Wednesday, April 23, 2014

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South Africa: ANC at a Crossroad

Incoherence at last week's policy conference leaves the ANC looking shaky ahead of December's five-yearly conference in Mangaung.
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South Africa's President Jacob Zuma. Photograph by Michael Wuertenberg, World Economic Forum.

South Africa, a BRICS nation and lender of $2 billion to the IMF's Euro debt crisis firewall fund, is one of the world's rising stars.

Yet the continued inability of the ruling party to create a coherent macro-economic framework means the majority of South Africans remain politically and economically disenfranchised, often without access to proper healthcare and education. The ANC’s National Policy Conference, held last week in Midrand, at a price tag of R40 million ($4.8 million), was an expensive and ineffectual exercise in rhetoric after ambitiously branded itself as signifying South Africa’s “Second Transition" to Democracy. The conference set out the ANC's proposed framework for South African national policy to be ratified at its five-yearly conference at Mangaung in December.

Balancing growth and development

Post-apartheid South Africa’s development path still battles to redress past injustices that have manifested as its ‘triple challenge’ of poverty, inequality and unemployment - more than a quarter of South Africans are officially unemployed whilst unofficial figures claim more than 40% are jobless. Its balancing act between social development and raw economic growth will depend on the state partially shepherding the economy away from its dependence on its minerals and energy complex and foreign direct investment, towards redistributing profits into productive investment and job creation.

During its rule, the ANC has released a plethora of policy initiatives in a blur of acronyms. Two of these are the strategic New Growth Path (NGP) under Ebrahim Patel and the diagnostic National Development Plan (NDP) under Trevor Manuel – both vociferously criticised by the left and labour, who disagree with the recommendations of the NGP and despise Manuel, the market liberal former finance minister.

The status quo in South African political economy is the result of the ANC being, or allowing itself to be, held hostage to the demands of speculative capital when it came to power. And evidencing Stockholm Syndrome in relation to hot money, South Africa made macro-economic trade-offs with financial markets, favouring over-prudential fiscal and economic policy over borrowing for development. The left and labour have since viewed the ANC as having sold out poverty alleviation for the “neo-liberal consensus” of a marketised economy in search of macro-economic stability. And while the Trevor Manuel years, under Mandela and Mbeki presidencies, saw GDP growth, it fell well below the target average of 4.2% for the period 1996-2000. This strategy has left South Africa victim to the vagaries of a globalised financial market, with insufficient employment and too small a domestic market. The financial crisis has taken its toll - with economic growth slowing considerably since 2007. Some difficult choices will have to be made to pull millions of South Africans out of poverty.

Reigniting nationalisation urges

ANC policy is hamstrung not only by its internal factional dissonance, but also by the continued resurgence of the so-called nationalisation debate around state intervention in the mining sector. The ANC’s recent history has seen the expulsion of its former youth league leader, Julius Malema, caviar socialist, enfant terrible and most recently, a protégé of Robert Mugabe, who whipped up support for nationalisation within the ANC’s tripartite alliance.

The justification for nationalisation is said to be based on a clause in the ANC’s Freedom Charter that says the mineral wealth of South Africa should be distributed to the people. And even though this interpretation has been disputed by its author Ben Turok, proponents insist that the clause is general and so open to interpretation. But the socially responsible dimension of nationalisation is also undermined by less altruistic motives. Some insiders say that mining magnate and ANC veteran Tokyo Sexwale supported Malema and his ilk because mining losses could be passed onto the state.

Last year the ANC commissioned the State Intervention in the Minerals Sector (SIMS) report amidst much fanfare to directly address nationalisation. Discussion documents released prior to the conference indicated that the ANC remains firmly capitalist and supports the recommendations of the SIMS report - mainly that nationalisation would not hold favourable outcomes for South Africa. However, the policy conference created yet more confusion. The ANC appeared to support nationalisation more than the discussion documents had indicated, and Jacob Zuma added that South Africa had to “go deeper” than nationalisation. Zuma also said that “the state should also capture an equitable share of mineral resource rents and deploy them in the interests of long-term economic growth, development and transformation”.

The wavering over nationalisation is certainly frustrating foreign investors and markets, which are firmly opposed to the idea. And it is no accident that the Mining Lekgotla (Tswana for ‘meeting place’) that took place in Johannesburg on June 5 and 6 was scheduled so close to the policy conference. Nationalisation as a policy choice is unsurprisingly viewed by the mining and investment community as one of the greatest obstacles to South Africa’s future prosperity. Anglo American’s CEO Cynthia Carroll summed up the mood in her speech at the Lekgotla: “I have made clear many times my total opposition to nationalisation.”

While nationalisation is viewed as a means to redistribute wealth to communities by ANC policy makers, business groups fear state expropriation of assets, especially following Zimbabwe’s claim for 51% of Zimplats, a Zimbabwean mining company owned 87% by a South African company, Impala Platinum. Ratings agencies Fitch and Standard & Poor’s this week both warned that the ANC’s failure to quell the nationalisation debate on this occasion is harming investor confidence.

COSATU, the country's biggest trade union federation and part of the ANC's tripartite alliance with the South African Communist Party (SACP), broadly supports nationalisation if it favours local communities and workers. However, COSATU spokesperson Patrick Craven is of the opinion that while the nationalisation debate is important, it has somewhat overshadowed some of South Africa’s other pressing issues. Craven thinks this is largely the fault of the media, telling Think Africa Press that media “obsession with nationalisation reflects the class interests of media owners”.

Opportunities missed

Despite a promising agenda of discussion documents on the direction in which South Africa's policy framework should take, the ANC squandered a golden opportunity for debate and then coherence, at a critical point in its Centenary Year.

The ANC has once again failed to join the dots between SA's various economic plans and planners. The politically threatened Zuma's pre-Mangaung power-mongering saw the party emerge from Gallagher Estate further divided, both as an entity and around core issues, leaving analysts disillusioned and businesses and activists alike furious. The gimmicky "Second Transition" that was meant to reflect a second phase in overcoming colonialism, patriarchy and apartheid instead became a failed branding exercise. If anything, all it revealed was how the atomisation of the party impacts on its ability to communicate a clear message on core issues.

Self-sabotage

The ruling party has struggled for too long now to consolidate its strategy for South Africa's political economy, with the demands of its warring factions undermining the needs of those South Africans whom these issues most affect. In trying to be everything to everybody, the ANC’s future direction is ultimately opaque.

Craven explains that “the ANC has always been a broad church, but there is a resultant tendency for statements to be self-contradictory and things become unclear as a result”. While few COSATU and SACP delegates attended the conference since it was mainly an ANC discussion, Craven says “COSATU supports most of the initiatives and plans the ANC has put forward, but we worry not only about their lack of implementation, but also about inconsistencies and contradictions in them, like the New Growth Path, for example”.

The ANC has made some tepid progress last week in addressing some urgent core issues, such as land reform, developmental state financial regulation, black economic empowerment, education, and youth unemployment, but Craven says for now it remains difficult to comment authoritatively on the outcomes of the conference until the official conference report is released.

In a turbulent time for global politics and economics, the ANC must articulate its own coherence as a post-struggle organisation, and turnaround an internal culture tainted by poor service delivery, corruption, increasing authoritarianism, policy incoherence and factionalism. On the way to Mangaung, the ANC’s crossroad is also South Africa’s. 

Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, syndication or educational purposes, please contact: editor@thinkafricapress.com

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Comments

Anyone who was hoping for substantive outcomes and policy direction from this conference rather than pre-Mangaung jockeying was being very optimistic.