Alec Hogg: Why SA business is now coming out against Jacob Zuma (video) | Fin24

Alec Hogg: Why SA business is now coming out against Jacob Zuma (video)

Apr 08 2016 07:21

Last week the Constitutional Court confirmed that the President of South Africa Jacob Zuma failed to uphold, defend and respect the country’s constitution. He has since apologised for his actions, and while the ANC has accepted, opposition parties called for his impeachment.

National assembly voted against this motion, given the ruling party’s majority, but how does this impact business and more importantly international investment?  Biznews founder Alec Hogg was interviewed by Divan Botha, the host of Kyknet show Winslyn looking at South Africa’s political economy. The full interview was first broadcast on DSTV channel 144 and is transcribed below.- Stuart Lowman

Divan Botha: Hello Alec.

Alec Hogg: Hello Divan.

Alec, I always say it’s difficult to separate business and politics, but we just had the Constitutional Court saying that our President actually defied the Constitution and there’s also his role in office. What’s the impact on normal South Africans?

Well, I think South Africans are wondering what happened in the last year/last five years, that we’ve got to the situation we’ve gotten to now. Remember, the ruling party were instrumental in creating the Constitution in the first place. We are a constitutional democracy. That’s what we are and if you have the President of a country and the National Assembly that break all the rules, I guess people are wondering ‘what next’.

Let’s take it back to business. We saw that when we had the announcement where the President said he’d apologise publicly, that the Rand actually appreciated and after that, it actually appreciated slightly more. Do you think that there’s a very clear link between what’s happening in politics and the value of our currency?

There definitely is. I like the description that I heard from political science professor of Princeton University who said that in a developing country like South Africa, politics is more important than economics. The minute we can start understanding that, then we can track the changes a lot easier. We have a situation in South Africa where the ruling party itself is very clearly split.

They are trying to paper over the cracks and indeed, if it was a normal democracy as even the South African Council of Churches said last week, then the President would have resigned over what he did. It’s not a normal democracy and the ANC don’t really want him to go. They’ve had an experience once before with Thabo Mbeki and the party split.

It wasn’t a big split, but COPE was a significant loss to the ruling party at that time. Whatever happens, they’re going to do it at their time. They’re going to do it at their pace, but they’re going to do it.

It’s a fascinating statement – that you say they’ll do it at their pace. Many times, the market wants the President to resign rather than what’s actually going to happen. Just a few hours ago… Even before I get to that, I always say, “Is business vocal enough during these times?” Business kind of lags the political party or the opposition parties. Firstly, why do you think that’s the case? Why do you think business takes so long to actually react?

We have a history in South Africa, which is one that puts business on the back foot for starters, with business primarily being perceived as white. It’s not really the case anymore. If you look at the complexion of the people who own the companies and indeed, the executives of the companies, it’s a lot better balanced than its perceived to be but that’s the first thing. Business is on the back foot.

It doesn’t want to talk too loudly because it is concerned that it might be hit over the head, as happened during the Mbeki presidency where many of the business leaders (think of Paul Harris at Rand Merchant Bank/FirstRand and the hiding he got).

Anglo American at the time: Tony Trahar got into terrible trouble with the South African government for expressing his point of view. I think things are shifting, though. If you look at the last week, you had the Guptas who are related very closely (thanks to Julius Malema) to Jacob Zuma (the Zuptas) and the Guptas have lost – very publicly – their services company KPMG.

Today, we had the news that both Barclays Africa and Sasfin have terminated their relationship with the Guptas. In a previous regime, they might have done so very quietly. At the moment, business is coming out very strongly in support of Pravin Gordhan.

If you recall, they accompanied him on the tour around the financial capitals – both to London and to Boston/New York – and they were vocal in their support, including someone like Christo Wiese who has played a low profile his whole business career. Yet he was on that roadshow sitting next to Pravin Gordhan, telling the international community why they should trust this man.

Let’s talk about what happened thee hours ago. It seems as though Trevor Manuel broke complete rack and he said, “It’s time for the President to resign.” Do you think that if he starts breaking, that will see others following suit?

Well, its already started. It started with Barbara Hogan. It then went through to Vytjie Mentor (what a beautiful name). Then we had the Deputy Finance Minister (Mcebisi Jonas) who confirmed that he had been offered a job by the Guptas. Trevor Manuel has been vocal. He was vocal over the Nenegate saga. He has now though (today) said, “Zuma must go”, which is a complete divergence from what one has seen from within the ANC at the moment. To be fair though, Zuma and Manuel were never really great friends. When Zuma took over, Manuel was no longer kept on as Finance Minister. He was put into a different portfolio so it’s not entirely surprising. There is however, a bit of a business slant to this as well – that Trevor Manuel is now the Chairman of Old Mutual an he’s also the Deputy Chairman (here in South Africa) of Rothschild so he’s seeing it differently.

We only have 30 seconds. One thing is the Panama Papers. Do you think it’s really going to be as big as we think it is?

Very dramatic for South Africa if the ANC members open their eyes and see what actually happened. We now have it confirmed in the Panama Papers: Jacob Zuma met with the President of the DRC.

Shortly afterwards, huge oil blocks – 3700kms and 2500m2 – that were owned by Tullow Oil, which they got in 2006 through a transparent process were taken away by presidential decree and given to companies, which are now shown to be owned by Khulubuse Zuma. Not only causing international ructions, Tullow Oil is a R37bn company

listed on the London Stock Exchange but also the presidential decree, which is going to affect investment in that country and in Africa.

Absolutely. I think this thing is going to get some legs and I’d love to chat to you at a later stage about that. Thanks, Alec.

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biznews  |  jacob zuma  |  alec hogg  |  zuma must fall  |  sa economy


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