They shoot horses, don’t they?

I had an extended metaphor for the title about South Africa being not quite ready for the knacker’s yard, despite the apparently universal hysterical consensus, but by the time I got to the dancing yourself to death bit, it all became a bit tenuous. 

Anyway, I plan to restart the chatty/newsy/regular version of my blog. I worry about the mental health and wounded aesthetic sensibilities of some of my old followers who have had to read the weeklies for themselves over the last few years.

This modest contribution is a bit long and dreary and tries to cover too much ground, but I had to establish a baseline from which I can make short and inciteful comments in the future. The interminable below is the hurdle I had to get over. You are invited to get over it with me.

So here goes:


Having to start somewhere, I want to give an SA financial market slant to a glance at:

  • The opening up after Covid, and the hovering possibility of it coming back strong.
  • The Russian invasion of Ukraine.
  • The resultant sanctions.
  • The cumulative supply-side shocks and the spiking of food and fuel prices – and the possibility of actual shortages soon or at some time in the future.
  • China’s zero tolerance of Covid policy and the possibility of a catastrophic collapse of that policy.
  • The deep damage to supply chains and the rise in the price (and availability) of pretty much everything.
  • Deglobalisation – now and later.

Social instability, most obviously expressed as food riots, are robustly correlated in both very long and shorter term big data studies. Wikipedia gives an interesting list from the 1700s till today here of riots related to shortages. Academic and multilateral agency commissioned work pulls out the nuances and demonstrates how variable are the responses in different countries to similar conditions. The IMF produced an interesting, short summary of some of the connections between economics and social unrest and politics. To get a quick feel of the non-linear connections and the surprising insights, I recommend you give it a whirl here.

These are some scattered insights I took away from some of the readings:

  1. The poorer the country, the weaker its democratic institutions, the more likely violence will break out and be widespread in the event of food shortages.
  2. In some countries conditions are so bad that people are purely concerned with survival and have long given up any hope of help from the authorities. Disruptions here are more likely to be in the form of population movements and refugees.
  3. Some countries – Mexico, and even Russia spring to mind – are unlikely to have communal violence expressed at what are essentially popular governments and authorities.
  4. Some countries develop patterns of cleavage around old or repeated grievances, so that anger at food price spikes and shortages might, for example, be taken out on groups that are seen to be to blame or are seen to have exacerbated the situation. South Africa experienced widespread violence against other African migrants in 2008 just as many countries in the world were experiencing ‘food riots’. Operation Dudula’s launch into a much more serious (compared to 2008) environment for food and fuel prices, raises the risks to dizzying heights, but I will try to deal with that in future articles. (Dudula is perplexing and I would guess that while it has found rich and ‘organic’ soil amongst many of the South African poor, I suspect there are hands and fingers in there with a whole complex of political and secret agendas. I don’t know any secret truths about this, but I don’t trust anybody, and I especially don’t trust ‘hidden’ hands’ not to slip and cause things to spin out of control.) South Africa’s proposed legislative response – here and here – tightening the ability of undocumented foreigners to work legally in the country is, in part, a response to the growing rumblings of discontent – and partly the ANC trying to hold onto its declining voter base. It is clear that some among our leaders and political strategists in the state are still furious that Mugabe and Zanu-PF were able to wriggle out of political failure by pushing several hundred thousand hostile (to Zanu-PF) urban dwellers southwards and onto the shadow labour markets and economies and sometimes the welfare system of South Africa. I suspect they (the South African government strategist types) see this as a favourable political moment to attempt to turn Zanu-PF’s victory to defeat.

Food production and the myriad inputs supplied from around the world is a complex business. Most of us will have heard the many kind of food stuffs and animal feeds produced in Russia, Ukraine and Belarus that have been taken out of the global market and therefore will immediately increase the price through the basics of supply and demand. But those countries are even more dominant as the source of fertilizers – many made from natural gas. Suddenly potash, urea, nitrogen, phosphorous, potassium and ammonium nitrate are tripping off the fingertips of Twitter bores who only a week ago were epidemiologists, and before that climate scientists. Well, I was a garlic farmer for 5 years and I know that a crop I harvested last year would now be in the bag and in the bank, but the crop I had just finished planting now with shortages of fertilisers and weed and pest control chemicals, would yield a 10th (thumb-suck-alert) of what I harvested last year. The food supply has the potential to worsen well into the future as planting is taking place before alterative supply chains and sources of inputs have been explored or logistical systems have been priced and reestablished for dealing with distribution when harvest takes place – although these systems, prices and products are not, ultimately, ‘fixable’ in any time horizon I can think of.

South Africa – the upside down of the commodity price shock

Governments, if they have the cash, can ameliorate some of the most deleterious impacts of the price shocks. In LATAM governments often subsidise food and fuel in situations similar to these. Some governments release strategic reserves of fuel or grains while some administratively control prices of essential or staple foodstuffs. You might remember the usual suspects flogged our entire strategic oil reserves in 2018 ‘because it was getting stale’. While the crooks themselves were nabbed (sort of) and the oil is still sitting there getting more stale than at any time since the Paleozoic, the country lost so much money as part of the general looting that we don’t have as much of the ready to soften the blows the poor are taking and will likely take again and again in the near future.

However, while our government might not have significant strategic reserves that could be released to impact inflation (aside from reducing the fuel levy), as a country we are receiving some modest relief, during these early waves anyway, from some aspects of the unfolding global catastrophe.

South Africa has an abundance of gold, diamonds, Platinum Group Metals, iron ore, coal, including thermal coal, manganese, titanium – and just a whole lot of stuff that Europe and China, especially, used to get a fair slice of from Russia, and these commodities are subject to the same inflationary forces because of supply interruptions as food inputs. So the prices of many items and commodities South Africa exports has gone through the roof, and this provides some kind of balance for the things we import going through the roof (oil and petroleum products being the most obvious.)

So the owners and managers of precious metal mines are making super-profits and government is pulling unexpectedly high revenues through taxation on those super-profits, especially gold and platinum but a whole lot of others bits and pieces we grub out of our lucky ground.

So if you are African and  not from oil exporters Libya, Nigeria, Algeria, Angola, Sudan, Egypt, Congo-Brazzaville, Uganda, Gabon and Chad and you don’t have a developed mining industry in the other areas of global shortfall, the future looks bleak and scary.

If you have a sustainable fiscal framework (which South Africa is still hanging onto for dear life, despite the heroic efforts of some to steal and destroy as much as they could) you will probably ameliorate some of the immediate suffering by spending more money. So we could expect South Africa to up its Social Relief of Distress grant from the woundingly small R350 to something more bearable, like R400 or even R500 per month in the February 2023 budget and possibly (although unlikely) adjust things upwards earlier in the MTPBS in November this year. Government is not bestowing these acts of kindness to just anyone: you have to be proudly South African and pretty much on the brink of starvation, and be able to prove it.

My light banter might suggest I think the government is being as mean-as-cat’s-pee, as my old mum was wont to say. But that would be a mistaken impression. The bigger debt metric story for South Africa is a catastrophe all of its own and Minister Enoch Godongwana has taken up the lonely, unpopular fight to keep us from going down an Argentinian type route into darkness and debt no honest man can pay. So the Minister has indicated he can’t use the windfall to solve all the pressing problems, but he can use some to make life bearable for the benighted poor and unemployed. As long as the lion’s share goes to our national debt and lays the grounds for its gradual decline.

But the upside of price hikes is giving workers grounds to demand their share. Already, the mini supercycle of profits and state revenues arising out of the supply-side shocks is giving unions in the gold and platinum sector itchy feet (can’t really blame them) see here , and public sector unions, already intensely aggrieved by government having broken the third year of a 3 year agreement in 2020 and having now experienced 2 years of a wage freeze,  are entering the current negotiations in full hazmat suits to keep bodily fluids off their skin. (I also don’t know what that comment means, but it sounds gruesome – Ed).

I think it is going to be one of those wage bargaining seasons that I always call “The Winter of our Discontent” and I have not discounted the possibility of the public sector unions striking in support of their no-doubt inflation-plus demand. I also don’t  think the Minister will bend, on the big issues. With unemployment sitting just below 50% for the mass of our people, and the public sector providing good and secure jobs with a built in 1.5% pay progression, any national strike is not going to charm the public. In fact, it might prove to be deeply irritating to the person standing for hours in a queue waiting to get R350 to live on for a month if red-shirted crowds are trundling up and down the street looting the desperate kiosks and traders and overturning rubbish bins.  And anyway if they all went on strike, only in those areas of excellence (that I will explore elsewhere) will anyone notice the denial of service. That’s a silly facetious comment. I’ll definitely have Ed take it out. I think the revenue overruns gives the government a little room to play with, possibility increasing the cash gratuity portion, as long as it doesn’t go into the base and become endlessly multiplied into the future, which is pretty much how we got here in the first place. 

The miners on the other hand, are a different story. At Sibanye-Stillwater, where the workers in NUM and Amcu have been holding out deep into territory where they will never make back the money they have lost, Neal Froneman, the CEO, just walked away with R300.3 million in remuneration (mostly from a never to be repeated share incentive scheme). What can you say? The workers wanted to small share of the super profits, but it looks like their bosses are paid to hold a hard and cold line that they will not cross. Miners who are making super profits are in for labour unrest. It’s a no brainer. Wait for PGMs, it’s going to be even worse. A winter of discontent, indeed.

The infrastructure disaster, has reduced our ability to get our overpriced commodities onto the high seas and into the hands of whoever might want them, including many looking around for supply they used to get from Russia, Ukraine, and Belarus. From electricity to ports to freight to water-reticulation we have shot ourselves in the foot, but even limping and bleeding we are making a killing out of some aspects of the commodity shock – as well as suffering for not having received the double edged blessing of oil – and gas being too new for us to make full use of it. But for us, that is an old story. 

