Recent events in South Africa have sent some conflicting signals to investors about sovereign risks. On the one hand there was some regulatory flip-flopping over the Vodacom listing given objections from the union organisation COSATU, which raised questions about the influence of unions in Jacob Zuma’s administration. On the other hand the sovereign issuing some $1.5 billion was highly successful and oversubscribed.

With Zuma recently elected on a platform of change for his domestic audience and continuation of old policies when speaking to investors, there is a raft of new ministers and new ministries and quite a bit of policy uncertainty. No foreign investor will deny South Africa’s need to address serious social problems of inequality, housing, jobs and education through a more developmental state agenda.

However investors I speak to simply want to see that this is not at the expense of the productive sectors of the economy. This agenda will naturally involve the ANC’s allies: COSATU and SACP (communist party).  As such, the process of governing will be a noisy affair for investors. I put the Vodacom incident down to such noise.

However I believe the new Zuma administration will find itself heavily constrained by the need to raise funds for its agenda and so keep investors onside as the government’s borrowing requirement balloons. Add state owned enterprises engaging in very necessary investment, and a current account deficit and you arrive at a funding requirement north of  500 billion rand for the next two years.

This will act as a strong rationalising influence though a backup overdraft in the form of an IMF flexible credit lending facility would be a benefit.  It also should not be forgotten that there is still a strong business influence in the cabinet and the ANC from the likes of Cyril Ramaphosa and Tokyo Sexwale.  Most investors buy the case of policy not shifting sharply to the left, though a lot of questions have been planted in the minds of investors.

Keeping the different factions in his cabinet in line will be key for Zuma’s success, especially with two new hurdles looming: the Bharti/MTN and the Xstrata/Anglo American mergers. Both are sensitive and likely to be jumped on by unions.  The inflation-targeting debate is also being reopened locally — a topic foreign investors love to discuss.

It is now up to Zuma and his team to deliver on prudent macro-policy as well as his developmental state priorities in order to sustain the current goodwill from investors.  It is still early days for his administration. We hope not to be disappointed — for South Africa’s sake as much as anyone elses.

Peter Attard Montalto is emerging market economist at Nomura International.

South African opposition leader Helen Zille has not endeared herself to the majority of voters who recently handed the ruling African National Congress a landslide victory in the national polls.

Zille came under fire from her political enemies for her appointment of a predominantly white and almost completely male cabinet in the Western Cape, the province where her DA party took power from the ANC.

She retaliated by attacking President Jacob Zuma, calling him a “self-confessed womaniser with deeply sexist views, who put all his wives at risk by having unprotected sex with an HIV-positive woman”.

That referred to Zuma’s acknowledgement that he had such contact during a trial on rape charges of which he was acquitted. The row has ended any suggestion that after Zuma’s election, there might be a period of better relations between the government and opposition.

ANC Secretary General Gwede Mantashe , said Zille has “elevated herself from being the leader of the official opposition to being the enemy”.

Quite apart from the name-calling, the row also looks as though it could distract attention from the opposition’s own efforts to present itself as an alternative to the ANC.

It is not the first time that South Africa’s opposition has found itself caught in a war of words with the ANC rather than showing what it will do differently.

Zille’s opponents say she is still to answer the question over the gender and racial balance in her Western Cape cabinet. Does that matter? What will it mean for her chances of winning over voters from the black African majority, who so clearly backed the ANC in the election? What will it mean for South Africa’s prospects if the government and main opposition are so quickly at each other’s throats?

Thousands of South Africans danced, cheered and sang hymns to celebrate President Jacob Zuma’s swearing in. Zuma, they said, as a man of the people, would give them houses and electricity, fight AIDS and crime, and ensure prosperity even as South Africa is on the brink of its first recession in 17 years.

But appointments to key ministries have raised questions over how well the new government will function.

Economic policy is seen intact after largely expected changes at finance-related ministries, but appointments to some other key sectors, including mining, energy and telecommunications left more doubts.

Siphiwe Nyanda, the newly appointed minister of communications, has been a military man, yet outside the African National Congress (ANC) and defence he is something of a mystery. He now takes over communications, a crucial ministry with oversight of Telkom, Africa’s biggest telecoms firm.

