South Africa’s ruling party, the African National Congress (ANC) voted on Monday to elect Cyril Ramaphosa as their next leader. He will likely become the ANC’s de facto Presidential candidate for elections in 2019, and is hoped to steer the party back on course, regain the trust of voters, and rebuild the economy at a time when investment has slowed.
This time ten years ago, the ANC ousted then President Thabo Mbeki and replaced him with Jacob Zuma as party leader. What followed was the systematic dismantling of key institutions and the rise of rent seeking by the political elite. State owned enterprises have had their boards reshuffled endlessly, undermining their governance to the extent that large tenders could escape scrutiny, sending these bodies into near bankruptcy. Ministers opposing state capture have been axed, the most dramatic of which saw the Finance Minister, Pravin Gordhan, replaced earlier this year with someone closer to President Zuma and his agenda. Gordhan estimates that between R150-200 billion have disappeared from the financial system over the past three years. Implicated in the widespread cronyism are not only the now infamous Gupta family and their lieutenants, but also a number of well-established and trusted international consultancies.
A party at a crossroads
The run-up to the ANC conference had been marked by infighting over which direction the party would go – keeping the status quo or rebuilding the party and stamping out the cronyism that has flourished under Zuma’s tenure. The increasingly entrenched factions threatened to split the party and risk losing an election for the first time since 1994, when Nelson Mandela brought it to power. Although Ramaphosa was ahead in polling amongst delegates entering the conference, his victory was far from guaranteed. Objection to the Zuma faction’s blatant corruption means the party has been weakened, and changing demographics have tilted support away from urban areas, in favor of provincial supporters more susceptible to the populist rhetoric favored by Ramaphosa’s rival, Nkosazana Dlamini-Zuma (President Zuma’s preferred candidate and ex-wife). Observers feared that corruption and bought votes would give her the top position, and that she in turn would protect her former husband from corruption charges and keep the rent-seeking arrangements he had created in place.
Ramaphosa ran explicitly on a platform of anti-corruption, and is the darling of investors. His victory has already been met enthusiastically by markets, with the Rand immediately gaining against the dollar. Indeed, so important was the outcome of the conference that Moody’s held off on downgrading the country’s investment status.
Moving away from business as usual
It is widely expected that Ramaphosa has the will and know-how to stabilise the economy and shut down state capture. This should return confidence to the region’s stalwart economy, at least in the short term. In the long term, however, Ramaphosa still faces an uphill battle. Three of the six senior positions within the ANC - the Deputy President, Secretary General and Deputy-Secretary General - went to politicians with deep connections to the Gupta family and who are unlikely to back Ramaphosa’s expected reforms. This weakens Ramaphosa’s position substantially, and what lies ahead is going to be an intense battle between the two factions. That being said, Ramaphosa has the advantage. He can appoint the Public Protector, members of the Constitutional Court, and the head of the National Prosecuting Authority.
More than anything, this vote represents an attempt to prevent the ANC from splitting, by dividing the key positions amongst the two factions. All in all, the country is in a better place than they were prior to this conference. What will be the deciding factor is how the NEC (provincial government leadership) falls. If the NEC goes to predominantly Ramaphosa-aligned candidates, he has a good chance of getting his agenda through. If not, it will be an uphill battle. Regardless, politics in South Africa have been shaken up for the better, finally giving the country an opportunity to breathe new life into business and industry and regain its footing on the global stage.
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