Supply chains and China’s (maybe) catastrophic collapse of Zero-Tolerance

So global supply chains were the things that networked and wrapped the globalising world into a seamless chain of extraction, manufacturing, nimble labour processes, logistical magic including container ships and aircraft, retail and marketing and that iPhone, its inputs of every conceivable material, labour, technology, fuel, transport system, would slide into the sweaty hands of those with the ready to purchase the pretty, clever machine at the end of the line.

Now just add another thousand processes, dependent on there not being a lockdown, dependent on diesel and other fuels not costing the earth, trucks and boats and planes all having their own bits that might be stuck in other supply chain jam-ups and those iPhones themselves having the chips and covers and glass and pixels and all the stuff stuck in other broken supply chains, and the rare earths and platinum casing and … well this could become even more boring than it needs be. Supply chains across the world are paralysed and interrupted by Covid and war and sanctions and their broken interconnectedness means fewer of the end products are reaching those who want to buy them, pushing up prices, always pushing up prices. And with runaway inflation we are starting the long cycle of aggressive rate hikes around the world. No cheap money, less GDP growth.

So here is one of my doomsday fears. China’s bet the farm that they have an infinitely superior form of dealing with Covid than the chaotic irresponsible way that everyone else who isn’t China has handled the crisis. Basically their Zero Tolerance of Covid had been a matter of national pride and supreme success as the rest of the world died and the survivors chaotically wandered around in circles bumping into each other while being decimated by successive waves of disease. And it is unavoidably true that many pumped up official and even patriotic, ordinary citizens, felt proud and superior. Until Omicron came along and seems to have shredded their policy. But up till now they have hung in there, showing their fortitude and their certainty. So 20m people in Shanghai have been locked down as Omicron and starvation do their thing and China has doubled down and doubled again.  Lockdown in Shanghai has increased a range of supply-line disruptions but it has also raised the question: is China just going to spread the lockdown forever, or will it chaotically withdraw from this increasingly dangerous strategy. Or is it such a stable, authoritarian country where people will just do what they are told, and go from ‘zero tolerance’ to ‘living with Covid’ without a catastrophe? I wonder and I worry.

Right now at least some of the world thinks it is a disaster and South Africa, which relies so much on Chinese resource demand, would be a serious casualty if China failed to grow at close to expected rates (5.5%) because they doubled down on a failing Covid strategy. This will give you some idea of how we have kept our head above water in these times and suggest how a serious underperformance in Chinese growth would hurt us.

Everyone and their dog is reducing growth forecasts for Europe and the US which takes care of most of our trading partners. The dreaded recession word is being heard quite widely as is stagflation. 


It will probably be news to no-one that the unravelling of global supply chains, war (have no fear, I will deal with SAs approach to the invasion of Ukraine, just not right here and now) and deepening conflict between powerful nations rolls back the relentless march of globalisation. In short that means less integration of production and supply processes across geographies and national borders. There is lots to say about this, and many who will ascribe relatively prosperity to the growing integration of the world economy. Well, it might not be news to you that as many ascribe the loss of  sovereignty of nations in general, but smaller and weaker ones in particular, to multinational companies and the super-rich. There is much here to debate and discuss, but let me just leave this here: trade unions, national governments, and country-based enterprises wishing to be protected from global supply chains, are not all going to be weeping about a rollback of globalisation. In fact it re-raises the possibility of governments protecting domestic industries, of trade unions getting back some of their influence over companies and labour processes that will for now be more confined to sovereign states and domestic law.

South African Politics, in a sesame seed shell

I think CR has the December conference in the bag and while SA remains on the radar screen of many of the big EM bond funds I don’t think the world will be hanging on the edge of their seats waiting for this conference results like they were in 2017. I will be discussing this on and off all year so I won’t try and do it justice here.

The RETs are now facing an interpretation of the ‘step aside’ law that says you can’t stand for positions in the ANC if you have been charged with a serious offense in a court of law. That’s puts most of them out of the running. I am of the view that the faction around Ramaphosa will hold the line on this position even if the opposition is likely to be intense – the alternative is that public anger at ANC corruption will confirm a below 50% vote in the national elections of 2024 – which is a better than even possibility anyway. There is lots to discuss about the other top six positions in December 2022. Will Paul Mashatile spin his Treasurer General and acting Secretary General and clever tactical sense into a Deputy President position and therefore, most likely, into a presidency in 2029? Could Ronald Lamola take it and make the CR crew grin from ear to ear. Do we care this far out?

I am positive about the various attempts led by Operation Vulindlela to open key government owned infrastructure to private operators, builders, maintainers. This applies to ports, rail, freight, power, spectrum auction, digital migration … and, even though it is mixing oranges with apples, finding a way to reduce the skills mismatch between our economic needs and our education system or skilled immigration laws. We have a long way to go, and this is mostly what I will be discussing from now on. CR and his cronies staying in power, even in an alliance government after 2024, is crucial. 

For now I am worried that no matter what we do, we are more than ever tossed on the waves of a series of global storms – it is only after the roiling waters calm or recede that we might make our own way. Till then we are flung hither and thither and the best we can do is bail.

Mkhize vibes off into the sunset

It looks increasingly likely that Zweli Mkhize’s tenure as Minister of Health will come to an end sooner rather than later – he dodged a parliamentary inquiry on the morning of the 4th and has given up on giving the statistical briefings on his own Twitter account. It is not surprising that Mkhize, through choice or instruction, is reducing his media profile as he is swamped, in the popular domain, with information that appears to indicate he and his family might have improperly benefitted from Health Department tenders while an SIU probe following the same vector nears completion.

A common sentiment has emerged that this somehow presents a risk for Cyril Ramaphosa’s hold on the ANC, or that Ramaphosa considers Mkhize an ally. Both of these contentions seem questionable. We should not forget that Mkhize was effectively unaligned at Nasrec (and ran for President against Ramaphosa, with the help of Digital Vibes’ two key players). Mkhize certainly has not had the vocal pro-Ramaphosa media profile of of the likes of  Ronald Lamola or Fikile Mbalula. It has never appeared unthinkable that Mkhize would run for the ANC president next year. So what does Ramaphosa have to lose by marginalising him, and why is it taking so long?

In short, Ramaphosa has demonstrated a preference for biding his time when he sees a positive outcome as likely. The risks inherent to suspending another powerful political individual before he is convinced that this is the way the cookie is already crumbling are unnecessarily high. Ramaphosa has preferred process to direct action in dealing with situations like this. This may mean that often the action taken comes late – but it has the advantage for Ramaphosa of making it very difficult for his opponents to fight back.

Ace Magashule is trying his best to fight his own suspension, but doesn’t have the weight to fight the inevitable. Having lost the political battle, he has turned to judicial means. This is a show of weakness, not an indication of a great battle to come.

Ramaphosa is genuinely risk averse, and has gradually formed ANC rules – and strengthened societal institutions – that disadvantage his enemies and as they grind, slow and fine, seem to be likely to see him come out on top (as Anthony Butler identified here).

Zweli Mkhize might have been seen, by the finger in the wind school of analysis, as having honed his already long set of credentials during the pandemic and to be ready for some form of elevation in the ANC, perhaps to the presidency.

Like all leaders who are in the public eye at times of national crisis he benefitted from the sort of populist sainthood that politicians seem to enjoy when they are not doing an obviously terrible job, but would undoubtedly have been consigned to the demonic ranks in hell when the vaccine chaos began to bite along with the 3rd wave.

In those streets the Digital Vibes story was treated with shock and dismay. We are not saying Mkhize is a known ‘bad-actor’, but the fact that he was Kwazulu-Natal Premier from 2009-2013 and that bastion of probity, the ANC Treasurer General, from 2012-2017 (neatly spanning the rise of the Premier League and state capture) does not leave us burning with a sense of personal betrayal when we hear about the Digital Vibes shenanigans.

We do not think Mkhize’s exit clears the path for Ramaphosa at the National Conference in 2022, mostly because we do not think the path is significantly cluttered, and not do we think Ramaphosa’s cabinet would be significantly weakened by Mkhize’s exit. If anything it leaves the option to pin the vaccine chaos on him and replace him with someone who appears good and clean and fresh, tra-la-la.

Written by Nic Borain and Laurent Balt

Cornered RET

This piece was written jointly with my colleague Laurent Balt.

So where to now for Ace Magashule, and what future for the RET forces?

The state of the RET

Unpacking the health of an ANC faction nowadays is tricky business, in that they are generally not factions in the traditional political meaning, but rather loose coalitions defined by common and shifting interests, and seldom with particular ideological cohesion. Ideology is mostly used as an instrument to differentiate or pressurise opposing factions.

The case in point is the RET, which is cohered by the dire consequences of its fragmenting (fragmented) hold over the ANC. It is now all about fighting to avoid punishment for individual members while desperately throwing up flak and beating drums to distract attention.

Its 3 most visible (or at least present in the public mind) players are all in legal trouble: Magashule faces a corruption trial in August and a hostile NEC, Zuma is locked in a personal battle with the Zondo Commission and a trail of other legal woes too exhausting to trace, and Busisiwe Mkhwebane is probably on her way out.

The other political centres of power aligned with Magashule have been conspicuously quiet since the NEC decision. ANC structures have cracked the whip on official expressions of support for Magashule. And Magashule’s provincial support base (still evident in some Free State RECs) has been damaged by the dissolution of the ANC provincial executive by the Supreme Court of Appeals.

The balance of power in the NEC also seems to have shifted towards Ramaphosa. In the most recent meeting, Ramaphosa won almost all of the battles, getting his preferred candidates deployed to the NWC and the Youth League Task Team. Attempts to collapse the meeting by Magashule’s supporters are best read in terms of a lack of alternative strategies. Alleged threats of mass resignation had little credibility. Our understanding of the ANC Constitution is that a majority of the NEC would have to vote in favour of or resign to trigger a special national conference – a bar too high for the RET, we think.

