Africa News blog

Support slumps for rival to South Africa’s ANC

It would be hard for the leaders of South Africa’s COPE party to put a positive spin on its latest poll rating of just over 2 percent. If the breakaway group from the African National Congress gave the ANC a bit of a jolt before elections in April, the ruling party doesn’t seem to have much to worry about from that quarter now.

In terms of electoral success, it hasn’t been a good year for parties trying to challenge the former liberation movements that run most of southern Africa.

In Namibia, a breakaway group from the ruling SWAPO party emerged as the main opposition, but still only won just over 11 percent of the vote and complained of foul play. In Mozambique, Frelimo won another resounding victory, beating both old rival Renamo and the new MDM – which complained at the barring of some of its candidates.

Angola’s President Jose Eduardo dos Santos signalled to his MPLA party that he would wait another three years before a presidential election he is almost certain to win.

The picture is somewhat different in Zimbabwe, where President Robert Mugabe was forced into a power sharing deal with rival Morgan Tsvangirai, a former union leader, but even there the one-time guerrilla told his ZANU-PF recently to stop bickering and mobilise to win ‘uncontested victory’ in the next election.

There is a big difference between South Africa and some of its neighbours in that nobody is challenging the fairness of the electoral system.

But the same question arises here as elsewhere as to when, if ever, opposition parties might be able to seriously challenge the hold of the movements that came to power through their victories over colonial or minority rule.

What is COSATU fighting for?

South Africa’s largest trade union federation was quick to break into stirring songs of class struggle during its recent congress and COSATU members showed an impressive ability to sign along in unison.

But the question of what it is fighting for these days and its role in the ruling tripartite alliance with the African National Congress and the South African Communist Party has never been under such great scrutiny as it has since President Jacob Zuma took office in May.

Zuma’s struggle for power would have been much harder to win – perhaps even impossible – without the support of the unions and he was happy to take centre stage at the COSATU conference in a bright red Mao-style suit.

But while ever ready to promise support for fighting poverty, Zuma has shown scant sign of agreeing to union demands for everything from big increases in spending to the nationalisation of the central bank.

Unions are now preparing to do battle over the fate of Trevor Manuel, who won the respect of markets as finance minister for policies that unions see as too pro-business and who now heads a planning commission in the presidency.

As well having little love for Manuel, unions feel his role is undermining one of their own in the government – Economic Development Minister Ebrahim Patel.

But the argument highlights the difficulty for COSATU of being both within a broad government it helped bring to power and trying to then pressure that government for changes in the name of a working class struggle.

Sovereign risk in South Africa

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.

South Africa’s unions flex their muscles

After South Africa’s unions came close to blocking the listing of mobile phone group Vodacom, new President Jacob Zuma may want to keep a closer eye on his left wing allies.

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.

There was no doubt the bid had undermined Zuma’s strenuous efforts before last month’s election to assure business and investors that there would be no policy shift towards his left wing allies once he took office.

Lawyers for the government opposed union federation COSATU’s attempt to stop the listing in court and made clear the Zuma administration stood by what had been agreed already.

But investors still want reassurance from Zuma that other deals would not face similar challenges by his allies.

COSATU, which has 1.8 million paid-up members in the country of nearly 50 million, said it was angry and disappointed at the court allowing the listing to go ahead and called on South Africans to boycott Vodacom.

But by taking a strong stance on the Vodacom listing, the labour federation may be positioning itself to play a bigger role and could intensify its protest action against other businesses.

Motlanthe greeted with relief, but South Africa’s problems are not over

South Africans have widely greeted new President Kgalema Motlanthe, many of them with a sense of relief after the bitter and divisive power struggle between his ousted predecessor Thabo Mbeki and Jacob Zuma, leader of the ruling African National Congress.

Motlanthe, quiet spoken and dignified, struck exactly the note the public were looking for when he took office, sober but smiling gently – a huge contrast to the theatrical ebullience of Zuma and the aloof, intellectual style of Mbeki, who was seen as arrogant and out of touch with his people.

The sense of relief was palpable on Friday.

“Motlanthe restores order” said the front page headline of Johannesburg’s Star newspaper, over a picture of the new president swearing the oath of office. “New leader steers SA to calm,” said the Pretoria News. “For now the country has at its head a nice and largely untainted man with not much ego who doesn’t think he knows everything and who listens to people. You can almost feel the relief in the republic,” Business Day said in an editorial.

But Motlanthe’s honeymoon may not last.

He must try to end an unprecedented battle inside the ANC while his country, Africa’s biggest economy, faces serious stresses including record inflation, slowing growth and a power supply crisis that has hit vital platinum and gold mines. Yet, he has little room for manoeuvre. Although fully accepted as the third president since the end of apartheid, he is seen only as an interim leader, holding the fort until Zuma takes over after elections expected around April next year.

This will make it difficult even to make a mark, without arousing suspicions that he wants the permanent job himself–something that many South Africans would welcome.

How will Zuma’s resumed court battle affect South Africa?

Jacob Zuma, the embattled leader of South Africa’s ruling African National Congress (ANC) launched a big fight for his political life on Aug. 4, asking the  Pietermaritzburg High Court to dismiss a graft case against him that could stop him becoming president next year. If his application is rejected, a full corruption trial could follow later this year and South Africa could head into a protracted period of tension and uncertainty. Read the following insights from leading analysts and have your say on how the legal process could affect South Africa:

Keith Gottschalk, the University of the Western Cape (see full analysis)

“Jacob Zuma’s Zuma’s legal team has already proved, year after year that, if you have a bottomless pocket such as taxpayers, you can protract litigation, U.S.-style for the better part of a decade.”

