Speculation that president Jacob Zuma could face another challenge at this week’s ANC NEC meeting was enough to spark a rally in the rand – but analysts warn that the hope that the president will be recalled is overstated.
A report by Bloomberg late on Wednesday, citing senior ANC insiders, fueled speculation that the ANC’s National Executive Committee will be tabling a discussion over Jacob Zuma’s fitness to remain as president.
The ANC was quick to rubbish the report, saying that no agenda for the meeting had been officially set – however, Bloomberg’s sources doubled down, quite literally, with two more anonymous senior officials telling the publication that Zuma removal talk was on the cards.
The new, coupled with positive CPI and production data released by Stats SA this week, helped the rand push through the R13 to the dollar resistance level, to settle at a much stronger position of R12.90 to the dollar.
Just talk of Zuma’s removal was enough to spur positive sentiment in South Africa, with investors recommending selling the dollar for the rand and buying longer-dated bonds (which still provide an appealing yield rate, despite junk status).
However, analysts have warned that the new wave of positivity needs to be tempered with the reality of South African politics – more specifically, how difficult it would be to get Zuma out of office.
Two routes – both with challenges
Bloomberg analysts have noted that the two avenues to Zuma’s exit are wrought with challenges.
The NEC could take a majority vote to have Zuma recalled, as it did with former president Thabo Mbeki, but by all accounts, the president commands a significant majority within the NEC.
Some analysts peg Zuma’s control of the NEC at 60% – while others say it is as high as 80%.
The resolve of the ANC NEC to protect Zuma was seen at the last sitting in 2016, when the issue of Zuma’s presidency was raised, and quickly shut down by pro-Zuma members.
Since that meeting, there have been some significant changes – such as the president firing former finance minister Pravin Gordhan, sending South Africa to junk status, as well as the more recent blowout with Brian Molefe and the web that connects him and Zuma to the Gupta family – which may affect the balance of the NEC’s support of the president, but that remains to be seen.
According to research analyst at Nomura, Peter Attard Montalto, the baseline view is that there is little hope for the NEC to suddenly shift – and it would be a mistake to think Zuma is weaker because of public scandals.
This leaves the only other route, which has also been well-worn – Zuma’s removal through Parliament.
No confidence vote is also sketchy
Zuma could be removed through a motion of no confidence in Parliament, if sitting MPs can secure a majority vote to have the motion passed.
The Democratic Alliance has attempted this several times in the past, each time failing by the overwhelming majority vote of the ANC caucus.
In the forthcoming motion, there may be a slight difference, in that the Constitutional Court is currently mulling a bid by opposition parties to allow the vote to be held in secret. Without fear of repercussions from the ANC, some MPs may vote in agreement with the bid, delivering the 50-plus votes needed to remove the president.
But again, the analysts have tempered the view with the reality that the ANC is notoriously internalised – historically choosing to find common ground within its own ranks. It would be unprecedented for the party’s MPs to vote with opposition parties against its own president.
Even if the Constitutional Court orders the vote in secret (which legal experts have said it would be hesitant to do, considering the separation of powers), there is no guarantee the voting will go the way opposition parties hope.
The ANC is on record saying that no matter how the vote is done – secret or not – it will not support the motion.
Attard Montalto has previously said that investors do not fully grasp the intricacies of South Africa’s politics – and often overstate the positive sentiment whenever a Zuma exit comes up.
According to Bloomberg’s analysts, there is agreement – Zuma’s exit is anything but a sure thing.