Three policies at the ANC’s national conference that should worry investors

 ·29 Jun 2017

With the ANC’s national policy conference set to start tomorrow, economists and investors have their eyes on what policies the ruling party will focus on – and how factionalism in the party will play out.

In a new note to investors this week, research analyst at Nomura, Peter Attard Montalto highlighted the most important factors for economic stakeholders to watch out for.

According to Attard Montalto, this iteration of the policy conference is going to be less about the actual policies, and more about big names in the party vying for the presidency – and using established ANC policies to make their mark and draw battle lines.

Previous conferences were launched with the ANC’s succession battle under wraps, and were used to set the foundation for future leadership. This year, however, the succession race has been blown wide open.

One of the key policies that will be used in the battle between presidential hopefuls, is ‘radical economic transformation’, the analyst said.

“Policy is (now) central to the leadership transition with Radical Economic Transformation (RET) seen as a key badge of entry to the Zuma faction,” he said.

“While a concept that has already existed in the ANC for at least 10 years, RET is likely to be central to this policy conference in its current incarnation – not for ideological reasons but as a defining political wedge to split the party and drive an agenda to electoral success in December and then 2019.”

Attard Montalto said that the market will struggle with the outcomes of the conference, as the resolutions are normally short and simple and couched in left-wing rhetoric.

“Nevertheless, among the mass of other issues on every policy sphere, we look for three specific areas around RET that the Nkosazana Dlamini-Zuma camp will likely attempt to drive into the final document.”

Rebalancing the budget – and giving the presidency power to determine it

Attard Montalto said investors should expect something on macroeconomic policy, specifically referencing the rebalancing of the budget and the need for the new Presidency-led process on budget strategy (which is actually starting now for the first time ever) to push transformation faster through budget choices.

“We would not expect a major appeal to a mass increase in expenditure. We also expect some reference to either the SARB constitutional mandate or MPC mandate to drive more rapid transformation, higher growth and faster job creation as well as pushing the SARB to transform the financial services sector faster.”

Pushing transformation in the finance sector

“We expect a greater focus on financial sector transformation, especially availability of credit to black SMEs.” While specifics are unlikely, Attard Montalto expects that the Dlamini-Zuma camp wants to emulate the Mining Charter for banks.

More aggressive land reform

“The wording here may be deceptive in the final resolutions, but we look for some push towards, or at least opening the door to, land expropriation without compensation. This could be dressed up in a consultation or a request by the ANC for government to reconsider the current structure of land reform to deliver faster.”

Attard Montalto said that any policies coming from the conference will appear tame, as the Dlamini-Zuma camp would not wholesale rewrite ANC policy – however, these will become the ‘factional wedges’ that will divide the ANC’s between its presidential hopefuls, with the Ramaphosa camp sitting on the other end.

Aside from that, investors can expect the same rhetoric as has been heard since the policy documents first came out. The real battle lies at the elective conference at the end of the year, he said.

Read: No such thing as white monopoly capital – ANC Gauteng

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