Investors fear jump to left under Zuma
Jittery investors will closely eye the African National Congress’s (ANC) election conference next week, fearing a victorious Jacob Zuma would chart a leftist course to appease his communist and labour backers.
Portrayed as a champion of the country’s poor, frontrunner Zuma will face-off at the five-day conference beginning on Sunday against incumbent ANC leader and head of state Thabo Mbeki, whose pro-business stance has earned the confidence of international capital.
But as investment steams ahead, the grumblings of ordinary South Africans over income disparities and massive unemployment grow ever louder.
And Zuma has been lending a sympathetic ear, rubbing shoulders with the poor at nationwide rallies and giving voice to their concerns about such issues as access to education and health care.
“We believe that the Polokwane conference will once again show that the ANC is a disciplined force of the left by adopting policies which are pro-poor,” a key Zuma backer, the Congress of South African Trade Unions (Cosatu), said in a statement this week.
Maarten-Jan Bakkum, an economist at ABN Amro Asset Management, said the thought of Zuma governing Africa’s economic powerhouse left many investors uneasy.
“They fear more radical economic policies,” he said. “One thing that is on people’s minds is the risk of land reform and a strong negative impact on South Africa’s investment climate.
“The Zuma risk is not insignificant.”
Should he win, Zuma will have a clear shot at the country’s presidency when Mbeki steps down in 2009.
While Zuma has been travelling the globe seeking to assure investors that economic policy would not shift to the left on his watch, questions about his financial scruples have not helped put the business community at ease.
He faces being charged with corruption after his economic advisor was jailed for graft, causing Zuma to be axed as deputy head of state in 2005 although he kept his position as deputy ANC president.
The economy has been growing consistently since 1999, reaching 5,4% last year—the fastest rate since 1981.
But 13 years after the ANC took power after the demise of the whites-only apartheid regime, an estimated 40% of South Africans are still jobless.
Zuma has won the backing of Cosatu and the South African Communist Party (SACP) in his campaign for the party’s top job. He also has the support of five of the party’s nine provincial bodies, with the other four behind Mbeki.
“It is possible that [Zuma] may, at the prompting of his supporters on the left, introduce some changes to the detail of policy,” said Steven Friedman of the Institute for Democracy in South Africa, a Pretoria-based think tank.
But this need not necessarily be worrisome.
“I think there is a general feeling in government now that more needs to be done to fight poverty, within a broadly market-friendly framework.”
Though derided by Cosatu, the government’s Growth, Employment and Redistribution (Gear) macroeconomic policy, pursued under Mbeki for the past 10 years, received the thumbs up at a party policy conference in June.
Observers say there is unlikely to be a major directional shift under Zuma, and a slight leftward slant may even be welcome.
South Africa’s overarching business chamber, Busa, said recently the choice of successor “does not pose a significant threat to the creditworthiness of rand-denominated debt”.
“We do not expect a significant shift in the ANC policy, regardless of the outcome of the conference,” said chief executive Jerry Vilakazi.
Nevertheless, the makeup of a possible Zuma Cabinet is sure to be a hot topic in boardrooms, having allied himself with the likes of SACP head Blade Nzimande who recently described the economy as “essentially colonial”. - Sapa-AFP