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The Ramaphosa Heuristic

Tracking the momentum of Cyril Ramaphosa – his vulnerability to attack within the ANC, his ability and intention to implement structural reforms and accountability for corruption – has become a widely used heuristic for assessing the state of South Africa more generally.

A heuristic is a mental shortcut. In this case, it’s a way of substituting a complex set of questions and answers with presumably simpler proxies. It can describe any number of problem solving or decision making strategies that are ‘adequate’, but not perfect.

Such shortcuts can be useful. Without them we live overwhelmed and paralysed as increasing volumes of information, misinformation and deliberate lies pour into and through our heads.

However, this kind of heuristic should not be the analytical equivalent of examining the entrails of a chicken. There must be a viable reason to argue why a shortcut or proxy question might stand in for a larger one. And, importantly, we must understand the limitations of the exercise.

Assumptions about Ramaphosa

To use this heuristic consciously one would need to believe or ‘assess’ that Cyril Ramaphosa has an optimal plan for South Africa and that he has the optimal means of implementing the plan.

Only last week CR launched the South African Economic and Recovery Plan – download it here – with which, let’s assume purely for argument’s sake, we agree and, further, that we think it is a plan based on a good reading of the problems or trajectories it is trying to correct. Also let’s assume that the plan might be a compromise, because of CR having to: balance the potentially conflicting interests of labour, business, employed/unemployed, different government departments, different sectors of the South African population (e.g., rural/urban); while staying within boundaries that would otherwise make him vulnerable to attack from his enemies in the ANC itself, staying within the boundaries of international treaties and obligations … I could possibly go on and on and on … but we assume, for the purposes of this exercise, that these are ‘optimal’ compromises. That is, where he has had to do less – or more – than he wished because of the need to keep an interest  group ‘on board’, we assume he has pushed it as close to his desired outcome as the politics allow.

Thus this heuristic is based on the view that:

  1. The ‘necessary’ conditions to correct the economic and political trajectory of South Africa (made ‘sufficient’ by urgency and decisiveness) are the implementation of structural reforms and an effective campaign to win back control of all spheres of government from state capture and corruption.

  2. Cyril Ramaphosa is the only available (or most viable) agent to bring these conditions into existence.

These two assumptions and the heuristic that results from them, need to be applied cautiously. My view is an over enthusiastic application has already distorted some risk assessments, particularly immediately after Nasrec in January 2018 when what later became the pejorative, ‘Ramaphoria’ ruled the investment mood. Possibly the ‘error’ was deepened by the forgivable relief of not having Jacob Zuma in the job. But it should be obvious in retrospect that “not being Jacob Zuma” is an imperfect credential for being a good president.

Ramaphoria was a wild overestimation of the will, agency, plans and political support of Cyril Ramaphosa and a wild underestimation of the depth of damage done over the so-called lost years.

Another assumption post-Nasrec was that Ramaphosa held the same beliefs and goals that market actors tend to: fiscal discipline, SOE rationalisation and a range of policies on their wishlists. But this was more a projection of one set of actors onto Ramaphosa, rather than an accurate assessment of both what was possible and what Ramaphosa’s policy programme actually was. Initial market disappointment over failures to slash public sector expenditure and bring a new ruthlessness to SOCs was predictable, and largely a product of unrealistic expectations, rather than failed promises (although these aren’t in short supply).

I do happen to think, and have argued and will argue again, that the ANC that held its national conference at Nasrec in December 2017 elected the best president it had available for election to that post. Further, I use the Ramaphosa Heuristic when all I have is a few seconds to glance up at the scoreline of history.

However, I am extremely cautious about expecting too much from one man and his party. Perhaps the world is always a furious storm of unpredictable chaos. But right here and right now, I am particularly watchful of my own and others’ instincts to impose unrealistic simplifications on complex problems.

To read more about heuristics you can do a lot worse than starting with the great Daniel Kahneman’s “Thinking, Fast and Slow” (2011).

 

 

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.

Anyway.

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 http://www.tzarmory.com” 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 …

Greetings.

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.

Firstly:

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).

Secondly:

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.

Speculative

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:

JacobZuma
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.

AGAINST RECALL

  • 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.

FOR RECALL

  • 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.

 

 

‘Tis reasonable to hope this might be the season to be (faintly) jolly

For those who were tortured by my somnolently incoherent post last night, here is the follow up. Hopefully a little clearer.

  • The flip-flops around the Minister of Finance leave Jacob Zuma looking weak and vulnerable. There are grounds to begin questioning whether he will see out his full term.
  • The appointment of Pravin Gordhan is a victory on a number of different fronts and should be celebrated.
  • We can expect the process of fiscal consolidation to continue on track.
  • It really is the season to be jolly.

Gordhan’s shock reappointment as Finance Minister – positive

Jacob Zuma fired the increasingly widely respected Minister of Finance, Nhlanhla Nene, on Wednesday December the 9th. He gave no reasons but there had already been wide speculation that:

  • Nene decisively blocked a nonsense SAA deal to lease some Airbus planes upon which Zuma associate SAA board chair Dudu Myeni had set her sights;
  • That Nene was pushing important investigations into corruption or mismanagement at SABC that were getting uncomfortably close to Zuma’s close personal friend Hlaudi Motsoeneng and
  • Most importantly Nene was blocking the (approximately) ZAR1-trillion nuclear deal that was the pet project of Jacob Zuma and his close business associates the Guptas – who had appeared to prepare for the deal by investing heavily through Oakbay investments in several uranium mines

Almost immediately the ZAR tanked, the bond yields spiked and everyone with a voice screamed blue murder at the irrationality of the axing.

