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EDINBURGH — President Jacob Zuma has emerged marginally more powerful from a vote of no confidence in the South African parliament, but the ANC is weaker. That’s the message from Nomura’s Peter Attard Montalto, a South Africa analyst based in London who reckons the markets will steady but continue to weaken. Zuma’s victory comes at a cost for the economy, with lower consumer and business confidence likely to deter investors. – Jackie Cameron
President Jacob Zuma’s defeat of the no confidence vote in parliament has marginally strengthened his position. He will go ahead and push his policies – and his faction will win the ANC succession race.
That’s the view of leading London analyst Peter Attard Montalto, who said in a note to investors that his team thinks the markets are done with most of their correction back now and but will grind weaker in the coming days as the (negative) status quo reasserts itself.
Winning the secret ballot “shows President Zuma’s ultimate political strength – being able to turn the ANC’s own processes and collectivism inwards onto itself for his own personal (factional) advantage, even when the odds are stacked against him”.
“We believe he will use this win as a new parliamentary mandate within the ANC and especially the NEC to see down opposition and move forwards with his policy agenda in Government (e.g., including the Mining Charter) as well as politically to provide momentum for his faction and their campaign into the elective conference.
“We retain the view that while December will be close and very hard fought, we still believe the Zuma faction will win,” said Montalto.
Zuma’s ex-wife Nkosazana Dlamini-Zuma is the current candidate set to pick up his reins.
However, Nomura highlights opinion that the ANC is significantly weaker in the minds of voters. Montalto reckons the ANC could easily lose an election if it were held now.
“The issue for the ANC is that in this, it has linked President Zuma and the ANC even closer together in the mind of the electorate, which should resonate to some degree in 2019.
“As such we see 2019 as even more in the balance for the ANC. What is clear is that if the election were held now the ANC would lose, in our view (i.e., fall below 50%). The question of 2019 is more how much a new leader after December can reclaim lost ground to scrape in above 50%. Our baseline remains the election is in play, but it is not obvious the ANC would lose power,” he said.
Also weaker will be business and consumer confidence, predicts Montalto. Expect an economic growth rate that barely registers in positive terrain for this year. The rand is likely to remain volatile, with the dismal macro economic picture and ratings downgrades playing into the currency’s steady decline.
— Ulrich J van Vuuren (@UlrichJvV) August 8, 2017
I doff my hat to the brave women and men who tried again today in Cape Town to rid their beautiful country of the tyranny of Jacob Zuma.
— SikonathiMantshantsh (@SikonathiM) August 8, 2017
6. My ancestry, heritage and identity is tied to the ANC. I derived no pleasure, seeing ANC unable to stand on principle. I cried.
— Nomboniso Gasa (@nombonisogasa) August 8, 2017