas story broke. I was glad to have Machiavelli as a companion to think about how those with agency might cause, or allow, such things to happen and why they might do so.)

So, anyway … Jacob Zuma is the Prince and I doubt he ever needed a Machiavelli to tell him how to be what he is and how to do what he does.

Here is the opening dedication. It’s quite compellingly mysterious to those among us who are a little thin on our Florence-during- the-Renaissance, but it is also a good explanation of the work that follows:

Dedication: To the Magnificent Lorenzo Di Piero De’ Medici

It is customary for such as seek a Prince’s favour, to present themselves before him with those things of theirs which they themselves most value, or in which they perceive him chiefly to delight. Accordingly, we often see horses, armour, cloth of gold, precious stones, and the like costly gifts, offered to Princes as worthy of their greatness. Desiring in like manner to approach your Magnificence with some token of my devotion, I have found among my possessions none that I so much prize and esteem as a knowledge of the actions of great men, acquired in the course of a long experience of modern affairs and a continual study of antiquity. Which knowledge most carefully and patiently pondered over and sifted by me, and now reduced into this little book, I send to your Magnificence. And though I deem the work unworthy of your greatness, yet am I bold enough to hope that your courtesy will dispose you to accept it, considering that I can offer you no better gift than the means of mastering in a very brief time, all that in the course of so many years, and at the cost of so many hardships and dangers, I have learned, and know.

This work I have not adorned or amplified with rounded periods, swelling and high-flown language, or any other of those extrinsic attractions and allurements wherewith many authors are wont to set off and grace their writings; since it is my desire that it should either pass wholly unhonoured, or that the truth of its matter and the importance of its subject should alone recommend it.

Nor would I have it thought presumption that a person of very mean and humble station should venture to discourse and lay down rules concerning the government of Princes. For as those who make maps of countries place themselves low down in the plains to study the character of mountains and elevated lands, and place themselves high up on the mountains to get a better view of the plains, so in like manner to understand the People a man should be a Prince, and to have a clear notion of Princes he should belong to the People.

Let your Magnificence, then, accept this little gift in the spirit in which I offer it; wherein, if you diligently read and study it, you will recognize my extreme desire that you should attain to that eminence which Fortune and your own merits promise you. Should you from the height of your greatness some time turn your eyes to these humble regions, you will become aware how undeservedly I have to endure the keen and unremitting malignity of Fortune.
Niccolò Machiavelli


I know how Niccolò feels. Sometimes these humble regions are just that little too humble. However, I would have been more cautious about calling for the Prince’s attention if I was Machiavelli. If the Prince read the little book, then the Prince would know that Machiavelli had the Prince’s number and that Machiavelli had rewritten the handbook. Which I can’t imagine would have charmed the Prince.

I will attempt a ‘highlights package’ of The Prince and possibly some learned comments (which are unlikely to be as good as you will find in this interesting article and interview). For the keenest among you, there are several places on the internet where The Prince is downloadable for no charge – I am sure the copyright has long expired … or rather I hope so. My copy, which is in electronic form on my laptop, originates at:

Finally, Jacob Zuma still has a few crocodiles to hop on before he reaches safety. I still think that the odds are against him, but I am not an actuarial statistician, wandering or otherwise . I draw comfort purely from the certainty that no-one, ultimately, gets out of this alive.

Zwelinzima Vavi’s suspension from Cosatu and the ANC/SACP/Num decision not to attend the Marikana commemoration, both on Friday last week, are, to my mind, indicative of a significant retreat of ANC hegemony.

Hegemony’,  as I imbibed the concept from probably slightly fevered readings of Antonio Gramsci’s sublime Prison Notebooks while I was a student activist (and from endless discussions in those semi-mythological ‘smoke filled rooms’) has proved, for me personally, a useful and adaptable tool for conceiving of the ebb and flow of political power.