Zuma then, perhaps more mysteriously, appointed the relatively unknown and unqualified David Van Rooyen to the post, despite there being many highly qualified candidates available (South Africa has made a point of putting its highest quality ministers into the National Treasury position.) The widespread assumption was that Nene was being replaced by someone who would be more compliant to the President’s wishes, and more importantly, to the wishes of those who are in business with the President.

Then …

Then, even more shockingly, late last night (13/12/2015) Jacob Zuma did an about turn, dropped Van Rooyen and reappointed Minister of Co-Operative Governance, Pravin Gordhan, as Finance Minister (a post he – Gordhan – held prior to Nene’s appointment 18 Months ago.)

Jacob Zuma has had his wings closely clipped – which is a good thing

The decision to axe Nene bordered on the criminal but most analysts thought that Zuma could get away with anything he wanted within the ANC – even as the ANC lost support amongst the electorate. Well it appears they were wrong. A powerful enough group of leaders have got together, sat Zuma down and forced him to make a humiliating climb down. The financial market response might have helped and the bleating of the opposition and the press would have given some support, but the ANC prides itself of being impervious to the shallow swings of public opinion (which is no bad thing). This was an internal leadership revolt against Zuma, the Holy Grail that many had been hoping for as the country went from the healthy constitutional democracy of 2007 to this damaged (in many of its most important institutions) country, almost overwhelmed by rent-seeking and corruption.

We out here in the public realm don’t know anything for sure, except Zuma was given a ‘warm klap’ (warm slap – colloquial Afrikaans) and we can hope that this might begin the unravelling of his negative influence on the country and its politics. The admonishment and humiliating climb-down must have been caused by ANC heavyweights who have finally found their voice and power enough to put Zuma in his place.

Pravin Gordhan will be a better Minister of Finance – even than he was before

Gordhan has all the credentials and had a close to faultless term as head of the National Treasury. (If memory serves, like all heads of the NT his slips concerned the public wage sector bill and desperate attempts to avoid public sector strikes.) His only weak point is he tends to run an unhappy office … it was widely speculated that the staff at the National Treasury were unhappy with his dictatorial style of leadership. This we can live with.

Of interest is that since Gordhan had left the Treasury a witch hunt has been conducted in Gordhan’s previous posting, the South African Revenue Service, SARS. The witch hunt has been against an alleged “rogue spy unit”. The fact is the special investigation units, established by Trevor Manuel and Pravin Gordhan were an essential part of investigating complicated tax avoidance and fraud cases, especially those involving heads of large criminal networks and powerful politicians. It is a small step to see who might have been the obvious targets of the special investigative units. And an even smaller step to see why and who has stimulated the witch hunts and slander against the loyal SARS investigators involved in these units – calling them rogues and criminals, and ensuring their dismissal or buyout.

Thus this is going to be a Finance Minister that nobody is going to push around – especially not Jacob Zuma and his cronies – against whom Gordhan has good reason to feel ill-disposed. It’s a win-win.

My only faint worry is I am not sure of Gordhan’s attitude to the nuclear programme. I am sure he will not do anything to threaten the process of fiscal consolidation, but as an old style ANC securocrat he might have an over-attachment to nuclear power (an affliction of those who grew up in the ANC in the 70’s mostly because of the USSR’s warm embrace of that technology).

Don’t call me stupid, stupid

Having been woken by my children to tell me we had a new, new finance minister I blundered out of bed and scribbled this for my paying clients – forgive the blurriness it is essentially the sleeping pill that’s doing most of the world work.

There were 7 more errors in this paragraph. I just fixed the ones that jumped out and bit me on the nose – and left the crazier ones visible so you too can learn not to write when on sleeping medication. There rest cans stay in the farmyard.

Dear All

Don’t call me stupid, stupid

  • Pravin Gordhan appointed Minister of Finance – 5 days after the obscure Dave Rooyen’s appointment (It’s 10 p.m. on  Sunday evening so this is a bit late and bit rushed).
  • The only possible good side is that Zuma responded well to universal criticism from prices and the press and the commentariate.
  • The truth is policy is in free-fall and Zuma clearly does not know what he is doing.
  • This is a scary time and it would be appropriate to be as cautious as possible

Jacob Zuma has just announced that after ‘careful consideration’ he had decided that he was rescinding the appointment of David Van Rooyen as Minister of Finance and appointing instead, previous Minister of Finance Pravin Gordhan. It could be that with the ZAR falling  out of bed, that condemnation of Nhlanhla Nene’s unexplained removal was almost universal and our bond and currency markets were in chaos … whatever it was, it was a deeply embarrassing and  chaotic act redolent of uncertainty and panic.

Even though this is a “good” decision, from Zuma’s perspective it is “clutching” at straws, it looks weak, it look like the centre cannot hold. Expect serious political instability in the palace of power. Zuma must be back against the wall, making a decision that makes him look  so  weak, so foolish.

