As the ANC begins its elective conference on Friday with President Cyril Ramaphosa back in the driver’s seat, experts say this week’s better-than-expected economic growth figures will further secure his position.
Ramaphosa is widely expected to survive an impeachment vote in parliament on Tuesday, an outcome political analyst Mcebisi Ndletyana told Business Times was good for business continuity.
“For business this is the kind of person and leader they are not unhappy with. So, they are fine, they are content. He remains in the game,” Ndletyana said.
Ramaphosa will be on a stronger footing at the ANC’s 55th national elective conference this week after the national executive committee (NEC) sprang to his defence in the wake of a report by an independent panel, which found the president my have violated the constitution and corruption laws. Party MPs were instructed to vote against adopting the report, while Ramaphosa has approached the Constitutional Court to have its recommendations set aside.
Ndletyana said indications were that Ramaphosa remained firmly in his position, and that the ANC NEC would vote against the report. “For now, there is some certainty he will stay. Of course, the markets are looking to that certainty and a leader who understands their vision — and he is that leader.”
Ratings agency Fitch said this week even if Ramaphosa were to resign, a potential successor was more likely to emerge from the moderate wing of the ANC “rather than the Zuma-linked Radical Economic Transformation faction, which advocates more populist approaches”.
Still, Fitch said the scandal may further damage the ruling party’s reputation. “When we affirmed South Africa’s rating at ‘BB-’, with a stable outlook, in November 2022 we stated that the party could lose its majority in 2024, but that we did not expect this to lead to immediate changes in economic policy, as the ANC would most likely remain in government in alliance with smaller parties.”
Ndletyana said the economy was performing surprisingly well under the present circumstances and that markets view Ramaphosa as a force for stability.
“There were a lot of expectations that the economy would not do well. Tuesday’s numbers are an indication that things are not unravelling. There is great potential to do better. Things are looking up,” said Ndletyana.
On Tuesday Stats SA reported that GDP expanded by a better-than-expected 1.6% in the third quarter, rebounding from a 0.7% contraction in the preceding three months, despite Eskom’s unprecedented load-shedding. Stats SA said the growth was boosted by the performance of agriculture, transport, finance, communications, and manufacturing .
Daniel Meyer, a professor at the UJ’s College of Business and Economics, said Ramaphosa was good for stability despite being slow to take difficult decisions for the benefit of the economy.
“He is slow to respond to anything. In that way it is bad, but for the stability of the economy it is good he is still there,” Meyer said. “The outside world looks positively on him. For me it would be nice if we could have someone who can make decisions and give guidance on what we can do for our economy. It is slow progress with him there. We cannot afford the slow progress at this stage.
“Who else is there we can trust? I am not 100% sure; everyone has skeletons in the cupboard. Even though Ramaphosa has [been] slow [to make] decisions, I cannot see anyone else taking over now.”
However, research associate at the Social Policy Initiative, Duma Gqubule said Eskom’s unreliable power supply was a bigger threat to the economy than the Phala Phala scandal. The state-owned power utility on Wednesday said than in addition to a raft of breakdowns at its coal-fired plants supplies of diesel to power open-cycle gas turbines were depleted, prompting it to implement stage 6 load-shedding for the fourth time this year.
How does Ramaphosa expect the economy to grow when there are blackouts, higher interest rates and austerity? It is a toxic cocktail that is going to collapse our economy
— Duma Gqubule, research associate at the Social Policy Initiative
Gqubule said Eskom's generation capabilities were getting progressively worse.
“The situation with Eskom, the economy and the unemployment crisis is going to make Phala Phala look like a picnic,” he said. “People are going to start asking if David Mabuza is worse than this current administration. I think South Africa must focus on what matters, which is the Eskom crisis. We need to change the CEO Andre De Ruyter immediately. I do not know what it will take. Will it take a total blackout for the board to come to its senses and replace De Ruyter?”
Gqubule said the next CEO should be a temporary appointment. “Nobody must be appointed beyond an 18-month to two-year term to stabilise the situation,” he said.
“How does Ramaphosa expect the economy to grow when there are blackouts, higher interest rates and austerity? It is a toxic cocktail that is going to collapse our economy.”
In a joint statement on Thursday, Business Unity South Africa, Business Leadership South Africa and the Energy Council of South Africa called on business, labour and civil society to reduce consumption as far as possible to relieve pressure on the national grid.
“Load-shedding is hugely detrimental to our economy and all citizens. The elevated stages, such as currently being experienced, present a major safety and security risk to assets, businesses, and ordinary citizens,” they said in a statement.
The organisations also urged the government to make funds available for diesel to power the gas turbines reserved for emergency use.
“We further call on government to fund adequate and reliable diesel supply for our national peaking generators, which are critical to ensuring that Eskom can best manage a stable grid and mitigate a further escalation in load-shedding levels,” they added.
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