The concept comes from the Greek word ἡγεμονία (look at me … I can cut-and-paste from Wikipedia) which means both ‘rule’ and ‘leadership’ but especially implied and indirect power or rule.

Hegemony (in my own lexicon) is used to describe the myriad ways in which the dominant group extends its direct power (let’s say, for argument’s sake, that direct power is that exercised through party discipline, or through the state, especially apparatuses of implicit or actual coercion). The extension of the reach of the dominant group beyond the immediate terrain that it obviously controls and into the middle ground or the rest of society (usually conceived of as civil society) is what I think of as hegemony. It is direct power extended as influence and leadership and as a result of occupying the high ground and by in some way representing the national as opposed to sectional interests and, ultimately, effective through persuasion rather than control – forgive all the awkward italicising.

The ANC that won to power in South Africa during the end of the 80’s and early 90’s was, to my mind, the exemplary example of the exercise of hegemony. The only power available to the ANC during this period was so called  ‘soft power that derived from its occupation of the moral high-ground and came about as a result of its (the ANC’s) careful building of broad fronts and tighter, more disciplined formations, like the ANC/SACP/Cosatu alliance itself.

This is the context in which I assess both Vavi’s suspension from Cosatu and the fact that the Marikana commemoration appears to have been a ‘no-go area’ for the Ruling Alliance. Obviously both news items can be understood as important for other reasons, but this is the prism through which I have chosen to view them.

(Note: ‘retreating power or hegemony” is not the same as having  ‘lost power or hegemony’. I am not saying in raising the points below that the ANC has lost its ability to ‘influence’ and ‘lead’ … rather I am saying that there are signs that it is significantly weakened in this regard. Not explored in this article is the consequences – which I believe are extremely serious and threatening – of any such potential loss of ANC hegemony. I have previously discussed this in an article entitled Beware the thing that might pick up power lying in the street and I have made similar points in Zuma’s brittle grip tightens.)

Cosatu suspends Vavi – and the Ruling Alliance shudders

Zwelinzima Vavi, suspended after a special meeting of Cosatu’s central executive committee on Wednesday last week, has indicated that he will challenge the decision in court.  During his press conference on Friday announcing this, Vavi released a document containing what purports to be a series of intelligence reports claiming that he (Vavi) is part of a US ‘soft-power’ plot to undermine Cosatu and the ANC.

Vavi’s strategy, and that of his supporters, appears to be to mobilise ordinary workers, notably in the National Union of Metalworkers of South Africa (Numsa), the Food and Allied Workers Union (Fawu), the South African Municipal Workers’ Union (Samwu) as well as in those branches, regions and local areas of otherwise anti-Vavi unions where Vavi remains popular with the rank and file – including, for example, the Kokstad region of the SA Democratic Teachers’ Union (Sadtu).  The ‘fight back’ strategy will culminate in a special Numsa congress to be held in December.

So what?

Vavi’s refusal to accept his suspension and his publically announcing that he will contest in court the Cosatu CEC decision suspending him is more serious than it first appears – and may well lead to his expulsion. (To get a sense of why this may be the case, here is what Gwede Mantashe, ANC secretary general, said of Vavi’s decision to challenge his suspension: “This is unprecedented. It is the worst case of organisational ill-discipline. If the ANC takes me through a disciplinary process, the worst thing I can ever do is to go out and attack the ANC. That is unheard of” – Sunday Times.)

The so-called ‘intelligence document’ that Vavi released on Friday (available as a pdf at the Mail and Guardian website here) appears to be a clumsy attempt to discredit Vavi by linking him (and various other Zuma opponents) to comical ‘imperialist plots’ to spread coups and chaos in Africa. The contents of the document are not worthy of consideration. However, if it is true, as Vavi claims, that his opponents in Cosatu and the ANC distributed the document, it is legitimate to consider the possibility that it was produced in a ‘dirty tricks’ department somewhere within the state security apparatus and/or somewhere close to the leadership of the ruling party.