I will try and deal with this in more detail in the morning.

Nic Borain

 

 

Overreach – how generals, tyrants and puffed up fools implode

Business Day  this morning published an article suggesting that Nhlanhla Nene was on the verge of being shuffled out of his Minister of Finance position to some face-saving backwater.

I wrote early last week in a client note: “It is widely held that the National Treasury and Minister Nhlanhla Nene have come under hostile pressure for investigating close Zuma allies and an axe in the form a threatened Cabinet shuffle hangs over Nene’s head to keep him compliant with Zuma’s own spending priorities and plans for SOE’s and nuclear power roll-out (to which Nene is widely believed to be opposed in its current ZAR1-trillion form).”

However I have repeated to several of my clients that I believe that while Zuma might axe Nene is might be a step too far, the moment the great leader overestimates his greatness and fails to understand his Ozymandian limitations.

Nene is the first black African Minister of Finance and he is at least as steely and technically competent as any of his post 1994 predecessors. Last week be brought the meat-clever down on the plan of SAA board chair Dudu Myeni (widely suggested to be an intimate of Jacob Zuma) to place a mock-up company in an already done leasing deal between the national carrier and Airbus. The company would have been nothing other than a rent extraction tool – and added hugely to the costs of the deal. Myeni’s reprehensible argument was that it was all for the purpose of transformation – proving that the political elite uses the practice to loot the SOE budgets as much as it ever does to promote real BEE.

Nene has also been going after the SABC’s Motsoeneng (another person who brags widely about his relationship with the President and his untouchable status) and he (Nene) has been widely assessed to be dragging his heals on Jacob Zuma’s pet nuclear deal that in its current form  would beggar the country and state finance for many years to come.

So Nene has apparently got in Zuma’s face and he is facing the axe – according to various stories including the one linked above.

When Nene was first appointed on May 24 2014 I expressed concern about his seniority in the party and questioned whether he would be able to stand up to the fiscal pressures that would be placed on him – especially in relation to his predecessors in the position and especially in our declining growth environment.

I was wrong – if anything Nene has been both stronger and more tactical in his attempts to meet the increasingly difficult targets of fiscal consolidation – given the endlessly lower levels of growth. The rating agencies, those who grade South African government debt and have recently moved us closer to non-investment grade (i.e., junk) have come to rely on the dependability of the head of the National Treasury. We have a tradition of putting some of our best ministers in the position and Nene has risen to the challenge.

The Business Day story quoted above (which might be rubbish, but chimes with several of our initial views) suggests that some “malleable” nobody by the name of Des van Rooyen from the Parliament’s finance committee could replace Nene (the closest information I could find on a web search for this character was this smarmy speech on the ANC website).

I have no idea if this is true, but have concluded elsewhere for a range of reasons and from a range of sources that Nene is vulnerable and that ‘an axe hovers over his neck’ because he has stood up to Zuma.

If Zuma gets rid of Nene, because the head of the NT has offended Zuma’s friends and he is showing opposition to Zuma’s nuclear retirement plan or legacy project he (Zuma) would be making a grave mistake – a mistake leaders who have come to overestimate their power often make.

Axing Nene will be read by the capital markets and rating agencies in exactly the terms I have described above – Nene has been exemplary in his job except when forced to concede to political pressure from the top – and even then he has skilfully manoeuvred to lessen the damage.

If Nene is axed I will be unsurprised to see us downgraded to junk by the end of 2016.

I will also be unsurprised to see political shifts against the leader (Zuma) who has finally overstepped the mark, who has heaped damage upon damage on the South African political economy, especially as regards to its reputation for probity, but who has especially damaged the reputation of the ANC.

I see from the Business Day story that the rumour is the Guptas “let the cat out of the bag” (read “announced”) the impending Cabinet reshuffle. Excuse me! This more than anything suggests (if it is true), not for the first time, that Zuma has sold our sovereignty to these shady interlopers for something a lot more than a mess of pottage.

My underlying point is that Zuma’s power is becoming more brittle and his lines of support stretched thinner and thinner. He is engaging in actions that parts of his party find repulsive and there is a point beyond which a system under stress can quickly unravel as the connections snap and the nodes pop.

 

 

 

 

The race is on …

… but it’s difficult to know who to back

Thank you Mail and Guardian for publishing the story we all wanted even though you have probably broken the whole cannon of ethics in journalism.

The story to which I refer, titled “Ramaphosa starts fight for top job”, was published in the print edition of the aforesaid newspaper on November 13, it was written by Mmanaledi Mataboge & Matuma Letsoalo and leads with that treasured line: “ANC deputy president Cyril Ramaphosa has declared his intention to stand for the ruling party’s presidency in 2017, sources say.”

Yes, we all know that sources say “Space pumpkins stole my baby”, “Jesus was an astronaut” and “Jacob Zuma has no relationship whatsoever with SAA chairperson Dudu Myeni”, but in the M&G case referred to above I am prepared not only to forgive them because they took one on the chin for the team but I honour, respect and encourage them through the difficult times that lie ahead for them and other similarly esteemed organs.

