Alert 62 – South Africa: Political uncertainty continues ahead of expected reshuffle

Political tensions are elevated in South Africa as uncertainty has increased ahead of an anticipated cabinet reshuffle. President Jacob Zuma has been expected to announce a reshuffle for some time, especially since there has been a vacancy in the Deputy Minister of Trade and Industry position, after Mzwandile Masina was elected as Mayor of Ekurhuleni. It is also likely that Zuma will use the reshuffle as an opportunity to side-line his political opponents and cement his control over the national government.

Divisions have persisted within the ruling African National Congress (ANC) for some time now, but factionalism has deepened in the build up to the party’s elective conference in December 2017. The December conference is expected to be highly contentious with the winning faction expected to define the ANC’s foreseeable future, with some speculation that the outcomes could include a split from the ANC, as seen following the elective conferences in Polokwane in 2007 and Mangaung in 2012.

One faction is believed to be coalesced around Zuma, who enjoys the support of the so-called Premier League, which comprises the premiers of the provinces of the North West, Free State, and Mpumalanga, as well as the leaders of the ANC Youth League (ANCYL) and the ANC Woman’s League (ANCWL). This faction will likely support Zuma’s chosen successor in December, or whichever the candidate is most likely to maintain the current system of patronage perpetuated by the Premier League. The opposing faction centres on Deputy President Cyril Ramaphosa and Finance Minister Pravin Gordhan, who are seen to be more pro-business and good governance and less likely to maintain existing patronage systems. Gordhan in particular is despised by the Premier League due to his stewardship of the Treasury and his apparent refusal to back a US$100 billion nuclear deal which would benefit the Premier League’s financial backers, the controversial Gupta family.

It is this enmity towards Gordhan and Zuma’s perceived desire to control the Treasury that has raised concerns that Zuma could try to remove the Finance Minister in a reshuffle. This could precipitate a financial crisis similar to the one in December 2015 when Zuma removed then Finance Minister Nhlanhla Nene and replaced him with the little known Des van Rooyen. This saw a crash in the Rand’s value and eliminated R500 billion (US$38.5 billion) from South Africa’s economy in four days. The resulting fallout forced Zuma to backtrack and appoint Gordhan, himself a former finance minister, to the Treasury. It is believed that the humiliation deeply angered Zuma and continues to drive political tensions between the two.

There are indicators that Zuma is considering replacing Gordhan, or his deputy Mcebisi Jonas, despite the economic risks. On 23 February 2017, former Eskom CEO Brian Molefe was sworn in as an ANC Member of Parliament (MP). Molefe has long been touted as a potential replacement for Gordhan given his high-profile business experience. However, in 2016 Molefe was implicated in the Public Protectors ‘State of Capture’ report into corruption and inappropriate influence by the Gupta family. Molefe was found to have visited the Guptas’ private home often while the family was negotiating lucrative supply contracts with Eskom. Zuma is likely hoping that Molefe’s profile and expertise will offset negative fallout should he indeed appoint him to the Finance Ministry. However, this is unlikely, as Molefe is viewed as a compromised person in league with the Gupta family.

In addition, there have been leaks emerging from the ANC that if Zuma were to replace Gordhan with Molefe he would face a cabinet revolt. It is believed that this opposition would be led by Ramaphosa and be supported by ministers associated with the South African Communist Party (SACP) and ANC parliamentary Chief Whip Jackson Mthembu. These individuals would cease to be ministers but continue to be MPs and would likely then push for a vote of no-confidence in the President.

Should Zuma opt to instead replace Jonas with Molefe (and even possibly put Jonas in the vacant Deputy Minister of Trade and Industry spot) the impact on both the economy and the cabinet would far less significant ‒ while still undermining Gordhan and the Treasury.

All these political machinations are taking place during a time of intense political uncertainty and social friction in South Africa. Slow economic growth, rising unemployment and increasing crime rates have led to an uptick in social tension sin the country. The past week has seen a surge of xenophobic protests and anti-immigrant sentiment. In addition, the lack of a clear majority on the city councils of Johannesburg, Tshwane, Nelson Mandela Bay and Ekurhuleni following the 2016 municipal elections have also undermine the capacity of these metros to govern and deliver services.

The current political infighting within the ANC, is distracting the government from addressing urgent issues such as, sluggish economic growth, rising national debt, crime, xenophobia or issues around tertiary education. This situation is likely to continue until the ANC’s elective conference in December at the very least, and if quite possibly until the 2019 national elections. During this period of uncertainty and distractions, South Africa’s economic and social problems are likely to worsen.