Dipuo Peters qualified in social work, but has been chosen to lead the energy ministry and help tackle the country’s power shortages that have led to a five-day shutdown of South Africa’s mining industry and crippled the country’s investor-friendly image.

“It appears this is South Africa’s tradition to appoint a minister who has no technical qualifications whatsoever,” said independent analyst Andrew Kenny.

Barbara Hogan, who has led the health ministry for the past six months, has been moved to oversee the public enterprise department, also in charge of sorting out structural problems at state-owned utility Eskom, which now supplies some 95 percent of the country’s power.

Analysts welcomed the split of the energy and mining ministry into two entities, saying it would allow for better focus on the challenges at hand, especially in view of the economic slowdown. They say that while political motives could have motivated individual appointments, the eventual success of each entity will depend on the ministers’ leadership skills and ability to appoint the right people around them.

Zuma appointed Susan Shabangu, who has only held deputy ministerial positions before, as mining minister in the world’s top source of platinum and No. 3 gold producer. She came to prominence as deputy security minister last year when she advised police dealing with criminals: “You must kill the bastards if they threaten you or the community. You must not worry about the regulations.”

Some say it is too soon to speculate on how the ministers will do. The ministers need to be given the benefit of the doubt for now, they say. The first 100 days in office may indicate whether or not they will push for change and deliver on the promises made. What do you expect?

If Nigerian banks appear to have suffered disproportionately in the global financial crisis, maybe they have Heathrow Terminal 5 to blame.

Nigerian banks were advertising their services on billboards in Terminal 5 last year, and travelling investors felt it showed the banks were rashly trying to keep up with international investment banks in aiming for a global profile, causing many to sell, a banker specialising in Africa told journalists this morning over breakfast.

"Those adverts were a sign to sell Nigerian banks," Luca del Conte, executive director in treasury and capital markets at Medicapital Bank said.

"We have about 100 institutional investors, and of 50 funds that we speak to actively, more than half mentioned this.  Once capital markets started shaking, funds did not ask any more questions, they just sold."

Medicapital says the banking sector represents over 60 percent of market capitalisation on the Nigerian Stock Exchange, but daily volumes on the exchange have dwindled to $10-15 million a day, suffering also from a fall in the oil price, compared with $100 million a year ago.

William Gumede

South Africa’s national elections last week have reshaped the contours of the country’s political landscape. It has almost certainly killed off the careers of many opposition leaders who have become institutions and their parties with them. It virtually obliterated the peer parties of the ANC, with their roots as liberation movements, such as the Pan Africanist Congress of Azania (PAC) and the Azanian Peoples’ Organisation (Azapo). It is clear the electorate believes these parties are irrelevant, outdated and under poor leadership. The Inkatha Freedom Party, whose founder, Mangosuthu Buthelezi also professed that it has its origins in liberation movement politics has also been brought down to size.

 The IFP has dominated the KwaZulu Natal province since the 1960s, but embarrassingly lost out to the ANC now. ANC President Jacob Zuma’s overt appeal to Zulu speakers in the province who have supported the IFP in the past, by arguing that is better to support him (Zuma) for the presidency, and have a Zulu-speaker in the presidency, has evidently worked. Many IFP supporters have voted for Zuma merely on the basis of ethnic affinity, rather than his record in government.

 But this strategy also run the risks of increasing ethnic divisions, with some Zuma supporters already whispering for the ‘Xhosa-Nostra’ to be purged from government. This is a reference to individuals who were allies of former President Thabo Mbeki, are Xhosa speakers or who are from the Eastern Cape province from where Mbeki and former President Nelson Mandela hail.

(more…)

 
Dr Sehlare Makgetlaneng is the coordinator of the Africa Institute of South Africa’s South African 2009 Election Observation and Monitoring Team. He writes in his personal capacity.

The Zuma administration’s foreign policy will be determined to a great extent by the struggle to satisfy national needs and demands.  These can best be understood if we take into account not only the country’s  increasing level of corruption and violent crime, but also high  level of  expectations  from the urban and rural unemployed, the poor and the working class expecting the qualitative improvement in their material conditions.
     
