Shawn Hagedorn: When a beleaguered president is a blessing

While South Africa is not broken, there are many areas that need to be relooked at, and other options thrown around in order to fix them. But where does one start. In an emerging market it’s imperative that one understands the political economy, as politics drives business. So in order to lay the foundations for the country’s economic and political future, one has to understand the present. And in this case you start at the top, the person leading the country, President Jacob Zuma. Independent strategy advisor Shawn Hagedorn provides some recommendations for South Africa’s future, but he’s not pushing for Zuma’s exit. He says the President should be given the opportunity to clean up his mess before he goes. Agree? Hagedorn offers some ideas of why, as well as what’s needed to be done. This is the first of a four part series looking at South Africa’s political and economic future. Let’s us know what you think? – Stuart Lowman

By Shawn Hagedorn*

Rallying for “new leadership” is disturbingly vague. SA has large specific challenges and the ANC will rule the national government until at least 2019. The focus must shift from personalities to policies.

Calling for President Zuma to go in the absence of a favoured replacement reflects anger and frustration. If the focus were to shift to executing a workable plan, it would become clear that a beleaguered-yet-cunning president can be a valuable asset for overcoming today’s severe political and economic blockages.

shawn_hagedorn_mindmap_oct_2016

SA’s economy is in need of serious repairs. Upliftment has stalled leaving an intolerable portion of the population stranded. What is the plan? How is political paralysis to be overcome? When?

Fixing SA’s economy will require a broad structural overhaul. A milestone precondition was achieved when a competitive political environment emerged unexpectedly.

That the ANC can no longer presume majority support is a huge step forward for SA and it should, ultimately, be healthy for the ANC. All of SA’s factions must now respond to how stalled upliftment threatens social upheaval.

SA
Shawn Hagedorn

The top priority must be a new plan. Yet nothing promising is in the works. From now until 2019 there could be much sizzle and no steak. Many people want Zuma to be gone with little consideration of who or what comes next. The potential costs of muddling along are cavalierly ignored.

The economic trajectory can only be sharply improved if various policies and procedures are broadly modified. Focusing on removing Zuma is a bad bet as it would take a political coup to oust him before the ANC’s Elective Conference late next year.

Someone has to back a big policy shift. Zuma is the top candidate given his formal and informal positioning. Focusing on the unlikely prospect of Zuma being recalled undermines prospects for necessary policy rethinks.

As things currently stand, SA’s fastest path toward broad prosperity would begin with Zuma overcoming factional paralysis to shepherd a well-reasoned policy pivot. If that sounds unrealistic, what success path is more likely in the next two years? What are the costs of ongoing policy paralysis?

The ANC can expect, but not presume, to win an outright majority in 2019. With so much at stake, the party should be overhauling its many ill-conceived economic policies. Rather, the party’s effectiveness is undermined by infighting.

The inherently incompatible interests of the party’s key factions had long been placated through a shared belief in redistribution. Zuma’s patronage machine then captured the party. More recently, the economy entered a period of prolonged stagnation.

The new economic reality has undermined hope and thus patience and political calm are slipping. Many households are ratcheting back their expectations. There is suddenly far less money to go around.

This would be a recipe for social upheaval even in a country with normal levels of poverty, unemployment and inequality. It should be clear that waiting for 2019 to resolve SA’s political and economic blockages is irresponsible.

Headlines trumpet setbacks with little acknowledgement that Zuma has built political ramparts designed to withstand steady bombardment. He has many cards to play. This could be quite useful.

Cartoon courtesy of Twitter
Cartoon courtesy of Twitter

The considerable chorus calling for President Zuma to go has not inspired a public competition of ideas by would-be successors. This mostly reflects their understanding that he isn’t going anywhere. Also, in the best of times the ANC struggled with economic policy making. Ramifications from the local elections now distract and unsteady the organisation’s internal balance.

Resentment toward Zuma must be converted into a catalyst for effective changes. Much must be accomplished between now and the 2019 elections.

When I sought to explain Zuma’s general strategy, roughly five years ago, I was greeted by politely dismissive chuckles. In one published essay, I set out the criteria despotic leaders of resource endowed nation should use to choose a finance minister. That Zuma was able to entrench his patronage machine without benefit of an intentionally complicit finance minister is a testament to his political cunning.

Creating widespread awareness of Zuma’s tactics required a meticulously researched best-selling book by an exceptional scholar, RW Johnson, who, oddly enough, had known Zuma when they were young children.

Had commodity demand remained firm, Zuma’s strategy would still appear viable. Now, his most likely early exit scenario would begin with his closest cronies saying that they can cover his back better than he can. This would be portrayed publicly as a new beginning while the underlying intent would likely be to further entrench patronage.

A formidable and realistic threat to his party, and Zuma’s patronage machine, is a large breakaway faction from the ANC in about two years leading to today’s ruling party being firmly rebuffed in 2019. Zuma and his cronies will need to guard against this before, after, and during the ANC’s elective conference next year.

Democratic forces are often most formidable, and least attractive, at the level of party infighting. The ANC’s next generation of leaders risk inheriting a legacy which is more hollowed than hallowed. Adequate incentives for change are present while attractive options to forcefully eject Zuma and his patronage machine are lacking.

Emotions fog the realisation that Zuma has the power and savvy to drive formidable policy shifts. In a country mired by policy paralysis, this should be viewed opportunistically.

Zuma miscalculated economically; meanwhile, he notched up a long string of political wins to entrench his patronage network. While placing excessive reliance on China’s resource appetite he – along with many others – was indifferent to SA’s workforce becoming far more indebted than competitive. This state of affairs is now a problem for everyone.

South African President Jacob Zuma. File photo. REUTERS/Mike Hutchings
South African President Jacob Zuma. File photo. REUTERS/Mike Hutchings

Zuma shows no signs of being a constitutionalist. In dated political theorist terms, he is a royalist. He and his cronies expected to be able to live luxuriously by virtue of SA’s abundant geological treasurers while maintaining the electoral loyalty of the poor largely through redistribution policies designed to entrench subsistence life-styles.

Zuma’s strategy could never be viable in the long-run but had commodity demand remained firm, the day of reckoning might have only arrived in a decade or two. Now all interest call for formidable policy shifts yet the ruling party is paralysed by factional strains.

There is no simple way to argue that a cunning-yet-beleaguered president is the country’s best hope to remove the key political blockages which impede essential economic reforms necessary to unlock SA’s formidable potential. The following three essays build a pragmatic case for a path that would leave everyone better off.

  • Shawn Hagedorn is an independent strategy adviser. You can follow him on twitter @shawnhagedorn.