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Cape Town – As the National Executive Committee (NEC) of the African National Congress starts its meeting on Friday, an economist said the market has underestimated the support for the Jacob Zuma camp and its ability to “fight dirty” in a way the rest of the ANC can't.
That’s the warning from Nomura's emerging markets economist Peter Montalto on Thursday.
This follows tension within the ruling party of Zuma’s links with the Gupta family, which has been accused of offering politicians jobs via Zuma as long as they push their business agendas through.
Deputy finance minister Mcebisi Jonas and former ANC caucus chair in Parliament Vytjie Mentor both claimed that the Guptas had offered them top Cabinet positions.
Senior ANC politicians have voiced strong concerns over the allegations and analysts believe they are trying to push for a recall at the NEC meeting.
Montalto said that while an exit plan for Zuma could happen later in the year after local elections it seems less likely now. He expects “a broadly stalemate whitewash outcome from this NEC”.
“The Tenderpreneur faction is currently in the majority on the NEC and will likely back Zuma with a whitewash outcome from the meeting,” he said.
Explaining how Zuma could be removed as president, he said there was the recall and constitutional options.
The recall option is where the NEC decides, as the deploying body of ANC cadres, to tell an office bearer that it basically has lost confidence and wants them to resign. “Our understanding is that a motion must be put to the NEC by a senior leader (most likely a top-six member) or an ‘elder’ to be voted on and approved by simple majority.
The constitutional option occurs in parliament. “The courts have no mechanism for removing the president, but judgements of the president acting unconstitutionally (which is an issue in the current Nkandla case) can be important catalysts.”
He said the ANC will want to resolve the issue “in house” and to do recall with private votes behind closed doors rather than have the ANC and opposition parties voting together in parliament.
The ANC, he said, might decide it is better to deal with these issues after the local elections battle this year where the ANC is already under pressure.
Montalto said the market would have a major rally on Zuma’s exit. “It would be the inverse of Nene-gate in December. It would likely stave off downgrades for now at least as agencies gave South Africa the benefit of the doubt. The market would likely become overoptimistic at the prospect of real change occurring.”
