Investors wary of SA policies

Johannesburg - South Africa should focus on combating poverty and unemployment, its ruling alliance said on Sunday, priorities likely to worry foreign investors hoping for continued business-friendly policies.

"Decisive action is required to transform the patterns of wealth production and distribution," the ruling ANC, Cosatu labour federation and Communist Party said in a statement at a news conference after holding an alliance economic summit.

"Macroeconomic policy needs to support economic development and employment creation."

The pledge was made during the biggest political shake-up in the history of the African National Congress, which has ruled since the end of apartheid in 1994.

The ANC forced President Thabo Mbeki to step down last month at the climax of a power struggle between him and ANC leader Jacob Zuma, a move that prompted the defence minister to resign and threaten to form a breakaway party.

The creation of a new party would be the most serious division in the 96-year history of the ANC and would raise questions about the direction of Africa's biggest economy.

Mbeki was replaced by former trade unionist Kgalema Motlanthe, who along with Zuma, has said the country would stick to economic policies which won Mbeki praise.

But investors are cautious.

Bowing to pressure

They worry Zuma will bow to pressure from his trade union and Communist Party supporters to steer the economy to the left if he becomes president after a general election due around April next year, which is widely expected.

The more immediate issue is a political crisis which deepened after the ANC suspended former defence minister Mosiuoa Lekota after he strongly indicated he would form a splinter group to challenge the ruling party.

It is not clear how much support Lekota, a former ANC chairperson, has, though he has said hundreds of local party supporters have resigned and that regional and provincial ANC branches are contemplating leaving the party.

One heavyweight, the former premier of South Africa's richest province, Mbhazima Shilowa, resigned from the ANC and joined Lekota's campaign to change South Africa's political landscape.

Although the ANC still enjoys political mileage from its fight against apartheid, some South Africans have become increasingly frustrated with party power struggles that have overshadowed crucial issues such as poverty and crime.

They may welcome a new political party, which could also comfort markets if it sticks to Mbeki's business-friendly policies as expected.

- Reuters