So …   Cyril Ramaphosa is the presidential candidate for a slate including Gwede Mantashe, is (probably) backed by Gauteng and Eastern Cape provincial ANC’s, is also backed by Limpopo but unreliably and incoherently.  They (this camp) will fight on every terrain where votes are up for grabs in 2017 – which includes KwaZulu-Natal that they narrowly lost to the opposition at the provincial conference last weekend. They will obviously try to win Western Cape, Northern Cape and seem confident that the ‘premier league’ provinces (Free State, Mpumalanga and North West under the the charming patrons, Ace MagashuleDavid Mabuza, Supra Mahumapelo) should yield votes in their favour too.

The other camp, let’s call it the Nkosazana Dlamini-Zuma Camp, is backed by the ‘premier league’, the ANC Women’s League, the ANC Youth League, the winning faction in Kwazulu-Natal (and that is big cheese in ANC internal national votes) and all the premier league provinces. So they are ahead, in case you missed that.

If that’s all plain sailing for you up till now, here comes the confusing bit: the SACP is under vigorous attack by most of the elements supporting the Dlamini-Zuma camp and we must assume the SACP is backing the Ramaphosa/Mantashe ticket.

I would prefer things to be neater. I haven’t argued this point in these pages in enough detail – or with enough vitriol –  but in my private pantheon of villains of South African post liberation politics the SACP has pride of place. In about 2005, facing a probable ousting from the ruling alliance by Mbeki, the SACP pulled off a tactically brilliant but deeply unprincipled counter stroke by riding the debauched, corrupt, amoral, untrustworthy, deceitful, disreputable, tribal, traditionalist, sexist, shameful and scandal-ridden – but still saleable to the populist masses – Jacob Zuma back to power in December 2007 – later ensuring Mbeki’s early removal from the presidency. (Can I say that on my blog? No, you’re fine. That’s all true. I took the illegal stuff out; it halved the length of the story – Ed).

The SACP was lavishly rewarded in the Judas coin of cabinet posts and general status and influence and continued to act as Jacob Zuma’s strength and shield through the myriad scandals that were to follow.

It is my belief that the impact this party’s control of industrial policy has had on our national economy has been little short of ruinous, and its top leadership has shown arrogance, contempt and self-aggrandisement on a scale I would never, ever, have predicted from the party I idealised throughout the 1980’s.

So what happened? Why did groups I assume are close to … or proxies for … Jacob Zuma begin attacking the SACP. (Lets leave the #FeesMustFall for the moment as a stroke of luck for those pushing this line … and get back to it when we are being more conspiratorial.)

Slight rumours of criticism of Jacob Zuma’s various excesses and the SACP’s culpability in its stance in relation to the president filtered into the public domain from discussions internal to the SACP in the lead up to its 3rd Special National Congress in July 2015. Perhaps that self criticism was a lot harsher and the party realised that sticking with Zuma, his policies, his patrimonial and clientelist style, his absence of a plan would lead the country, the ANC and the SACP towards catastrophe?

I do think the SACP has been a restraining hand on the worst excesses of corruption and patronage … so it is not inconceivable that in contrition (and lack of other choices) they have joined the good guys.

I have discussed in detail in the past why Ramaphosa will always be treated with caution by the exiles, Robben Islanders, and the those who worked primarily in the underground military and security apparatuses of the banned ANC. I will get back to this question as I think the conclusion I drew might be changing.

Three last small points

I think  both candidates would be more than adequate to fill the positions they are competing for. A significant portion of Dlamini-Zuma’s support is coming from groups that are characterised by the words I used to describe Jacob Zuma six paragraphs above this one. If there is a large centrist group of progressive Africanists, waiting to show their hand for Dlamini-Zuma, let them do so soon. And they should learn from the SACP that unprincipled alliances can end up doing you much harm.

The ‘woman for president’ argument is basically rubbish. Interestingly it was Thabo Mbeki in his struggle against the rise of Zuma that brought up this facile and distracting little trick. At least Mbeki had made the right noises about the role of women throughout his presidency so that when he suggested Phumzile Mlambo-Ngcuka (then deputy president), alternatively Nkosazana Dlamini Zuma, it could not as easily be dismissed as a dishonest ploy.

The argument being advanced in 2015 that Nkosazana Dlamini-Zuma should be president because it is time for a woman president, is being advanced by the most backward, traditionalist, dare I say misogynistic, elements of the ANC. Dismiss the argument out of hand – even if the appointment of a women president, perhaps of the highly experienced Nkosazana Dlamini-Zuma, might be something of which we could all be justifiably proud. The argument has been advanced purely for factional reasons – which doesn’t necessarily mean it won’t get support from those who believe it would be inherently a good thing.

Finally this is all being played out in the public realm (which basically means it is being cobbled together out of hints and rumours by analysts and journalists) extremely early.

Remember this is a contest that will only be formally resolved in 2017 (probably in December of that year) at the ANC elective National Conference and only lead to a change in the country’s government and president in 2019. I assume it is a sign of desperate desire for change (for the better) and fear of change (for the worse) that has caused these issues to assume such a central public focus so early.

 

 

 

 

 

The alliance is dead, Zuma’s dignity saved and SA dams on life support – and how I think I know what I think I know

I wanted to discuss something called heuristics, which refers to the way we make decisions or reach an understanding about something, especially when the matter under consideration is complicated.

