Risks and Opportunities in South Africa's Fluid Politics

South Africa has captured the imagination of the United States before. At the height of U.S. public interest, a moral prerogative rather than an economic one defined the focus on South Africa. Many thousands of people in North America and around the world marched and boycotted apartheid. There was a widespread fear that only civil war would end the exploitative segregation system that many deemed a crime against humanity. Yet, through negotiation, a constitutional democracy was established in a move even the most secular have celebrated as a ‘miracle’. With post-colonial failures an all too common occurrence across the continent, the hope for South Africa was that it would not follow the road taken by many of its peers after liberation.

Today, South Africa remains a vitally important country, according to prominent U.S. thought outlets on international affairs. As one of the world’s largest exporters of precious metals used in a multitude of industrial and commercial applications, continued trade has been termed “vital for the economic security of the West.” The country secured a seat as a non-permanent member of
the UN Security Council for the third time on Friday last week.

With its mineral resources and power as a regional hegemon in Sub-Saharan Africa, it occupies a vital strategic place for North America on a continent of over one billion consumers. Africa is where vast economic growth potential and a billion people see ongoing battles of Chinese versus U.S. influence and area-specific threats of terrorism. There are varying degrees of both decline and (mostly) progress among its 54 countries. South Africa’s new president Cyril Ramaphosa is more internationally minded than his predecessor, who showed little interest in continental leadership.

The great hope for South Africa

In a recent essay for this site, I assessed the prospects for liberty in South Africa in the hours following a new presidency, after a Parliamentary vote of no confidence succeeded against the ultra-corrupt President Jacob Zuma. The hope for South Africa remains one in which property rights are protected and extended to the historically dispossessed, the economy is opened for millions to enter who until now remain excluded due to bad legislation and all South Africans enjoy the rights and freedoms enshrined in its Constitution.  It is one where race relations strengthen in the positive direction they have taken since 1994 (amidst divisive racial political rhetoric); a country where an overwhelming majority of all South Africans still see each other as indispensable to the country’s success.

A new presidency

Direct threats to property rights, moderate public opinion on key issues, and the Far Left’s wager as a minority power broker have characterised most of the initial 100 days of office for the fifth South African president from the party which has ruled since the end of apartheid.

The new presidency of Cyril Ramaphosa was an internal ANC party change. The previous president Jacob Zuma was mired in corruption and an ailing economy, while the official opposition was gaining ground. In 2014, the ANC’s average support was 62.15%, and this fell to a 53.4% average support nationwide by the 2016 local government elections. At the party’s national conference late last year, Zuma’s ex-wife Nkosazana Dlamini-Zuma was defeated as she ran for leadership of the party – a sure path to the South African presidency. She was seen by many as a continuation of her former husband’s legacy in a deeply divided party. There was talk of a breakaway by so-called ANC moderates compromised of business-mined reformers and Constitutionalists had she won.

It was a narrow victory for the Zuma opponent Cyril Ramaphosa, perceived as a business-minded reformer, and kept the liberation party once led by Nelson Mandela together. The top elected leadership positions under the presidency were split between factions in a delicate balance of power, gluing together a new unity many predicted would not occur for the continent’s oldest liberation party.

The feat of “unity” was engineered by David Mabuza, premier and leader of the Mpumalanga province. Delegates are sent from all provinces by their local branches of the party. Sometimes entire provinces choose to vote en bloc in support of a candidate. The ninth and last province to cast their ballots, the Mpumalanga delegates voted in a bloc for Ramaphosa (after Mabuza appeared to be backing Zuma’s faction). It was a last-minute shift that changed the outcome entirely. Ramaphosa was elected first among equals to the post of ANC party president. In return Mabuza was named deputy president of the party and now the country. According to several accounts, his character may not match his levels of political genius. A host of allegations (including murder) emanate from his home province.

Drawing the battle lines

The battle lines and direction have become clearer since my analysis two and a half months ago. In 2016 the Economic Freedom Fighters (EFF), a self-declared Marxist breakaway from the ANC, voted with the historically classical liberal-leaning Democratic Alliance (DA) to secure DA leadership in the economic engine of Johannesburg and Tshwane, home to executive capital city of Pretoria. The move was to hurt the then Jacob Zuma-led ANC, as the EFF’s leader Julius Malema sought vengeance for being booted out of the party under Zuma’s watch.

The move is indicative of how fluid South Africa politics can be as well as the extent to which even the most hardened ideologues on the left can take self-contradictory positions with relative ease. It holds promise for an era of coalition-style politics over time as the ruling party loses support. The details of implementing ideas behind rhetoric are often much harder to sell than the extreme rhetoric itself, given moderate public opinion seen across the country in polling.

The official opposition also secured Nelson Mandela Bay, however without EFF help, home to Port Elizabeth – the most populous city in the deeply ANC province of the Eastern Cape (birthplace of Nelson Mandela and any ANC stalwarts).

With Ramaphosa’s ascension to the presidency, the ANC has breathed new life from a decline – even as internal opposition to Ramaphosa from populists and Zuma-supporters and in the past
month has been on public display. The EFF is using its position since Zuma’s ouster to switch its support back to the ANC. Cyril Ramaphosa backed a Parliamentary motion to Expropriate Land without Compensation – to be considered in part a first move in an effort to have the EFF return to the ANC. A merger of the two is likely to be concluded after the federal elections next year, where the combining of both parties’ votes could constitute a two-thirds majority in the Legislature. It opens the door to easy changes to the Constitution, the type of which are being debated now on property rights, currently held up in committee processes.

Negotiating away property rights: a dangerous compromise

Many corporate business leaders, who overwhelmingly backed Ramaphosa a few months ago, appear to assume he has a master plan amidst what is a fundamental assault on a pillar of liberal democracy – undermining property rights.

