This Is What May Be Next For South Africa Under Zuma


Now that president Jacob Zuma has survived the latest attempt to get him to step down as president, several scenarios lie ahead for the South Africa – none of which are particularly great for the country.

This is according to the research analyst at Nomura, Peter Attard Montalto, who in a note to investors on Tuesday that the results of the ANC NEC meeting showed that the group’s assessment of the political situation was on point.

Nomura has long maintained that the ANC NEC was split between pro-Zuma tenderpreneurs and anti-Zuma reformists, but the scales were weighed in favour of the former.

Assessing media reports and the official line from the ANC regarding calls for Zuma to step down, Attard Montalto said that it is clear that it is a 60/40 split in favour of the pro-Zuma crowd.

This split can be presented as such:

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According to Attard Montalto, it is not clear that the anti-Zuma faction believed there was a significant chance of success at this NEC, “instead, we see the move as an attempt to regain lost momentum especially after little came of the ‘SaveSA’ march at the start of November.”

The baseline assessment is that the anti-Zuma faction while becoming more vocal, are not growing in number – and so the latest attempt to topple Zuma at NEC level could be interpreted as desperation.

With this in mind, the outcome of the ANC NEC meeting was not a surprise – but presented a number of possible outcomes for the country’s political landscape in the next few weeks.

While Nomura holds that it is unlikely that Zuma will be removed as president before 2018 (when he will voluntarily step aside to allow the newly elected ANC leader to take over – likely his preferred candidate, Nkosazana Dlamini-Zuma), there is a slim chance that the anti-Zuma faction could interfere with these plans.

This could play out in the ANC caucus splitting and support a motion of no confidence in Zuma in Parliament – which if successful, would result in a market rally – or a more abrupt change, with ministers resigning on principle, forcing a Cabinet reshuffle.

There is also the possibility of Zuma executing his ‘scorched earth’ trump card, where he could fire all who stand opposed to him, Nomura said.

Of all these potential outcomes, the most likely would be the maintenance of the status quo, Attard Montalto said – or a cabinet reshuffle where finance minister Pravin Gordhan is not shifted out of National Treasury.

There are opportunities for the anti-Zuma faction to be disruptive, but Nomura believes there will be little success.

“As such, the next two months are set to be very volatile,” Attard Montalto said.

The possible scenarios are outlined in the chart below:

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This is what could potentially be down the line for South Africa, according to Nomura:

  • Cabinet resignations: “It is possible that anti-Zuma ministers could resign. We think this is unlikely as they would open up their ministries to ‘capture’ and Zuma-loyalists being put in place. Resignations would be difficult for the market to parse outside of the National Treasury but would be a negative in our view.”
  • Cabinet reshuffle: “Jacob Zuma could act first before any resignations and remove those against him in the cabinet. However, we have been expecting a reshuffle since January 2015 and it has not happened yet. The situation now is more acute, however. We think a reshuffle is of moderate likelihood either mid- December or after the January NEC meeting before the February State of the Nation Address.”
  • No cabinet reshuffle or resignations: “This would mean a continuation of the status quo, where the machine of government slows as trust in the cabinet weakens but no particular shift of path. The market would still trade better in quiet periods despite the fact real reforms would not be forthcoming.”
  • ANC NEC Lekgotla in January and another attempted push against Zuma: “This could be possible, but as with the no-confidence votes in parliament it’s not clear what can be achieved by doing the same thing again and again with no change of outcome. It could be attempted, however, if there is a shift in support within the NEC.”
  • ANC parliamentary caucus splits with a no-confidence vote: “This may be a fascinating thing to watch. Parliament’s term before Christmas is drawing to a close next Friday 9 December meaning there is not much time left now and it remains unclear that the EFF especially will want to aid ANC rebel MPs in removing President Zuma. However, it is possible next year that the DA or even ANC rebel MPs could put forward a motion, and that would have to be heard under parliament’s rules.”

According to Nomura, while a split in the ANC caucus would be “fascinating”, the sense is that not enough MPs would rebel against the party.

To be successful it would need 50 rebel ANC MPs (though, as some smaller parties vote with the ANC or abstain, this could be closer to 55).

Under the constitution, Jacob Zuma would have to resign immediately if parliament passes a motion of no-confidence with a simple majority. If he did, then Deputy President Cyril Ramaphosa would become Acting President – but parliament would have to elect him or someone else as (‘real’) President.

This opens up great risk and uncertainty in the ANC given it has not concluded its succession problems, Nomura said.

If Jacob Zuma did not resign, however, then “there would be a full-blown constitutional crisis and South Africa would likely be veering towards a Zimbabwe scenario,” Nomura said.

However, this outcome is extremely unlikely, it said.


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