South Africa January 2018

 

South Africa Summary 23 January 2018

African National Congress (ANC) president Cyril Ramaphosa consolidates his power in the South African government, removing many allies of South African President Jacob Zuma (2009-present) and calling for further investigations into and charges against those involved with the Gupta family and alleged state capture. Ramaphosa states that Zuma’s departure “must be addressed”. The Constitutional Court of South Africa finds that parliament failed to hold Zuma to account for his role in the Nkandla scandal and orders parliament to draft rules governing the circumstances under which Zuma can be removed from office. Ramaphosa says the implementation of expropriation of land without compensation could turn South Africa into “the Garden of Eden”, though the policy must not harm the economy, making its implementation unlikely.

 

Zuma’s departure imminent as Ramaphosa consolidates power

African National Congress (ANC) president Cyril Ramaphosa has consolidated his power in the South African government, removing many of President Jacob Zuma’s (2009-present) allies and calling for further investigations and charges against those involved with the Gupta family and alleged state capture. Ramaphosa stated on 14 January that Zuma’s departure “must be addressed”1 acknowledging that “we should never humiliate President Zuma.”2 However, Ramaphosa was reportedly angry that Zuma on 18 January appealed a court ruling that Ramaphosa, and not Zuma, should be allowed to appoint a new national director of public prosecutions.3 Ramaphosa has initiated further moves reducing Zuma’s influence. First, Ramaphosa and the national executive committee (NEC) suspended the provincial executive committees in KwaZulu-Natal and Free State on 19 January as the Pietermaritzburg High Court deemed that they were not properly elected.4 Both provinces are strongholds of Zuma allies.5 Ramaphosa also removed Zuma allies from the Criminal Intelligence division of the South African Police Service (SAPS). Police minister Fikile Mbalula removed Zuma ally Richard Mdluli as Criminal Intelligence divisional commissioner on 17 January.6 Mdluli, suspended in 2011 following charges of intimidation, kidnapping, assault and murder, has received full pay since then and there have been 12 acting divisional commissioners. 7 Ramaphosa appears to be looking to remove any remaining power Zuma may have. Ramaphosa, as chair of the inter-ministerial committee on state-owned entity (SOE) reform, has made widespread changes at state-owned power company Eskom, which media and opposition members have generally viewed as a tool to enrich Zuma and his allies.8 Public enterprises minister Lynn Brown said on 20 January that the government had removed immediately the following Eskom members: acting CEO Sean Maritz; head of generation, b>Mashelo Koko; and suspended chief financial officer, Anoj Singh.9 Eskom chair, Zethembe Khoza, resigned on 19 January “in the interest of the country”.10 Those removed reportedly faced allegations involving the Guptas.11 The chair of the new 13-member board of Eskom is Jabu Mabuza. 12 Following the new board’s appointment, Eskom stated it would ask local banks to reopen lending facilities of up to R20 billion ($1.66 billion) to drag itself out of its financial crisis. 13Eskom reportedly only has R1.2 billion ($100m) in reserves, though Eskom’s target reserves are R20 billion ($1.66 billion).14 Eskom plans to publish its financial results by the end of January in a move to prevent the Johannesburg Stock Exchange suspending its publicly traded bonds at the end of January.15 Ramaphosa has also ordered further investigations into alleged corruption surrounding the Zuma-linked Gupta family. South Africa’s Asset Forfeiture Unit (AFU), a unit of the National Prosecuting Authority (NPA)16, confirmed on 16 January that it had obtained a preservation order against United States (US)-based consulting firm McKinsey, and Gupta-linked Trillian Capital Partners, and is investigating 17 matters that involve R50 billion ($4 billion) in suspected criminal profits.17 The investigations are being conducted with Ramaphosa’s backing: 18 The preservation order against McKinsey and Trillian prevents an individual or company from disposing or removing any assets which may hinder the full collection of tax due.19 The AFU obtained a high court order on 14 December allowing it to seize and preserve R1.6 billion ($132m) from McKinsey and Trillian over a controversial deal with Eskom.20 McKinsey alleges it did nothing wrong, but would return the funds to the South African public because Eskom did not secure necessary approval from the national treasury.21 Trillian has also reportedly co-operated.22

What options are available to remove Zuma?

There are media reports that if Zuma is removed, Ramaphosa would take control of the government immediately rather than appoint an interim president until the 2019 elections.23 Doing so would not affect Ramaphosa’s two terms in office, in terms of section 88(2) of the constitution.24 However, while Ramaphosa can constitutionally become South African president, he must first remove Zuma. There are four options to do this: Zuma can resign; the National Executive Committee (NEC) can recall Zuma as president, as it did with President Thabo Mbeki (1999-2008) in 2008; Zuma can be impeached through the national assembly; or Ramaphosa can wait until May 2019 when Zuma’s term ends naturally.

Resignation

Several sources have said Zuma’s departure is imminent and that the NEC is pressuring him to resign. While this would be a clean transition for Ramaphosa, Zuma would want concessions for his resignation. Media reports claim Zuma allegedly wants his ex-wife and Ramaphosa’s opponent for ANC president, Nkosozana Dlamini-Zuma, to be appointed as deputy president if he were to resign, though the presidency denied these reports on 14 January.25 Zuma has lost much of his presidential influence and power as Ramaphosa is responsible for choosing the new national prosecutor.26

Recall

The NEC has met several times since Ramaphosa was elected, leading to rumours before each meeting that Zuma would be recalled.27 This has yet to happen, which may be due to the rift it might cause among ANC members. Ramaphosa has the numbers to recall Zuma. Mpumalanga Province premier David Mabuza, who was seen as a Zuma supporter, is likely to side with Ramaphosa as he considers his own presidential ambitions in 2029. A recall may be more likely if Zuma does not agree to resign.