Perhaps he does. Public sentiment is still in his favour and he holds a strong record as a strategist. But there are powerful forces within his party opposing him. An ANC-EFF alliance with the current Deputy President, David Mabuza, and the EFF’s leader Julius Malema can force Ramaphosa out over time. For now, the very probable outcome is he will remain President, leading the ANC to another election win next year.

Ramaphosa’s popularity with business and the response of markets are weighed down (and waning) due to major structural problems. South Africa needs reform in education and labour markets, yet internal ANC groupings are strong enough to ensure neither are likely to happen.

For now, the government will in my view likely apply custodianship, placing all property under the custodianship of the state, offering leases and licenses as opposed to direct ownership. The move tilts the party in the direction of the EFF towards reincorporation, without removing the property rights clause of the South African Constitution. Nevertheless, the effects of custodianship in practice are damaging. Ninety-nine-year leases as a standard approach to custodianship are unlikely to exist in practice, undermining a basic certainty of tenure required for a growing economy.

Public opinion – an ironic counter-punch to populism

Fortunately, public opinion shows South Africans to be highly pragmatic. Electoral results show the EFF unable to breach the 10% ceiling for popular support, despite massive unemployment among young people. Even if then Expropriation of Land without Compensation is not necessary for the ruling party to maintain support levels, it serves the purpose of turning the public focus from education failures and youth unemployment of over 50%.

The Expropriation without Compensation proposal has shown black South Africans will lose property, not just white farmers. If there can be said to be a silver lining, it is that the policy has very publicly demonstrated in practice what radical thinking of state ownership means; something most South Africans do not instinctively see as desirable. A reality I have seen constantly, even if anecdotally, first as a public representative and now in work with grassroots think tank projects.

Amidst some heated debate, the official opposition reaffirmed a commitment to diversity without the use of quotas and adopted several measures at its federal congress a few weeks ago. The DA also reaffirmed its property rights convictions, education reform (including the piloting of vouchers) and labour-market reform in which delegates went so far as to allow for an opting out of a minimum wage for those who have been unemployed for 12 months or more.

The party leader hinted at the idea of working with a moderate ANC breakaway, assuming a future of coalition politics at the federal level. Moderate ANC members in the view of the DA are deemed to be those who remain inside the ruling party supporting the Constitution, property rights, and a market-driven economy.

At the last federal election, the DA won 26.9% of the vote. The party’s new head of policy, Gwen Ngwenya, is an unapologetic classical liberal and was appointed a few days after Ramaphosa’s election to the Presidency. Since her time in campus politics a decade ago, she has been a force for free speech, property rights, and an open market economy. Ngwenya previously served as chief operations officer for the country’s oldest classical liberal think tank. On her appointment, Ngwenya was touted as a future party leader, and elected officials like her offer significant hope for South Africa’s future.

The strength and values of the DA matter, perhaps more so than ever. The ANC has begun recognizing the looming prospect of coalition politics, even if unlike the DA, it has no experience of it. At the same time the DA is having internal debates on its own values and direction as the likely leader of a coalition alternative; with rising young leaders coming out in a firmly classical liberal direction. Some, such as the relatively young MP Zak Mbehle are even firmly libertarian.

What is wrong with South Africa can be fixed by what is right with South Africa

The positives for the country remain numerous – strong enough to fix the problems of South Africa. Race relations are still positive despite racial nationalism by some political leaders and widespread exclusion from the economy due to lacking property rights for the poor, an education crisis, and millions still locked into the informal economy. Racism on social media and online forums are very visible, though constitutes a bubble in which most South Africans do not participate. The majority of South Africans believe all races need each other for South Africa to be successful. It is a positive part of the social foundations which is usually not reflected in the media.

The warm reception to a relatively new President seen as business-minded and politically savvy, which therefore allows for someone patience by investors in what is seen as his indulgence of populist forces. The real work and perception of taking on vast corruption is also positive. Furthermore, the ANC has delivered successfully in the past on some scorecards, and the current president has taken some steps to stop the decline in governance

Nevertheless, none of South Africa’s challenges are structural. For now, risks include a final downgrade to speculative investment levels by credit-rating agencies, counter-productive policy overall, debt levels, a weak civil service, the deficit and destructive ideology.

The perception that the ANC is changing, however, does mean the party is likely to do well in the next election. The opposition is likely to run a campaign focused heavily on preventing a two-thirds ANC-EFF majority. However, many insist the DA should showcase its alternative policy offering. Property rights protection, via the rollout of title deeds to the poor in DA-municipalities, is popular (some ANC municipalities have implemented it too).

The future

Under the current ANC and an EFF reincorporation, discontent owing to poor economic performance may lead to a challenge to its majority in 2024 (the type of which began to emerge clearly under former President Zuma but was stalled in December with his internal defeat). The electorate may see the ANC and not its leader as the problem over the longer run, since reforms are tough to implement based on current power blocs that oppose changes to labour and education policies, while harboring anti-market prejudices.

The policies the EFF and ANC are currently contemplating will keep millions of South Africa in poverty and miss the real chance for a 5% growth rate, the current combined average for 2018
and 2019 among its emerging market peers. The leadership required is one that demonstrates exclusion from a genuine market economy (through cronyism and socialism), not markets
themselves, are the real threat. Alongside open markets, the promotion of property rights – especially for the poor awaiting title deeds – must happen, together regulatory reforms and an
affirmation of the entrepreneurial culture that exists.Entrepreneurship is so often stuck within the informal sector, which holds massive potential.

What is clear is South Africa’s future is never a foregone conclusion. The fight for liberty is taken on daily, the private sector keeps working away (including a dynamic informal economy against all odds) and with so much by way of public sector failure, the South African electorate may increasingly hold a healthy skepticism of its politicians and government.