The outstanding question is whether Vavi’s suspension or expulsion could lead to a defection of Numsa and other unions or parts of unions from Cosatu. The labour environment could be catastrophically impacted upon by this kind of collapse of Cosatu – especially if Numsa, already the largest, best organised and, perhaps, most militant Cosatu union, decides to contest with other Cosatu unions (especially Num) for membership.

The difficulty in making an assessment of whether Numsa could split from Cosatu is rooted in the fact that there is no template for the consequences of the factional driven axing of such a senior, respected and popular alliance leader such as is Vavi.

Up until now it was always a good bet that while ‘left’ and other ‘militant’ factions of the Alliance might fight against various positions and policies with which they disagree, the benefits of being within the Alliance always outweighed the loss of access to the policy-making/leadership-election processes that would go along with being outside the Alliance.  However, Vavi represents, more than any other single individual, the ‘left’ critique of ANC/government corruption (particularly allegations around Jacob Zuma’s Nkandla residence) and of government economic policy (particularly the National Development Plan) and it is distinctly possible that ‘left’ factions of Cosatu could conclude that the space for them to operate within the alliance would be closed down if Vavi is forced out.

Marikana – ANC and Num refuse to participate in commemorations

The African National Congress, the SACP and the National Union of Mineworkers boycotted the first anniversary commemoration of the Marikana killings, saying the event was “hijacked” (Num), that Amcu was  “a vigilante grouping” (SACP, quoted in Business Day 16.08.13) and that the “commemoration is organised by an illegitimate team called ‘Marikana support group’” (ANC, quoted in Business Day 16.08.13).

Thousands gathered on Friday at the hillside in Marikana where 34 mineworkers were shot a year earlier. During the commemoration, Lonmin CEO Ben Magara “apologised for last year’s deaths, the first and only company or government official to do so” – Business Day 19.08.13.  Ben Magara said at the commemoration: “I heard about your request to employ a relative of each of the deceased. I heard about the request for R12,500. I am here today to say: let us sit down and talk”. Joseph Mathunjwa, president of Amcu said this apology “was overwhelming” … he is the only person who came and gave an apology and he was not (at the time of the massacre) even part of the management … not even government has done that …his gestures show that he is a man who is willing to engage” – Business Day 19.08.13.

During the commemoration Dali Mpofu, legal representative of injured and arrested miners at the Farlam Commission, acted as the master of ceremonies, Julius Malema was among the speakers and Agang SA leader, Dr Mamphela Ramphele, “deposed” PAC leader Letlapa Mphahlele, NFP leader Zanele kaMagwaza-Msibi, IFP president Mangosuthu Buthelezi, Cope leader Mosiuoa Lekota, African People’s Convention leader Themba Godi, EFF leaders Kenny Kunene and Floyd Shivambu and UDM leader Bantu Holomisa also attended (City Press).

So what?

The complete retreat of the ANC and its allies (the SACP and Cosatu) in Marikana represents a highly significant loss of political terrain. The commemoration gathering was widely accepted and legitimate, Lonmin was represented as was a broad cross-section of the Nkaneng community as well as church, political and worker organisations. The fact that this was a ‘no-go area’ for the ANC and its allies is, in my opinion, the most significant evidence of loss of ANC hegemony since the 1994 election. The political loss for the ANC is reproduced throughout the platinum sector and tracks the relative gain of Amcu and the losses of Num. The opposition political parties are hovering around the platinum sector hoping to pick up the votes the ANC loses … but it is not yet evident which parties, if any, will benefit from the ANC’s apparent loss of support and legitimacy amongst platinum mineworkers. However, the existence of ‘no-go areas’ in national election campaigns is a recipe for violence.

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

Zimbabwe – grin and bear it

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

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

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

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

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

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

To repeat comments I made on Friday:

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

Arms probe in tatters

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

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

Zwelinzima Vavi

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

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

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

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

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

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

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

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

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

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


Amcu and the gold negotiations – some tentative speculation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Herewith my latest news update as of 06h30 this morning.

