The new world of competitive politics

Prior to last August’s local elections, it was generally accepted that the ANC would maintain its majority in the 2019 national elections with President Zuma choosing his replacement. SA’s politicos must now digest the implications of how such a scenario has come to look increasingly implausible.

Large and growing anti-Gupta-cronyism sentiment within the ANC and its traditional alliance partners, amid an ongoing stream of scandals in the news, all but precludes the outcome the Zuma faction must achieve: the next wave of ANC leaders accommodating their patronage network; and the ANC winning a majority, or near majority, of the national electorate in 2019.

If the Zuma faction prevails in December, this risks the anti-graft ANC members and alliance partners decisively breaking away - to form a new party, or perhaps to join an existing one. Even without a large formal break, various forms of divisiveness could lead to the ANC coming up well short of a national majority in 2019.

Agreeing to a compromise candidate in December might seem to be the safest option for those hoping to maintain the status quo. However, it is impossible for there to be a true compromise candidate as the status quo is not at all economically sustainable. That the ANC cannot resolve this is central to its 2019 electoral vulnerability.

Low, non-inclusive growth provokes deep electoral angst. Polling and traditional voting patterns then become unreliable as evidenced by the surprising Brexit and Trump victories. SA lacks growth drivers of any kind while the ANC lacks a unifying candidate and a coherent economic strategy. Nor are the state capture headlines going to fade away.

The global economy is demanding. While political power today is thickly clustered at the national level, indulging isolationist temptations has become unaffordable even for the wealthiest nations. SA’s inward facing policies have suited cronies while provoking stagnation and undermining poverty alleviation.

With declining prospects, as depicted by prolonged stagnation and credit rating downgrades, SA must now reconceive its political and economic landscapes. Much must be accomplished before and after the 2019 vote.

That SA’s economy has been unresponsive to global demands reflects policy indulgences which trace to the nation’s politics suffering from two mutually reinforcing shortcomings: national elections have not been competitive; and the constitution’s structure leads to party bosses being profoundly powerful. A coalition government would meaningfully mitigate both flaws.

Even ignoring the state capture slide, a ruling party confident of its ongoing electoral dominance and controlled by party bosses, while being beholden to an alliance of unionists and communists, was not going to prioritise working with business leaders to maximise competitiveness and growth. In addition, historic, geographic, and geological precedents have been deeply limiting, particularly: political oppression of a racial majority; and economic isolation made manageable only through resource extraction.

Bizarrely, this entire narrative has now imploded. The ANC’s tripartite alliance is splintering. A significant split of the party seems probable in 2018. That the stalwarts are publically challenging the ruling party’s bosses is more than a historical footnote. State capture has undermined poverty alleviation hopes in ways that pre-1994 SA could not.

SA’s traditional sources of economic momentum have been devastated. The trajectory of mineral demand keeps flattening as the global economy pivots toward services-led growth. Policies, practices, and pirating have further discouraged investing in SA’s mining sector. Technological advances overcoming geographic barriers have been offset by government’s anti-business and anti-western disposition.

Domestic consumption accounts for about 60% of the economy and its growth prospects have been pummelled by excessive reliance on debt to fund consumption. Household progress has been further blighted by meagre advances in conquering the legacy of a huge portion of the workforce being hectically under skilled.

Today's ANC comrades can’t sing and dance their way out of the web of misperceptions and missteps they have haphazardly choreographed. Translating “Radical Economic Transformation” into “inclusive growth” is an extraordinary challenge.

“Inclusive growth” language peppers political debates in the US and Europe. However, in those societies the economically marginalised are watching on big screen TVs and few cupboards are barren. In SA, over half the population gets by on less than R800 a month per person.

SA’s per capita income is stuck with no hope in sight. As is often the case internationally, high-skilled workers are gaining while everyone else is slipping. Growth, and jobs, will have to come from selling value-added goods and services to wealthy foreigners. This in turn will require sweeping policy reforms.

It is conceivable, though unlikely, that by 2019 the Zumas and Guptas will have exited SA’s politics and much of the patronage will have been purged. However, the damage done to the ANC brand by the fall of Brian Molefe is a stain that will long endure.

Parents that go to bed and wake up worrying about feeding their families don’t harbour hopes of their children growing up to be like Jacob Zuma. Rather, Brian Molefe was a leading role model and within the ANC he allowed himself to become a caricature of disgrace. The damage to next-generation hopes, and ANC support, will be lasting.

The flailing effort to re-instate Molefe has been a public relations disaster of extreme proportions made worse by its timing. The “White Monopoly Capital” meme was quite successful as it is true that much of SA’s economy remains under the control of whites. Thus the language resonated nearly rebuttal free.

Conversely, the follow-up slogan, “Radical Economic Transformation” invites a free-for-all effort to define it. The RET slogan was to build on its WMC predecessor to justify placing cronies in charge of an ever larger portion of the economy. The effect was always going to be narrow enrichment at the expense of broad poverty alleviation. Media and other probes will steadily confirm this underlying reality.

The likelihood that today’s Zuma-protected cronies will preserve their privileges after the 2019 election has plummeted with the result that various lower-probability scenarios are now quite plausible. This is itself a type of outcome. Political parties must now plan for a 2019 coalition result while considering how their voter support and coalition appeal will be shaped by their economic policies.

The party which will gain the most supporters, and perhaps then provide the post 2019 coalition government’s finance minister, is likely to be the one that can best define a “Radical Economic Transformation” model that provokes potent, and sustainable, inclusive growth. As SA’s politics are set to become far more competitive, the economy should respond in kind, eventually.

Shawn Hagedorn is an independent strategy advisor

@shawnhagedorn