Millions of South Africans heaved a massive sigh of relief just after 19:00 on Monday evening, 18 December 2017, when it was announced that Cyril Ramaphosa had been elected as the new president of the ANC with a narrow majority of 189 votes.
As expected Ramaphosa’s majority was razor however, as the incumbent in power there are strong signs that many hard line Zuma supporters are protecting their careers and supporting him. There are members who may still challenge some results, especially that of Secretary General position, in court. Currently the ANC lawyers and those representing a group of ANC members supporting former KZN Premier Senzo Mchunu who lost out on the position of Secretary General to Free State Premier Ace Magashule by 9 votes are discussing the matter of 63 missing votes. A further meeting is scheduled for January 2018.
Cyril Ramaphosa is desperate to show that the ANC came out of the congress “not only united but stronger than before”. It would therefore be no surprise if a negotiated settlement is reached where the results stands and Mchunu is elevated to a senior cabinet post.
Not only did congress bequeath Ramaphosa a divided management team but they, aided by Jacob Zuma, also left him a number of hot potatoes to handle.
* Expropriation of land without compensation:
This was the ANC at its populist best because section 25 of the constitution already makes provision for the expropriation of property:
(2) Property may be expropriated only in terms of law of general application–
(a) for a public purpose or in the public interest;
(4) For the purposes of this section
(a) the public interest includes the nation’s commitment to land reform, and to bring about equitable access to all South Africa’s natural resources;
(b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.
The issue of land in South Africa is a justice one which needs to be driven in line with the current provisions of our Constitution and not by tampering with the rule of law as the apartheid government did to circumvent entrenched clauses in the constitution.
No matter how Ramaphosa tries to attach provisions to the implementation of this resolution potential investors now know that Cyril Ramaphosa leads a party that is ideologically opposed to encouraging investment. No investor will bring money into a country where there is a governing party that wants even stronger methods to confiscate their property without compensation.
A point worth considering is that the majority of land restitution cases the recipients have preferred to receive cash rather than the land. Does the ANC propose to expropriate an individuals bank account?
* Nationalise the South African Reserve Bank:
This is another populist policy that will achieve nothing other than antagonises investors and the international rating agencies. The primary object of the SARB is defined by Clause 225 of the constitution and the shareholders, the board or the government can change that as the Public Protector found out in a recent High Court judgement.
If these good ANC cadres think that the reserve bank holds lots of money that can be siphoned off they are in for a rude awakening because the bank’s mandate is policy making and protecting the value of the Rand.
Any nationalisation will be purely cosmetic because the power lies in the hands of the governor and the deputy governors who are already appointed by the president.
The nationalisation will only antagonise investors with no benefits to South Africa.
* Paying for free tertiary education for all students from low and middle class households:
In an apparent move to boost the candidacy of Dlamini-Zuma the president announced that government will subsidise free higher education for poor and working class students enrolled at TVET Colleges or university students from South African households with a combined annual income of up to R350 000pa during the 2018 academic year. Poor and working class households is defined as households with a combined annual income of up to R350 000″ by the 2018 academic year.
South Africa is facing a financial crises so in recent days Ramaphosa and the ANC is now suggesting that this will be phased in over a five year period. There is still however no indication as to where funds for the current year will come from.
* Fiscal Discipline:
The review by Moody’s of South Africa’s sovereign credit rating with the potential of a down grade after the national budget at the end of February is still hanging like a sword over South Africa’s head.
Nothing has happened to alter predictions by Finance Minister Gigaba that the revenue shortfall will hit R50.8bn and the deficit will increase by 30% more than the 2017 budget target, to 4.3% of GDP with the gross national debt projected to reach 61% of GDP by 2022. Added to this is the additional burden of approximately R12 billion for free tertiary education.
One wonders what tricks Gigaba can pull out of the hat to balance the budget without resorting increasing the tax on individuals and businesses to discourage investment and entrepreneurial expertise in the country.
Ramaphosa and Gigaba will also need to take immediate steps to re-establish trust and confidence in the National Treasury and SARS both of which have been implicated in State Capture in recent months. Calls for tax boycotts and civil disobedience find fertile soil when there is a lack of confidence in the key organs of state finances.
* State Capture:
The new ANC president has to show that he is serious about eliminating corruption and state capture. During the run up to the ANC elective congress and also subsequently he has been talking about the need to take steps to prosecute those guilty of corrupt activities and appointing suitably qualified individuals into senior positions in government and State Owned Enterprises (SOEs).
But don’t hold your breath, remember that it was Ramaphosa who was charged with fixing these entities under the auspices of the Inter-Ministerial Committee (IMC) on SOEs, which has yet to deliver on saving the people of South Africa money or eliminating corruption.
* Jacob Zuma:
Without a doubt Jacob Zuma remains Ramaphosa’s biggest headache. As long as Zuma remains president of South Africa and can use his presidential prerogative he will be a problem. It is clear that there can be no trust in South Africa with Zuma around. This was clearly shown this week when the rand strengthened on rumours of Zuma’s removal from office and depreciated by one percentage when it was clear that was not going anywhere.
The ever wily Zuma bought some time by announcing the commission of enquiry into state capture but one hopes that Ramaphosa will see this for the side step that it is.
Ramaphosa would be wise to act early in his tenure of office to force a leadership transition while public and party members are behind him as demonstrated by the booing of Zuma at the ANC’s January 8 rally on Sunday. The longer he keeps Zuma the weaker he appears.
Cyril Ramaphosa has quite sensibly started off his term of office with a campaign of going back to the roots of the ANC to win back support from those disgruntled party supporters who deserted the party during the 2016 local government elections. These voters are mainly middle class and urban voters who do not owe a historical allegiance to the ANC.
He has also adopted a populist approach in his first few public appearances in 2018 particularly with regards to land reform. While making statements such as “It is possible for us to begin a process of working the land and improving agriculture – making it a very successful factor in our country. In fact, we can make this country the garden of Eden” may well assist in winning back supporters from the EFF it is likely to be frowned on by investors and the international rating agencies.
Having used the January 8 statement to merely float ideas rather than outline plans for growing the economy and creating jobs one must hope that he will use this week’s NEC meeting and legotla to develop definitive plans that can be presented to the nation in the State of the Nation address on 8 February and the National Budget two weeks later on 21 February.
He is still going to have to create certainty about the future of the disputed mining charter, will the investment limiting Private Security Industry Regulation Amendment Bill be signed into law and the future of the Protection of State Information Bill – or Secrecy Bill as it has come to be referred to. What will happen to this legislation which has been collecting dust on Zuma’s desk?
It will be interesting to see what message Cyril will give to the delegates at World Economic Forum’s summit in Davos-Klosters, Switzerland from 23-26 January. How will explain the ANC’s policy of land expropriation without compensation, the nationalisation of the reserve bank or the funding of free tertiary education?
As 2018 progresses we will be able to judge whether Cyril Ramaphosa can turn South Africa around or will the only difference be that he will simply give us the middle finger in good English!
Until next time…….
This newsletter is published by Clive Hatch former Leader of the Opposition in the Mpumalanga Provincial Legislature and former DA Provincial Leader. These views are my personal views and do not represent those of any other person or organisation.