So, what next for Magashule? Lobbying managed to secure him a month to “consult”. He intends to talk to party elders – Zuma, Mbeki, Motlanthe and Mathews Phosa. The latter 3 are all likely to tell him to comply with the ruling, and the former’s relevance to internal ANC politics is now in doubt.

Magashule clearly intends to force Ramaphosa to remove him via suspension. He will want to use the remaining 19 days (as of today) to convince enough political constituencies that his removal as SG will be damaging to their interests. This will be a tall task: Ramaphosa has been consistently focused on inclusion of as many political elites as possible in the upper echelons of state and party power. He (CR) can promise defectors far more than Ace can, and has made the downsides of his presidency for groups not aligned with him fairly limited. Only groups or individuals threatened with the same fate as Magashule (including Zandile Gumede, Mike Mabuyakhulu and Bongani Bongo) and potentially those who fear the same in the future have much incentive to align behind him. For most, however, there is a far greater incentive to marginalise Ace, both in terms of aligning with the faction in power, as well as opening up the SG position in 2022 and getting rid of potential challengers.

Three weeks is long enough for something to change that could alter Magashule’s fortunes. He is likely to keep some powder dry for the period immediately preceding what will probably be his suspension by the NEC, and not his own decision to step aside. It is, however, difficult to envision a situation where the RET camp continues to be Ramaphosa’s major internal opposition.

What next for Ramaphosa?

Ramaphosa’s handling of the political moment ensuing if/when Magashule is suspended is critical to his future. He has two contradictory imperatives: he will want to gain a more decisive grip on the party, but must also be careful to limit the damage he doles out to his political opponents. Pushing through the step-aside decisions included in the Integrity Commission reports passed at the 28th March NEC meeting will improve perceptions of ANC institutional strength and get rid of some of Ramaphosa’s most vocal opponents. But most of these opponents, Ace included, have relatively limited and provincially defined bases of support. Ramaphosa will want to be more cautious and conservative in marginalising major national-level elites (although the he paired back the influence of many Zuma-era national networks in the May 2019 cabinet reshuffle).

Ramaphosa also has a balancing act to do in consolidating his own support base. The SACP has proven a reliable ally, but pushing through a public-sector wage freeze cannot but damage his standing with COSATU (although it is currently is not being courted meaningfully by other elites and is historically weak). For Cosatu, the Ramaphosa ANC is the only show in town, and it is no surprise to us that Cosatu announced yesterday that it will support the ANC in local government elections this year – implying that at least one of the reasons was to ensure that the “wrong” groups (read RET) didn’t find a way back to power in the party in Cosatu’s absence.

Government, Ramaphosa and the ANC are vulnerable to the social pressures building up in all key constituencies as a result of economic hardship and the extremely limited fiscal space. It is a natural path of attack for the RET, which has already attempted to deepen the fissure between government and tertiary students struggling to for access to funds to study.

It is probably a sign of RET weakness that it has been unable to capitalize significantly on the narrowing fiscal space government faces. Social pressures will continue to mount as budget cuts and stagnant growth impact on quality of life. Fiscal consolidation is unavoidable, but it seems to us that making both public sector unions and the poor and unemployed feel the pain simultaneously is a dangerous strategy (with freezing of both wages and social grants), and one it is in Ramaphosa’s interests to soften as soon as the space becomes available.

NEC finally discards the Ace

It was a long night.

Ramaphosa’s allies were careful to keep the focus largely on Magashule himself, rather than open a broader front against the whole RET faction – a move we expect Ramaphosa and his cohorts to embark upon in the next several weeks. Magashule and his camp appeared to go to the meeting with the expectation of stronger support, but it appears they underestimated the ability of the group around Ramaphosa’s to undercut and isolate him, and incentivise support for Ramaphosa. They also underestimated the efficacy of Ramaphosa’s painstakingly inclusive approach to state and party governance. In effect, when the proposal for Magashule and others implicated by the Integrity Commission was raised, there was little incentive for non-aligned members and those whose interests are not directly tied to Magashule’s position to stick their necks out for him. Whether it was due to manoeuvring by Ramaphosa’s camp (as implied here), or a simple calculation of who can promise more, Magashule’s allies were in the (furious) minority.

So what?

Markets should view this development, even with the month-long delay, as credit-positive – although they are likely to take a wait-and-see approach, having given the ANC the benefit of the doubt just once too often. We do think that having the RET on the back foot will allow the Ramaphosa aligned group to implement more growth-friendly policies. However, they have their traditional ‘left’ allies in Cosatu and the SACP to keep them close to traditional statist policies, but probably with a softening or speeding up on energy and spectrum auction.

Certainly, Ramaphosa will now have a stronger hold on the party. This is probably the first NEC meeting where Ramaphosa has come out having won basically all the political battles on offer. A more neutral or even pro-Ramaphosa replacement Secretary General – probably an upgrade of current Deputy Secretary General Jessie Duarte – will boost his chances of a second term. Magashule was never a realistic competitor for the Presidency, and opposition is far more likely to come from “third way” candidates like Paul Mashatile or Zweli Mkhize.

In a linked move, Ramaphosa has savvily managed to get the impeccable Kgalema Motlanthe appointed as the head of the ANC Electoral Committee, which will effectively oversee the election and selection processes of the party. The Committee provides Ramaphosa with a measure of insurance, as it diminishes the hold of the SG’s office on the conference process.

Paths to power

What next for Ramaphosa? Assuming he has won this battle and Ace goes, he will be keen to consolidate his power. A cabinet reshuffle seems likely for almost opposing reasons: Ramaphosa probably wants to at least shuffle a few low-performing portfolios, and maybe get rid of a few people he no longer needs to keep happy. In addition, the moment of Ace’s departure presents an opportunity for Ramaphosa to buy the loyalty of some floating elites through political patronage in the form of Cabinet posts.

Leading the ANC and the country always requires horsetrading and the president still needs to balance the needs of aligned and opposed elites, and creating an internal party environment where his opposition prefer to stay under his umbrella and fight from within, rather than seek an exit to the wild fringes of the party or the actual wilderness outside of the ANC itself. Good factional management will soften the blow to his opponents and incentivise cooperation rather than competition.

The implementation of Ramaphosa’s policy agenda, amorphous as it may be, will rest on how he uses the state and party to control political heads. Mbeki directly controlled Director-General appointments and used a strong Presidency and its Policy Coordination and Advisory Services (headed by Joel Netshitenzhe) to marshal ministers who had been appointed for political expediency. Ramaphosa has a much weaker hold on policy-making and implementation, in the party and the state, although Operation Vulindlela represents a limited approach to increasing the Presidency’s hold on policy.

Teatime at Nkandla, AstraZeneca and the mutant strain

Tea as theatre

I was adamant I wasn’t going to add to the verbiage about the Nkandla tea party. But then City Press led with the headline “THE GREAT TEA PARTY FIGHTBACK” (yes they were shouting) to give voice to the strategist supposedly leading the Zuma and Ace defence league and running the campaign to get Ramaphosa out of office. In as far as there was a thread, it goes like this:

Malema was to persuade Zuma to appear before Zondo and avoid being attacked or charged for refusing to do so. Appearing, according to the reasoning, would help the world see Zondo as biased and incompetent and anyway, by the time he handed his report to Ramaphosa, the president would be too politically weak to do anything about it.

The EFF would participate in the vote of no confidence supposedly leaving Ramaphosa’s name and prestige in tatters.

The security services are hostile to Ramaphosa, the playbook continues, especially because of Ramaphosa having allowed the SSA to be trashed in public. The army is furious about the interferon scandal (don’t ask) and because of Ramaphosa’s ideological hatred of Cuba. Just go with it.

Obviously, a campaign in defence of Ace Magashule is a major pincer movement in this battleground. There’s a weird reference to Ramaphosa’s supporters in high heels, and then phalanxes of generals on the “progressive” side, like Zandile Gumede and Brian Molefe.

The only thing that gave me pause was the assertion that Ace has brought ANC membership from 898 000 to 1.4m. That was his RET job after all: build and or/construct ANC branches to strengthen voting for these forces at the 2022 national conference. When, if I understand it correctly, Ace would stand for president (eye-roll emoticon).

There has been some interest and concern that the RET faction and the EFF could linkup either for tactical or strategic reasons at some point. They have the same apparent objectives and complement each other’s demographic gaps. The EFF is young, in fact, it is essentially the Youth League of the ANC that was led by Zuma -and closed down by him when they became too threatening. The RET are elderly men and women, who seem to have consistently lost momentum as their innumerable legal woes increase. These groups are also rent-seekers hiding behind a call for radical economic change. Few would argue that all the individuals involved in the tea party and the supposed fightback campaign don’t primarily seek their own enrichment and protection from the law.

One can never be sure, but my own reading is the ANC group around Zuma and Magashule are steadily losing power and the EFF is reaching a ceiling consisting of the limited number of South African’s who can, frankly, take their policies and style seriously. It was always only about Malema. I believe his setting up of the EFF was intended to establish a powerful ANC Youth League, that the mothership would be forced to invite back as the crew aged and the glorious history of the struggle settled into the sunset. That strategy would only have worked if the Zuma camp was still in power, which helps explain the shared interests. It feels like a desperate gamble for Malema. As the chances of a comeback for the state capture group recedes and their collective and individual names are ever more tarnished as evidence and information pour out of the Zondo Commission and the courts it seems to me that Malema has found himself at the end of a road, where helicopters and tea time at Nkandla is all he has left to entertain his political audience.

Vaccine risks

The Financial Times leaked the disappointing results of the double-blind, randomised test of the efficacy of the AstraZeneca vaccine against the 501Y.V2 Covid strain. Professor Shabir Madhi’s briefing on Sunday expanded on the issues:

The short of it is the vaccine provided little or no protection against mild and moderate forms of the now domestically dominant (90% of all infections) 501Y.V2 variant of the Covid virus. Piling on the woes, it also appears that people infected with the original strain have no more resistance to the new variant than those who were not infected with the original strain.

