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Race for ANC top job split down the middle - Credit Suisse

Jul 12 2017 07:43
Lameez Omarjee

Johannesburg – The race for the ANC presidency is split down the middle for Deputy President Cyril Ramaphosa and former African Union chair Nkosazana Dlamini-Zuma, said Credit Suisse research analyst Carlos Teixeira.

According to a report on the ANC policy conference, issued by Credit Suisse on Tuesday, there have been positive developments. Most notably, there is an even balance of power between pro-Zuma and pro-Ramaphosa factions in the party.

“We think that, currently, Cyril Ramaphosa has an equal probability to that of Nkosazana Dlamini-Zuma of becoming leader of the ANC in December,” said Teixeira.

The financial services company’s research also noted that views supporting radical changes to policy to achieve economic and social transformation were not equally held within the party.

Deadlocks not bad

“The expectation going into this gathering was that the long-running push for radical economic transformation by the pro-Zuma faction would have been solidified at the policy conference,” he said.

There was a deadlock on many policy issues, and Teixeira said that it appears the pro-Ramaphosa faction managed to win a few debates. There was also a pushback on certain policy proposals.  

The debates on policy are expected to continue until the elective conference in December. “More radical policies are likely to be proposed by the Zuma faction, as it attempts to recover lost ground, in our opinion.”

READ: ANC divided over land, mines in policy talks

There was a deadlock on the discussion of land reform, as those calling for expropriation without compensation did not get majority support. Investors are likely to be concerned about the policies and interventions used to achieve the intentions, the report indicated.

Credit Suisse views the decision to research the impact of a change in the Constitution to allow expropriation without compensation, as a win for constitutionalists. “Research takes time, as does the process of amendments to the Constitution, which require a two-thirds majority,” the report read.

Credit Suisse is also of the view that the mining charter, which was not fully endorsed, will likely be revisited. “It faces court challenges by private industry. Some within the ANC, including Cyril Ramaphosa, have called for renewed discussions with the mining industry.”

As for the mandate of the Reserve Bank, the conference resovled that private shareholding of the bank should be ended.

ALSO READ: Rand knocked as ANC proposes nationalising Reserve Bank

“This would be consistent with global practice generally and would make no difference to the conduct of policy by the bank, in our view,” the report read.  

However the monetary policy framework remained untouched. “So while the resolution on the 'ownership' nature of the bank was poorly received by financial markets, the fact that the policy framework emerges untouched from the conference is a loss for the 'populists' in the party, in our view, and a win for the ‘constitutionalists’.”

Fiscal policy will continue on the path of consolidation, Credit Suisse noted.

The decision to do away with the phrase “white monopoly capital” in favour of “monopoly capital” is also viewed as a victory for constitutionalists. The softening of “radical economic transformation” to Ramaphosa’s “radical socio-economic transformation” also conveys a more, which conveys a more collaborative approach to solving the country’s problems, the report explained.

The conference also revealed a need for correction within ANC leadership, said Teixeira. The party’s diagnostic report presented by Secretary General Gwede Mantashe indicated a decline in public trust in the ANC. This was seen in the outcome of the 2016 municipality elections as well as reports of state capture, he explained.

“The policy conference appears to have shown that a large part of the ANC recognises that the party will continue to lose electoral support if it does not self-correct.”

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