Africa News blog
African business, politics and lifestyle
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.
The attempt to sink the $10 billion bourse debut of Vodacom, which went ahead on Monday after an 11th-hour court ruling, hurt the rand currency and revived investor concerns over Zuma.
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.
Making sure South Africans hold their new government accountable is essential if the country is to succeed under Jacob Zuma, believes Mamphela Ramphele, an anti-apartheid activist and prominent South African businesswoman.
“We underestimated what it means to govern a modern democracy,” she told Reuters. “In that context we have made many mistakes. The first mistake was to conflate the leader, the party, the government and the state. That conflation leads to the undermining of state institutions … and abuse of state resources for party political reasons.”
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.
“The new President of the Republic will be a president for all, and he will work to unite the country around a programme of action that will see an improvement in the delivery of services,” Zuma said after the African National Congress won its sweeping victory.
It was South Africa’s most exciting election campaign for a long time, enlivened by the split in the African National Congress and the personality of Jacob Zuma, the man who is now pretty much assured of becoming president despite the best efforts of plenty of people within his party as well as the opposition.
So far, the results don’t look too different from the pre-poll forecasts. An ANC victory was never in doubt and the battle was as much as anything about whether the party could keep its two-thirds majority in parliament, which lets it change the constitution and further entrench its power. That was still in doubt after early figures.
Nelson Mandela, a global symbol of reconciliation after the end of apartheid in 1994, appeared at the ruling ANC’s last election rally before Wednesday’s vote, delivering a last minute campaign boost for party leader Jacob Zuma.
Wearing a Zuma t-shirt, he sat beside the ANC leader, who has been fighting corruption allegations for eight years. The case was just dropped on a technicality and some South Africans still question his innocence.
It’s one of the biggest ironies in South African politics — the most loyal ANC voters are often those the party appears to have let down most bitterly.
For millions of poor, mostly black South Africans, life has barely changed since the African National Congress defeated apartheid under Nelson Mandela in 1994.