Importantly, all parties have been careful to note that the paper is not peer-reviewed, published by its authors, and is unable to draw any conclusions about the AstraZeneca vaccine’s ability to stop serious infections, hospitalisations, and deaths caused by the new strain. The main reason is the median age of the 2000 or so subjects was about 31 and none of them went to a hospital or got seriously sick. The confidence interval also provides a wide margin for error.

Possibly because of the stature of Prof Madhi there has been little dispute about what the research actually concludes. Health Minister Dr Zweli Mkhize immediately suspended the AzstraZeneca roll out and is already indicating South Africa will focus on Johnson & Johnson and the single-dose Pfizer vaccine. It’s difficult to find solace in the idea that government has it it in hand. It hasn’t had much in hand, particularly related to vaccines and I will believe it when I feel the prick in my arm if you know what I mean.

So what?

Those here and abroad predicting global and domestic growth, company performance, stimulus package timing and a host of other factors that have a profound influence on the world, took a long, hard look at the vaccination programmes and made a call on the most likely path and impact. The best of them will have done cross country comparisons and some would have noted risks, either that the programme goes better and quicker than the estimate or that mutations and other issues might seriously prolong the negative environment.

Prof Madhi’s findings appear to be the first unequivocal demonstration that mutation of the virus has seriously impacted the efficacy of at least one vaccine. Would it not be wise to consider the possibility of new mutations, waves of new infections in previously vaccinated populations and a sort of arms race between the virus’s ability to rapidly change its spikes and the drug industry’s desperate tweaks to existing products or a search for whole new classes of drugs?

Obviously, this is a significant risk for South Africa, to pile onto the crisis caused by the government’s slow start. But it is also a global risk and one not likely to recede for a few years. However, we must also consider the potential upside: AstraZeneca and other vaccine makers manage to adjust their vaccines to improve efficacy on new variants, or that the existing vaccine is capable of preventing severe cases of Covid, which may make it somewhat useful.

Key person risk, Molefe’s attack on Ramaphosa and other matters

Some tenuously connected thoughts about political risk and financial markets in recent South African newsflow:

For whom the bell tolls

The marginal victory of Cyril Ramaphosa at the ANC conference at Nasrec in December 2017 immediately raised the matter of ‘key person risk’ inherent in having one portly fellow as the absolute lynchpin of the weak hold the ‘reformists’ had won on the top structures of the ANC.

Then it was: what if he trips and bangs his head? The billions of rand that had flown in and out of financial markets on Ramaphosa’s marginal victory seem to me, anyway, not to have considered adequately that DD Mabuza, Ace Magashule, and a swathe of nervous crooks who had benefited from State Capture, were the only people waiting in the wings.

I am reminded of that risk by the ever more visible deaths from the Covid 19 pandemic – most obviously to local observers that of Jackson Mthembu and four Zimbabwean cabinet ministers. With South Africa having failed to position itself to take advantage of the various vaccines, one has to realise that as time passes it is likely that more people will die. I think it will feel like a net is closing.

So what?

Key person risk, attached to the person of Cyril Ramaphosa, remains. Who exactly is waiting in the wings if the presidency post suddenly had to be filled may be a more complicated question that in was in  December 2017, but it is as uncertain and unsettling now as it was then. I am not arguing that the pandemic increases that risk, purely that it brings it to front of mind again.

Molefe Swings Wildly at Cyril Ramaphosa at Zondo Commission

I remember Brian Molefe when he ran (with the excellent Phakamani Hadebe) asset and liability management at the National Treasury in the early 2000s. He was, then, in my estimation a likeable and impressive public servant. Which probably means I shouldn’t make snide remarks about the weeping, self-pitying Gupta asset and the Saxonwold Shebeen. So I won’t.

Molefe’s alleged hand in forcing the sale of the then Glencore-owned coal mine Optimum to Gupta owned Oakbay Investments is at the centre of the Public Protector report that brought the Zondo Commission into state capture into existence in the first place.

The story of Optimum, Tegeta, Eskom and the price and quality of coal is complicated and Molefe is accused (not in a court of law) of having used Eskom’s finances and leverage to force the mine out of Glencore’s hands and into the Guptas, in a particularly sweet (for the Guptas) deal. 

Molefe’s strategy was to argue that Cyril Ramaphosa was actually guilty of precisely what Molefe was being accused of. As if pulling a rabbit out the hat, he revealed that Cyril Ramaphosa was the chair of Optimum, joint owner (and BEE partner as the Mining Charter required) and conflicted as deputy president and convenor of the ‘war room’ set up by government to address the Eskom and electricity supply crisis.

The specific narrative here is a fine example of fake news. Ramaphosa divested himself of any assets that could cause a conflict of interest as well as board memberships immediately after his elevation to the Deputy Presidency in May 7 2014 (and actually began this process in 2012). The so called ‘war room’ was only established in December that year and Molefe was only appointed Eskom CEO in February 2015. The dates are important because Molefe’s evidence was a Trumpian self-portrayal of of his (Molefe’s) fight against Ramaphosa in alliance with white monopoly capital. See summary of some of the details from Daily Maverick here  and for those with more time on their hands, a great summary of Glencore’s evidence to the Zondo Commission covering the Optimum saga, also on Daily Maverick here.

So what?

There are lots of different interests at play here, but I think the main angle is that this is a skirmish in the ongoing factional struggle being played out in the ANC. At least one of the strategies of the camp Molefe is apparently aligned to is to attempt to discredit Ramaphosa, especially to suggest he is corrupt.  Given from whence it comes, the accusation does not appear to be gathering momentum, and Ramaphosa has stated publicly that he will resign if he is charged with corruption.

Political Party Funding Act

The presidency has announced that long awaited legislation limiting and opening for public scrutiny – through reporting requirements to the IEC – political party funding will become law from April 1 – see statement here for details.

So what?

This is an important anti-corruption reform and I – for one – am surprised and impressed at how tight it is. Seen as part of Ramaphosa’s attempts to roll back the corruption that had taken hold of our public life it is definitely positive.

However, perhaps the more serious influence peddling, pork belly politics and straight forward corruption has taken place within the ANC and, up until now, hidden from any form of public scrutiny. Where one party is as dominant as the ANC has been from 1994 to the present, the real money will be the investment in campaigns of particular leaders for party president – in part because the party president will (up until now) become the country president and head of government.

The current Public Protector who investigated money moving through the various accounts that was used by the CR17 campaign – the internal ANC campaign that led to the tight victory of Cyril Ramaphosa at the December 2017 ANC conference – has had her report set aside in the Pretoria High Court using some of the most disparaging language about her motivations and understanding of the law in the long list of judgements against her. However, the process has revealed that electing and ANC president costs in the region of R400m and the one of the bigger expenses is the paying of membership fees for many thousands of ‘ANC members’ around the country.

Now this might not have come as a surprise to those who watched Jacob Zuma’s successful campaign leading to his election at the Polokwane national conference in 2007. But it should be clear that if the ‘money politics’ in the ANC is not part of the anti-corruption reforms being led by Cyril Ramaphosa across a broad front, the battle is lost. This requires a discussion about means and ends. Cyril Ramaphosa would not have been president if he wasn’t prepared to get down and dirty. But perhaps that’s enough for now.


Public sector wage bill – slugging it out in Labour Appeals Court

As I write the government and labour are clashing in the virtual Labour Appeal Court, in between freeze frames, dropped connections and the acerbic wit of the inimitable Judge Dennis Davis.

In essence:

  • Whether or not the government is able to ‘hold the line’ on freezing the public sector wage bill is the biggest identifiable risk to South African economic stability over the next 3 years at least.
  • The Labour Appeal Court currently in session is unlikely to stop the conflict – legal or political – over the government breaking of the 3rd and final year of its agreement with public sector unions. The matter could go to the Constitutional Court which means the immediate risk could hang over the economy for – at least – months.
  • No matter the outcome, the clash will poison negotiations for agreements and industrial relations in the public sector for 2021 and beyond.
  • The crisis has both legal and political implications, with upward pressure on state spending driven by the collapse in employment, the growth of poverty and the Local Government Election in August 2021.
Public Sector Wage Bill

The government yesterday tried to stop today’s long awaited big day in the Labour Appeal Court. The government proposed that the hearing be postponed until February 1 2021 and that all parties go back to the negotiation table.

The PSA and Cosatu refused, even though the court case is not going to immediately resolve the matter, with the possibility of either labour or the government taking the matter to the Constitutional Court.

Thus the timeline of a decision that will have a decisive impact on the quality of government debt and the credibility of the targets of state spending cuts is impossible to determine.

So what?

The very fact that the government tried to back out of the court case and renegotiate the cuts and proposed cuts has raised anxiety in some who invest in our government debt. Was government going to offer more than was indicated in the February budget or the MTPBS? How else would they reach an agreement?

This is the big depth-charge risk that at least contributed to the Moody’s and Fitch downgrades on the 20th of November.

And this is directly about whether and at what price government will be able to borrow in future – and indirectly about what should be the priorities and capacity of government spending. Ultimately it is about whether government will be able to pay its debt or risk the devastating condition of national bankruptcy.

The government has placed all hope of pulling back from the fiscal cliff of deteriorating debt to GDP ratios by freezing the biggest item of government spending, namely the public sector wage bill. Thus the government has broken the final year of a 3 year wage agreement forged in 2018 and has promised to freeze those wages over most of the term of the next 3 years.

Promised who, you might ask? Well, promised the people and institutions that lend government money or assess the quality of the debt government already owes.

Unions are well within their rights to argue that the problem isn’t that government has spent too much on the public sector wage bill but rather that government, the ruling party and/or senior state and party officials have stolen the money – which might be a legally uncertain assertion, but certainly rhymes with the national mood. Government is arguing that it would be unconstitutional to be held to an agreement struck before the devastating economic impact of the Covid19 pandemic; that it cannot, in absolute terms, afford to give the increases to which it previously agreed. For now the struggle is in the hands of the courts, but in the long run it will be fought in the streets and the election.

