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SA investors cheer Ramaphosa rival’s suspension

‘It shows an element of steel that has been missing,’ said Adrian Saville.
Image: Waldo Swiegers / Bloomberg

Investors are celebrating the suspension of one of the main party rivals of South African President Cyril Ramaphosa as a sign that he is finally tightening his grip on the governing African National Congress (ANC).

But they say Ramaphosa must move far more quickly on reforms before they can turn bullish on the growth prospects of Africa’s most industrialised economy.

Ramaphosa has slowly consolidated control over the divided ANC after narrowly winning a leadership contest in December 2017 that also saw enemies elected to powerful party posts.

He only felt confident enough last week to move against Secretary General Ace Magashule, who has been charged with corruption, after his allies in the ANC’s national executive pushed through tougher rules for members charged with serious crimes.

“It shows an element of steel that has been missing,” Adrian Saville, a longtime fund manager and economics professor at GIBS business school in Johannesburg, told Reuters.

Magashule denies the corruption allegations and has called the charges he faces flimsy.

But his suspension clears a major obstacle to Ramaphosa’s bid for re-election as party leader next year. The secretary general oversees the day-to-day running of the ANC and plays a central role in conferences where party posts are won and lost.

Nolan Wapenaar, Anchor Capital’s co-chief investment officer in Cape Town, said sidelining Magashule could cut the number of “nerve-racking headlines” that sap confidence in South Africa.

The rand has rallied and local bond yields edged lower since Magashule’s suspension, although other factors have also contributed, including the National Treasury cutting debt issuance.

Hurdles remain

Ramaphosa is not out of the woods yet.

The ANC is riven by factions that are in constant flux, including one that still remains loyal to Ramaphosa’s scandal-plagued predecessor Jacob Zuma.

The Covid-19 pandemic has exacerbated the weak state of public finances and longstanding problems such as unemployment.

Many investors feel Ramaphosa has not delivered on promises to clear policy blockages in sectors such as energy, where red tape still prevents big companies from generating their own power despite state utility Eskom regularly implementing outages.

“The direction of travel is the right one, but the speed has been slow,” said Pavel Mamai, partner and portfolio manager at London-based ProMeritum Investment Management.

Wapenaar said South Africa still faced a “policy quagmire”, noting that miners were not opening new mines despite a commodity boom.

Changes to visa rules affecting skilled migration and the release of radio frequency spectrum for telecoms firms are two other areas where the president had not met expectations, said Peter Attard Montalto, head of research at Intellidex who tracks reforms under Ramaphosa.

“Magashule’s suspension is an important step, but it does not shift the dial on reform,” he said. “Factional politics is not blocking policy.”

Read: ANC faces funding squeeze ahead of vote

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I am reminded of the banquet scene in The Untouchables where Al Capone (played by Robert De Niro), baseball bat in hand, gives a little sermon on the virtues of teamwork. The assembled mafiosos all nod in agreement and then, without warning, Capone bludgeons one of them to a pulp.

The crime that Magashule and Zuma committed was to steal for themselves and not for the team.

Consider the step aside rule (three years in the making): cadres who have been charged with serious crimes must step aside. They must now officially do nothing.

But cadres who have been convicted of serious crimes are rewarded: like Tony Yengeni, or the fop who parades as a deputy minister.

The country is governed by a criminal racket with the aim of staying in power forever. A change of personnel will not change that. Every change in policy since Ramaphosa came to power has been for the worse: more red tape, more delays, more BEE and, do not forget, EWC.

What has actually improved? Is the lack of reforms all the fault of Magashule? Of course not. The team comes first and Cyril is nothing if not a team player.

Agreed.

Imagine the cheer from investors if the anc disbands??

That’s the only thing that will ever make a difference.

Not so myopic, what then if not even worse? We need to reform the ANC so that it can and with Gods help will be able to reform the errors of the Constitution that have promoted and institutionalised corrupt thinking and actions such as Proportional Representation instead of Democratic Representation.
There are many good people that can make the difference, as there are many many bad people that continue to prevent this. The rotten apples need to be identified and convicted by a system of Criminal Investigation, Prosecution and Justice that is reborn from the ashes that we have in front of us.
It is unfortunate that money brings power and this is what is preventing the desire of the people to be supported by a reality of Justice that is unquestionably Just.

Under ANC rule, the citizens of the entire country are in the same position as the exploited inhabitants of the crime-infested Cape Flats. They are financially dependent on the benevolent, soft speaking, and well-mannered leader of the criminal gang. They support this gang leader, not because he is a noble leader, but because all the alternatives are much worse.

I concur yes the ANC is exactly the same as those gangs that infests the Cape Flats. I always say this it doesn’t matter where you come from, it’s what your choices are that gets you there. I can vouch for this as much as cape town being named the third most ambitious city in the world it also needs to deal with it’s socio economic ills in the belly. Gangs operate exactly like a political parties, you get recruited from a young age these days they even poach university graduates, doctors, lawyers, accountants lobbyists, etc. We all see cape town for it’s glory on the surface but go in the centre and see what’s lurking. This is shambolic. Many of the inhabitants on the Cape Flats have no alternative to this and it exactly makes and states the same trajectory like the ANC, the only difference is that gangs have not liberated anyone but instead you die at it.The Government of the country cannot solve the gang problem and neither can the COCT, or the DA of the day. The only people that can do it are those that live in it.

The gang culture is a manifestation of a socio-economic problem. It is the crystallization of order out of chaos, so to speak. Young people grow up in poverty, without a family structure, without role models, without self-respect or a sense of belonging. They are adrift in a stormy ocean of poverty and violence.

They tend to clump around a central figure that accepts them for what they are. They anchor themselves in their shared deprivation and they build a structure around testosterone, the only source of power they have. They gain self-respect and belonging through violence and intimidation. Most of these kids are good material, but they find themselves in the rubbish dump of society.

Some escape through sports like martial arts that teaches them self-respect and discipline. Others escape through religion that brings them in contact with their emotions and makes them realize that they are human and that they have a soul. Religion and sports offer an alternative structure and discipline to the gang culture.

Only economic growth can solve this problem. This is why the ANC exacerbates this problem. The ANC government, through its economic policies, condemns more young people to become gang members.

End of comments.

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