The word (heuristics) can mean the short cuts we take but the general field also deals with the many errors of thinking to which such short cuts can and do lead.

There was a particular line from a client note I wrote earlier this weak as I was considering the matter of Dianne Kohler Barnard’s booting from the Democratic Alliance that I thought about afterwards and wondered on what basis I had reached the conclusion.

The line was : “If I had to take a wild, but still informed, guess, I would say the DA is likely to pick up stragglers from this defection but the EFF will get the lioness’s share, and apathy the lion’s” (this being in relation to ANC losing support in urban black middle-class and DA attempts to keep its current support and also win some of the new.)

But then I thought I might as well show you the note before I went onto a discussion about heuristics to give myself something to use as a basis for the discussion. The version of my note below had some of the ruder but funnier bits pulled by those who have better judgement than me. But seeing as this is my website I thought I would leave in the the silly jokes as I wrote them.

SA Politics – 3 November 2015

  • Kgalema Motlanthe says the alliance is dead… and the ANC respectfully nods its head. The SACP and Cosatu look increasingly as if they will be on their own soon.
  • The Gauteng ANC and the Gauteng government fighting to bring the ANC as a whole back to the black middle class (and the middle classes generally).
  • The DA uses the meat cleaver against supposed racist sentiments in its ranks – but a rose is a rose is a rose.
  • Drought and failing infrastructure raises risk that water shortages will be the new load-shedding.
  • … and in other news, ideal candidate Tokyo Sexwale stands for FIFA presidency and the ANC Women’s League marches on the Union Buildings in heroic defence of Jacob Zuma’s dignity.
Ex-President Kgalema Motlanthe says the unsayable truth that everybody knows and a calm and respectful ANC welcomes his intervention … the pigs have indeed taken flight

In an exclusive interview with Business Day yesterday (catch it on YouTube here but the whole – extremely interesting – text here), the widely admired and respected ex-ANC deputy president and ANC secretary general and ex-country president (from 25 September 2008 to 9 May 2009) said things about the ruling alliance that everyone knows but few have dared say.

The alliance is dead, Motlanthe declared. The three organisations have become one organisation. In so becoming, Cosatu expelled 350,000 workers by expelling its largest affiliate, the National Union of Metalworkers of South Africa (Numsa) as well as the leadership that had criticised the failure of Cosatu to take a stand independent of the ANC. The ANC would now meet as opponents those workers and shop stewards in Nelson Mandela Bay Metro and other areas of the Eastern Cape in local government elections next year.

He said a number of other things that were stern – if coded – attacks on the current leadership of the ANC:

  • Rising debt is fast approaching 50% of GDP. “We have a crisis and people who understand that are the people in Treasury because every week they have to go and borrow money in order to manage the current account… and they are raising this money in markets where political sentiment counts for naught”.
  • “Nuclear, for instance, it’s going to cost trillions,” he said. “If you have no regard for public debt… and it’s public debt… not government … it would affect each of us, each individual South African” – Business Day 02/11/2015.
  • He stood against Zuma at Mangaung party elections knowing he would lose because he refused to be part of a leadership where “it would be a constant battle just to get them to operate on the basis of the (ANC) constitution” – Business Day 02/11/2015.
  • He thought the decision to expel Julius Malema was part of the rise of unethical and factional decision-making. Now “(what) the EFF is saying resonates with their (young people’s) own feelings.”
  • The bullying tactics of the ANC in the National Assembly alienated people from minority groups – for example Afrikaners were “drawing back into their laager”.

The ANC put out a media statement, to the astonishment of many, on 2 November saying: “The African National Congress wants to affirm Comrades Kgalema Motlanthe as a leader and a voice reason” – and went on in the same vein – see here.

Cosatu diplomatically trashed him: “we find it regrettable that, he has ignored all the facts,” said the official statement. “Cde Kgalema was part of the leadership collective in government and in the ANC that defended labour brokers and e-tolls …” etc., etc. See here for the whole whine.

The SACP is, for the moment, maintaining a stunned silence.

So what?

Motlanthe is seen, in my opinion correctly, as an impeccably honourable man and representative of the ANC’s best instincts – which is largely why the Zuma machine had to squeeze him out after Mangaung in 2012. But there are new winds blowing through the ANC. Zuma is either on the retreat or happily edging towards retirement. The SACP and Cosatu are closer than ever to exiting (probably by being pushed) the ruling alliance.

While opposition is growing everywhere, it does not yet threaten the ANC’s overall and powerful majority. However, anyone with an eye on 2019, 2024 or 2029 – for example Motlanthe – the implacable consequences of the current trends are obvious. Defections from the ANC are closely linked to perceptions of corruption and the nepotistic behaviour associated with the Nkandla gang, perceptions that are most strongly held by the urban middle classes.

The ANC can either start or make visible a process of renewal at its National Congress in 2017 or a gradual decline, shift into rural areas and the defection of the urban middle classes is inevitable. This is precisely the road Zanu-PF took when it started losing ground in its most educated urban constituencies. That Zimbabwean journey is on-going and unhappy.

Gauteng – trying to seize the ANC by the scruff of its neck and pull it towards modernity and the urban middle classes

Look at this full page advertisement in Sunday Independent 1/11/2015:

Capture

… and this:

Front page advertisement in same newspaper
Front page advertisement in same newspaper

So what?