… and just as an aside

Earlier this week Business Day (1/12/2020) published an interesting article reporting that the Democratic Alliance had voted against the Division of Revenue Second Amendment Bill, which details how revenues are distributed among national, provincial and local spheres of government.

The bill cuts provincial allocations by ZAR60bn – most of which was destined in some shape or form to fulfill ‘contractual obligations’ to public sector employees. If government loses the case in the Labour Appeals Court – and/or in whatever legal processes follow – the Western Cape argues it will be out of pocket by ZAR2.3bn just in the 2020/2021 year.

According to Western Cape finance MEC David Maynier national government has ‘transferred risk to the provinces by preemptively cutting budgets.”

To give you some sense of the weight of the government’s liability with regard to the public sector wage bill – which has grown dangerously as a percentage of non-interest government spending – take a quick glance at compensation data from Annexure B of the the Medium Term Budget Policy Statement from October 2020. It should be immediately apparent that there is not much left over for other crucial expenditure priorities and it is unsurprising that there has been widespread anger that government found ZAR10.5bn for SAA – instead of softening the blow of the wage freeze in the public sector:



Ace in the hole*

Ace Magashule’s 10th November arrest linked to his involvement in the Asbestos Scandal has the potential to be a seismic political event for South Africa, should he be successfully prosecuted and sentenced. This caveat is important, given both the long-standing capacity constraints at the NPA and the botching of previous state capture prosecutions, including the reversed freezing of Gupta assets in relation to the Transnet-Regiments Capital deals. This case is likely to be different, as the evidence package has been built by the highly-capacitated Zondo Commission in line with the NPA Investigative Directorate.

What could happen next?

Given that the legal merits or otherwise of the state’s case against Magashule and others is both uncertain and beyond our scope here, we will rather concentrate on the political process and consequences that could arise, presuming the case sticks.

“Cadres of the ANC who are formally charged for corruption or other serious crimes must immediately step aside from all leadership positions in the ANC, legislatures or other government structures pending the finalisation of their cases. The Officials, as mandated, will develop guidelines and procedures on implementation, and the next NWC meeting will review progress. In cases where this has not happened, such individuals will be instructed to step aside.” See full NEC statement from August 30 here.

Nominally, in line with the much-vaunted NEC decision taken in August that ANC members charged with corruption should step aside, Magashule should leave his positions as Secretary General and NEC member until such time as he is cleared or sentenced. The odds of Magashule voluntarily stepping aside are, needless to say, quite slim – especially given that less powerful politicians than he have proven resistant to pressure.

So he will have to be forced out if Ramaphosa wants to get rid of him. The procedural route to getting rid of Magashule comes via the sheep in wolf’s clothing National Disciplinary Committee. According to S25.18 of the ANC Constitution, a member who is found guilty of corruption by the NDC is automatically expelled from the organisation (which would mean Magashule yielding all his other positions as well). But rules and regulations are easily subverted, especially with Nomvula Mokonyane as the chair of the Appeals Committee. So, enforcement would have to be driven through the NEC by Ramaphosa and his allies.

When does it happen?

Should it happen, the timing of a Ramaphosa-aligned push to remove Magashule would be important. He cannot be pushed too early: firstly, this risks lending credibility to claims of the politicization of the Free State corruption trials, which Magashule will be keen to amplify. Secondly, the NDC lacks the investigative capacity to convict Magashule of corruption before the actual trial has taken place. He also cannot wait too long: the optics of Magashule overseeing the ANC’s operations do not play well with Ramaphosa’s anti-corruption drive – especially not in an election year. More importantly, Ramaphosa cannot allow Magashule to control the accreditation and delegate apportionment in the build-up to National General Council (between Q1 and Q2 2021) and, more importantly, the December 2022 national (elective) conference, his next major risk moment. The creation of ghost members and parallel branches is likely to begin soon, with provincial, regional and local power brokers keen to exploit their leverage in 2022 and influence conference outcomes.

We know by now that Ramaphosa is mostly risk-averse, so it seems more probable that institutional action will occur later rather than sooner, if and when Magashule has been sentenced by a court (lending decisive weight to his removal).

However, there could be a window for Ramaphosa to act immediately if he feels he has enough NEC support – but pushing through the removal of a sitting Secretary General would likely raise serious concerns of organizational instability from across the NEC. Ace has far fewer friends in high places now than he did 2 years ago, and allies will be quick to jump ship if given the right incentives – but still, we do not think the CR faction feels confident enough to follow this route now.

(Remember the NGC in 2006 forced Mbeki to back down from his dismissal of Zuma as Deputy President. Zuma and his allies were able to spin the implicit victimhood into a successful bid for the presidency. The big difference is that CR never fiddled with the prosecution process, but instead improved the damaged institutions and leadership of the NPA, SIU, Asset Forfeiture Unit, Crime Intelligence and let the process take its course, while Mbeki clearly intervened and corrupted the prosecutorial process.)

Who replaces him?- 

Presuming Magashule is successfully removed, Ramaphosa’s second headache would be his replacement. Procedurally, Jesse Duarte would step in to Magashule’s role on an acting basis – as Cheryl Carolus did when Ramaphosa resigned this position in 1997. Duarte, while by no means a Ramaphosa ally, is probably willing to toe the line sufficiently, and would also represent some kind of “factional management”, placating anti-Ramaphosa forces without properly surrendering any power to them, and possibly mitigating the chances of a splinter group. This is our most likely scenario.

But if Magashule is gone, Ramaphosa’s opponents will be historically weak, and he may gamble to push a different candidate through the NEC, which would strengthen his grip on the party. Gwede Mantashe seems the most obvious choice, as Ramaphosa’s most politically powerful and closest ally, and a 10-year holder of the position, although the nuclear and gas sectors may regret his resignation as a minister – and we don’t think he can be spared right now.

Senzo Mchunu could also take the office he thought he had won as supporters carried him to the stage at Nasrec, although he is the midst of a bruising and vital battle on the public sector wage bill with unions, and seems to have been entrusted with pushing through the wage freeze announced in the 2020 MTBPS.  He is probably not available for the job right now, but might be after 2022.

Ramaphosa may find another “unity” candidate  which placates enough of the NEC to be viable. In all cases, Ramaphosa will be balancing increasing his strength in the party with the need to manage factional discontent.

* Written with my esteemed colleague in Nic Borain Advisory, Laurent Balt.

Corruption arrests and Land ho!

Several posts will be attempts to catch up on relevant news, and argue why I think these are, or are not, important. This is one of those.

Corruption Arrests

Do the corruption arrests constitute a step change in attempts to unpick the tangled web of ‘normal state and economic activity’ from rent-seeking and the criminal diversion of public spending into private pockets? The working assumption is that corruption diverts resources from the poor and hollows out the state so that it becomes at best a home for incompetents and at worst a vehicle for the criminal looting of public resources.

There has been about 40 (and counting) arrests relating to the Free State Asbestos contract, Bosasa, KZN SAPS catering tender as well as a conviction and expected further arrests related to the looting of VBS Mutual.

Then there is the episode of Ace Magashule last week warning against a ‘Hollywood style’ arrest of himself, probably to test the waters of his support (disappointing, for him) and to head-off just such a style of arrest of himself. There is so much criminality sticking to Magashule like bubblegum –Estina?, Pierneef?, the Asbestos deal, the kitchen sink? – I will talk about this in more detail in a follow-up post, but say for now that I will not be speechless with surprise if Magashule is arrested at any moment.

The ZAR6m-7m Pierneef that went missing from Ace Magashule’s Premier Office

Together, these incidents make it difficult not to see a new wave of anti-corruption activity, coordinated for maximum visibility, breaking as I write. It is also the fulfilling of the promise made by head of the Investigating Directorate in the NPA Hermione Cronje that high-profile arrests would happen before the end of September.

So what: Given the deeply embedded, multilayered, multi headed, tangled fibre of corruption through which most of our public life is threaded, it is unsurprising that many snort derisively about arrests or any high profile anti corruption action. However, I believe this would be a mistake. These arrests are obviously the result of painstaking preparation by the NPA, SIU, the Hawks, SARS and Crime Intelligence and other security agencies which in turn are institutionally more sound (although some more than others) because of actions taken by the executive (Cyril Ramaphosa and his cabinet) in early 2018.

Thus it will be impossible to argue that that CR has interfered in the process of prosecuting corruption and state caputure, even after he ammended regulations – in a game changing move – in July 2020 allowing evidence and evidence leaders to flow , from the Zondo Commission to the NPA, SARS and other similar authorities. (There is a good story on this behind a paywall here, but I can recommend that if you pay for only two new sources in SA, Businesslive and Daily Maverick should be your choices.)

Equally, it is too early to crack the Champagne, and probably too early to start saving to buy a bottle. We have every reason to take a ‘wait and see’ attitude. However this surge is the first of its kind and, as we know, the past is an imperfect indicator of the future. The way to eat the proverbial elephant is one mouthful at a time, and I believe the first course has been served..

Land ho … ho ho

Of the booby traps left in the wake of the (mostly) orderly retreat of the Zuma/Gupta/RET/Magashule faction at Nasrec in 2017, the land issue was potentially the most dangerous to the so called ‘reform faction’ represented by Cyril Ramaphosa (I will be discussing in a later post the assumptions we make when we assume CR is a useful proxy for ‘good’ policy prospects for the country as a whole).

It is widely held that the land question has mass public resonance as the sharpest edge of colonial and apartheid dispossession and as the most obvious and visible evidence of ongoing racial disparity. It is also one of many important commitments the ANC government has largely  failed to implement, despite a previously coherent programme of land restitution, redistribution and tenure reform.

