@ChrisRugaber Even better! Thank you
South Africa's ANC elective conference
South Africa's ruling African National Congress (ANC) meets on 16-20 December in Johannesburg for an elective conference to choose a successor as party president to embattled head of state Jacob Zuma ahead of national elections in 2019. The contest looks to be a straight fight between Zuma's former wife, Nkosazana Dlamini-Zuma, and Deputy President Cyril Ramaphosa, who if successful is highly likely to take immediate steps to remove Zuma from office. The contest is so close that legal challenges and accusations of vote-rigging, sabotage, and intimidation are highly likely to prevent a clear outcome, leading to further government instability.
- Despite wide variations in estimates of ANC delegates' pledged votes for the election of the party president, Ramaphosa is consistently in the lead, but this increases the probability of interference by the Zuma camp to prevent his victory at all costs, and thereby bring about a disputed outcome. Zuma would stand to lose heavily if he lost his influence over the ANC, especially if Ramaphosa could quickly engineer his removal as head of state before his term ended in 2019. That departure would precipitate a full report into the allegations of state capture involving Zuma's alleged channelling of lucrative contracts to companies controlled by the Gupta brothers, possible reinstatement of 783 corruption charges relating to a 1999 arms deal, and further graft investigations.
- There are many options open to the Zuma camp to frustrate Ramaphosa's victory, but this would risk deepening the divisions within the ANC and even provoking violence between supporters of the rival camps. One possibility is simply to influence some of the 5,240 delegates, likely through financial means, to change their vote. Other options include legal challenges over disputed provincial conferences and hundreds of controversial branch votes, which could be used as spurious grounds to challenge the result; disruption of the accreditation process; sponsorship of a faction promoting from the floor a "compromise" candidate; and the more desperate options of rigging and intimidation of delegates.
- Any outcome that does not immediately leave Ramaphosa as the new ANC president is likely to cause further damage to South Africa's ailing economy and investment climate, and split the ANC. It would increase the risk of credit ratings agencies downgrading South Africa again, after moving it to junk status in April 2017 following Zuma's sacking of respected finance minister Pravin Gordhan. This would deepen long-term indebtedness, which has risen to over 50% of GDP, and deter investors who might otherwise be enticed by Ramaphosa's pledge of more business-friendly policies and commitment to dismantle the networks and structures that made rampant corruption and state capture possible. If Ramaphosa does not come out on top, there is a high risk that he and his supporters will either leave the ANC or aim to trigger a fresh no-confidence vote in Zuma. This would prolong political instability over the months before the no-confidence vote was arranged, and deepen the damage done to the economy by Zuma possibly pushing through controversial projects such as a ZAR1-trillion (USD71-billion) nuclear deal with Russia.
Indicators of changing risk environment
- Allegations of intimidation and financial inducement to persuade ANC delegates to change their vote from the decision agreed by their branches.
- Violence breaking out at and around the ANC elective conference venue, as has happened in provincial conferences in the past year.
- Attempts to push delegates into voting for a compromise candidate, which is likely to be seen by Ramaphosa supporters as a way for Zuma to retain influence.
- Failure by either side to accept the outcome of the vote, including confirmation of legal challenges.
- Reaction of ratings agencies and international markets, including possible downgrades and depreciation of the South African rand.
Martin Roberts is the Deputy Head of Desk, Principal Analyst Country Risk
Posted 15 December 2017
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