Research analyst at Nomura, Peter Attard Montalto says that, despite increased noise and unhappiness around president Jacob Zuma, chances are slim that anyone will be successful at getting him to stand down.
This is because the president still commands majority support in the places where it matters – namely the ANC’s NEC and in Parliament, he said.
“Based on our observations, it seems like there is only about 20% probability before May 2018 of a Zuma exit,” the analyst said.
“Ultimately, we believe this issue is about the drivers and balance of power within the NEC and parliament and the fact that civil society pressure likely plays only a minimal role.
“Ratings and markets could put increased pressure on the probability of a Zuma exit, but has, in this global risk backdrop, shown insufficient cause for pressure on Zuma.
“We believe an early NEC will occur to instruct the ANC in parliament not to vote against the president in a likely second-week of May no confidence vote, which we see failing.”
The baseline of 20% acknowledges that Zuma has taken a risk in the processes that are still to come (leading up to the elective conference) – but the low probability also recognises that it was a calculated risk, and the understanding that Zuma is confident in his levels of support within the NEC.
Either Zuma is politically naive, or he is a master tactician that can play the internal machinations of the ANC better than anyone else. Nomura believes it is the latter.
Scenarios where Zuma could go
Within the 20% probablity, there are three levels – each more likely than the next:
- With almost no probability is Zuma leaving by resigning. In this scenario, Zuma would not have the majority support in the NEC that is believed to be a fact, and deputy president Cyril Ramaphosa would be most likely to become president in the interim, and even win at the elective conference.
- The next highest level is Zuma leaving through a recall. This was the route through which Thabo Mbeki lost the presidency. In this scenario it is highly unlikely that the ANC NEC would reach a consensus for his successor, and a neutral president would likely be placed in power until the elective conference.
- The most likely scenario would be Zuma leaving through a no confidence motion. But to achieve this, opposition parties would need support from within the ANC itself – about 60 votes – which is seen as an unlikely outcome. In this scenario, Speaker Baleka Mbete would become president for 30 days while a new leader is selected.
But even considering these scenarios where Zuma could go, Attard Montalto said that the outcome would be problematic for South Africa in any case.
What will happen if Zuma goes
A Zuma exit would see a strong rally in the markets, especially in asset prices; but they would remain nervous, especially around the uncertainty about succession, and the political infighting that would follow.
In the most likely scenario (motion of no confidence) markets would definitely not be happy with any extended period of time the Mbete is in power, the analyst said.
In the end, the only real players in getting Zuma out are the ANC members themselves, with opposition parties in Parliament being the second biggest. Nomura has effectively shrugged off civil action, saying that protests and marches have little to no impact on the inner-workings of the ANC.
“Much of the protest action appears small – though the real test will be this Friday’s marches to the Union Buildings,” Nomura said.
Markets will be watching for large numbers – but expect the turnout to fall well short of ‘the Brazil level’ – about 500,000 people, i.e., the same proportion of the population as turned out in the streets in Brazil in recent times.
The analyst group also warned that violence against protests from Zuma faction supporters is also a risk to monitor.