  • NDP – defections to the left and right
  • Collusion scandal in the construction industry gathers momentum
  • Tax Review Committee – some welcome caution
  • Proposed legislative changes in the mining industry shows SA government’s deep ambivalence towards the sector
  • Ramaphosa – rumours that Zuma faction is planning his side-lining
  • Zimbabwe election chaos looms
  • Zanu-PF funding Julius Malema? Good story, but impossible to prove
  • ICT takes its ‘R150-billion’  iron-ore claim to the Constitutional Court

National Development Plan – under attack from left and right

Trade union Solidarity has added its voice to growing (but varied) criticism of the National Development Plan (NDP), calling it “self-contradictory, heavily race-based, deeply interventionist … largely unworkable … downright intrusive and harmful and … likely to require substantial funding”. [1]

Solidarity joins John Kane-Berman (Chief Executive of the South African Institute of Race Relations) who recently said “half-baked solutions suggested by the National Development Plan would do little to address the multiple challenges facing South Africa” and, further, that the plan “is a hotch-potch of contradictory ideas that have not been properly costed and are bound to fail” – Business Day 03/07/13.  Kane-Berman added that the lack of future scenarios for tax revenues, budget deficits or the public debt means that an endorsement of the NDP amounts to giving the government “a blank cheque for more taxation and more borrowing and probably for both” – ibid.

The NDP was adopted by the ANC at its Mangaung conference In December 2012 and has since been repeatedly endorsed as the cornerstone of the government’s medium and long-term planning by Jacob Zuma and members of his cabinet.

Since then the policy has been welcomed by organised business (for being generally market friendly) but strongly criticised by Cosatu for prioritising growth over inequality, employment over ‘quality work’ and for its reliance on markets and the private sector.

So what?

Jacob Zuma’s government has used the NDP to lend an appearance of coherence and co-ordination to policies as diverse as infrastructure development, labour market reform, tax policy, mining regulatory shifts and anti-corruption campaigns. Our own view is (unusually) closer to that articulated in a recent position paper by the South African Communist Party which said that the NDP is “a broad vision open to necessary criticism and engagement. It is NOT really a PLAN, still less a fit-for-implementation plan.”

Government should not be judged on its broad statements of intent – which is essentially what the NDP is. Government should be judged by what it actually does (or fails to do), what legislation it brings to parliament, what structural reforms it affects, the degree to which it improves the public service, how it manages the public purse … and by a host of other performance indicators.

The collusion scandal in the construction sector

Murray and Roberts CEO Henry Lass’s public apology for the company’s involvement in the widespread collusion scandal made the main headline on the front page of the Business Times yesterday. “I know that the Competition Commission’s findings of collusion in the construction sector has angered and disappointed you, just as it has our board, executives, employees, shareholders and other stakeholders,” Lass bemoans. He then goes on to explain that much of the wrongdoing took place in the dim and distant past. “None of the current executives at Murray & Roberts were found to be at fault for any form of collusive conduct through the Fast Track Settlement”.

So what?

It appears that public outrage at the scandal is growing. The lead editorial in the Sunday Times is particularly scathing. Headed: “Jail the price-fixers in the construction sector”, the editorial argues “when the private sector is caught out cheating and inflating costs for everyone who pays tax, we should judge them by the same standards we apply to the likes of Bheki Cele, Dina Pule or Menzi Simelane. Apologists argue that construction companies did this to make the deadline for the World Cup — but it’s a poor argument. It wasn’t just the soccer stadiums that South Africa’s iconic blue-chip companies with suitably self-righteous corporate governance manifests, such as Aveng, Group 5, WBHO and Murray & Roberts, colluded on. There were many others, including the Coega harbour nearly a decade ago, the Nelson Mandela bridge and any number of other construction projects.”

