December 21, 2017 / 8:05 AM / a year ago

No clean sweep for South Africa's Ramaphosa in ANC race

JOHANNESBURG (Reuters) - Cyril Ramaphosa may have won the race to be leader of the African National Congress, but he failed to decisively wrest control of South Africa’s ruling party from President Jacob Zuma.

Newly elected president of the African National Congress (ANC) Cyril Ramaphosa speaks at the end of the 54th National Conference of the ruling ANC at the Nasrec Expo Centre in Johannesburg, South Africa, December 21, 2017. REUTERS/Siphiwe Sibeko

Zuma’s faction retains influence in the ANC’s incoming National Executive Committee (NEC) and was felt in conference debates on divisive policies such as land expropriation and nationalization.

Ramaphosa’s incomplete victory could stymie his chances of tackling entrenched corruption and implementing reforms to kickstart economic growth, tasks which he placed at the center of his campaign for the ANC’s top job.

It also lessens his chances of ousting Zuma from the state presidency before his second term ends in 2019.

That could disappoint investors who have bet heavily that Ramaphosa, a 65-year-old former trade union leader and millionaire businessman, will be able to turn around Africa’s most industrialized economy.

The rand currency has been volatile since Ramaphosa’s election, as investors continue to assess how much clout he wields.

“Because Ramaphosa does not have a strong majority in the NEC and because of the lingering presence of Zuma loyalists, he will not be able to drive his own agenda,” said Darias Jonker, director for Africa at Eurasia Group.

Zuma’s decade in power has badly tarnished the ANC’s image at home and abroad as growth slowed to a near-standstill.

He has survived several votes of no confidence, and analysts say he has cemented his control over the ANC by using political patronage.

The ANC’s new NEC, announced in the early hours of Thursday, is split roughly 50-50 between the Ramaphosa and Zuma factions. The party’s “top six” most powerful officials, announced on Monday, are also split down the middle.

Zuma said on Thursday that “there was no winner or loser in the election of leaders” at the ANC conference.

Were Ramaphosa to try to force Zuma from office, he would need to secure the support of the NEC, which includes his main rival in the ANC race, former cabinet minister Nkosazana Dlamini-Zuma, Zuma’s ex-wife and preferred successor.

Others on the NEC include prominent Zuma lieutenants Finance Minister Malusi Gigaba and Energy Minister David Mahlobo, who would defend the 75-year-old leader to the bitter end.

POPULIST POLICIES

The two most controversial policy resolutions adopted at the ANC conference on Wednesday called for land expropriation without compensation and nationalization of the central bank. Both those policies were most vociferously backed by Dlamini-Zuma.

The expropriation of land from white farmers in neighboring Zimbabwe had a devastating impact on food production and any mention of nationalization in South Africa is enough to spook investors, since left-wing elements of the ANC have also called for mines and banks to be state-owned.

A senior ANC source told Reuters the Ramaphosa camp would try to ensure that the shift to full state ownership of the Reserve Bank would go no further than the resolution adopted at the conference.

The Reserve Bank said that changing its ownership structure could raise the level of uncertainty in the economy and would be costly.

Land expropriation without compensation is also unlikely to become the norm soon, but the fact that the ANC called for the constitution to be amended as a step in that direction could dent already weak investor confidence.

“This kind of rhetoric will now have to inform Ramaphosa’s speeches and perpetuate concerns over property rights at a time when the economy needs exactly the opposite signals,” said Anne Fruhauf, an analyst at consultancy Teneo.

Land is especially emotive in South Africa, where the ANC is under pressure to address gaping racial inequality more than two decades after the end of white minority rule.

A logo of Standard Chartered is displayed at the financial Central district in Hong Kong, China November 23, 2017. REUTERS/Bobby Yip

The opposition Democratic Alliance on Thursday criticized the ANC’s call for land expropriation, saying it failed to address the broader issues of property rights for poor South Africans and government mismanagement of existing land programs.

The debate over land was so heated among ANC members on Wednesday that a delegate said a fight broke out, and a party official said it nearly caused the conference to collapse.

Jonker at Eurasia Group said ANC policies were always more populist and left-leaning than what was eventually implemented by government.

Additional reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia

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