CIB Fireside Chat Episode Five: The political outlook as discussed by Jones Gondo and DR Ralph Mathegka

The fifth episode of our Fireside Chat with Jones Gondo, Senior Credit Analyst, and Dr Ralph Mathegka, a renowned independent political scientist, author and commentator on South Africa’s political landscape was about the ebb and flow of South African politics and how it is shaping the policy environment. 

Dr Mathegka touched on four important factors in South Africa’s political landscape: what the African National Congress (ANC) and its incumbent leader, Cyril Ramaphosa, should do; the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) and their respective stances; and his views on the Zondo Commission.

Many South Africans are facing socioeconomic difficulties characterised by low economic growth, a rise in unemployment and unsustainable public finances, compounded by the Covid-19 global pandemic. There are difficult policy decisions and compromises to be made, but the grand political bargains that move us forward are log-jammed. For the economy to function properly, we need policy certainty, rule of law and strong institutions to attract the type of investment flows needed. 

A look at the midterm policy environment in South Africa

A few of the questions that comes to mind when talking to a renowned political scientist are: is policy failing or is the evident flow evolving? Where are the ANC policy resolutions in terms of implementation? Dr Mathegka has a positive outlook for the state of politics in South Africa, which he attributes to the fact that he follows it daily and in the long term. When looking at things in the long-term, there is a sense that the system has definite patterns. It has settled down and one can almost predict what is to come out of it with regard to policy trajectory. The big question is whether President Ramaphosa will prevail over a divided party and demonstrate that he is hegemonic and dominant in the ANC. 

The state of our politics shows a policy gridlock, with little agreement when it comes to policies. There’s been no robust shift to manage the debt within Treasury, but South Africa has a higher tolerance to crises than expected. While people are angry, they are not any more or less angry than they were a year ago or before Covid-19. What was experienced during lockdown was a concentration of anger that is more manageable when it is spread out over time. People are angry because a lot of money was spent in a short time; but how different is the situation where corruption normally happens over many months?

Policy trajectory and the ANC

When it comes to policy trajectory, the ANC is unlikely to break the impasse in the next few months. Most things will be concentrated to the elective conference, says Dr Mathegka. There hasn’t been a catalyst from the last elective conference to cause a shift in the power balance that would allow the president to be more hegemonic. The only way to shift the power balance will be at the party’s elective conference in a few years. But what do we do while we wait? The game plan is for the president to build a rapport with people outside the party to push some of the policy reforms that seem inevitable. But would these reforms be accepted in the ANC? If ANC members were hardened against reforms and serious anticorruption 10 months ago, they are even more so now as the stakes are higher. 

The role of DA

The Democratic Alliance (DA) is diminishing itself to almost a minority party, which is contrary to what it actually is. It is going to be very difficult for the party to come back to the centre after it has almost abandoned centre politics. The party is genuinely frustrated about how to craft an identity in the very fluid political landscape that is South Africa. Its problems are the centre, and not wanting to say that it will win the election through majority. It has resigned  itself to accept a coalition based on minority. The worry about the DA abandoning centre politics is its instability. The only party that remains relatively stable is the EFF. 

The role of the EFF

In a time where the EFF was struggling to remain relevant amid its problems, such as the VBS issue, Clicks afforded the party an opportunity to latch on to a different issue and run with it. EFF has done political manoeuvring, but it is on the policy front where problems arise. There is a faction in the ANC that agrees with the political views of the EFF, which leaves Ramaphosa vulnerabl,e even within his own party. This is why the lack of a formidable DA contesting at the centre leaves the ANC at the mercy of the EFF.

With the DA retreating from the centre you may see more instances where the EFF and the ANC agree on matters. The ANC’s Radical Economic Transformation group tends to win by almost using the EFF as a proxy for some of its policy positions. The view is that we will stumble to the next ANC elective conference and a lot of people think that by then, the transgressors will be in jail. In essence there is a lot of ill-discipline in the ANC due to a power vacuum created by the contestation of Nasrec; and that is a difficult balance to keep. 

Law fair and the legacy of the Zondo Commission 

Dr Mathegka recently wrote about law fair and why it is an interesting dynamic in the policymaking environment. Law fair is the beginning of democracy. If you look at South Africa, there are multiple centres of power – Luthuli House, the Union Buildings and Parliament – but one doesn’t get a sense of the national agenda by looking at them. There is nothing that stands above it when it comes to policy. The government hasn’t crafted a message or national agenda that can be appreciated by all. When it comes to law fair, groups are going to use the court and other lobbying mechanisms to contest for what they want to see in policy. 

An example of this is the unions, which are now saying that they will not stand down on their demands for increased wages because the policy has been signed. They are going to court and will continue to do so, but only for themselves. It has nothing to do with taxpayers. Soon, we may see people trying to contest the budget processes in court. Groups will soon realise that the best way for them to achieve their agendas is to go to court. 

Powerful groups can organise themselves to lobby the power and use the court to achieve their agenda and air their grievances. Some say that this is how democracy functions, but there needs to be a clear sense of an essential agenda. The problem is that we don’t have a central agenda, which creates a situation where powerful groups are the ones whose voices are heard more often. The powerful seem to have it all, which leaves the poor resorting to their easiest means – protesting on the street and causing a disruption to everyone. 

On the Zondo Commission front, Chief Justice Zondo is frustrated and something explosive will come out of the commission. It may be so explosive that even the president may not do anything to impede it. The commission is crafted in a way that someone can go to the courts and demand action. 

The big questions still remain around the state’s ability to move in so-called unity or social compacts to get policy movement. We will see a lot more contestation in the coming months and years heading towards the elective conference. There is no single source of power; there’s no one with a hammer to get through all of this, which makes an analyst’s job much more complex as we look at each risk and try to see our way through it. It certainly makes for interesting times in South Africa. 

The opinions expressed in this article are solely those of the analysts and do not reflect Nedbank’s views or policies.

If you are looking for other relevant market commentary, view our previous Fireside Chat here.

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By | 2020-11-23T14:57:39+02:00 November 20th, 2020|Markets and Research|0 Comments

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