We have written extensively (here for the most detailed example) about the ANC losses in the Gauteng metropolitan areas in the May 2014 election and how this is applying pressure on the ANC to move back towards its urban middle class base.

The above advertisements are an almost perfect example of the marketing – and governance – campaigns the ANC Gauteng provincial government is conducting, undoubtedly with its eye on the 2016 local government and 2019 national elections.

As the link to our research above indicates, the ANC is vulnerable in its most sophisticated urban constituencies (Tshwane, Ekurhuleni and the Greater Johannesburg Metro in this case) and is least vulnerable in the poorly educated and poverty stricken rural areas.

(Some analysts interestingly believe that this is a ‘perverse incentive’, linked to this defecting black middle-class, for the ANC to underfund tertiary education. See the inimitable Johnny Steinberg argue this case, with all the requisite subtlety and disclaimers, in Business Day 10/30/2015 here.)

The Desperate Alliance

Ms Dianne Kohler Barnard, (now ex) shadow minister of police, was axed from the Democratic Alliance over the weekend after she was found guilty of misconduct, bringing the party into disrepute and contravening its social media policy.

What she had done was share a Facebook post that argued some aspects of government were better managed under apartheid strongman PW Botha than they are today. She claims not to have read the post properly, and immediately deleted it and apologised when she realised what it said. She was initially suspended but a disciplinary committee decided to expel her from the party.

So what?

On the face of it this appears to be a harsh and hurried sentence – unless the disciplinary hearing discovered that, in fact, Barnard did have apartheid sympathies and is an admirer of PW Botha. I find this unlikely – but that her re-posting of the article was careless and insensitive is beyond doubt. However, the punishment probably has more to do with DA desperation to woo suspicious black voters than any previously hidden demonic impulses in Barnard.

The DA has to make whatever strategic choices it feels are necessary, but we doubt that expelling Barnard or, in fact, electing Mmusi Maimane, will be enough window dressing to tempt the mass of voters into the shop. Risk is always highest as one steps from a safe ledge to another. The DA is stuck in a peculiar conundrum of needing to take care of its “racial base” in its ‘safe’ white and coloured constituencies (apologies for the casual South African terminology – we use these terms because they had precise historical/legal meanings under apartheid and they have on-going consequences and meanings in the present) while reaching out to the ANC’s fragmenting urban middle-class base.

If we had to take a wild, but still informed, guess, we would say the DA is likely to pick up stragglers from this defection but the EFF will get the lioness’s share, and apathy the lion’s.

Kidnap and MTN – risky business

City Press 11/01/2015 argues that the size of the proposed MTN fine for tardiness in deactivating millions of improperly registered SIM cards despite numerous warnings and fines, is because the matter “stopped being a purely regulatory issue and became a matter of national security” when unregistered MTN SIMs were used by kidnappers to negotiate a ransom for a former Nigerian finance minister in September.

The Nigerian Communications Commission has imposed a fine of N1.04 trillion, the equivalent of ZAR70b (a number of different estimates are given, but this is the general region). Read the full article here and another take here.

So what?

Regulatory and political risks are rising throughout the world, as sovereigns assert their power over markets, globalised or otherwise, partly in response to the Great Recession and partly in response to terrorist threats (and often to protect their own ‘national’ enterprises against foreign competition). It has now become common for massive fines to be imposed by governments on companies that are not necessarily domiciled in the jurisdictional area under that government’s control.

Drought and failing infrastructure raise risk that water shortages will be the new load-shedding

KwaZulu-Natal and Free State provinces have been declared disaster areas due to drought conditions that are worse than they have been for 24 years. Minister of Water and Sanitation Nomvula Mokonyane said 170 water schemes (that usually means dams) in the country are currently affected by the drought – Eye Witness News 02/11/2015.

Water utilities are also under pressure after years of under-investment while having had to expand connections to millions previously denied access by discriminatory legislation under apartheid.

“Water shedding will take the form of pressure reduction to manage leaks in the system and an overall loss of assurance of supply,” said Anthony Turton, a professor at the Centre for Environmental Management at the University of Free State.

So what?

Food security, food price inflation and a multitude of industrial processes are water dependent. Water clean enough for human and animal consumption is also, obviously, important. The predicted length of the drought and the state of our increasingly rickety water and sewerage reticulation systems represent increasing risks in South Africa.

And in other news …
  • Tokyo Sexwale, ex-Robben Islander, businessman, ex-Premier of Gauteng and ex-Minister of Human Settlements (and ex-too-many-other-things-to-name) has announced he will be making himself available to replace Sepp Blatter as FIFA president. Sexwale has very little football administrative experience and I cannot think of anyone better qualified to run FIFA … it’s a perfect fit.
  • The ANC Women’s League marched on the Union Buildings last Friday in the high priority cause of ‘defending Jacob Zuma’s dignity’. Some commentators have argued that it was a last ditch attempt. “That horse has bolted,” said one analyst who preferred not to be named Elspeth. Almost 300 members of the League were engaged in the mass march which was peaceful and well ordered.

So … my intention is to use bits of that to discuss heuristics, for those of you who are clamouring to hear more about that.