Expect civil claims from various angry customers (including metropolitan governments) … and it is not inconceivable that criminal prosecutions of some executives who didn’t “come clean” in the Competition authority process could still be on the cards.


Tax Commission – some welcome caution

Pravin Gordhan has named members of the long promised Tax Review Committee charged with inquiring ‘into the role of the tax system in the promotion of inclusive economic growth, employment creation, development and fiscal sustainability’. Judge Dennis Davis will chair the committee. Other members are Annet Wanyana Oguttu, prof Matthew Lester, prof Ingrid Woolard, Nara Monkam, Tania Ajam, prof Nirupa Padia, and Vuyo Jack – with Cecil Morden, an official from National Treasury and Kosie Louw, an official from the South African Revenue Service as ex-officio members who will provide technical support and advice.)

So what?

It’s an adequate committee staffed and led by people respected across society and (mostly) with the necessary technical expertise. After the ANC adopted policies at its Mangaung national conference in December last year that specifically called for increased taxes in mining (the State Involvement in the Mining Sector document) it is a minor relief that the Treasury has qualified the terms of reference by specifying (amongst other limitations) that the any changes to the mining tax regime must take account of “the challenges facing the mining sector, including low commodity prices, rising costs, falling outputs and declining margins, as well as to its current contribution to tax revenues.”


Mining industry legislative changes show ANC ambivalence about the resources sector

The Mail & Guardian published an interesting piece raising important concerns about proposed changes to legislation contained in the Mineral and Petroleum Resources Development Amendment Bill that was tabled in parliament on June 21. According to the author of the article (Peter Leon a partner and head of the ‘mining sector group’ at Johannesburg law firm Webber Wentzel) the bill “perpetuates and, in some respects, exacerbates” excessive administrative discretion in the issuing of mining licences.

In the article, Leon says that the proposed legislation “inexplicably deletes all the Act’s statutorily prescribed timelines and leaves this to ministerial regulation … second, it introduces an export licensing system for ‘designated minerals’, which are vaguely defined as: ‘Such minerals as the minister may designate for beneficiation purposes as and when the need arises in the [Government] Gazette.’ All ‘designated’ minerals will require the written consent of the minerals minister prior to their export.”

Leon points out that under the proposed legislative changes “the minister becomes the pricing tsar for ‘designated’ minerals” and “the department will effectively control all exports of such minerals”.

So what?

Many of the proposed legislative changes Peter Leon discusses in this article are precisely those that were originally contained in the State Involvement in the Mineral Sector document adopted as policy by the African National Congress at it December 2012 National Conference. So, despite various attempts to mollify investors after a torrid 2012 (through, for example, Kgalema Motlanthe’s framework agreement for a sustainable mining and the ‘sensitive’ tax commission terms of reference discussed above) the ANC and its government is still following its contradictory impulses with regards to the resources sector. Expect confusion and contradictory signals to continue to undermine sentiment in the sector.


“Fierce ANC Ramaphosa succession battle brews” – Sunday Independent

The Sunday Independent quotes several unnamed sources claiming that there is a campaign in the ANC to prevent the party’s deputy president, Cyril Ramaphosa, from becoming the country’s deputy president after the national election next year. The weekly newspaper claims the fight is “pitting President Jacob Zuma and Ramaphosa’s supporters against each other.” The story suggests that either ANC chairwoman Baleka Mbete or Public Services Minister Lindiwe Sisulu are likely to replace Kgalema Motlanthe in 2014.

So what?

This story is based on the idea that the long term imperative of Jacob Zuma and his lieutenants  is to control the succession in 2017 (in the ANC National Conference which will elect the next ANC president ) and in 2019 (in the national election which will elect the next country president). Why? Because an independently minded candidate (which, in this narrative, Cyril Ramaphosa is imagined to be) might fail to protect Zuma from the consequences of the corruption allegations that still hang over his head. A careful reading of this and similar stories indicates that the “unnamed sources” in favour of ensuring that Ramaphosa becomes deputy president next year are from Gauteng and the “unnamed sourced” plotting against him are from Kwazulu-Natal. Such stories in the popular press are inevitably based on factional leaks out of sections of the party pursuing some or other agenda of their own. This doesn’t mean there isn’t a plot against Cyril Ramaphosa, it just means we need a healthy sense of scepticism about these kind of leaks into the media.