The Zuma administration will commit itself in practice to the value of continuity in South Africa’s foreign policy. Central to this tradition will be popular foreign policy objectives pursued by South Africa since the end of apartheid.
     
They include support for peaceful resolution of conflict on the African continent and beyond, support for the regional and continental organisations and integration as well as multilateralism. It will continue with the country’s practical and theoretical call for continental socio-political and economic renaissance or transformation.
     
South Africa under the leadership of Thabo Mbeki used the African Renaissance to contribute towards the resolution of conflicts in African countries conducive for the operations of its capital and the realisation of the objectives of its socio-economic policy objectives.
     
It regarded its active participation in conflict resolution as key to peace, security and stability in Africa. It viewed continental socio-economic transformation or renaissance as the process to be achieved through peace and stability creation and consolidation, actions against corruption and implementation of socio-economic policies conducive for the operations of foreign investment.
     
The Mbeki administration was reluctant to lead Africa in international relations. It called for a further integration of Africa into the global capitalist system and African solidarity and unity to fight what Mbeki refers to as global apartheid and to contribute towards an equitable world.
     
These two central aspects of South Africa’s foreign policy, focusing firstly on Africa and secondly on developed countries, raised high level of expectations within Africa and the rest of the world and placed its policy on grounds vulnerable to criticism from individuals with different positions and interests in its efforts to serve as a leader of Africa in its transformation and its relations with the rest of the world particularly developed countries.
     
These problems are a dilemma it faced in its attempts to serve as the representative of Africa to the developed countries and the representative of developed countries in Africa. This policy helped to explain why South Africa under Mbeki was unable to substantiate its declared theoretical position on African Renaissance in practice. It impelled it not to antagonise developed countries in its African Renaissance project and to seek support from weak African countries.
     
Under Mbeki, South Africa put itself on the level that Africa expected more than it could deliver in resolving Africa’s problems.
     
It pretended that it could meet requirements of this expectation. It did not substantiate Mbeki’s progressive position that its role in the resolution of the African conflicts should be guided by the struggle to achieve African transformation in the interests of the masses of the people. South Africa remained central to the consolidation of dominance of Africa by developed countries.
     
The Zuma administration will be a substantial and welcome addition to the struggle against Africa’s problems.
     
It will use the country as the regional and continental power to criticise African leaders who are enemies of their people and strive for free, independent exercise of foreign policy.
     
There will be a shift in the direction towards South Africa realising its potential as a centre of independent development on the African continent.
     
It will be under enormous internal progressive pressure to ensure that the country constitutes a strategic continental threat to the internal and external interests inimical to the interests of the continent and its people.

The acknowledgement by Zimbabwe’s central bank governor that it raided the private bank accounts of companies and donors to fund President Robert Mugabe’s government during the economic crisis has increased speculation over his fate under the new national unity government.

Central Bank Governor Gideon Gono said the central bank took foreign currency from private accounts to help pay for some $2 billion in loans to state-owned companies and utilities and for power and grain imports. He said the government still had to repay about $1.2 billion, so the bank could repay the money it owes.

Heading the central bank at a time Zimbabwe was suffering economic collapse and hyperinflation that touched at least 231 million percent a year (according to official figures) was never going to be a badge of honour for the governor, but as he made clear in his statement, Zimbabwe’s problems went beyond economics.

“It was a political problem and not an economic one that drove us into the difficulties this nation experienced, and quasi-fiscal operations were a response to those political challenges we have now resolved through the inclusive government,” the statement said. “Our call is to let bygones be bygones and for everyone and every entity to start anew and open a new page.”

Gono has come under pressure from Prime Minister Morgan Tsvangirai’s Movement for Democratic Change (MDC) to resign since the former opposition party joined Mugabe in a unity government in February. Western diplomats have also said Gono’s departure could help bring a resumption of badly needed aid.

Are his days numbered now Tsvangirai and Mugabe seem to be working together more closely than many might have expected?

Professor Thandwa Mthembu is Vice-Chancellor and Principal of the  Central University of Technology, Free State. He writes in his personal capacity.

