Wednesday, January 03, 2018

South African Central Bank Attacks ANC Nationalization Move
Delegates also adopt resolution for state to expropriate land without compensation

Newly elected ANC leader Cyril Ramaphosa addresses delegates during the closing of the party
Joseph Cotterill in Johannesburg

DECEMBER 21, 2017
Financial Times

South Africa’s central bank on Thursday criticised the African National Congress’s proposal to nationalise the institution, warning that such a move was “unwarranted given the country’s fragile economic situation”.

The rebuke underscored the challenges that Cyril Ramaphosa, the ANC’s new leader, faces as he attempts to balance market expectations that he will promote business-friendly policies against the party’s increasingly populist strains.

ANC delegates approved a proposal late on Wednesday that the government should buy privately owned shares in the Reserve Bank of South Africa at a conference where Mr Ramaphosa won a narrow victory to succeed President Jacob Zuma as party leader. They also adopted a resolution that the state should expropriate land without compensation, a contentious issue that would require a constitutional amendment.

Both measures were core planks of the campaign led by Nkosazana Dlamini-Zuma, Mr Ramaphosa’s opponent in the leadership contest and Mr Zuma’s former wife.

Markets initially reacted positively to Mr Ramaphosa’s victory, sending the rand to a nine-month high amid hopes that the deputy president would fulfil his election promises of tackling rampant corruption and reviving a stagnant economy. But some of the optimism has diminished over concerns that he has inherited a divided party, with Mr Zuma’s allies elected to half the ANC’s top six posts.

Results announced on Thursday for elections to the party’s powerful national executive committee showed that its members were split between Mr Ramaphosa’s supporters and Mr Zuma’s backers.

Ownership of shares in the central bank does not affect its policy independence, which is set down in South Africa’s constitution, but the investors do vote to select seven of 10 non-executive directors. Ms Dlamini-Zuma’s backing of nationalism was seen by her critics as a veiled attempt by the president’s allies to undermine the bank’s independence.

In his first speech as party leader on Thursday, Mr Ramaphosa, one of South Africa’s wealthiest black businessmen, promised “a radical path of socio-economic transformation,” to redress the huge imbalances created by apartheid. He also endorsed expropriating land without compensation.

“Land has been an issue of great concern . . . when dispossession took place, poverty became a partner to our people,” said Mr Ramaphosa, who is now positioned to lead the ANC into 2019 elections.

Mr Ramaphosa said land reform “must not undermine the economy,” and analysts say the ANC could take years to finalise its policy. But frustrations over the pace of restoring land to black ownership have pushed the issued high up the political agenda.

The ANC adopted more populist rhetoric under Mr Zuma’s leadership as a wave of corruption scandals linked to the president, his allies and the Gupta business family caused the party’s support to plummet.

Sizwe Mpofu-Walsh, an activist who supports expropriation without compensation, said the ANC has sought to appease rival factions within the party.

“I think this will be a signature of the Ramaphosa era,” he said. “The Dlamini-Zuma faction lost the battle, but won the war on policy. They put Ramaphosa up to be an acceptable face in order to keep political power.”

Fitch Ratings said on Wednesday that “policy trade-offs and continued infighting are likely as Ramaphosa seeks to form and maintain political alliances”.

“As long as growth is too weak to significantly reduce inequality, pressure will remain for redistributive policies, even if they weaken South Africa’s growth potential,” the rating agency said.

Analysts say Mr Ramaphosa could try to use the national executive committee to force Mr Zuma from office, but add that he may now have to tread carefully given the delicate balance of power in its ranks. On Thursday, Mr Ramaphosa said that Mr Zuma was “among those whose advice we’ll need”.

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