The ANC erupted in all-out war on Thursday.
After three days of raging debate about the role of the Reserve Bank that roiled markets and made the rand the worst-performing emerging market currency, President Cyril Ramaphosa finally broke his silence.
He said the party would not seek to nationalise the central bank or expand its mandate, a key demand of the ANC faction that opposes him and which is associated with his predecessor, Jacob Zuma.
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He was immediately contradicted via Twitter by Ace Magashule, who as secretary-general is the highest-ranking official at Luthuli House, and was a staunch Zuma supporter during the latter’s time in office.
The tweet, which was later deleted and which Magashule said was fake, tagged the president and Zizi Kodwa — a Ramaphosa ally who is his spokesperson in the ANC presidency in addition to being deputy minister of state security — and included a copy of a statement issued earlier in the week following the national executive committee’s lekgotla, the ANC’s biannual planning meeting.
It was unclear if Magashule wrote the tweet himself or an official had written the tweet.
While Ramaphosa and Magashule are on opposite sides of the ANC’s factional divide, this is the first time that the conflict between them has been so brazenly played out in public, a clear sign that any pretence of unity has been abandoned.
It is a major threat to Ramaphosa’s aim to attract $100bn of investment over five years and is also likely to fuel scepticism among those who hoped the ANC’s decisive victory in the May elections would strengthen his hand.
The drama started on Tuesday, when Magashule issued a statement saying the party wanted to expand the mandate of the Bank to include growth and employment, and to explore the use of quantitative easing to deal with government debt.
Developed economies have used the policy, which involves printing money in order to inject liquidity into the economy to prevent deflation, which is a general and sustained drop in consumer prices that discourages spending and investment.
Magashule’s statement sparked a slide in the rand that had by Thursday pushed it above R15/$ for the first time since October 2018.
At 6.49pm on Thursday, the rand was trading 0.8% weaker at R14.9943. It broke through R19/£ and was 1% weaker at R19.0538.
The local currency has lost almost 4% since Monday.
In a sign that the drop, which ironically may constrain the Bank’s ability to cut interest rates, was purely driven by domestic factors, the next biggest decliner among 24 emerging markets tracked by Bloomberg, Argentina’s peso, has lost just 0.1% in that period.
Ramaphosa, who had faced criticism for his silence in the wake of the Magashule-induced storm, finally responded on Thursday, having left it the day before to finance minister Tito Mboweni and Bank governor Lesetja Kganyago to defend the central bank.
"It is our desire for the SA Reserve Bank to be publicly owned. However, we recognise that this will come at a cost, which given our current economic and fiscal situation, is simply not prudent," he said in a statement issued in his capacity as ANC president.
There was "broad agreement" to use other instruments to boost the economy and create jobs, the statement said.
The delayed response was "like scoring an own goal against your own economy", said Jannie Rossouw, head of the school
of economic and business sciences at the University of
the Witwatersrand.
"He should have shown that he is the president and not Ace Magashule running the country from Luthuli House," Rossouw said. "We have negative economic growth and the one institution that is still giving stability in our economy is now also under threat. It seems that the ANC really has no clear perception of the damage it does to the SA economy."
The ANC has been struggling to hold itself together.
Magashule was part of the pro-Zuma faction, which supported Nkosazana Dlamini-Zuma ahead of the 2017 Nasrec conference, where Ramaphosa won the ANC’s presidency.
Correction: June 7 2019
An earlier version of this article said the Mexican peso had lost 0.1% since Monday. It was in fact the Argentine peso.
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