Zimbabwe election chaos looms

Zimbabwe is due to host national elections on July 31 – having endured a chaotic ‘special vote’ on July 14 and 15 for approximately 80 000 uniformed personal.

SO what?

The Mail & Guardian put it well:  “every indication is of a poll that will be not only shambolic but also intrinsically unfair. The outcome of the past two elections in Zimbabwe were fiercely disputed and it would be tragic if the result once again left the country in limbo. Equally unacceptable would be a façade of legitimacy over another stolen election.”

(Tony Hawkins, “professor at the University of Zimbabwe’s Clinical Research Centre” gives a useful analysis of the “dismal economic past and the failed policies of President Robert Mugabe and his Zanu-PF party” on the leader page of the Sunday Times. After his analysis – which I recommend here  – Hawkins says “given these statistics and Zimbabwe’s ranking near the top of the list of failed states, it is difficult to understand why South Africa’s chattering classes are so convinced Mugabe will win again next week. His track record of economic failure is unparalleled in any developing country that has not experienced civil war or military adventurism.” While this ‘member of the South African chattering classes’ has no real idea whether Mugabe will win –by hook or by crook – next week’s election, I have to agree with both the Mail and Guardian and Professor Hawkins that it is a foregone conclusion that it will be ‘shambolic’ and ‘intrinsically unfair’.)


Bits and pieces

  • Facebook profile, Baba Jukwa, purporting to be a kind of ‘deep throat’ in Zanu-PF has claimed (according to  City Press) that Julius Malema’s Economic Freedom Fighters are funded by key members of Robert Mugabe’s cabinet. “This is ostensibly in revenge against President Jacob Zuma and his international relations adviser, Lindiwe Zulu, who have been heading the Southern African Development Community mediation process in Zimbabwe following the violent 2008 polls” – City Press 21/07/13.
  • Business Times said “rumours are swirling that Cell C has been trying to put together a landmark, cross-sector deal to partner with First National bank (FNB)”.  The story repeats speculation that “(e)ssentially, this would see FNB start its own cellphone business using Cell C’s network as its backbone” with the intention of rolling out integrated cellphone banking to the customer base of both companies  – Business Times.
  •   Imperial Crown Trading and Mineral Resources Minister Susan Shabangu have filed papers at the Constitutional Court, asking it to set aside Pretoria High Court and Supreme Court of Appeal judgments giving Kumba Iron Ore subsidiary Sishen Iron Ore Company (SIOC) full rights to one of the largest iron ore mines in the world. ICT is co-owned by Deputy President Kgalema Motlanthe’s long-time partner, Gugu Mtshali. “At stake for ICT is a 21.4 percent share of the mining right, which is conservatively expected to produce a net profit of R150bn over the next 30 years for its owner” – Sunday Independent.
  • Pali Lehohla, Statistician General and head of StatsSA used some unusual language to describe his feeling about his now retired deputy director general Jairo Arrow as well as now fired chief of Methodology, Evaluation and Standards, Marlize Pistorius – who together identified an 18.1% undercount in Census 2011. Aside from expressing his temptation to “physically manhandle” Arrow, Lehohla also said “we will rid this organisation of those kinds of plotters … you have to act with integrity and flesh, flesh, no blood, no drop of blood must come from the neck … It must be a sword that cuts clean. That’s how we deal with people like these … when you attack you must attack as aggressively to eliminate it completely” (Sunday Independent). Is this what happens when statisticians become generals

[1] Solidarity is a (largely white) South African trade union that mostly organises skilled and semi-professional workers. The criticism of the NDP appear in Solidarity’s latest Labour Market Journal (that can be accessed here.)

