Dec. 14 (Bloomberg) -- Jacob Zuma, who was fired as South Africa's deputy president after he was implicated in a fraud trial, is poised to win control of the ruling African National Congress at a party conference next week, putting him on track to supplant Thabo Mbeki as the nation's next president in 2009.

Zuma's comeback is supported by the country's largest labor federation and the South African Communist Party, which form part of the governing alliance. They are demanding more state spending for the poor and a letup in interest-rate increases.

His response has been to woo investors at Citigroup Inc., Merrill Lynch & Co. and other firms, assuring them he won't buckle to union demands. He has pledged to continue pursuing foreign investment, which has helped push growth in Africa's largest economy to its fastest rate in a quarter-century and helped the stock market triple since 2002.

``As we saw with Mbeki, it's talk left and walk right, and we will probably see the same thing with Zuma,'' said Fritz Kaegi, an analyst at Chicago-based Columbia Wanger Asset Management. ``The political situation doesn't change our outlook for South Africa.''

The ANC leadership poll will take place in the northern town of Polokwane Dec. 16-20. Zuma, 65, won almost 900 votes more than Mbeki out of 3,721 ballots cast in the nomination process last month, the first barometer of support for the two men.

Policy Shift

Prior to taking power in 1994, the ANC advocated nationalizing the country's mines and banks, imposing a national minimum wage and regulating food prices. Mbeki, a British-trained economist, was one of the main drivers of the policy shift that included erasing the budget deficit and selling off Telkom SA Ltd., Africa's biggest fixed-line phone operator.

Mbeki named Zuma, who has no formal education, deputy president in June 1999. He fired him six years later, following allegations that Zuma's financial adviser tried to solicit a bribe for him. Zuma was later charged with corruption, then with raping a family friend half his age.

Zuma's fortunes changed last year when he was acquitted of rape and a court threw out the corruption charges after prosecutors said they needed more time to investigate. A decision on reinstating the case will be made next year.

Prosecutors alleged Zuma tried to secure bribes from the South African units of Thales SA, Europe's largest military- electronics maker, in exchange for protecting them from a probe into government purchases of arms. Zuma denied any wrongdoing, and said there was a plot to discredit him politically.

No Threat

At meetings this year with executives from Merrill and Citigroup in Johannesburg and with intelligence provider Strategic Forecasting Inc. in Austin, Texas, Zuma said he had no intention of changing economic policy, according to two attendees.

Financial markets have ``absolutely nothing to fear from me,'' he said in an interview in Cape Town on April 17.

South Africa's economy is in its longest period of expansion since World War II, with growth accelerating to 5.4 percent last year from 5 percent in 2005. Growth averaged 2.8 percent a year between 1994 and 2004. The country is preparing to host the 2010 soccer World Cup.

The Congress of South African Trade Unions, which represents about 1.8 million workers and backs Zuma, is calling for action to reduce the country's 25.5 percent unemployment rate, the highest of 61 countries tracked by Bloomberg News. It is asking the government to increase tariffs, pay the poor a monthly stipend and nationalize several companies.

Given South Africa's needs to fund its current account deficit and attract foreign investment, Zuma will have little scope to deviate from the economic path Mbeki has forged, said Jac Laubscher, group economist of Cape Town-based Sanlam Ltd., the biggest South African-owned insurer.

`Policy Continuity'

``I'm inclined to take the line that there will be policy continuity,'' Laubscher said. ``Regardless of who is the president, he will be faced with the same problems, he will be faced by the same constraints.''

That view is shared by London-based Veronica Kalema, a director in Fitch Ratings' sovereign credit team, who said the change in the ANC leadership won't alter her outlook on South Africa. Fitch on July 25 raised the country's credit-rating outlook to ``positive,'' indicating it may be upgraded from BBB+, the third-lowest investment-grade level.

``History is full of populists who when they come to power take a look at the numbers and realize they don't have that many choices,'' said Kim Catechis, who oversees about $4.6 billion as head of emerging markets for Scottish Widows Investment Partnership in Edinburgh.

Azar Jammine, chief economist of Econometrix in Johannesburg, is more wary.

``Time and again you get international investors only reacting with a lag,'' he said. ``They should be more concerned than they are, partly because I think you may well see a complete change of guard in terms of the management of the economy.''

Several of Zuma's public statements have caused controversy. During his rape trial, he testified he had consensual sex without a condom with his accuser, who was HIV-positive, and that he had a shower afterwards to reduce his chances of being infected. Last year, the Star newspaper cited him as saying gay people were ``a disgrace to the nation and to God.'' Zuma later apologized for the remark.

To contact the reporter on this story: Mike Cohen in Cape Town mcohen21@bloomberg.net

Last Updated: December 14, 2007 11:18 EST