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Political risks to watch in SA

Johannesburg - Labour strife, unemployment and inflation cloud the outlook for South Africa, with global credit ratings agencies questioning if President Jacob Zuma is up to the task of running Africa's largest economy.

Zuma, who is expected to win re-election for another five year term in polls next year, has tried to reassure investors he has a plan to fix the economy and is serious about tackling a corruption problem that has led to the waste of billions of dollars meant to eradicate poverty.

But his ruling African National Congress (ANC) has undermined the message by putting legislation before parliament that would add more regulation to a labour market rated as one of the world's most restrictive while stepping up punishments on those who try to expose graft.

Zuma also faces criticism over millions of dollars in public funds spent to upgrade his country estate and the deaths of 13 soldiers sent to the Central African Republic.

Labour unrest

Mining firms Anglo American Platinum (Amplats) is looking to cut about 14 000 total jobs after seeing production and revenue drop during a turf war between rivals unions. Gold mining companies have also threatened job cuts due to the labour strife.

Zuma's ANC, which has close ties to one of the unions, is having trouble keeping a lid on the quarrel, setting the stage for another year of labour strife, which could slow growth.

The central bank says expensive pay hikes to settle some disputes were increasing pressure on inflation, which is at the upper end of its 3% to 6% target band.

What to watch:

- Whether Amplats or other firms make good on threats to sack workers.

Central African Republic

Opposition parties and media have questioned the deployment of troops to the Central African Republic, with the groups accusing Zuma of dispatching South Africa's military to the diamond-rich country to protect ANC business interests.

Zuma says the troops were upholding South African policy.

What to watch:

- Documents that may discredit Zuma

- A deployment of South African troops to the Democratic Republic of Congo, which could cause Zuma more harm.

'Marikana massacre'

Zuma's government could come under greater scrutiny as more details emerge about abuses in the August 16, 2012 shooting at Lonmin's Marikana platinum mine in which 34 protesters were killed by police.

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

What to watch:

- Fresh testimony from the official commission of inquiry, where further evidence is expected 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 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, angry at graft and government performance. Protests could destabilise the ANC.

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