That’s nothing! I remember ….

There were several times last week when I felt admiration for the protesting students, including those who crashed through the gates of parliament and, quite bravely in many cases, stood up to the SAPS’s counter attack, stun grenades and all.

I admit to some brief, irresponsible, trickster elation – Loki let loose upon the world – good for them … ha ha, let it all burn … that will show the fat bastards inside the building.

I didn’t lose my sense of judgement to the degree that I never felt sorry for some of the SAPS members who were woefully unprepared and overwhelmed, just as I felt disgusted with others for the unnecessary violence against the initially peaceful, if somewhat over-boisterous, students.

But by the time the Sunday papers rolled out I was becoming slightly nauseated by the ridiculously laudatory and pompous language being used to describe the protesting student of the #FeesMustFall and #shutdown campaigns.

I am not giving examples because these were mostly hyperbolic aberrations from commentators and journalists I otherwise admire (read City Press, the Sunday Independent or the Sunday Times of the 25th of October 2015 and the point will clearly and quickly be made). In general the pitch and tenor was thus:

Eugène_Delacroix

… which is Eugène Delacroix ‘s “Liberty leading the People”, 1830 – the French Revolution before it ate its children.

Well, this week the #FeesMustFall movement is also eating its children – although it’s a much smaller snack than the French feast after 1830.

However the students have banked the partial victory of the 0% fee increase for 2016. And can there be anyone in the SA news-consuming-public who has not considered the many accounts of black students shaving their nutritional intake so they can send part of their National Student Financial Aid money back to their parents and siblings?

This is what I wrote in a client note earlier this week:

Student protests – expect splits, fragmentation, radicalisation, isolation, ill-discipline and loss of momentum – but they kept it together long enough to change the game.

The student protests against fee increases have begun to wind down and fragment after the sometimes violent clashes at the Union Buildings on Friday where President Zuma acceded, in a closed meeting with student leaders,  to the 0%-increase-for-2016 demand.

In parliament Minister of Higher Education (and General Secretary of the SACP) Blade Nzimande had a torrid time defending his handling of the protests and explaining where the money for a 0% increase would come from. His main proposal was: “My view is that the government must have the political will to tax the rich and wealthy to fund higher education” – quoted in Business Day 28/10/2015.

So what?

The student revolt has deepened the opposition to government in general and increased disillusionment with party politics amongst students throughout the country. On balance the ANC has probably lost more ground than it was losing in this constituency anyway. However, the ruling party retains a variety of youth allies that operate on the campuses (including several SRCs, the ANC Youth League, the South African Students Congress – SASCO – and the Young Communists League – YCL.)

There will be fiscal implications that we will be exploring in the next few weeks as we examine the problem of funding for education generally and higher education in particular.

Zuma’s government must feel beset from all sides but the more focussed political attack is on the South African Communist Party – coming from within the ANC. Prior to its special national congress in July the SACP let it be put out that it wasn’t quite as gung-ho about Zuma’s increasingly corrupt and incompetent presidency than it appeared from its slavish defence of the man from Nkandla for the last 6 years. This in turn has led to Zuma’s most ardent (and patronage driven) supporters in the ANC Youth League (and the so called premier league) to escalate an attack on the SACP and its leadership. The student revolt against fee increases was a opportunity welcomed by these groups to join an attack on Nzimande.

It is still too early to predict with high levels of confidence a final collapse of the ruling alliance but the possibility is probably higher than it has been since 1994. An exit of the SACP (and probably Cosatu) from their formal ‘governing alliance’ status with the ANC might lead to ‘financial market positive’ changes in industrial and labour policy, but as likely might remove some of the constraints on corruption the SACP and Cosatu have brought to government and the alliance.

Okay, enough of all of that.

What I really wanted to say was that while watching the student and police confrontations my thoughts went back to the many protests and clashes  my ‘comrades’ and I had with with the police and army in the 1980’s.

On the ‘white’ campuses it was largely just teargas and beatings with shamboks or quirts – although I remember the panic and fear as much as I do the elation.

In the townships it was a different matter – shotguns, R5 rifles and necklacing  – excitement, yes; but also horror and terror.

I was explaining some of the differences between then and now to a close family member who is a student at a ‘previously white’ campus.

As I spoke I gradually came to realise something – funny at first, but then embarrassing. I was starting to sound remarkably like the Four Yorkshiremen.

The 1980’s was not worse than Marikana; and I am forced to remind myself that this, too, hovered over those students last week as the possible consequences of their actions.

So to lighten it slightly and to own up to my own pomposity, I sent that family member a copy of the famous Monty Python piece.

Four well-dressed men sitting together at a vacation resort.

Michael Palin: Ahh.. Very passable, this, very passable.

Graham Chapman: Nothing like a good glass of Chateau de Chassilier wine, ay Gessiah?

Terry Gilliam: You’re right there Obediah.

Eric Idle: Who’d a thought thirty years ago we’d all be sittin’ here drinking Chateau de Chassilier wine?

MP: Aye. In them days, we’d a’ been glad to have the price of a cup o’ tea.

GC: A cup ‘ COLD tea.

EI: Without milk or sugar.

TG: OR tea!

MP: In a filthy, cracked cup.

EI: We never used to have a cup. We used to have to drink out of a rolled up newspaper.

