DAVOS — I had the pleasure of briefly chatting with Deputy President Cyril Ramaphosa in the Congress Centre at the World Economic Forum in Davos on Wednesday. He was friendly and approachable (I can’t imagine Jacob Zuma being as open to a chat). Ramaphosa, though, is also going on a media blitz by talking to some of the biggest media houses in the world. On Wednesday, Bloomberg TV interviewed him and I hear that other major global publications will also chat with him this week. There’s no doubt that he’s focused and has a targeted message that he wants to communicate. – Gareth van Zyl
By Francine Lacqua, Mike Cohen and Amogelang Mbatha
Bloomberg – South African Deputy President Cyril Ramaphosa said the authorities are intensifying their attack on pervasive corruption in the state and are having “positive” discussions with investors about the future of Africa’s largest economy.
“The wheels of change are moving now and they are going to start speeding up,” Ramaphosa said Wednesday in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland. “Cleaning up clearly is going to be quite a mammoth task, but we have to start somewhere. Our people are clamoring for a clean government, and that is what we are going to give them.”
Ramaphosa, 65, was elected leader of South Africa’s ruling African National Congress last month, positioning him to succeed President Jacob Zuma, whose almost nine-year tenure has been marred by scandal. While Zuma’s second term is due to end in mid-2019, the ANC has said its newly elected top six leaders will determine when he should step down.
“We have taken a view that this is a very, very difficult matter,” Ramaphosa said, when asked if Zuma would serve out his term. “We have decided we are going to manage this transition very carefully. What we don’t want to see is him treated with disrespect. We will manage it so well so that it does not divide the nation.”
The rand has rallied on optimism Ramaphosa can bring in change and revive an economy that sank into its second recession in a decade last year. It’s the best performing currency tracked by Bloomberg since he won the party leadership, trading stronger than 12 to the dollar on Wednesday for the first time in almost three years.
A lawyer and one of the richest black South Africans, Ramaphosa has already shown his increasing influence over the government. His office announced sweeping changes to the board of cash-strapped state power utility Eskom Holdings SOC Ltd. on Jan. 20, including the appointment of Jabu Mabuza, one of Zuma’s most outspoken critics, as chairman.
Last week prosecutors moved to seize assets of Trillian Capital Partners Pty Ltd., which was majority owned by an ally of the Gupta family, because of alleged unlawful payments from Eskom. The Guptas are in business with Zuma’s son, Duduzane, and have been implicated in alleged looting of billions of rand from state companies in reports by the nation’s graft ombudsman and a group of top academics. Zuma and the Guptas deny wrongdoing.
Ramaphosa said the government, business and labor are working together to address South Africa’s failings, and he’s confident the country can avoid further downgrades after two major ratings companies cut their assessments to junk last year.
“We now have a better story to tell to the ratings agencies. Some of the things that they were worried about, we are putting right now,” he said. “We are more stable. We are correcting issues of regulatory uncertainty. We are also addressing issues of where growth of our economy will come from and we are also addressing issues of state-owned enterprise reform. It is not like last year, or a year ago, when we were all over the show. We’ve got a game plan.”
Plans announced by Zuma last month to provide free tertiary education for poor students shouldn’t place undue pressure on the country’s finances, according to Ramaphosa.
“The burden may not be as large as we thought it was,” he said. “When the budget is announced, we will be able to find the money. I think we will find the solution for that. I think we should be able to have a well-balanced budget. We are on a good path. The discussions I’m having with investors have been very positive.”
Full Bloomberg TV interview transcript with Deputy President Cyril Ramaphosa
Francine Lacqua, Bloomberg Anchor: How is the dialogue with President Zuma?
Cyril Ramaphosa: The dialogue is going very well. We are in a transitional period. After the ANC Conference where I was elected as president we’ve decided – both of us decided that we needed to manage the transition with President Zuma being in the Union Buildings, which is a seat of government, and me being in Luthuli House, which is the headquarters of the ANC.
We should never find the two centers at loggerheads and at war with each other, so we decided that we will set up a protocol which will lead to us discussing matters properly, matters of government, matters of ANC, so that we have a smooth transition and that’s precisely what we are doing.
We’re you surprised to see that Mr. Zuma went to appeal to the high court for you to change the prosecutor, the head prosecutor?
Yes that was a bit surprising but one of the issues that he appealed on was the setting up of the commission of the inquiry, in the state capital. I had to go and inform him that the ANC conference had actually taken a decision that he should not appeal that decision of the court. We discussed it and then after that meeting, he then went ahead and set up the commission of inquiring into state capital.
He did however say that he would want to appeal on legal matter just to clarify who has the final authority of appointing commissions. So it’s another matter which does not change anything. So we’ve agreed that that can go ahead but the real issue that’s important is that state of capture inquires lay head. So we agreed to go ahead with in the terms of reference are being finalized. So soon it will all be systems go but we also taking care to separate the work of the commission and what needs to happen in terms of pursing those who have done wrong. So that they can do prosecutions, arrests as well as continue investigations.
There’s a lot of hope being pinned on you to clean up South Africa.
