Research analyst at Nomura, Peter Attard Montalto, says that the outcomes of the ANC on president Jacob Zuma came as no surprise – as the NEC has been aware of, and feeding state capture since as early as 2010.
In a research note to investors on Tuesday, Attard Montalto said that there has been a persistent, common misunderstanding by the market at large that the ANC NEC would use a motion of no confidence against Zuma to ‘punish’ him for state capture as new evidence emerges.
“This is not what is happening. Instead, we think the NEC has been fully aware of the extent of state capture, how various participants are involved in different ways and the impact on government, the state and the ANC,” he said.
“The NEC has been aware since 2012 (or even starting from 2010 as the narrative started to build). On top of that, the revelations about the president having an exit plan to ‘escape’ to the UAE if needed has been known about within the NEC since Q2 2016,” the analyst said.
Contrary to expectations that the NEC would be holding Zuma to account, it is dealing only in the very narrow sense with information about state capture becoming public and affecting its poll standing and the resulting backlash from civil society, Attard Montalto said.
The analyst reiterated the point made by Nomura in the past, that South Africans and investors are making a mistake thinking that president Zuma is weak.
While his position in the party is certainly weaker than it was when he rose to power (and even in terms of the number of NEC members that still back him), the outcome of this weekend’s meeting proved that he still holds all the ultimate power in the party.
“The key component of disagreement we have had over this issue is that, through the lens that the NEC knowing all (about state capture) already, it cannot be shocked by what information is coming out about President Zuma, so there is no issue of people switching sides in any numbers,” the analyst said.
“Add in the fact that those rent extractors in the Zuma faction, who may want to switch sides, would not find a home in the anti-Zuma faction – and have their own set of rent extractors waiting for access to power again from December. As such, we view the NEC as sticky.”
According to Attard Montalto, Zuma’s support base in the NEC is still at 60%, perhaps 55% at a push – and the fact that only 18 members reportedly spoke out against the president (versus 54 who supported him) came as a surprise.
However, this only pushed the point further – “while in pure number terms the NEC may be more finely balanced, the anti-Zuma crowd are too scared or too compromised or too threatened to speak out and hence their view does not count,” the analyst said.
On the other main outcomes of the meeting – backing the call for an investigation into state capture and getting rid of Brian Molefe as Eskom CEO – Attard Montalto said this was a ‘fig leaf’, and a simple attempt to prevent further ‘own goals’.
The focus is now on the party’s policy and elective conferences, the analyst said, and it would be a mistake to think that Zuma and his faction are any weaker when he has survived two attempts to get rid of him, despite mounting evidence against him.