GC: The best WE could manage was to suck on a piece of damp cloth.

TG: But you know, we were happy in those days, though we were poor.

MP: Aye. BECAUSE we were poor. My old Dad used to say to me, “Money doesn’t buy you happiness.”

EI: ‘E was right. I was happier then and I had NOTHIN’. We used to live in this tiny old house, with greaaaaat big holes in the roof.

GC: House? You were lucky to have a HOUSE! We used to live in one room, all hundred and twenty-six of us, no furniture. Half the floor was missing; we were all huddled together in one corner for fear of FALLING!

TG: You were lucky to have a ROOM! *We* used to have to live in a corridor!

MP: Ohhhh we used to DREAM of livin’ in a corridor! Woulda’ been a palace to us. We used to live in an old water tank on a rubbish tip. We got woken up every morning by having a load of rotting fish dumped all over us! House!? Hmph.

EI: Well when I say “house” it was only a hole in the ground covered by a piece of tarpolin, but it was a house to US.

GC: We were evicted from *our* hole in the ground; we had to go and live in a lake!

TG: You were lucky to have a LAKE! There were a hundred and sixty of us living in a small shoebox in the middle of the road.

MP: Cardboard box?

TG: Aye.

MP: You were lucky. We lived for three months in a brown paper bag in a septic tank. We used to have to get up at six o’clock in the morning, clean the bag, eat a crust of stale bread, go to work down mill for fourteen hours a day week in-week out. When we got home, out Dad would thrash us to sleep with his belt!

GC: Luxury. We used to have to get out of the lake at three o’clock in the morning, clean the lake, eat a handful of hot gravel, go to work at the mill every day for tuppence a month, come home, and Dad would beat us around the head and neck with a broken bottle, if we were LUCKY!

TG: Well we had it tough. We used to have to get up out of the shoebox at twelve o’clock at night, and LICK the road clean with our tongues. We had half a handful of freezing cold gravel, worked twenty-four hours a day at the mill for fourpence every six years, and when we got home, our Dad would slice us in two with a bread knife.

EI: Right. I had to get up in the morning at ten o’clock at night, half an hour before I went to bed, (pause for laughter), eat a lump of cold poison, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad would kill us, and dance about on our graves singing “Hallelujah.”

MP: But you try and tell the young people today that… and they won’t believe ya’.

ALL: Nope, nope..

To whom it may concern …

To those who noticed, apologies I disappeared without so much as a by-your-leave or hint of explanation.

Two pressures and one anxiety drove my precipitous descent into silence.

The first was increasing time constraints that led me to be largely republishing here bespoke material a few weeks after those who had paid for it had seen it. And it was, as a result, quite stodgy and formal – and constrained by myriad compliance regulations that govern what can and can’t be passed off as ‘research’ in the financial markets.

The second was the legitimate concern that almost universal cost cutting would cause some of those who pay for my research or writing to do the calculation and conclude: “ah, what the hell, lets wait two weeks and then we can get it for free anyway.”

The third issue is a more generalised anxiety I have with social media, celebrity and this golden age of narcissism. Who cares, or more strongly: who should care, about the passing fancies and non-peer reviewed musings about SA politics from someone you might not even have met and whose credentials are not obvious? The easy ‘unsubscribe’ button has helped me put this worry behind me.

I think it was Samuel Johnson who said: “No man but a blockhead ever wrote, except for money” and aside from private letters, shopping lists and work that adds value to our literary inheritance, l agree with him.

I am unlikely to be adding to our ‘literary inheritance’ any time soon, however I do intend to start writing, mostly about SA politics, here again, even if it is occasionally.

Why?

The need to market my wares is one reason I am happy to acknowledge  – and I hope Johnson would approve.

But there are other reasons that are slightly more difficult to explain. I think it was  Michael Ondaatje who wrote in one of his poems something along the lines: ‘I never know what I love till I write it out’. (I promise to find this quote and this poem).

Well, I never know what I know until I write it out. Or even stronger: I never understand what is happening until I can write an explanation that is not full of lies or incoherence. Many posts, especially if they are rushed and poorly edited, will contain ‘lies’ – I mean the kind I am not aware I am telling. But the joy and terror of writing here is lies expose themselves to me, and to anyone else who cares to see them, as soon as I hit the ‘publish’ button.

Finally, of course, it’s important for citizens and those who care about the country to discuss politics. It’s either everyone’s business or it’s the business of those who have stolen it and practice it in secret.

Issues of the day

Unsurprisingly I am right now consumed with the NGC, the SCA ruling on the Public Protector’s powers, the Premier League, the titanic battle in the ANC in KwaZulu-Natal, succession, the shifting fortunes of the SACP, the potential of opposition parties, the 2016 municipal election, the collapse of our resources sector and the awful oncoming wave of lay-offs, the chaos in organised labour, the hard swings in the ANC’s foreign policy … and the possible impacts of any and all of these matters on economic development and economic policy in the future.

I will publish something that strikes me as particularly interesting here in the next … week (I almost said ‘weekend’, but ‘under-promise and over-deliver’ is the new trite management mantra to which I hope to subscribe soon).

(The SCA ruling link is to Pierre De Vos’ Constitutionally Speaking, obviously.)