Based on current information on Jacob Zuma’s beliefs, ideas and practices, what are the prospects for his soon-to-be installed administration in South Africa?
My overall thesis is that Zuma is no less enigmatic than former President Thabo Mbeki, his old rival.

But Zuma is more eclectic in thinking and approach. Books have been written about Mbeki’s enigmatic character. But, one thing certain in the socio-economic governance and administration model he ushered in is that he exhibited neo-liberal and pro-capitalist inclinations that made him appear dogmatic and monolithic. This is evident in his macro-economic policy, Gear. It is also evident in his micro-economic policies. BEE policies, for example, were designed to create a new black middle class and “filthy rich” black people, too.

I believe Zuma is no less enigmatic; but is progressively eclectic. At the personal level, whilst he is incontrovertibly traditionalist, he mingles with the Church, modernists and the like, effortlessly.
Zuma has a deep sense of respect for elders, which is, ironically, an integral part of our moral values. Even though Archbishop Tutu has expressed resentment of Zuma as a person, the ANC leader has avoided any retaliation. That is a marked contrast to Mbeki’s response to Tutu’s criticisms of ANC practices in 2004 (not Mbeki himself) – the then president branded the Nobel peace laureate a self-serving ignoramus, a liar and a populist.

Zuma appears to be at peace with his capabilities or lack thereof. He exhibits no mistaken belief that there is no South African who knows better than he does. He is, therefore, unlikely to assemble teams of Harvard professors to solve South Africa’s problems. He has already shown his preference for local talent and will draw on many local experts to solve South Africa’s problems.
On many occasions, Zuma has made it clear Mbeki-led macro-economic policies, including those of the Reserve Bank, will not change, despite protests from his comrades. Further, he has effectively called for a re-alignment of our affirmative action policies, promising Afrikaners that they could be recalled into government positions that require skills that are acutely lacking. Again, this attests to his belief in the worth of alternative ideas and sections of our society. But, despite this reality, the coalition of the media and opposition parties has not stopped to pronounce his indebtedness to his leftist friends.

Worrying our human rights activists, he has made it clear that the laissez faire approach to criminals is up for review. Intriguingly, his rather conservative views on this matter resonate with those of many sections of our society, some liberals included.

We should, therefore, expect the Zuma administration to be more eclectic, pragmatic and open to varied ideas and approaches. In the process, we should witness different and less dogmatic approaches to solving our problems. More sections of our society should feel they matter and that government is accountable.

William Gumede is the author of “The Democracy Gap: Africa’s Wasted Years” and ”Thabo Mbeki and the Battle for the Soul of the ANC”.

South Africa votes on 22 April with not only its globally admired efforts to build democracy in tatters, but against the backdrop of many other promising attempts to build viable democracies across Africa now backsliding.

Military coups, such as the recent one in Madasgascar, assumed to be part of Africa’s terrible past, appear now to again have become a regular occurrence. The election earlier this year of Muammar Gadaffi - who himself came to power by military coup in Libya - as leader of the African Union, by his peers, is symbolic of the continental regression.

When South Africa became democratic in 1994 with Nelson Mandela at the head, it was hoped that the new democracy at the southern tip of Africa would provide a powerful home-grown impetus for expanding democracy across the continent.

And it initially looked promising, with Mandela’s exemplary moral leadership; and his successor Thabo Mbeki’s initial efforts to champion an African economic, social and democratic ‘renaissance’.

However, soon the African curse struck: Mbeki’s moving rhetoric did not match actual day-to-day practice. While preaching democracy, Mbeki clamped down on internal dissent, packed public watchdogs with uncritical loyalists, and looked the other way when allies were shown to be corrupt or incompetent.

It is inconceivable that the ruling African National Congress, with Jacob Zuma at the helm, will not win South Africa’s national elections. Formidable charges of corruption were dropped against Zuma after the acting head of the national prosecuting authority emphasised that the case against the incoming president was solid, but that possible political interference in the timing of whether to press charges against Zuma made the authority reluctant to press ahead.

Most African independence and liberation movements have failed on three levels in government: leadership, building viable democracies and prudently managing their economies.

Some leaders come to power by violent means and rule through violence. Some start off proclaiming themselves democrats, but once in power turn into autocrats. Some leaders prefer to die in office, as the case of Robert Mugabe in Zimbabwe.

