SA’s leadership changes gear
WHAT IS CLEAR IS THAT RAMAPHOSA’S LEADERSHIP TEAM IS STARTING TO CALL THE SHOTS
It has been a dramatic week in which Cyril Ramaphosa’s election as ANC president in December has been followed up — more speedily than many might have expected — with some strongly positive signals of change.
President Jacob Zuma is not gone, as many had hoped. However, the ANC’s national executive committee has resolved that he will have to go before the 2019 general election campaign gets under way and the governing party’s leadership is negotiating an exit package. Whether he will still deliver February’s state of the nation address remains unclear.
But what is clear, meanwhile, is that Ramaphosa’s new leadership team is starting to call the shots and that the change at the top has unlocked action in some key areas.
The law-enforcement authorities that had previously declined to do anything about state capture even as evidence of the dealings of the Gupta family and their corrupt counterparts mounted, have suddenly come to life. The National Prosecuting Authority’s (NPA’s) Asset Forfeiture Unit, which had quietly obtained orders to seize Gupta and other assets late in 2017, has now come out of the closet and is forging ahead with moves to freeze up to R50bn in assets, among these the Guptas’ Free State farm. The unit has even persuaded the Dubai authorities to freeze Gupta assets there if it can be proven they are the proceeds of crime.
Even NPA boss Shaun Abrahams — the so-called Shaun the Sheep — seems to have found a hint of a spine as he attempts to cling to his job despite a court ruling against his appointment, promising he has 200 witnesses waiting to testify against Zuma and the Guptas.
And in perhaps the most dramatic sign of a power shift at the top, the government has at last appointed a new chairman, new board and new interim CEO at Eskom, with the board directed to get rid of allegedly corrupt Eskom executives including Matshela Koko and Anoj Singh.
It will become clear only in coming days whether the measures at Eskom will be enough to arrest the crisis at the utility, which has been shunned by the markets, is running out of cash and must publish its delayed interim results by end-January to avoid having its bonds suspended by the JSE. The new board is not in place yet and stabilising the utility will be a mammoth task – with the risk that if it can’t be done fast enough, Eskom will default on its debt and put at risk not only the stability of SA’s public finances, but of its entire financial sector.
That reflects the extent to which SA is still walking an economic tightrope, despite the positive and welcome signals of change at the top. Speaking at a Deloitte conference in Sandton last week, S&P Global Ratings’s Konrad Reuss commented that none of the key issues of concern the rating agency had cited at its November downgrade had gone away.
SA’s growth rate was still dismal, year after year, and its public finances were weakening in a context of high and rising contingent liabilities from state-owned enterprises, with S&P rating Eskom at a level that “tells you there is a clear and present danger of a default”, said Reuss.
S&P has already junked SA’s rating and Moody’s Investors Service could yet do so after February’s budget, which will be closely watched for evidence that the government is willing to act to stabilise SA’s public finances.
And, crucially, ratings agencies and markets will be looking for signs that the government is finally making economic growth a priority and taking some of the tough decisions required to get growth going again.
The positive signals will help for now, but the uncertainty about the timing of Zuma’s departure is not good for sentiment and the markets will wait only so long to see the signals translate into action to boost the economy and tackle its most pressing challenges. Ramaphosa and his ANC colleagues cannot afford to lose the momentum. They need to act decisively, and soon.