The conference decision to instruct government to change the constitution to allow for land expropriation without compensation had some real, visceral support but was also backed by those who need(ed) CR to fail, so they could take back the ANC in 5 years time. ‘Failure’ in this case would arise either from a popular revolt if Cyril Ramaphosa failed to act or if action caused a flight of capital and skills running from weakening protections of private property and leaving behind economic paralysis – causing Cyril to reside over declining growth, making him less electable at the NC in 2022.

While the faction supporting Ramaphosa at Nasrec fought hard against the conference adopting the resolution, it gave in when the Zuma aligned group threatened to collapse the conference and put Zuma in power indefinitely unless their enemies stood back on the EWC question.

Ramaphosa has now gazetted the Expropriation Bill – replacing the Act of 1975 – which gives effect to what is already implicit in the Constitution (according to the long held position of the Ramaphosa camp). This position is that the constitution already allows the state to expropriate land without compensation. The Bill defines where this is ‘just and equitable’ and spells out explicitly what conditions for expropriation, with or without compensation, need to be met.

Parliament will continue with its process to amend Section 25 of the the Constitution – coming to a head in about 2nd quarter 2021, although the Expropriation Act will be living proof, supporting the view of the Ramaphosa camp, that constitutional change was never necessary in the first place. It is by no means certain that the ANC will cross the 2/3rds vote hurdle requirement for a constitutional change but we will have to wait for next year to see.

The Expropriation Bill spells out which land can be expropriated and where compensation may be nil: land purchased for speculation, state owned land unlikely to be used for other purposes, abandoned land, land in which the state has invested more than its market value, and where the land poses a health or safety risk to persons or other properties. But even in these cases the courts (and not the minister as previously speculated) will decided on what is equitable and just  compensation – which may be nil. Overall this reads as a reasonably progressive move that defuses some of the tensions surrounding EWC and remains overall market-friendly.

Undoubtedly as part of the timing, the government announced the release of 700 000ha of land for leasehold for aspirant or established black farmers. The land is mostly in the North West and Limpopo, with smatterings in all other provinces except Kwazulu-Natal and Western Cape.

A portion of the land has been occupied and part of the disbursement will require an attempt to ascertain how other farmers and/or squatters got access to this land and whether some of them may be worthy title holders. Whatever happens the process will not be smooth.

We should note as an aside that the sharper public demand appears to us to be for land closer to city centres for the building of houses. Most government planning on this issue acknowledges this fact, but does not take away from the dual approach: build a class of successful black farmers; make land available for building of houses closer to where people work.

So what: The internal/ANC risks to the CR faction will come due when the ANC holds its delayed National General Council which is designed to assess progress between National Conferences, but we can expected a last gasp attack on CR from the RET faction demanding he explain progress with the 2017 Nasrec conference resolutions. We think he has handled the order to nationalise the SARB (rubbish demand, too expensive, gains the ANC nothing) but EWC and the change of the constitution will carry more weight. However, the intention was to damage CR or damage the economy – the gangsters in the RET factions didn’t care which. And my view is the careful phrasing of the expropriation bill is not going to panic markets and all that is outstanding is the addition of “which may under specific circumstances be nil” added to Section 25 of the constitution and already defined in the Expropriation Act, by then.

 Keep an eye on: Last night’s request by Treasury for a delay in the MTPBS to the 28th of October, from the 21st. The Treasury is under the hammer of conflicting demands and requests. How hard it holds the line will be an important signal and the postponement might be a technical issue, but is grounds to increase risk levels.

Finally, Thursday is the day that the Nedlac agreed plan for economic recovery is due to be released. Those who have seen advance summaries have very little good to say about ANOTHER plan. We wait and see.

Under Construction

Apologies for the inconvenience but this site is undergoing reconstructive surgery – please wear a hat and mask at all times. The regular political commentary that has not been published here for two years will resume when the management finds a WordPress technician who can speak any of South Africa’s official languages.

Meanwhile here is a picture of an interesting frog:

The mossy red-eyed frog is one of hundreds of species threatened by a virulent fungus that may be responsible for 90 extinctions in the past 50 years.














Ne ne ne Nene

The Minister of Finance, unlikely hero and protector of the public purse, has slipped precipitously in public affections as he apologised for visiting the Guptas while Deputy Minister and his son appeared to be at the centre of a scandal at the PIC, the institution for which the Deputy Minister of Finance is responsible – here’s the not bad but turgid M&G on the son’s story and the sneering rejections of the apology from a Sunday Times contributor here.

So what we have here is THE hero of the fight against Zuma, the nuclear programme and the pillaging of SAA who was smashed out of the way by Zuma so he (Zuma) could get his hand on the national coffers. The rumpled guard who stood his lonely duty against impossible odds is now grist for the mill of the self-righteous press and the inane twittering of social media. For crimes and misdemeanors he may – or may not – have committed well before he took his vorpal sword in hand and did some snicker-snack, but not enough to kill the beast, he must be sent, besmirched, unworthy, into the outer darkness.

He’s a good metaphor if nothing else. Be careful of questions you ask, because the truth might not be what you want to hear.

We have set up the Zondo and Nugent commissions that will (hopefully) dig and dig until the slaughtered bodies and tortured truths of the Zuma pillage are dragged into the harsh light. I expect many heroes to be exposed to have old blood on their hands.

Zuma’s campaign with the Gupta’s was not the first attempt at state capture, only the best organised and most ambitious. From Sarafina II to the Strategic Defense Package the clay-footed heroes of our revolution are waiting in their serried ranks to be exposed. (Read Anthony Butler’s interesting piece, The Treasury has always been embattled, its ministers always horse traders.)

It looks like Zondo and Nugent will actually do their jobs, unlike the execrable Sereti, either a bumbler or a crook, and that means we have chosen a path entirely unlike the Sereti cover-up.

The Hawks and SAPS will have to follow the evidence. The wrongdoers will have to be punished.

If I had to guess I would say there were very, very few central leaders of the ANC who have not, at least, lifted a finger to help a friend or family member. And even if they are the best of the lot, they too face the inexorable processes that have been begun and will endlessly unwind the complex webs until the many secrets unravel and are visible gossamer in the wind.

Well good luck with that. It’s not as if there is a generation of ANC – or any other political party – leaders waiting in the wings, technocrats and professionals, to fill the hole that will be left in our political and administrative leadership.

If Nene is the standard for the kind of traitor the bright and clever twitterati believes should resign and be punished for his crimes – and they are right, the law says so, the constitution says so, nobody is above judgement and they are all, all honourable tweeters – then we might have a small human resources problem.

In the real world government, the ANC, the legislature, the executive and the judiciary – as well as the 4th, 5th, and 700th estate (which is about where social media lives) will have to find a way to draw a line, either in time of offence or quality of offense. Below the line you get a slap on the wrist, above the line you face fines, prison and banishment from public work. Without such a line – one that might be impossible to draw – the smallanyana skeletons will make everyone ineligible for office of any kind.

I don’t know how to solve this problem. My instincts are to make a “political solution”, which means my instincts are to sacrifice principle for workability. But I don’t know if that might do irreparable damage to our constitutional democracy. It’s either the iron law or its negotiable, I don’t know which is worse.

Nene reminds me of Boromir of JRR Tolkien’s Lord of the Rings. He’s a great warrior of Gondor, valiant and steadfast, but already corrupted by his temptation to use the One Ring in the war against Sauron and, unforgivably, guilty of trying to wrest it from Frodo. But now he stands facing the Uruk-hai, the sort of Orc spetsnaz. He dies as the hero he was, sprouting thick orc arrows and the bodies of the dead around him as he gives his friends a chance to escape.

Both Nene and Gordhan are plumpish and don’t really fit the image of swords and sorcery heroes gallantly protecting the public coffers from the Zuma Orcs sent in waves against them. But they stood fast and are standing still. South Africa will remember them in myth and song, fractured heroes who held the fragile line.

Counterrevolution and the Tiffany Smith & Wesson

The counter revolution is not gonna headline the Sunday Times

That Sunday organ is a well established field of play for leaks from factions struggling for power in and around the ANC – and, just as an aside, proved itself most obliging to the whole State Capture initiative by assisting the decimation of SARS through its exclusive reports on the Rogue Spy Unit. See one of those despicable stories here and here for coverage of one of the ST’s deeply inadequate and belated apologies.

Hey but they said sorry and changed some editorial staff. No use dwelling on the past, or crying over spilt milk. Time to move along, look to the future. Can’t stay a victim forever … ahem, sounds familiar. And anyway, it is probably the ‘better’ Sunday read so ya gotta do what ya gotta do.

You can imagine my Sundays are not shining beacons of light in my work week. I consume the weeklies that day the same way as experts at eating elephants accomplish their mammoth task: by taking very small bites. I also eat with long teeth, as my Afrikaans brethren idiomatically suggest is the correct manner one chews food of questionable provenance.


I read the lead Sunday Times story first thing Sunday morning. It was written by award winning journalist Qaanitah Hunter; who by reputation and in my experience of her work is without blemish or at least no blemishes I know about. I have never heard (or read) her to be fast and loose with the truth, or to be in the service of any of the many nefarious forces that compete for journalists’ attention.

But that story was very iffy. So, Zuma had a “clandestine” meeting with ANC secretary-general Ace Magashule, former North West premier Supra Mahumapelo, ANC Women’s League secretary-general Meokgo Matuba, and ANC Youth League KwaZulu-Natal secretary Thanduxolo Sabelo at the Maharani hotel in Durban on Thursday last week.

The day before, and sans Zuma according to the story, a comparable meeting took place at the Beverly Hills Hotel in Umhlanga Rocks and was “believed” (by whom, one might dare ask)  to have been attended by Magashule, Mahumapelo and former SAA board chair Dudu Myeni.

The allegation at the heart of the story is contained in the following paragraph:

The meeting is believed to have discussed a fightback strategy that involved court action to challenge the outcome of last year’s ANC national conference at Nasrec, where Ramaphosa was elected president.

