As the ANC’s elective conference in December draws closer, political campaigns and bids for the presidency are coming through with greater intensity – while analysts and economists try to predict the outcome.<\/p>\n
According to research analyst at Nomura, Peter Attard Montalto, the best outcome for the ANC would be a united party, electing a leadership that all sides of the ongoing factional war will be happy with.<\/p>\n
This would prevent the deepening divisions or even a split within the party, which would spell chaos for the country as a whole.<\/p>\n
However, the analyst conceded that it may already be too late for that scenario – as divisions and mistrust now runs deep within the party – even though this is what both ‘main’ sides of the factional battle ultimately want.<\/p>\n
In a market update to investors on Tuesday, Attard Montalto said that negotiations between the pro-Zuma and anti-Zuma camps of the ANC have been ongoing since around Easter, and have intensified in recent weeks.<\/p>\n
“We believe there is some agreement on the structure of the ANC leadership and how the ANC would reform and shape itself after a unity slate was elected, including possibly an exit strategy for President Zuma as part of such a single-slate compromise,” the analyst said.<\/p>\n
“The question, however, is which personalities go where? Factionalism and distrust are simply too deep. As such there is no real agreement at all \u2013 simply a theoretical framework.”<\/p>\n
So what will happen?<\/strong><\/p>\n With the first – and possibly best – outcome apparently off the table, Attard Montalto pointed to other possible outcomes, particularly where the ANC’s slate politics comes into full play.<\/p>\n With no unity in the party, the default collapses back to a dual-slate proposition – with two teams (ostensibly led by Cyril Ramaphosa and Nkosazana Dlamini-Zuma) contending for the presidency.<\/p>\n According to Attard Montalto, there are currently around seven full-declared candidates vying for the presidency, with many other “shadow” candidates in the background who may or may not throw their names into the hat.<\/p>\n Dual-slate bidding involves a lot of money for campaigning and vote-buying, and will increasingly drive factionalism, forcing members in the ANC to choose sides. Until the slates are fully known and declared, many will keep their heads down and hope for a unified option, the analyst said.<\/p>\n Neither candidate – Ramaphosa, nor Dlamini-Zuma – are completely liked or supported by their own teams, Attard Montalto said, with a ‘unqualifiable’ risk present that either or both candidates could be replaced.<\/p>\n “We see a higher probability of Dlamini-Zuma falling victim to this than Ramaphosa. After the recent no-confidence vote the name of Speaker Mbete has increasingly been raised as an alternative possibility within the Zuma faction,” he said.<\/p>\n The analyst said that Nomura’s baseline is that the pro-Zuma faction will emerge as the winners – purely because Zuma cannot afford to lose, and may adopt a “whatever it takes” approach to ensure victory.<\/p>\n Thus there is also a risk that the elective conference may not happen at all, if Zuma feels his faction is at risk of losing – a point that Attard Montalto feels is being largely ignored by the markets.<\/p>\n Market reactions<\/strong><\/p>\n According to Attard Montalto, the markets remain “too optimistic” that things will change in South Africa through December.<\/p>\n “We also think the market\u00a0is still attaching too much upside (in structural and economic terms) to a Ramaphosa Presidency.”<\/p>\n The analyst said that more investors are coming over to the reality that there would broadly be a holding of the status quo under Ramaphosa in the event that he wins – because he would need the support of the pro-patronage faction to even get there.<\/p>\n The analyst said that investors are increasingly looking to December to hedge and trade – but conviction remains low.<\/p>\n “Put simply, we think investors are finding the political narrative too complex to trade with any certainty or size,” he said.<\/p>\n
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