South Africa’s African National Congress (ANC) gathers this week to review and revamp its policies at a meeting that will be overshadowed by a power struggle to succeed South African President Jacob Zuma as leader of the ruling party.
South African Deputy President Cyril Ramaphosa and former African Union Commission chair Nkosazana Dlamini-Zuma are leading the field of contenders to be elected head of the ANC in December and probably president in 2019.
Dlamini-Zuma has backed her ex-husband’s call for “radical economic transformation” to increase the black majority’s share of wealth, while Ramaphosa has put more emphasis on inclusive growth and a clampdown on corruption.
The leadership contest will not feature on the agenda of the six-day ANC policy conference that starts today in Johannesburg, but divisions between the competing power blocs will play out in the debates over issues such as land redistribution, and ownership of banks and mines.
“What people will look for at that conference is to what extent it gives an indication as to who’s winning in the ANC, in terms of the factional battles going on there, and what that means in terms of economic policy and markets,” said John Orford, who helps manage about 600 billion rand (US$46.3 billion) at Old Mutual Investment Group.
Policy decisions by Zuma have weighed on local assets: He fired respected minister of finance Pravin Gordhan in March, a move that saw the nation lose its investment-grade status with two ratings companies for the first time in 17 years and sparked calls from within the ANC for him to be fired.
Reports by the nation’s graft ombudsman and thousands of e-mails leaked to the local media implicating Zuma and his allies in the looting of billions of rand from state coffers have heightened party divisions and compounded investor unease.
Zuma denies wrongdoing.
South African stocks have missed out on an emerging-markets rally this year, held back by an economy that slipped into recession for the first time in eight years.
Divisions over what needs to be done to address the malaise have become increasingly prominent in the ANC this year.
While Zuma backed a new mining charter published on June 15 that calls for greater black ownership, which has been condemned by the industry, Ramaphosa said companies and the government should “go back to the drawing board” to reach a consensus.
The president has also called for the constitution to be changed to allow land seizures without compensation, an option discarded by other senior ANC leaders.
Draft policy proposals circulated ahead of the ANC’s policy conference contain few new initiatives to revive growth and tackle corruption, said Susan Booysen, a politics professor at the University of Witwatersrand’s School of Governance in Johannesburg.
“I see a serious mismatch between the challenges of the time and the solutions that the ANC proposes,” she said by telephone.
Nomura International economist Peter Attard Montalto said in London he expects the talks on land redistribution and other measures to effect so-called radical economic transformation at the conference to garner the most investor interest.
Industries such as mining and financial services, which the government has indicated require intervention, are most at risk from policy changes, he said in an e-mailed response to questions.
John Stremlau, a visiting professor of international relations at the University of Witwatersrand, said he expects policy issues to take a back seat until the ANC succession battle plays itself out.
“They are so preoccupied with the leadership struggle, I don’t think we are going to see light at the end of the tunnel until after December,” he said.
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