Growing risk ANC election could hit SA ratings, confidence hard

Cape Town - There is a growing risk of a postponement of the December 2017 ANC leadership election and this could be a significant negative event South Africa's ratings outlook, confidence in the country and the rand.

This is the view expressed on Tuesday by Gina Schoeman of Citi Research.

"We expect politics to become even more volatile from here on – negative campaigning is already under way, as are acts of violence (in provinces)," said Schoeman.

She was commenting after the the Pietermaritzburg High Court on Tuesday declared the 2015 KwaZulu Natal (KZN) provincial ANC election of Sihle Zikalala as provincial chair null and void. Zikalala is allied to Zuma, making the ruling significant, in Schoeman's view.   

"December is still a long way off and we have our doubts that President Jacob Zuma will accept the potential outcomes from a ruling that so obviously favours a Ramaphosa-win," she said.
KZN has the biggest ANC membership of all nine provinces and is currently split in two between Zikalala (who supports Zuma and, therefore, Nkosazana Dlamini-Zuma), versus Senzo Mchunu (ousted by Zikalala in the 2015 provincial election) who supports Cyril Ramaphosa.

"The court ruling means the balance of power in KZN could now flip to pro-Ramaphosa. The ANC is studying the judgment and will make decisions soon," said Schoeman.

ANC branches

About 70% of ANC branches must pass audits for the National Conference in December to go ahead. To date, branch audits have been completed for 6 of the 9 provinces (Gauteng, Mpumalanga, Limpopo, North West, Free State and Northern Cape).

The Eastern Cape, Western Cape and KZN audits are under way.

On passing its audit, a branch then nominates branch delegates to attend the National Conference. The preliminary credentials list for December shows 2 454 branch delegates plus an additional 271 individuals from the National Executive Committee (NEC) of 86, Integrity Committee (11), ANC Youth League (64), ANC Women's League (64) and ministers or deputy ministers (46).

"These numbers are not final, but highlight how important branches are. Of the 2 454 branch votes, KZN represents 524 delegates (21%) followed by the Eastern Cape’s 398 (16%) and Mpumalanga’s 304 (12%)," said Schoeman.

"If the ANC decides that Zikalala must step down and be replaced by Mchunu, this implies another 21% of the branch vote in favour of Ramaphosa. The Eastern Cape and Mpumalanga have already openly declared their support Ramaphosa.

"In total this could mean 50% of branches favour Ramaphosa, which ties in with the findings in our September political survey that Ramaphosa is currently leading the succession race."

Bloomberg reported earlier on Tuesday that, if the leadership changes from one faction to another in KZN, it can have an effect on the balance of power within the province, according to Dirk Kotze, a political science professor at the University of South Africa in Pretoria.

“That would complicate matters for the Zuma camp. What happens at branch level is very much influenced by provincial and regional interventions. Who is in those leadership positions is absolutely decisive.”

“It’s a toxic environment, it’s tense and highly divisive, and this paralysis is exploited by everybody and anybody on the lookout to advance their agendas or enrich themselves,” Babu Baijoo, a veteran ANC member and former speaker of the municipality in Pietermaritzburg, told Bloomberg by phone.

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