Imagine you are the producer of a major and successful television soap-opera.

Gradually, for reasons that are not immediately apparent, market research begins to indicate your share of the prime-time television audience is diminishing – and, further, that the declines are accelerating.

I suspect what you do is try to work out whether the viewers are being tempted away by a better soap, whether the quality of your show is slipping and/or whether your product is losing its appeal because the ‘demographic’ that follows your production is shrinking … or some combination of those.

Perhaps you try to adapt your trashy product to follow the shifting demographic; change the time-slot, perhaps kill off the older actors … have the Elizabethan extended family that has been the central theme be infiltrated by shape-shifting aliens who teleport the stately manor out of the English countryside and into a future post-apocalyptic New York … change the name to Downtown Abyss? Ok, maybe not.

Or you do a serious quality overhaul of your existing production, get better writers and introduce more popular and skilled actors, win back the defecting viewers … stick to your knitting, trust the product … and all those other management-speak exhortations.

I think the ANC is facing a crisis similar to that faced by the producers of this imaginary soap-opera. I suspect that the ANC, Agang and the DA do market research that is indicating and projecting significant voter swings away from the ANC . But I have nothing firmly in my hands other than rumours, leaks and hints.

So forgive me if I float an untested (and untestable at this time) hypothesis; one we are all going to hear bruted about soon: that it is ‘true’ that on current trends the ANC will get less than 59 percent of the vote next year but more than 52 percent, and further, that the ANC will receive less than 50 percent of the vote in 2019 (thumbsuck alerts all round).

The assumption is untestable (by me) because I don’t have the bespoke polling data and (by anybody else, in my opinion) because such data do not take adequately into account the myriad subjective and objective factors that might  impact on the trend.

But among the reasons I take seriously the possibility that this is, in fact, the trend is, for example, the rapid growth of Amcu and the concomitant shrinking of  Num. Another is this public domain ranking of Zuma’s approval rating amongst urban Africans by TNS Research published in the Sunday Times on 12/03/13:




































































Don’t know

















Net positives


















… and updated by TNS this Monday (1/7/13) indicating a slight improvement in favour of Zuma (read from the top: 42, 50, 9 and -8). The point is there is a significant drop in Zuma’s approval ratings and concomitant rise in his disapproval ratings from February last year. It is reasonable to consider the possibility that this applies to the ANC (although, again, and at the risk of being pedantic, there is no established corollary between Zuma’s ratings and the ANC’s … but as a personal aside, I would imagine he must represent a specific liability.)

When I think of Mandela’s ill health and what I see as signs of how destabilising for the ANC his passing be may be (although the opposite could also be true), when I consider the anti-Zuma noises coming from Winnie Mandela and the frisson of mischievous excitement around Julius Malema’s proposed Economic Freedom Fighters … and when I put a whole mess of hints, trends, rumours and suppositions together with other metaphorical canaries that I use and which are dying around me like flies, I feel confident, for the first time since 1994, to at least consider how things might be when and if the ANC is clinging to an electoral majority, or perhaps even losing one.

As I begun to consider this (and helped along by a good and irritatingly insistent friend) I discovered that I still, subconsciously, conduct my professional duties under the burden of a normative (as in relating to an ‘ideal standard or model’)  assumption that has remained unchanged and largely unexamined since about 1994.

This normative assumption goes, roughly, something like this:

South African society is shaped by irresolvable contradictions. Most obviously between the poor, largely African, majority and the propertied white minority. Only an African National Congress, held comfortably in power by the trust and momentum established by its role and identity as leader of the liberation struggle, and by its clearly ‘African-led’ character, could possibly negotiate the perilous path between the imperative to deliver radical redress to the African majority and the absolute requirements to operate within the disciplines of global capital markets and to keep whites engaged and invested.