Rainette Taljaard, Helen Suzman Foundation (see full analysis)

“If the arms deal was the loss of innocence for South African’s ruling party, the Zuma trial will be the collateral damage to constitutional structures with long-term consequences.”

Adenaan Hardien, Cadiz (see full analysis)

“If anything is giving market participants sleepless nights, then it has to be what Reserve Bank Governor Tito Mboweni and his Monetary Policy Committee will decide when they meet next week.”

Markets shrug off Zuma case

Adenaan Hadien, Cadiz Holdings

Pietermaritzburg may well have been brought to a standstill with the resumed corruption case of Jacob Zuma in the High Court, but I suspect the same would not be true for local markets.  Certainly, if last week’s market performances are anything to go by, then reactions are likely to be muted.  Last Thursday, the Constitutional Court dismissed all four of Zuma’s appeals to prevent the state from using potentially damaging evidence against him in his corruption trial.  On Monday, Zuma’s legal team submitted an application for a permanent stay of prosecution, arguing that his constitutional rights have been violated.  This application and the round of appeals which may follow if, as is expected, it was rejected, would again delay things. On the week, the local currency gained over 4% against South Africa’s trading partners’ currencies and bonds enjoyed gains last seen in the late-1990s.  Equities put in a more mixed performance on the week, due to the oscillating woes of resources against financials and industrials.  The performances of bonds were even more impressive, given the higher-than-expected consumer inflation figures released on Wednesday.  Granted, Thursday’s producer inflation numbers were more encouraging.

It is not that the Zuma trial is not important.  That the leader of the majority political party is on trial for corruption is certainly a big deal.  But the saga has dragged on for so long that there is a sense of numbness creeping in.  There is also a positive spin to all this.  Notwithstanding vitriolic noises sometimes made by allies, and while there have certainly been casualties in a brutal battle for succession in the ruling party that has extended to key political institutions, South Africa’s democracy remains firmly intact.  If anything is giving market participants sleepless nights, then it has to be what Reserve Bank Governor Tito Mboweni and his Monetary Policy Committee will decide when they meet next week.  Last week’s performances suggest that there isn’t too much sleep being lost at the moment.

Holding pattern dawns in Zuma saga

 Raenette Taljaard, Helen Suzman Foundation  

ANC President Jacob Zuma’s quest for a pre-trial stay of prosecution looks certain to  perpetuate uncertainty and an uncomfortable ongoing holding pattern and turmoil inherent in these dramatic events.

These compounded uncertainties do not only affect the South African economy with perceptions of political risk ratcheting up as key members of the new ANC leadership step up the rhetoric as Zuma goes to court but also creates tremors for core constitutional institutions and the bench in South Africa. After upholding the search and seizure warrants used against Zuma and rebuking his legal team for what amounts to delaying tactics, the Court also discouraged pre-trial legal wrangles of the kind that started in Pietermaritzburg.

Various options are on the table for Zuma: playing for time through delaying tactics; if convicted a possible Constitutional amendment to stay prosecution for a sitting President, or a general amnesty for the arms deal.

New revelations alleging corrupt activity on the part of President Thabo Mbeki in the arms deal – which he chaired as head of a Cabinet Sub-committee – have been dismissed but will fuel the ongoing perceptions that Zuma’s is a selective prosecution, adding fuel to an already burning fire that appears set to singe the judiciary. Unless there is a full account of what happened in the arms deal – a scenario unlikely on the eve of the fourth democratic poll – the rumblings of conspiracy will continue to eat away at the heart of the ruling party irrespective of former President Nelson Mandela’s calls for unity as the party celebrated his 90th.

What appears certain, irrespective of which route is the most likely denouement of the Zuma saga, is that the rule of law, constitutionalism and the South African bench will never be quite the same. If the arms deal was the loss of innocence for South Africa’s ruling party, the Zuma trial will be the collateral damage to constitutional structures with long-term consequences.

No quick end seen in Zuma case

Keith Gottschalk, The University of the Western Cape

Jacob Zuma’s legal team has already proved, year after year that, if you have a bottomless pocket such as taxpayers, you can protract litigation, U.S.-style for the better part of a decade.

    The Presidency currently has a line item budget of 10 million rand per year for Zuma’s legal expenses. By South African standards, this is a record. It will certainly enable his legal team to appeal every point of procedure, then if necessary the verdict, and sentence. Each appeal starts with a delay of six or nine months on the court rolls, repeated as it winds it way upwards through a full bench of the High Court, followed by the Supreme Court of Appeal, followed by the Constitutional Court.

    Sooner or later Zuma’s lawyers will also discover that above the highest court in South Africa lies the new Southern African Development Community (SADC) Tribunal, based in Windhoek, already resorted to by Zimbabwean white ranchers.

    In short, it’s unimaginable that Zuma’s trial will have concluded by election day in 2009. The last appeal might well stretch even beyond a one-term Zuma presidency, which would end in 2014.

      There are several analogies in other western-style governments. U.S. Vice-President Dick Cheney shrugged off similar allegations to those against Zuma. Israeli Prime Minister Erhud Olmert was not prosecuted for illegally receiving money, but has announced his early retirement.

    Italian Prime Minister Silvio Berlusconi faces more serious claims than Zuma – allegations that he bribed judges. Italy’s ruling party reacted by passing a law forbidding the prosecution of a prime minister. Then they retroactively changed corporate accounting law to pre-empt another prosecution. At the same time a top ANC leader smeared South Africa’s judges as “counter-revolutionary”, Berlusconi smeared his judges as “Reds”.