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Political risks to watch in SA

Jan 10 2013 17:07 Jon Herskovitz, Reuters
Jacob Zuma

Jacob Zuma won a landslide re-election as president of ANC in December, positioning him to remain as head of state until 2019. (Picture: Greg Marinovich, NewsFire)

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Johannesburg - Ratings agencies fear President Jacob Zuma's policies are eroding the competitiveness of Africa's biggest economy while failing to address corruption undermining anti-poverty programmes.

Zuma won a landslide re-election as head of the African National Congress in December, positioning him to remain as head of state until 2019.

Labour unrest that paralysed large parts of the mining sector for about three months from August has dented investor confidence, hit growth and sent the rand to near three-year lows against the dollar. It looks set to reignite this year.

Meanwhile, former president Nelson Mandela, 94, spent nearly three weeks in hospital in December for a lung infection and gallstone surgery. His frail health has renewed concerns the ANC has lost the moral compass that guided the liberation movement he once led.

Labour unrest

South Africa was rocked by its first major labour unrest this year early in January when police fired rubber bullets and stun grenades to break up protests by farmworkers near Cape Town who shut a highway in a strike for higher wages.

The unrest looks set to intensify in the crucial mining sector as workers returned after New Year holidays with a deadly turf war between rival unions looking set to grow worse in 2013.

What to watch:

Whether Harmony Gold makes good on a threat to shut its Kusasalethu mine due to the labour strife, which could lead to 6 000 job losses and send a resounding message to the ANC that industry is fed up with a poisonous union movement.

'Marikana massacre'

The government appears vulnerable as more details emerge about abuses in the August 16 shooting at Lonmin's Marikana mine in which 34 protesters were killed by police in the deadliest security incident since the end of apartheid.

Testimony of police planting evidence and shooting workers in the back has raised questions about police commissioner Riah Phiyega, a relative unknown, handpicked this year by Zuma to reform a force beset by allegations of corruption and brutality.

What to watch:

- The resumption on January 21 of the official commission of inquiry, where further evidence is expected to be released that could embarrass the government.

Mining taxes

The ANC has called on mining firms to pay more to help it finance social welfare programmes, which could place another burden on companies hit by labour friction. The ruling party's most-discussed measure is a windfall "resource rent" tax.

The government also plans laws to make iron ore and platinum miners sell "small amounts" of output to local processors at a discount to diversify the economy and create jobs.

What to watch:

- The plans still lack detail and should be fleshed out early in the year.

Corruption

South Africa has slid in Transparency International's perceived corruption gauge from 38th in the world in 2001 to 69th in 2012, with many worried the government is ignoring deals that benefit the politically connected.

The Zuma administration has placed before parliament a raft of legislation, which critics say would make it easier for corrupt officials to hide graft while setting up a small and largely unaccountable cabal around the president who would control the flow of classified information.

What to watch:

- Growing protests from the poor, anger at graft and shoddy government performance. Protests could destabilise the ANC.

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jacob zuma  |  farmworker protests  |  strikes  |  ratings  |  economy
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