Rise or fall: SA at a crossroads as ANC decides

The world will be watching next weekend – hot on the heels of the exit of Zimbabwe’s Robert Mugabe and Angola’s José Eduardo dos Santos – for further dramatic regional developments as the ANC elects new leaders for the next five years.

The highly contested ANC leadership election may determine if South Africa’s democratic project, and economic prosperity on the continent, thrives or stutters, and its choice of leaders will be a leading indicator of whether Africa will be a force for progress or instability in the world in the decades ahead.

South Africans today shoulder the burden of three years of, on average, 1% economic growth. Half its 54million people live in poverty and a third of its economically active population are unemployed.

South Africa’s “two-speed society” is characterised by a nonracial, affluent urban elite living side by side with marginalised communities that include a growing army of unemployed young people.

So what do the candidates offer to tackle these challenges in a different and effective way? A review of the two main ANC factions’ recent policy statements to the just under one million ANC members leads one to conclude that South Africans can anticipate one of two futures:

• One in which the ANC elects President Jacob Zuma’s preferred successor, Nkosazana Dlamini-Zuma, which will help to consolidate the power base of Zuma and his allies, and result in what South Africans have come to know as “business as usual” in the ANC and the government; or

• One in which the ANC “modernisers and constitutionalists” led by Cyril Ramaphosa win power, potentially resulting in the near-term exit of Zuma and his allies, the appointment of a new administration, the launch of an economic recovery plan and an attack on corruption.

What the candidates promise

Ramaphosa recently presented a “New Deal” based on the National Development Plan and ANC policy, with a promised focus on accelerating economic growth and transformation, targeting economic growth of 3% next year, rising to 5% within five years, alongside transformation, internships, a national minimum wage for the employed and permanent work opportunities for the unemployed.

Many business people, unionists, citizens and communists are united behind this vision and his brand of “radical economic transformation” to spur growth and address apartheid legacies.

Dlamini-Zuma – although she has of late moderated her rhetoric – launched her economic policies with an attack on the “policy independence” of the Reserve Bank and “white monopoly capital”, and issued a call for “land restitution without compensation”.

Her supporters argue she would deliver radical economic transformation to resolve historic legacies and stimulate growth. Market commentators, however, see her policies as populist, and a recipe for economic decline. Many in business fear that her party support base may escalate the “state capture” of the past decade of Zuma’s rule into “private sector capture”, with destabilising consequences for the economy.

Both candidates, if elected, would in reality have to face up to a looming “fiscal cliff” in which rising debt, slow growth, slowing tax revenues and broken parastatals threaten a fiscal meltdown. Eskom alone poses significant systemic domestic fiscal risk.

The victor will have to move swiftly to present a budget in February that staves off a credit rating downgrade by Moody’s and up to $10-billion (about R136-billion) of forced bond sales on the back of exclusion from the Citi World Government Bond Index.

What is certain, therefore, is that the ruling party’s conference will be a binary moment for South Africa’s political and economic future, and its prospects to resolve the enduring apartheid legacy and conflicts.

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