Lack of democracy and the lack of viable alternatives – either because they are brutally silenced or just irrelevant – are among the reasons why oppressive regimes are ousted in coups.

Yet in the still rare cases where opposition parties remove oppressive ruling parties through the ballot box, they often behave no better in power themselves.

Democracy is invariably seen by most of the continent’s leaders and ruling parties in the most minimalistic way – and meaning only holding the occasional election.

Another problem is that very few post-independence African ruling governments have managed to spread wealth evenly. Invariably the benefits go to the old colonial elite and the new post-colonial ones made up of prominent struggle figures and the liberation or independence ‘aristocracies’. The overwhelming majority remain as poor as before.

It is not that there are no quality leaders in ruling African political movements, it is that the patronage system of these movements is so entrenched that serious new contenders outside these networks cannot break through.

Ruling political movements are often the problem themselves: parties run tyrannically are unlikely to be able to build democratic societies. What makes successful independence or liberation movements, trying to overthrow corrupt colonial administrations, often make for poor governments.

Furthermore, liberation and independence movements often mimic the autocratic governments they fight.

Open elections for the top leadership are discouraged, leadership centralised and opposition is often discouraged.

Doctrinaire positions on economics, whether inspired by the West, the East or romantic notions of past African management styles, makes for woolly economics once in power.

African voters often vote for parties and leaders based on their past struggle record, rather than on actual performance in government. Yet, it is their performance in government that will make a difference in ordinary voters’ lives.

Most African leaders, even the out-and-out dictators, claim to be ruling on behalf of the people. Yet, they experience daily life in a way that is outrageously different to that of the average poor supporter: when ordinary South Africans are besieged by crime, Jacob Zuma spends more in a month on personal security than many might earn in years.

South Africa goes into the election with a number of parties, but in Africa, it is not only whether there is an opposition party that is crucial, but the kind of opposition party.

Sadly, in most African countries opposition parties are hardly relevant.

In South Africa, enthusiasm for the Congress of the People, a splinter from the ANC, has abated, following poor policies, the undemocratic election of its leaders and poor visibility.

The global financial crisis is likely to make daily life even more difficult for ordinary people not only in South Africa, but across Africa.

Such worsening conditions may prove the catalyst for restless long-suffering ordinary Africans to rebel against failing governments.

However, it may also provide unscrupulous, but failing leaders, the excuse to reverse democratic reforms, blaming scapegoats for their own inadequacies, bowing under the pressure from their allies to extend corrupt patronage, or to embark on irresponsible economic populist measures, to bolster their own power.

Most African parties and leaders often still mostly blame outside and internal forces for failures, which block the necessary self-examination.

Yet, unless there is thorough introspection by African political movements themselves, to learn from past failures, viable democracy will remain a distant dream for the continent’s long-suffering ordinary citizens.

Manoah Esipisu is deputy spokesperson at the Commonwealth Secretariat. He is co-author of “Eyes of Democracy: Media in Elections”. He writes in his personal capacity.

Next week South Africa will hold its fourth elections since the extinction of apartheid and the rise to power of freedom icon Nelson Mandela. The election will come four months after the cliff-hanger 2008 election in Ghana, and ahead of potentially critical elections in Angola, Malawi and Mozambique.

Elections do not have a very good reputation in Africa, and, in my view, there are seven reasons why.

Lack of political will

So profound and fundamental is this problem that if it is not addressed it can render all the others irrelevant. A botched election is as a result of a deliberate political decision by somebody to subvert the electoral process in their interest. For example, the (now defunct) Electoral Commission of Kenya (ECK) did not wake up one day and say “We think that we are going to change the results of this election. We think we are going to mess with the paperwork so no one will know what the result of this election was.” It is clear that there was a deliberate decision by a Mr X or a Mr Y to tell the Commission what to do or what not to do. And because of structural or other reasons beyond my immediate understanding, the Commission (as an institution and its leadership) was vulnerable to that kind of pressure.

