Analysts say a crisis of legitimacy in the ANC is emboldening business to put its foot down and demand action on matters such as the Guptas’ alleged influence over state affairs.
Something unusual happened last week: the business community spoke out in the lead-up to the ANC’s national executive committee (NEC) meeting.
In statements issued by Business Unity South Africa, Business Leadership South Africa and the Black Business Council, organised business warned that decisive leadership was needed to deal with allegations that the Gupta family has had undue influence on government affairs. Business urged the government to allay any fears of state capture.
Organised business generally shies away from publicly commenting on politics. Corporate sector activity is not just responsible for the bulk of taxes in government coffers, the sector also accounts for most political party funding. The ANC is no different.
The first show of force from the private sector came when finance minister Nhlanhla Nene was suddenly removed by the president and replaced with parliamentary backbencher Des van Rooyen. Markets went wild. The already weak rand slid past 16 to the dollar and bond yields on the benchmark government 10-year bond rose quickly.
Chief executives met the ANC top six. Party officials then met the president, who that evening announced that Pravin Gordhan would be reappointed finance minister.
Now, a number of allegations have emerged from government officials about the Gupta family’s influence on state affairs. At the weekend, the ANC’s NEC discussed the allegations and urged all members with information to come forward.
Of all organised business, only the Black Business Council this week issued a response and said it welcomed the ANC’s assurance.
The ANC, because it is the majority party in Parliament, receives the largest share of public funding from the Independent Electorial Commission (IEC) – R72-million in the past financial year. But the bulk is from private donations, although the specifics are closely guarded.
An ANC discussion document showed that R71-million had been collected from the IEC in the 2014 financial year, but this constituted only 16% of the ANC’s overall income, the Mail & Guardian reported at the time.
The document proposed more public funding for political parties, with ANC treasurer Zwele Mkhize warning of donor funding possibly drying up.
Also, the party’s liabilities far exceeded its assets, according to the M&G’s report. The party argued that more public funding would serve to enhance democracy by supporting activities such as election campaigns and voter education.
“Traditionally, business preferred to wield its power behind the scenes with a push and pull around party funding,” said Ralph Mathekga, the head of political economy at the Mapungubwe Institute for Strategic Reflection. “They prefer not to go out and speak openly, [but] there has been a shift there.”
For a long time, the legitimacy of business has been intertwined with that of the ANC, and business has relied on the ruling party to put in a good word for it with unions and other stakeholders, said Mathekga. But a problem has emerged now that the ANC has run into a legitimacy crisis, he noted.
“A crisis of legitimacy allows business to put foot on ground and engage on its own terms,” said Mathekga. “I expect to see business pulling more strings and becoming much more vocal in the public space, a situation created by the declining legitimacy of the ANC.”
Khanyisile Kweyama, chief executive of Business Unity South Africa (Busa), said the body usually makes pronouncements around milestones such as the State of the Nation address or the budget speech. Yet, “there is a heightened awareness to be more vocal and visible in our initiative … But this is not sufficient if [we are] not also engaged.”
Kweyama said Busa had not yet decided whether it would respond to the outcome of the NEC meeting.
“There is not much confidence or certainty that can be read from the things that are happening. That does not mean there is anything wrong, but it doesn’t mean there is anything right,” said Alan Mukoki, chief executive of the South African Chamber of Commerce and Industry. “As Sacci, we have been very vocal all the way. At no time we have been very quiet,” said Mukoki. “We voice our opinions clearly on matters that do not make sense, but we try and stay closer to the facts and not go with sentiment.”
The “pedestrian corruption” alleged to have taken place between the Guptas and government officials was direct and crass, Mathekga said. But some in the ANC have tried to frame the issue away from one family and to speak more generally about the private sector. “It seems to try [to] shift blame from a direct, specific relationship and to reground the issue as a philosophical one which portrays politicians as being under siege,” he said.
Mukoki added: “[In] a political organisation like the ANC, they themselves would want to create a narrative in the public that the problem lies with the other side, that business is responsible for wanting to influence government. The main point, however, is whether there was any preference given to particular parties.”
The government has promised to fight corruption, and to provide an equal and fair chance of gaining business from the state, he said. “We have to first and foremost respect that we cannot tell government what to do; the government is democratically elected … [But] government does listen to us, make no mistake.”
Mukoki noted that 90% of government revenue is derived from business activities that generate tax.
He said there had been no indication from government that business should “go jump” but rather were willing to listen.
It is unlikely that particular business would withdraw funding from the ruling party, said Nic Borain, political consultant to BNP Paribas Securities South Africa.
“First and foremost, businesses are in competition with each other – that comes before their civic duty. They are not going to act in a way that puts them at a disadvantage to their competitors. They don’t want to take the stand. It is absolutely not in their interest to do so,” Borain said.
Business would shoot itself in the foot if it pulled party funding, Kweyama said, noting that economic growth could not be achieved through such an approach.
Although Sacci doesn’t have a position on party funding, individual members tend to fund a range of political parties as an investment in democracy, Mukoki said.
Markets are more cold-hearted and react instantly to economic and political instability.
“Governments generally hate the capital market,” said Borain. “They act as a stonewall; there is no persuading them.”
The market, Mukoki said, is a powerful force and reacts negatively in the face of uncertainty.
The rand is still trading at more than 15 to the dollar, and the 10-year bond yield, at 9.3, is at 2008 levels. The Star reported how, on Tuesday, demand for government bonds fell by 41% at the weekly fixed-rate auction. “Investors bid for R4.54?billion of R2.35?billion of securities on offer, compared with bids of R7.675?billion at the previous auction on March 15,” the report said.