April 03, 2016

South Africa: ANC on the Defensive

Yohannan Chemarapally

PRESIDENT Jacob Zuma is coming under increasing political pressure, both from within his party and from the opposition on an array of issues. His handling of the economy has been particularly under the scanner. Plummeting commodity prices have hit the South African economy very hard. The South African economy is heavily dependent on mineral exports. The mining sector, dominated by big conglomerates, accounts for 35 percent of the country's exports. It is the second largest economic sector after the agricultural sector. Since the end of the last year, the value of the South African currency, the Rand, has been steadily falling. Concurrently inflation too has been rising. South Africa has one of the highest levels of economic inequality and an unemployment rate hovering over 25 percent. Unemployment today is higher in South Africa than it was during the apartheid regime. CORRUPTION ON THE RISE Public opinion in South Africa puts the blame on corruption and cronyism for the problems they are facing today. A recent poll revealed that 83 percent of the people believed that corruption is on the rise in South Africa. There have been quite a few glaring instances of high level corruption. The head of the South African passenger railways system was caught using company funds for luxury holidays with female friends. The company's chief engineer was found to have a fake degree. $200 million was spent importing carriages from Spain which were not suited for the country's railway tracks. There was a lot of documented corruption during the football World Cup hosted by South Africa. Companies illegally fleeced more than $5 billion by overcharging for construction contracts related to the World Cup. The current deputy president, Cyril Ramaphosa, is one of the richest South Africans. He was a former trade unionist who had played an active part in the decolonisation struggle. But after the ANC took over he shifted to private enterprise and within a short period with a lot of help from the White captains of industry, became part of the business elite. Many former ANC and trade union leaders who were in forefront of the struggle against apartheid have gone into business and in the process have become immensely wealthy. In early February protestors belonging to opposition parties had taken to the streets of Pretoria accusing the president of being corrupt and having close links with an Indian business house. Atul Gupta, an Indian entrepreneur from Saharanpur in Uttar Pradesh had come to South Africa in 1991 before the formation of the first ANC government. He started cultivating links with top ANC leaders after the collapse of the apartheid regime. Today the company he created from scratch is among the biggest conglomerates in the country. The company has stakes in gold, uranium and coal mines in South Africa and other countries on the African continent. The Guptas own a pro government newspaper and a 24 hour television news channel in South Africa. The critics of the ruling party allege that the Gupta family's spectacular financial success owes a lot to the patronage extended by leading figures in the South African government, particularly President Zuma. Three of the president's close relatives, which includes his son Duduzane, are employed by Gupta. Duduzane is a director in one of the Gupta companies. In 2010, the State owned Industrial Development Corporation (IDC) lent $17 million to a Gupta company and Duduzane Zuma to buy a uranium and gold mine. The IDC has claimed that the deal was above board and has turned out to be a profitable one as the mining company has bucked the general trend and is making a profit. No workers have been retrenched and the IDC has converted its loan into a stake in the company. The Guptas became international tabloid fodder in 2013 when they flew more than 200 guests in a chartered plane from India to the high security Waterkloof Air Force base in Pretoria to attend their niece's wedding. Commercial planes are not allowed to land in the air base. After a public outcry, an inquiry was ordered by the government. The inquiry report said that the Gupta's had first got the Indian embassy to make a request to the South African government for permission to land at the air base stating that the wedding guests were on an “official” visit. Virendra Gupta, the Indian High Commissioner to South Africa at the time justified the request stating that senior Indian ministers and politicians were on board the plane. The report said that the Guptas had then falsely invoked Zuma's name to get clearance for the plane to land in the high security air force base. Many senior ministers in the Zuma cabinet were guests at lavish reception hosted by the Gupta family in the Sun City resort. The opposition also alleged that Mosebize Zwane, the minister of mines whom Zuma appointed in September last year was a person who had close links with the Gupta family. “Welcome to the Gupta Republic of South Africa: The New Minister of Mines is an extension of the Gupta Family”, a press handout issued by the populist opposition Economic Freedom Fighters Party (EFF) said after the appointment of the minister was announced. For the upcoming countrywide local elections, the EPP has made the Gupta-Zuma linkages as the centerpiece of their campaign strategy. “We cannot allow a situation where South Africa is being colonised by a family”, the EFF's firebrand leader Julius Malema recently said. Zwelinzima Vavi, a leading light of the South African trade union movement and a former high ranking ANC official, said that the South African government now only serves big business and the ruling elite. He alleged that the Guptas are “a shadow government and a sign of what is wrong with our country”. Right now, the Guptas along with the Zuma family, rightly or wrongly, have become the favourite punching bags of the opposition. The new rallying cry of the EFF is the “Zuptas should fall”, a cryptic reference to the alleged connection between the Zumas and the Guptas. “The flow of cash is so much that money has more power than political ideology and – that is the biggest threat to the ANC”, the ANC secretary general, Gwede Mantashe had cryptically remarked. The opposition alleges that the Guptas had a hand in the disastrous reshuffling exercise in the finance portfolio which Zuma carried out late last year. Zuma first sacked finance minister, Nhlanla Nene on December 9. Reports in the South African media said that the minister was sacked for his opposition to many of the decisions that the president wanted to implement, including a $50 billion deal Zuma signed with the Russian president, Vladimir Putin for the construction of nuclear power plants in South Africa. Finance Minister Nene was apparently of the view that deal was financially prohibitive. The opposition claimed that the Guptas would be among the beneficiaries of the deal as the uranium for the nuclear plants would come from their mines. But it is also a fact that South Africa is in dire need of assured energy supplies. Nene was replaced by a relatively unknown technocrat, David Van Rooyen. The news of his appointment sent South African shares and stocks plummeting. There was strong criticism from within the ANC too about the appointment. Zuma was then virtually forced to remove the newly installed finance minister and replace him with Pravin Gordhan, who had served in the position before. CHARGES OF MISUSE OF OFFICE But probably the most serious misuse of office charge the South African president is facing relates to the multimillion upgrading of his retirement house in Nkandla, in KwaZulu Natal province. The president had used State funds of more than $19 million to refurbish his large compound which boasted of a swimming pool and a helicopter pad. He has offered to reimburse part of the money back to the exchequer but the opposition is not satisfied. It wants him to quit office on this issue. They are suing the president in the country's highest court on charges of violating the constitution. The public prosecutor appointed by the government had ruled that Zuma should fully reimburse the State for the expenses incurred in the construction of his luxury retirement home. A constitutional court is hearing the case. However according to many South African commentators and economists, the roots of the country's economic malaise is directly related to the ANC led government's decision to adopt neo-liberal policies, two years after it came to power. The ANC's partners in government, the South African Communist Party (SACP) and the Confederation of South African Trade Unions (Cosatu) were willing parties to this decision. Post-apartheid denationalisation allowed many of the conglomerates to restructure and move many of their operations and investments overseas. A small but powerful black capitalist class has allied itself with white corporate interests. Land reforms and public housing were put on the back burner. The share of the GDP held by the private sector grew from 6.5 percent in 1994 to 20 percent by 2009. The in-house coup carried by the ANC against Thabo Mbeki was spearheaded by a group of Left wing leaders who felt that the government had diverted from the core principles of the alliance on issues like land reforms and labour rights. Zuma at the time was masquerading as a populist leader. Among his main supporters were people like Malema and Vavi, who had hoped that Zuma would reverse the pro-business policies that have been in place from the time of the Mandela presidency. But once in office, Zuma continued with the old policies. Malema and Vavi were later expelled from the ANC and went on to form their own political outfits.