Hunter was later sent a picture of a gun from the phone of the charming Ms Meokgo Matuba of the ANC Youth League.

Tiffany Blue and White Pearl

(The Smith & Wesson gun pic Matuba’s phone mysteriously sent to Hunter. I did a reverse image search and found this description which I thought I would share with you to brighten up a dull news day and remind you how classy the ANC Youth League  has become since Julius ‘AK 47’ Malema has left (oops – Ed): “This Smith & Wesson M&P .40 has been coated in Tiffany Blue and White Pearl Coat. Top it off with a little custom graphic work, and this is a great look. Get this pistol into the right light and the Pearl Coat really comes to life! Customize something for yourself today at” Get it into the right and Ms Matubu is unlikely to be showing Ms Hunter how things come to life. {Don’t be snide, it’s unattractive – Ed}.)


Meetings were denied. Magashule met his colleagues in the Top Six and then went on TV to say: yes, I did, in fact, as it turns out, have a meeting with Mr Zuma. No, it was not a conspiracy. There was much clever finessing about who was in which meeting but, ‘it was part of my job as Secretary General of the ANC’ asserted the worthy Ace Magashule. See that interview – here (the links on the eNCA pages seem to be the most stable).


So what?

I have little doubt and absolutely no proof that Ace Magashule and Jacob Zuma and a range of other State-Capture-implicated-individuals are starting to quake in their boots at the fine and implacable grinding of the processes that will  hopefully lead to them receiving their just deserts.

Likewise, I have little doubt and no proof that they are plotting like mad to get rid of Cyril Ramaphosa sooner rather than later. I think the Nasrec thing is a non-starter and they should be focussing attention on getting a NDZ win in December 2022, so Cyril Ramaphosa can be a one-term-wonder and they can go back to the unambiguous state capture festival and continue to avoid the legal consequences.

My view is that they are weakened but still dangerous – as a faction throughout the ANC but with particular provincial and organisational strengths. I argue elsewhere that their future, like the reformists gathered around Ramaphosa, depends to some degree on how the ANC performs in the national election in mid-2019 and how this feeds through into the national conference in December 2022.

The thumb-suck heuristic I am using is an ANC above 58% is good for Cyril Ramaphosa – and therefore, indirectly, good for lowered levels of political risk and investment. An ANC below 53 percent, especially one that slips below 50% in Gauteng or even Eastern Cape would leave Ramaphosa vulnerable. (Although thinking about it again, the latter set of results is so catastrophic for the ANC, the party could well disintegrate … but I will have to argue that out in a later post.)

(Note: I realise I am arguing that a stronger ANC victory is better than a weaker one next year, and I realise how controversial that is. It is not a view I have had since the mid-2000’s, but has re-emerged with the narrow victory of Cyril Ramaphosa in December. It is also not a view that I hold with strong confidence. I am aware of many weaknesses in the assumptions … but it is my view for now and I will attempt to defend it here over the next few months.)

I am interested as to why the story was published, why it was given so much prominence and why it made the allegation quoted above (that this was a meeting to plot to collapse the Nasrec result). If there is ‘information’ to be gleaned here it is more in the fact of the story and its publication, and less in its contents.

As I was saying …


I have decided to resume updating this WordPress site. Mostly with commentary based on news coverage about South African politics and investment risk. Occasionally with articles that I think someone following South African politics may find interesting.

Land ho

Cyril Ramaphosa’s announcement on the land question as president of the ANC has been thoroughly dissected and responded to in the weeklies and online newswires. The statement was delivered late night Tuesday 31st of July after a 2 day ANC NEC lekgotla. There are two linked and slightly discordant payoff lines.


There is also a growing body of opinion, by a number of South Africans, that the constitution as it stands does not impede expropriation of land without compensation. (Emphasis added).


Accordingly, the ANC will, through the parliamentary process, finalise a proposed amendment to the Constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected.

Read the whole statement here or watch it here.

There was much muttering about the ANC using the national broadcaster to address the nation, the lateness of the hour (after 10pm) and the fact that the ANC was preempting an established parliamentary process. However I don’t think these were matters of key importance.

So what?

There are a number of noteworthy points about this announcement.

  • It had previously been assumed that the parliamentary committee would report back in September this year, and that this would be the point that financial markets responded to the manner and content of a motion regarding Section 25 of the constitution.
  • The statement does not deviate significantly from this rhyming couplet from the Nasrec Conference resolutions:

15. Expropriation of land without compensation should be among the key mechanisms available to government to give effect to land reform and redistribution.

16. In determining the mechanisms of implementation, we must ensure that we do not undermine future investment in the economy, or damage agricultural production and food security. Furthermore, our interventions must not cause harm to other sectors of the economy.

  • The Ramaphosa statement does however break with the past by agreeing that the ANC will support an amendment to the Constitution – even though this paragraph is one away from a paragraph that says the Constitution is not the problem.
  • The implicit conclusion is that the statement is primarily ‘political’ as opposed to ‘principled’ – for want of a better way of describing the obvious tension.
  • The ‘land hunger’, apparently identified by the ANC’s own polling and its observation of the public consultation process by the constitutional review committee refers to both rural land for farming purposes as well as urban land for housing purposes. Also the ANC polls indicate a significant portion of its potential voters, particularly highly motivated voters, are strong supporters of this change. Such a category could swing an election.

So what?

The politics can be read at a number of levels. The ANC leadership agreed that it needed to get out from under the EFF dominance of the land reform issue – especially before the Joint Constitution Review Committee reports back to parliament with a possible recommendation that the constitution be changed and before the next national election. The last thing the ANC needs it to be seen to be being dragged kicking and screaming behind what its own research indicates is a stance that enjoys significant and motivated support.

At another level, the fact that the ANC President rather than the Secretary General (Ace Magashule) delivered the announcement could be interpreted as the Ramaphosa aligned ‘reformists’ getting out from under, and ahead of the Jacob Zuma aligned RET (Radical Economic Transformation) group. It may however be that it was considered a matter of such gravity that only the ANC president could deal with it.

However, this is not an optimal strategy for Ramaphosa or his reformist agenda. His allies fought the RET faction on the issue at Nasrec in December, and lost. (Although in all cases we must remember that the ANC statements on this matter are hedged by the conference declaration: “we must ensure that we do not undermine future investment in the economy, or damage agricultural production and food security … our interventions must not cause harm to other sectors of the economy.”)

What we are seeing is Cyril trying to make the best of an imperfect situation.

The only way this works is if the policy and constitutional change is accompanied by a massive social programme to implement all three pillars of the established but failed land reform programme: restitution, redistribution and tenure reform. This will require something of a Berlin Airlift i.e. a costly and complicated intervention, with tight deadlines, that require high levels of commitment and organisation. The ANC government has never got its act together on anything like this scale previously, and there are grounds for skepticism that it will do so now – especially as a close reading of the statements suggests that Ramaphosa and his allies do not believe this is the apex priority to set the conditions for higher potential growth, and in fact the very opposite may be true.


The ANC government either delvers on land, and on economic growth and on a successful election (‘success’, purely to indicate my thinking, means closer to 60% and failure indicates closer to 50%) or Cyril Ramaphosa will face a serious challenge for party leadership at the next national conference in 2022.

Almost any other configuration of the top ANC leadership (aside from the exit of Ace Magashule and DD Mabuza) will cause heightened anxiety in financial markets and be negative for investment.

The successful delivery of land reform is not the terrain on which Ramaphosa would have chosen to fight, but he has been forced onto this battlefield. For him, and perhaps the ANC, this battle might be a decisive driver of outcomes of the Ramaphosa presidency, the ANC’s electoral performance and GDP growth.

Zexit? Make me …

The last two weeks have been given over to overoptimistic outpourings of happiness. Here is the grumpy note I put out on April Fool’s Day as the aforementioned came out skipping into the park, hope reliably triumphing over experience:

Do you feel lucky, punk? Well, do you?

The Constitutional Court ruling against Jacob Zuma yesterday is another significant blow to his credibility and will reflect negatively on the ANC. However he (Zuma) remains in control of his party (even if slightly weakened) and with a significant degree of electoral popularity, especially in rural areas and KwaZulu-Natal. For now I maintain the position that he is most likely not to be recalled before his terms of office ends in 2017 (as ANC President) and 2019 (as country President) – although a recall remains a reasonable possibility. I  outline the arguments for and against this view.

Does Jacob Zuma face a recall?

A flurry of speculation about a possible recall of Jacob Zuma has followed the ruling against him and the National Assembly by the Constitutional Court yesterday.

So what?

The Financial Times yesterday pointed out in an article sub-headed “Real and Ibovespa[1] shine as president’s prospects darken” that “Brazil’s left-leaning president, Dilma Rousseff, probably will not miss when she leaves office … the tendency of markets to loudly applaud her every misfortune” – FT online on March 31 2016 at 08h35.

A similar dynamic is emerging around the apparent fortunes of Jacob Zuma – at least since his unexpected and unexplained firing of widely respected Finance Minister Nhlanhla Nene on 09/12/2015.

So will Zuma be recalled before his terms of office expire?

As an ‘uncertain future event’ question, I am obliged not to give a ‘yes or no’ answer – after all, how can I know?

In the normal course of events Jacob Zuma would be replaced at the ANC’s National Conference in 2017 (probably in December of that year), and as country President after national elections in 2019.

However the damaging scandals that are accumulating around him – the Nkandla scandal and now the humiliating ConCourt ruling, his raid on the National Treasury that underlay his firing of Nene, the widespread criticism of his apparently crony relationship with the Gupta family businesses, the serious deterioration of the State Owned Enterprises and other areas of the state, partly as a result of corruption that directly implicates his (Zuma’s) patronage networks – must in turn be damaging his ANC party.