The lack of political will partly stems from the winner-takes-all model associated with most democratic processes in Africa. There is so much at stake that no one wants to risk losing. No one wants to be on the outside.  There are really no profound ideological differences in the political parties. It is simply that people who are on the inside want to stay on and people who are on the outside want to get on the inside. Being on the inside means that you are in control. Ultimately it is all about money and power.

Abuse of incumbency

An incumbent will use all the resources at their disposal while in office to try and rig the electoral process or manipulate it to their benefit. This is a significant issue of perennial concern to Africans. It takes various shapes and forms. It could range from an incumbent using vehicles and staff from a government department to subverting money (as was the case in Zambia in 2001). It could also be as nasty as the manipulation of state media, the judiciary and the electoral commission. It is a serious problem.

Weak institutions

Many electoral commissions in Africa are weak and vulnerable. They are not properly independent .The way they are nominated and composed – usually by the executive and without a proper vetting process by parliament, leaves them open to abuse and manipulation. They often do not control their budgets and yet the way that budget is released or not released could impact their performance. Whether they are given adequate staff and whether resources are made available on time are critical to whether they can truly play their role as institutions responsible for democratic transition. The problems cited above could lead to a lack of confidence and a credibility crisis for an electoral commission. That’s why electoral commissions can falter and fail. Sometimes it is no fault of their own. They are designed to fail.

Two other institutions are worth mention. The lack of an independent and credible judiciary could be a death sentence to an election. Where does an aggrieved party or individual turn to if they are unhappy with the process? Conversely, when the judiciary stands up to be counted, it can have a very positive effect. If there is one significant positive that came out of the Nigerian election (April 2007), it was the role of the judiciary. In electoral-related cases filed in Nigerian courts, the judiciary came up with a number of decisions that went against the political will of the administration of Olusegun Obasanjo and is seen as a great positive to emerge from the process that was roundly criticised by domestic and international observers.

State media can also be designed to fail. In Malawi for example, the Malawi Broadcasting Corporation (MBC) was created as a government agency. The broadcaster’s leaders rightly say that unless parliament changes its mandate, they must serve the government in power. Ahead of elections next month, the MBC on average gives the ruling party more than 90 percent of coverage and the one percent to the opposition is all negative.

Weak political systems

Parties are often vehicles for individuals (which could be fine), but personality politics often provoke conflicts. Personal rivalries and fallings out are sometimes allowed to creep onto the national stage. Sadly, it is not about the name of the party or what it stands for, it all comes down to the name of the individual.

Poor voter registration processes

I often come across poor voter registration processes. On the one level it is a very technical issue. It can be down to a lack of civic education, it can be due to a lack of planning and money and resources. But even where there is cash in abundance, it can still go wrong. Ghana acknowledged that it had an inflated roll in some regions in last December’s election while Bangladesh, which had tens of millions of voters, had a perfect register with a digital photo for voter identification.

If people are not registered to vote, they are denied that right and nothing can be more profound. It gives people who want to be aggrieved after the election a good reason for rejecting the result. A good voter register is also your greatest insurance policy for the integrity of the ballot.

Lack of transparency in results process

Transparency is a key issue. This is a very simple thing but ultimately it can create a lack of confidence, suspicion, tension and then violence. And when someone or a party loses, they can claim to have been cheated. If electoral officials fail to provide adequate transparent proofs that a claim of cheating is erroneous, people will assume that it happened. They will say there is no smoke without fire and they will start using it to whip up tensions.

Lack of inclusivity

At the end of the day, elections are run for voters and political parties – who are the customers. And yet the attitude often in Africa is not to keep the customer happy. The attitude is often to keep the customer outside the shop. The parties and voters are seen as the enemy by the electoral commissions rather than stakeholders. One of the greatest strengths of the Ghanaian election was the existence of an inter-parties advisory committee which sought to fix emerging problems through adequate consultation with all those involved. It is a great thing to undermine rumour and conjecture; it is a great thing to enhance confidence. South Africa has a similar arrangement although the model is different from Ghana’s.

South Africa’s case

The extent to which South Africa tackles these challenges – in next week’s elections and beyond - will provide lessons for the growth of democracy in Africa which, although boosted by the smooth transition in Ghana, is still scarred by the 2007 and 2008 elections in Kenya and Zimbabwe.