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Radical economic transformation to take central stage at ANC policy conference

Jun 28 2017 18:29

Cape Town – Radical economic transformation will be the “key badge of entry” into the ANC faction aligned with presidential hopeful Nkosazana Dlamini-Zuma, according to Peter Attard Montalto, emerging market economists at Nomura.

Around 3 500 delegates will gather in the south-west of Johannesburg from Friday to Wednesday for the ANC’s five-yearly National Policy Conference.

Although radical economic transformation has been discussed for at least the last decade at ANC policy conferences, it is likely to take central stage this time around, said Montalto. “Not for ideological reasons but as a defining political wedge to split the party and drive an agenda to electoral success for the Dlamini-Zuma camp in December and then in the general elections in 2019.”

Logistics of the conference

Montalto explained that the six-day policy conference will split into a series of working groups to consider different policy agendas.

"The ANC’s policy discussion documents released in March act as the starting point for these discussions, but through the discussions and a series of consensus-forming exercises driven by committee chairs and rapporteurs each group feeds into a final list of policy resolutions which are combined and voted on at the end of the conference. The conference opens and closes with speeches from President Zuma.”

The policy resolutions coming out of the conference are technically recommendations to the ANC’s National Elective Conference in December where delegates vote on the points; they are then formally adopted and become ANC policy.

In the past, there has been relatively little deviation from the discussion documents, but then factionalism in the ruling party was less, he noted.

Discussion points

Five-year policy discussions at previous conferences were less important in the past, but this year is different and radical economic transformation will be central for the Dlamini-Zuma faction.

READ: ANC leader race down to Dlamini-Zuma and Ramaphosa - Bloomberg Survey 

Montalto expects delegates to discuss:

  • Macroeconomic policy, specifically referencing the rebalancing of the budget and the need for the new presidency-led process on budget strategy to push transformation faster through budget choices, although there should not be a major appeal for a mass increase in expenditure. Nomura however is of the view that there will be some reference to either the South African Reserve Bank’s constitutional mandate or that of the monetary policy committee to drive transformation, growth and job creation.
  • Financial sector transformation, especially availability of credit to black small and medium enterprises. “Although specifics are unlikely, we believe the Dlamini-Zuma camp wants to emulate the Mining Charter for banks,” Montalto said.
  • More aggressive land reform. “The wording in this discussion document may be deceptive in the final resolutions but we look for some push towards, or at least opening the door to, land expropriation without compensation. This could be dressed up in a consultation or a request by the ANC for government to reconsider the current structure of land reform to deliver faster.” 

That said, Nomura does not expect the Dlamini-Zuma camp will do any “wholesale rewriting” of ANC policy.

“Instead, we think these specific issues will become factional wedges driven into the party. The language used may be subtle and complex; however, we expect it to represent the real starting gun for factional alignments into December’s elective conference,” Montalto said.

Previous policy conferences

Montalto pointed out that during the ANC’s 2012 policy conference in Mangaung there were no specific policy recommendations on monetary policy, but a reference to the “balance of fiscal and monetary policy”.

The final policy resolutions from the 2012 National Elective Conference promoted flexible inflation targeting more strongly but made it clear that this should be ‘without sacrificing price stability’ which at the time could be viewed as an important compromise on language. 

“We may expect the resolutions to go further this time to reference ‘transformation’ as the Public Protector reform did recently.”

Montalto said Public Protector Busisiwe Mkhwebane’s ordering that the mandate of the bank be changed, according to a report she released on June 19 based on an investigation on the Bankorp bailout during the apartheid era, was a “deliberate precursor to the policy conference”.

With regard to land reform, in 2012 at the policy recommendations already moved away from “willing buyer, willing seller” to “just and equitable”, and seen already as a shift in line with and within the constitution.

READ: Investors seek clarity on ANC policies - research 

As for transformation of the financial sector, there were mentions of the need for greater access to finance, but no other specifics.

“Overall, the policy conference should be viewed through a non-ideological lens around succession,” Montalto says.

However, if there is no policy clarity emanating from the conference it could have adverse consequences for investment, economic growth and South Africa’s sovereign credit ratings.

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