There are so many assumptions – and slippery phrases – in that statement, that I am not sure where to begin.

But briefly (in as far as that is possible):

Firstly I am implicitly using a (somewhat antiquated) theoretical model of society that is based on the idea that the competition between  groups with closely aligned economic interests acts as some kind of driver that interacts with and shapes other features of society, including the state and formal party political contests. This is a (hopefully sophisticated) version of the base/superstructure model of Marxist theory. As a rough, working model, I will continue to employ this system in political analysis – even if it is purely as a way of organising my thoughts. It is an elaboration of the injunction to follow the money which I consistently find the most useful hand-axe in the tool kit I use to help me work out, to my own satisfaction if no-one else’s, what the hell is going on.

Secondly, I am weighting the racial divide, its historical features, its ideological characteristics, the materiality of its ongoing consequences – including the radical disparity in wealth and income – more heavily than any other feature of South African society. ‘Politics’ occurs around such contradictions and our politics remains overdetermined by this structural feature. I think this remains true – but less true than it was 18 years ago. Primarily because class development, including the development of a black wealthy/property-owning class, a black middle-class and a sophisticated and slightly wealthier working class (driven by the changing character and function of labour processes and the relative growth of the services sector) dilutes the central contradiction and adds competing fissures.

Thirdly, I continue to assume it is imperative to keep whites “on board”… and that we have to keep within the discipline of global capital markets. I am also assuming (or perhaps estimating that on balance) the ANC still sees these as fundamental constraints. Those are brave (wild?) assumptions, I know, but I do not have all night. So moving swiftly along …

Finally, the aspect of my normative assumption about which I am most uncertain is the central one. Who says the ANC cannot fall below 50 percent, that an alliance of opposition parties will not get above 50 percent? And that if both those bridges are crossed we are into the game mode where  “(o)nly (the) African National Congress  … could possibly negotiate the perilous path”. Which means?

I  appear to be saying that in the event that those barriers are crossed we will fail to negotiate that path.

That we collapse in a heap? That the ANC morphs into Zanu-PF – but with even scarier tribalist and repressive features – to recapture the political initiative? That the ANC embarks on an ever more expansive looting of private and public assets to feed a patronage system that comes to replace all other mechanism that establish stability, but a system that is absolutely limited by the availability of such lootable assets? Or perhaps that our future will look something like what (might be) happening in Cairo tonight? … I will get to that as soon as I hit “publish”.

If a democratic election goes against the ANC why am I so uncertain that the party or party’s that the same election goes in favour of will be unable to govern?

I suspect I actually believe that without the ANC in a comfortable majority that things fall apart, that the centre cannot hold, that

Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed*

Thus, this is little more that my personal failure to imagine a future significantly different from the present, yes?

It appears that I am constrained by my own habits of thought and prejudices. Now there’s a big surprise.

So, back to the soap opera.

If the ANC is slipping in the ratings, it can chase the shifting demographic by attempting to spread its skirts ever more widely – although I think it is already beyond the limits of the possible with that indecorous exercise.

… or it can do the political equivalent of the narrative device of having space aliens infiltrate the family (hmm, that might have happened already – ed).  I am not sure what a radical discontinuity in the ANC’s brand might look like – I think it could go one of two general directions, but I would imagine that the ANC strategists defining ‘the message’ for the upcoming elections must envy the clean simplicity of the Economic Freedom Fighters emerging platform.

… or the ANC could improve its character and performance by sticking to its knitting: cleaning up its leadership and improving its governance performance and winning back the trust of its purportedly defecting support. My impression is the ANC is going in precisely the opposite direction, but who’s to say they wont turn it around in response to a mild shock in 2014?

I  do not hold to the popular notion that “anything is possible”, but I am prepared to accept that a lot more things will come to pass than I have been able to imagine.

* As always, the best poetic accompaniment to fretting about the future of our politics is William Butler YeatsThe Second Coming … catch the incomparable poem here.

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

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

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