South Africa Is Desperate to End a Leadership Crisis
South African President Jacob Zuma’s grip on power is looking increasingly tenuous. On Nov. 2, the nation’s graft ombudsman released a report suggesting the president had been unduly influenced by three wealthy businessmen who work with his son, Duduzane. Zuma also had suffered a major setback in a battle with his finance minister, Pravin Gordhan, for control of the National Treasury.
In August, voters showed their indignation by handing control of Pretoria, the capital, and Johannesburg, the financial hub, to opposition parties in municipal elections. Ruling African National Congress veterans, labor unions, and civil rights and church groups that had quietly grumbled about Zuma’s leadership are now clamoring for him to go. While Zuma has shrugged off previous scandals, thanks to his allies in the ruling party, he’ll probably be replaced as party leader in just over a year, when the ANC chooses his successor for the next five years.
The ANC controls 62 percent of the seats in Parliament, which appoints the president and has the power to force him from office by holding a vote of no confidence. Says Anne Frühauf, senior vice president of risk advisory company Teneo Intelligence: “With opposition mounting, especially within his party, Zuma’s early exit now seems to be a matter of time, even if he is able to drag out the inevitable through procedural tricks.”
Zuma’s seven-year tenure has been characterized by missteps that eroded much of the progress made since apartheid ended in 1994. The economy is stagnant, and 27 percent of the workforce is unemployed. The country is at risk of a junk-bond credit rating, and students demanding free education have burned buildings and vehicles and disrupted classes on campuses.
Zuma has repeatedly undermined Gordhan’s authority, despite the great respect Gordhan commanded in dealing with markets. Last month, prosecutors announced they would charge Gordhan with fraud for illicitly approving a retirement package for a tax agency official, rekindling fears that Zuma was intent on appointing a more pliant National Treasury head. The case, described as a political hatchet job by Gordhan, was dropped on Oct. 31 because of a lack of evidence. Two days later the graft ombudsman suggested Zuma may have breached his code of ethics and ordered a judicial inquiry into possibly corrupt dealings between state officials and members of the Gupta family, who are friends and in business with his son. The Guptas have denied any wrongdoing.
Sipho Pityana, chairman of gold producer AngloGold Ashanti and an ANC veteran, has been heading the campaign for Zuma’s ouster. “People are no longer prepared to put up with your antics,” he said at a Nov. 2 rally where speaker after speaker called for Zuma’s resignation. “They are tired of state looting under your leadership.” Zuma denies ever intentionally breaking the law and says he won’t step down. He hasn’t been charged with anything.
The ANC, which has dominated politics since it first took power under Nelson Mandela in 1994, risks losing 2019 elections if it ignores public outrage and lets Zuma serve out his term, says Aubrey Matshiqi, a political analyst at the Helen Suzman Foundation, a Johannesburg-based research group. “What the ANC is doing now is to flirt with the real possibility of its own demise,” Matshiqi says.
The chances that Zuma may be headed for an early exit have driven the rand up 16 percent against the dollar this year, making it the best performer among 23 African currencies monitored by Bloomberg. An index of rand-denominated government bonds is near its highest level in a month.
One consequence of the turmoil is that senior politicians and officials implicated in wrongdoing have been exposed and there are attempts to hold them to account, says Bonita Meyersfeld, a law professor who heads the University of the Witwatersrand’s Centre for Applied Legal Studies.“We have a number of effective institutions,” she says. “We have a media that is firmly within the loop, we have a judiciary that is taken very seriously, we have a civil society that is very robust, we have minority political parties that are able to flex their muscles.”
The bottom line: South African bonds and the rand have responded favorably to any signs that Zuma will be forced out of power.