Impeachment

Ramaphosa may be more comfortable in letting legal instruments, such as the National Assembly (lower house of parliament), remove Zuma, who would then lose his presidential pension. Zuma’s hand was further weakened as the Constitutional Court of South Africa found on 29 December that parliament failed to hold Zuma to account for his role in the Nkandla scandal and ordered parliament to draft rules governing the circumstances under which Zuma could be removed from office.28 The constitutional court came to a majority ruling that “the assembly did not hold the president to account as was required”, though chief justice Mogoeng Mogoeng disagreed with the judgement, labelling it as “a textbook case of judicial overreach”.29 A parliamentary spokesperson stated that its rules committee “had already initiated a process” 30 to outline a procedure for impeachment.31

Allow Zuma to finish his term

Allowing Zuma to finish his term naturally appears to satisfy both conditions: Ramaphosa does not risk fracturing the ANC, but is able to run the government which allows for a stable market, and at the same time Zuma may be able to sort out his financial and tax issues, as well as prepare for any trial relating to his corruption charges. While the best option may appear for Zuma to appear as a figurehead president until the end of his term in 2019, inside sources appear to believe that there is imminent pressure on Zuma to resign before the State of the Nation Address in February, even if this is not in Zuma’s interest. It is unlikely that Zuma, who faces a raft of corruption charges and financial issues, will leave office without a promise of immunity for himself and his allies, which includes Dlamini-Zuma. Opposition Economic Freedom Fighters (EFF) leader Julius Malema has also said he believes Zuma will step down on condition that he and his family are granted immunity from state capture allegations, but that the EFF would contest any form of immunity for Zuma and his family.32

Ramaphosa states support for expropriation of land without compensation

ANC president Cyril Ramaphosa stated on 7 January that the implementation of expropriation of land without compensation could turn South Africa into “the Garden of Eden”33. Any move by the ANC to expropriate land without compensation is likely to unnerve investors, even if it is politically popular. If the ANC proceeds with the expropriation policy, it would likely need to do so before the 2019 elections as the ANC may not gain the required majority needed to amend the constitution. The ANC reportedly made a decision at its conference in December that it would support the expropriation of land without compensation.34 While Ramaphosa appears willing to move quickly to assume the presidency as soon as possible, it is unclear when Ramaphosa and the ANC would begin any form of land expropriation.35 The land expropriation statement noted that expropriation must pass a sustainability test to not hurt food security or undermine the economy.36 While there may be arguments that food security could be improved, there are few arguments that expropriation without compensation will not hurt the economy as investors may fear that the policy will move to other sectors of the economy. Thus, while politically popular, it is unlikely that Ramaphosa will willingly enable the expropriation policy.

ARC Briefing keeps you:

  • Up to date
  • In the know
  • Ahead of events!

Receive subscription information on your countries of interest or call: +44 20 7078 4080

 

1. [Times Live, 15 Jan 2018.]

2. [ Times Live, 15 Jan 2018.]

3. [Sowetan Live, 22 Jan 2018.]

4. [Bloomberg, 21 Jan 2018.]

5. [Bloomberg, 21 Jan 2018.]

6. [Mail & Guardian, 18 Jan 2018..]

7. [Mail & Guardian, 18 Jan 2018.]

8. [Fin24, 20 Jan 2018.]

9. [Fin24, 20 Jan 2018.]

10. [Fin24, 20 Jan 2018..]

11. [EWN, 22 Jan 2018.]

12. [EWN, 22 Jan 2018.]

13. [IOL, 22 Jan 2018.]

14. [New Age, 14 Nov 2017.]

15. [IOL, 22 Jan 2018.]

16. [Daily Maverick, 16 Jan 2018.]

17. [Daily Maverick, 16 Jan 2018.]

18. [Citizen, 19 Jan 2018.]

19. [South African Institute of Chartered Accountants, Oct 2014.]

20. [ Daily Maverick, “Newsflash: Asset Forfeiture Unit eyes R50-billion in state capture loot”, www.dailymaverick.co.za, 16 Jan 2018.]

21. [Daily Maverick, “Newsflash: Asset Forfeiture Unit eyes R50-billion in state capture loot”, www.dailymaverick.co.za, 16 Jan 2018.]

22. [News24, “R50bn expected to be seized in 17 state capture cases – AFU”, www.news24.com, 16 Jan 2018.]

23. [Times Live, 15 Jan 2018.]

24. [South Africa constitution, 1996.]

25. [Times Live, 14 Jan 2018.]

26. [The South African, 13 Dec 2017.]

27. [ Multiple sources: News24, 19 Jan 2018; Mail & Guardian, 10 Jan 2018; News24, 13 Jan 2018; Eyewitness News, 4 Jan 2018.]

28. [Moneyweb, 29 Dec 2017.]

29. [Moneyweb, 29 Dec 2017.]

30. [The Guardian, 29 Dec 2017.]

31. [The Guardian, 29 Dec 2017.]

32. [Huffington Post, 8 Jan 2018.]

33. [News24, 7 Jan 2018.]

34. [IOL, 7 Jan 2018.]

35. [The South African, 8 Jan 2018.]

36. [EWN, 22 Dec 2017.]