  • The ANC’s political history will favour an instinctive taking of a protective stance towards its leader and attempting to present a united external front.
  • The ANC is facing a major electoral challenge in national municipal elections in (probably) August this year. It would be extremely difficult for the party to deal with the recall of a still popular and powerful (however bizarre that might seem) president and fight an election at the same time.
  • The ANC was badly damaged and riven after the recall of Thabo Mbeki by the ANC’s National Executive Committee (NEC) in September 2008 and is likely to be cautious about undergoing a similar process against Zuma.
  • Zuma remains powerful within the ANC, having bound the majority of members of the NEC and many powerful provincial leaders into loyalty networks based primarily on patronage and the threat of the loss thereof. His power is slipping but my guestimate is that support is still comfortably above the 50% mark.
  • Zuma remains popular in large sections of the electorate, particularly in the majority province of KwaZulu-Natal and in most rural areas. He has lost significant support in urban areas and amongst the emerging black middle-classes, but this ‘loss’ is still a minority of the ANC’s electorate.
  • The ConCourt ruling essentially affirmed something Zuma’s counsel had already admitted to in the original hearing on Tuesday 9th of February and was surprising primarily for its clarity and depth, its additional criticism of the National Assembly for not holding Zuma to account and its clear list of corrective measures to be taken. This is to say it shouldn’t have come as a surprise to the markets or the public.
  • If Jacob Zuma loses control of the ANC and of the succession process the chances of him becoming swamped by serious corruption allegations after his term of offices ends increases significantly. His and his cronies’ backs are to the wall and they will fight vigorously – and with proven skill – to prevent a loss of control of the ANC.


  • Jacob Zuma has brought much scandal to the Presidency that we believe has damaged the party’s support – although not yet to a degree that puts the ANC in danger of getting below 50% in a national election. (Again a thumbsuck – Ed.)
  • The growing scandals have finally led to the emergence of an internal opposition (internal to the ruling ANC) that showed itself with Jacob Zuma being forced into an almost immediate recall of Des van Rooyen as the replacement finance minister after the Nene firing and the appointment of a previous finance minister, Pravin Gordhan. Since then significant cracks have begun appearing in Zuma’s previously impervious hold on the party, particularly around his apparently corrupt relationship with the Gupta family, whereby he may have handed his exclusive obligation to appoint cabinet ministers to the Gupta brothers. Again, these are setbacks, but have not yet left Zuma isolated. (A lot has happened since I wrote that … amazing that it was only 14 days ago).
  • If the ANC does particularly badly in the coming municipal elections it is likely that pressure for some kind of recall will increase in the party.
  • As Zuma moves closer to the end of his term – and the end of his ability to dispense patronage – it is likely that more distasteful aspects of his support will begin to dissipate, leaving him more vulnerable to an early recall.

On balance …

I think it is most likely that Jacob Zuma serves out his full term of office in both the ANC and the country. Additionally I think it is most likely that as we move closer to the end of his terms of office he will agree to take a step back and play more of a ceremonial role – probably in exchange for some form of promise of immunity. (We are not confident that such a “promise” has any value, but will examine this in later posts – Ed).

A recall is not impossible – or a resignation due to ill health, for example – but I consider this a lower probability than the alternative. It is important to point out I am not ‘married’ to this view and we will change it if and when circumstances and the facts change.

Lame duck – or at least limping slightly

What is clear, and should be considered good news, is that Zuma and his allies are fully taken up with fighting a defensive action. This significantly will lower their confidence and ability to engage in untoward activity with regard to state expenditure, also in the expenditure of State Owned Enterprises, or in undertaking any major cabinet reshuffles to achieve these ends. This may also apply to the proposed nuclear programme.

For example any form of follow-through on the December 2015 raid on the National Treasury or attempts to undermine Pravin Gordhan in his role as National Treasurer are likely to retreat (or at least be deprioritised) in the agenda of the Zuma clan and its business allies.

Thus the impunity with which Zuma and his allies have acted in ransacking aspects of the state is collapsing through hubris and overreach. His support is, as I have argued previously, brittle: hard, unyielding but likely to shatter when it breaks.

[1] Ibovespa is the benchmark stock index of the São Paulo Stock Exchange (Bolsa de Valores, Mercadorias & Futuros de São Paulo).

Does the Gordhan correction undo the damage wrought by Nene’s axing?

You might be surprised at how carefully some people who’ve never set foot on these shores, people who are mostly blindingly clever at maths and informed to a scarily deep level about our politics and history and whose job includes trading our currency and bonds, have asked me that headline question in the last week.

I have a stock answer that is true to myself but provides cold comfort to those whose fingers must hit one or other button to ‘short‘ SA relative to Russia, or vice versa, or Turkey or Brazil or the Philippines or offer up a financial instrument more exotic than I, for one, can understand, an indecipherable instrument that hedges all the angles but still takes a bet that has within its algorithms a call as to whether South Africa sucks completely or sucks less than the market has priced.

That answer begins: “well it’s complicated …”

Zuma as a president and the various cabals and gangsters that have kept him in place have had free policy and patronage range since 2008.

Nhlanhla Nene’s axing was the worst and most damaging – and exposing – decision Zuma and his cronies have taken since Zuma was elected ANC president in late 2007 (and I would include Mbeki’s recall in that comparison.)

Nene’s summary and unexplained axing and Van Rooyen’s appointment showed astonishing depths of either ignorance, cronyism or hubris – but I am tending towards ignorance, seasoned by the other two.

Only an extremely ignorant man, advised by people whose basic stupidity or grandiosity (undoubtedly a perfect combination of the two ) could have shat on the doorstep of global capital markets, of the people, countries and institutions that lend us money, those who own our banks and those who rate the quality of our government debt – and thought they could walk away from their malodorous mess.

We hear all this blather in ANC discussion documents about the crisis of capitalism, the unstable ‘casino economy’ and the glorious rise of China and Russia (India is occasionally mentioned) and this self-serving internal jabbering has left Zuma surrounded by coterie of people who think sentiment and a rain of Chinese dollars has relieved us of the brutal disciplines of global capital markets? Are these not lessons we learned in 1994 – 1996?

What? China will lend/give us money to bail us out as our currency crashes and the bond yields spike? Dream on morons. The markets aren’t everything you know, I hear him bleat, and this is what I have learned, Zuma proudly asserts, from my week at Focac and the visit of Premier Zi Jinping, my new best friend. The rise of China means ‘western’ markets have lost their power to take away our sovereignty.” Yay! Lets fire that neo-liberal sell-out Nene and get along with the business of taking back what is ours.

… and the awful retribution of the implacable, cold and thoughtless ‘markets’ crushed us under its heel, without even noticing.

Okay so a group of ANC leaders managed to slap him (Zuma) and his handlers down and have appointed Gordhan (again) who is going to deliver up some brutal lessons to this crew (I cannot wait!) … you will see in previous posts why I think that Gordhan’s appointment is not only a good idea, but leaves us in a position even better (politically) than when Zuma fired Nene (although it is a close call) – that is the answer I finally give to those who ask the question in the first paragraph … but only after long and probably boring but stern admonishments that complex systems do not yield up easy, dualistic answers.

But I want you to think about our core political leadership … or rather think about what they think about. Who are they? I assume it’s Zuma and his myriad sons and daughters and cousins and wives, it’s obviously the Guptas, the increasingly awful Lindiwe Zulu and others scattered about the differentially abled ANC Youth League, the Woman’s League and the Premier League with Ace Magashule neck and neck with Zulu in the running dog, protect-the-President-at-all-costs, Joseph Goebbels’ cup.

Jacob Zuma gave a perfect explanation (in terms of his logic) and defence of why he axed Nene in the speech he gave after the announcement. Rian Malan, journalist and author, nailed the problem by closely examining the unscripted words Zuma delivered after announcing that Nene was out and Van Rooyen was in.

You must read Malan’s article (here) but the long and the short of it is Zuma said “I am rebelling against (the idea that) what determines the value of a commodity is the law of supply and demand … The value of a commodity is the labour time taken in production …”

Do you know what that means? Do you realise how dire the consequences that flow from this being the view of our President?

Having been in reading groups in the early 80’s where we poured over and over “Capital: Critique of Political Economy” and several of Karl Marx’s other texts, I know exactly what Zuma thinks he means when he incoherently refers to Marx’s  Labour Theory of Value.

In the intellectual vacuum that Zuma and whatever advisers he used when he fired Nene and appointed Van Rooyen there could only have been a complete absence of the knowledge that most of those who lend us money, buy our financial equities or trade our currency base their decisions on the reliability, predictability and respect of the Minister of Finance. It doesn’t  matter if the traders and fund-managers are wrong or right in using this Cabinet Minister as the touchstone of policy credibility, it only matters that they do and the actions and inactions of the head of the National Treasury are scrutinised and combed with ruthless thoroughness by those who sell or buy our currency or debt (and in this case our bank’s equity as well).

We have a President surrounded by a coterie of what I am tempted to describe as imbeciles – and I don’t mean the Cabinet. Do they really think that  (the interrupted) rise of China will free us from the dictates of markets? Our debt, equity and currency are traded on markets where prices are set by how many buyers or sellers there are, not some sentimental, half baked understanding of Marxist theories from the mid-to-late 1800s. When those markets ‘think’ the politicians are clearing obstacles (Nene) so they (those politicians) and their clients can loot the public purse they (the traders) will unsentimentally sell the financial instruments that are the backbone of our economy and we will crumble. And this time we came that close.

We have a steely new Finance Minister who I believe has more reason than ever to stand up to the ignorant and incoherent policy coming from the centre – although growth and our place in the world will make his job intolerably hard.

We have seen that the centre can be countermanded when its decisions are so bad that they could have a real chance of pushing the country into penury.

However the centre is still the centre, and it is still strong and dominant in the ruling party anyway. We are not home and free while Jacob Zuma occupies the driving seat. It doesn’t really matter if he is a crook or a fool -he has shown unequivocally poor judgement, and this looms over us as an ever present risk.