Mkhize may be South Africa’s best chance at reform: analyst
Presidential potential Zweli Mkhize may emerge as South Africa’s best bet at truly reforming, says research analyst at Nomura, Peter Attard Montalto – but only if he can get a full campaign off the ground.
In a research note to investors on Monday (18 September) Attard Montalto said that thinking the ANC’s presidential race – which will likely dictate the way forward for South Africa to the 2019 elections and beyond – is between two people is an “unsustainable oversimplification”.
For the most part, the bid for the ANC presidency is seen as a battle between two main players – the ‘reformist’ camp of Cyril Ramaphosa, and the ‘pro-Zuma’ camp of Nkosazana Dlamini Zuma.
According to Attard Montalto, broadly looking at the state of play, taking into consideration the provincial standings, money, and the names on either side, all accounts point to Dlamini-Zuma emerging victorious from the party’s elective conference in December, though by a very small margin.
The ANC is seen as deeply divided, and any compromise slate – where a unified leadership emerges with candidates from both camps – is “not feasible”, the analyst said. This is primarily down to the incredibly complex make-up of the ANC itself.
The oversimplified version paints three ‘main’ factions within the party (conservatives, leftists and patronage factions) – whereas the reality is that there are probably around 12 different groups with different interests. Neither Ramaphosa, nor Dlamini-Zuma can win over all factions completely.
However, from the widely reported conflicts between Ramaphosa and Dlamini-Zuma’s camps, an alternative slate may emerge as an option away from the conflict.
Who would lead the ‘third slate’?
“There is only one person we believe who has the breadth of cross-party support to stand a decent chance of rising up through the existing two-slate factional battles – that is current Treasurer General and former KZN Premier, Zweli Mkhize,” Attard Montalto said.
Not only does Mkhize currently have cross-party and cross-province support, but he is also viewed as being relatively ‘clean’, politically. He has gained kudos and financial backing in the fallout of NeneGate and the firing of Pravin Gordhan, and has the potential to reach across party lines – something neither Ramaphosa nor Dlamini-Zuma can do, given the divisions.
“We do not view Dr Mkhize’s potential as a unity candidate as a simple joining of the two main factions. Instead, we see him as a third-way alternative that can create unity by reaching out to the other two factions. We believe this scope of popularity means he is at least as likely as Cyril Ramaphosa to win in December,” Attard Montalto said.
Should Mkhize launch a full campaign for the presidency, a key appointment for investors to look out for is who is chosen as his deputy. Nomura points to human settlements minister Lindiwe Sisulu as “the only choice”. However, Sisulu has been slated with the Ramaphosa camp – if she switches sides, the implications would be a big blow to the deputy president’s bid for leadership.
Despite the potential of the third slate, and the battle for the presidency being extremely close, Attard Montalto holds that Nomura’s baseline is that president Jacob Zuma will not allow his preferred faction (Dlamini-Zuma) to lose.
“We still expect NDZ to win the contest – just. But if a third-way alternative-slate campaign properly emerges (possibly led by Zweli Mkhize) we judge it would stand at least as much chance of winning as Cyril Ramaphosa and his faction,” he said.
“We think the market would struggle with a true multi-horse race. Indeed, the market has appears to have become quite bored with the elective conference race as it has become increasingly complex. Our advice is to (finally) give the prospect of a third way some benefit of the doubt but watch it closely.”
“If Mkhize becomes a credible candidate we would be much more ready to give him benefit of the doubt on true reform than any other,” the analyst said.
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