What do international investors ask you when you meet with them?
Well international investors, when we meet with them, confirm to us that South Africa is an important country as far as investment is concerned. They are concerned about issues that – things that have been happening in South Africa and they’ve been wanting to know whether the process that we have now started with of ridding our country of corruption, is sustainable.
And we’ve showed them that yes it is. We want you know whether the reforms that we are embarking upon on state owned enterprises, is sustainable. They’ve also wanted to know whether the legal frame work in terms of stability is sustainable and we said yes. Are institutions also sustainable and are they going to continue to be strong and we said yes to all of that. So the discussions that I’m having with investors are very positive, they’ve all been expressing very, very positive disposition toward South Africa because their level of confidence is going up.
They can see that we are very serious about dealing with corruption. We’re very serious about generating stability in South Africa so and also the governance of the country. So they can see that we are very serious.
How did corruption get so bad and how can you – how can you clean it up?
Well corruption got quite bad. It started seeping into state institutions, state owned enterprises and it actually took quite a bit of time for all of us to realize that this was a network which was well thought out, which resulted in the capturing of the state and when the newspapers started revealing it and when the emails started spewing out, we then realized that it was far more serious than what we had hoped.
Now cleaning up clearly is going to be quite a mammoth task, but we’ve got to start somewhere and I believe that we have already started with cleaning up our state-owned enterprises. Last week we dismissed the whole board of the electricity company that we have and we’ve installed a new board, a new CEO and those who have been found complicit in wrong-doing have been removed and will continue to be removed as we find things.
So the move – the wheels of change are moving now and they’re going to start speeding up as we go into other government departments, state-owned enterprise; it’s an imperative that we should clean up South Africa and rid our country of corruption because that is what is holding us back from reaching higher levels of growth and our people are clamouring for a clean government and that is what we are going to give them.
Do you think President Zuma will step down before his term ends?
We are in a transitional process or period right now; we are discussing this matter – – there are quite a number of commentators, a number of members of the ANC, a number of other leaders in the country who say he must leave right now. But we have taken the view that this is a very, very delicate matter. He still has one and a half years to serve his term out and we’ve decided that we’re going to manage this transition very carefully.
What we don’t want to see is the humiliation of a person who’s a head of state. What we don’t want to see is him being treated with disrespect, but in the course of all this we’re winning his cooperation in as far as managing this transition. So we will manage it so well that it does not divide the nation and we’ll manage it in the interest of the people of South Africa.
So at the moment, you think he will serve his full term or anything could happen?
We are managing the transition, we are in the course of managing this transition and all I can say to our people is that let’s allow this process to unfold and let’s see where it finally brings us.
How worried are you about the rating agencies cutting your debt again?
I’m much more confident that we now have a better story to put before the rating agencies and many of us will be actively involved in having a dialogue with them. Some of the things that they were worried about, we are putting right now. We are correcting issues of political instability; we’ve become more stable now; we are correcting issues of regulatory uncertainty, we are attending to that; we are also addressing issues of where growth of our economy will come from and we are also addressing issues of our state-owned enterprise reform process.
And I think that we now have a much more positive story to push to them. It is not like last year or a year ago when we were all over the show. Now we have a clear path to the future of – – a better future of South Africa and we’ve got a game plan. We now know where we’re going and we’re ridding our country of all the bad things that have been holding us back.
But will the rating agencies give you the time to do that? Or is there a danger that cut your debt rating at the next budget?
Well we are hoping, I’m hoping and we’re going to work very, very, very much towards this that they will give us time. They will see that all of us as South Africans are united at correcting what has gone wrong. Business is with us; labour is with us; government throughout various structures of government is working together and community-based organizations.
So you can’t do any better, this is like a potent force that even rating agencies will realize that South Africa now is on a correction path; we are correcting things and we are renewing ourselves and uniting a nation; a nation that wants to grow, a nation that wants the past to be behind us and correct all the bad things that have been happening.
And you’ve always said that policy consistency is one – is very important and one way of course to achieve the stability you’re talking about.
What will you do as head of the ANC to resolve the impasse over the mining charter, but also how to fund the tertiary education system and how to resolve the welfare crisis?
Well the welfare crisis is not really a crisis as it is now; we’ve got a welfare system which has functioned very well and we’ve been able to fund it and we will continue funding it because that is important to alleviate the poverty of our people and also deal with the inequality so I’m not so worried about the welfare system as it stands. But the education one is one that we need to deal with, we’ve got to find additional revenues to be able to fund the education and the tasks or the burden of it may not be as large as we thought it was. We’re currently getting students to be registered at the institutions of higher learning, we’ll be able to balance all the figures and we will see what the deficit is and then when the budget is then announced, we will be able to find money and it could be some budgetary cuts there and there; it could also be finding a new stream of revenue, but I think we will find the solution for that. I don’t think that will be such a major problem and I think we should be able to have a well balanced budget as well, much – – there are quite a number of challenges. So I think we are on a good path, we are doing quite a number of things correctly and we will continue to do them correctly.
Deputy President, thank you so much for your time today.
You’re most welcome, thank you very much.