The rand gained 1.5% against the dollar after news broke that the incumbent had trounced former health minister Zweli Mkhize (and the ‘Radical Economic Transformation’, or RET, faction of the ANC he is perceived to represent) in what was a tightly contested battle at the ANC conference at Nasrec, south of Johannesburg. South African banks, which act as a barometer of the economy and are widely held by foreign investors, rose 3-4% on the day.
In what is being received as an overwhelming vote of confidence in his reform agenda, Ramaphosa received 2,476 votes against Mkhize's 1,897.
Pottier said Ramaphosa’s convincing re-election had raised hopes that an “emboldened” president would be able to push ahead with his reform agenda. A defeat would have threatened the continuation of current policies.
“The outlook on economic growth and government debt still hinges on key reforms needed at both Transnet and Eskom. The public sector wage negotiations must still be finalised,” he said. On a more positive note, “it seems unlikely that the ANC will take a more populist turn in its policies and government spending, which is what was feared would happen had the RET faction won the vote and, therefore, greater control of the party”.
Pottier noted that the road ahead was still potentially rocky, even a little treacherous, with a cabinet reshuffle expected soon. There was also the lingering scandal over millions of US dollars (reportedly from the sale of a buffalo) hidden in a couch at the president’s game farm, Phala Phala.
“Although the ANC has used its numbers to quash the Phala Phala Report in Parliament, a question mark on Ramaphosa’s staying power remains as criminal prosecutions from the Hawks and Sars cannot be ruled out.”
Also, he added, it was possible that Gwede Mantashe, the former trade unionist and key Ramaphosa supporter who was re-elected ANC chairman at the conference, would push for responsibility for Eskom to be shifted from the Department of Public Enterprises into the Department of Mineral Resources and Energy, for which he is responsible. It is feared that Mantashe’s loyalty to the mineworker unions could be a key obstacle to introducing renewable energy from independent power producers, placing the energy transition at risk, which would likely worsen South Africa’s energy crisis.
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