There is one overwhelmingly positive outcome of the ANC’s Polokwane conference – it has set an important democratic precedent. Nowhere in Africa has a sitting President been rejected in a free vote by his own party. Nowhere in Africa has a sitting president been rejected by an electorate this soon after independence. The Polokwane vote therefore signals clearly that political leaders are accountable to, and can be removed by, an electorate. This is an important antidote to the pattern, both in much of Africa and in many other societies where ‘liberation movements’ have achieved majority rule, in which leaders entrench themselves in office indefinitely and cease to be accountable to an electorate. Whatever the future may hold, it signals that South Africa’s political path will differ from that of other African countries and in particular from societies such as Zimbabwe, where leaders entrenched themselves for decades.
It is also worth noting that, besides a change of leadership, the ANC conference also produced a commitment to greater democracy within the governing party and within the country more generally. Most important among these is a commitment to abolish floor-crossing, the practice which allows public representatives to ignore the expressed will of voters by changing parties even though they are elected on a party list, rather than a personal ticket. If implemented, this will help restore public trust in elections and the democratic system. The ANC also agreed to devolve more power over the choice of public representatives to its regions, which should help disperse power within the governing party.
It is no accident that Africa’s two most consistent economic performers, Botswana and Mauritius, are also its two oldest democracies. The evidence suggests that, in Africa, democracy is a necessary requirement for sustained growth. Because the change in ANC president has strengthened democracy’s prospects, it therefore opens up new opportunities for economic growth too.
It is almost inevitable that 2008 will be a year of considerable political fluidity. It is not clear yet whether Jacob Zuma, who now faces corruption charges, will be the ANC candidate for president. The presidential race has also left a divided ruling party whose rival camps may continue to compete for influence. This means that there will be considerable jockeying for power and influence during the year, prompting headlines which worry business decision-makers. In this environment, it will be crucial for business strategists to retain a cool head and a sense of perspective, focussing on the key issue of the year: will the democratic institutions on which growth depends emerge weakened or strengthened? Key indicators here will be whether the independence of the judiciary, the freedom of the Press and the integrity of the democratic system survive intact.
Thus far, most of the signs are more positive than negative. The ANC’s national executive appears to have ignored demands by some supporters of Jacob Zuma that he not stand trial and has affirmed its support for the rule of law and for the principle that all, including political leaders, are subject to the law. The new ANC president himself has appealed to supporters not to demonstrate against his indictment and said that he will stand trial. Zuma and his supporters seem far more concerned to woo the media than to restrict it. They have also said that they do not plan to remove Thabo Mbeki as president of the country before his term expires (a step which would seriously disrupt the political process as well as creating great uncertainty in the business environment). Whatever lies in store, it is important that business attention remains focussed on these issues – both in its analysis of the strategic environment and in the messages its sends to politicians. For example, business leaders argued strongly in President Mbeki’s Big Business Working Group meetings over the past eighteen months for the independence of the Scorpions when consideration was being given to the incorporating of that body into the SA Police Services, and it will be repeating those arguments even more strongly in the light of recent events to the new ANC leadership.
While the change in ANC president does bring new challenges to the business environment, a substantial shift in the policy environment is highly unlikely. The Zuma coalition includes the left but it is not purely a left coalition since it includes other groups too. The Polokwane conference, while dominated by Zuma supporters, brought no significant economic policy changes. There is no majority within the ANC for a substantial shift in policy, despite the prominence of sections of the left in the Zuma coalition. A Zuma-led ANC is likely to continue to seek a working relationship with business.
The Zuma ANC presidency will, however, continue a shift in emphasis, already evident during his predecessor’s presidency of the ANC, towards a more assertive attempt to address poverty within a market-friendly framework. Early examples include a commitment to extend free school education, to enhance the public sector’s role in health care, and to widen the child grant net. The ANC has also adopted the unions’ call for ‘decent’ jobs but has not specified how it will seek to achieve this goal. Clearly these are fiscal considerations for such proposals and business will have to be part of the debate on these.
It is important to note, however, that, with the exception of a promise to regulate but not outlaw foreign ownership of residential property (again a product of the Mbeki ANC presidency), there is no indication of ANC interest in intervening to restrict property rights or to enhance significantly the regulation of business. It is equally noteworthy that, if a Zuma presidency does materialise, it is probably more than a year away. During this time, significant interaction between the ANC and business is likely and a broad understanding between the two seems possible, given Zuma’s attempts, prior to Polokwane, to allay business fears.
One consequence of the change in the ANC presidency is likely to be an increased stress on mass mobilisation, which is seen by the new leadership as an important means of revitalising the ANC. While Zuma has called for mobilisation against crime, he has also suggested that ANC members may be mobilised in support of policy goals. This clearly raises the possibility of campaigns which will prompt concern among business people. It is, however, important to stress that there is no hard evidence yet of ANC plans to mobilise in support of social and economic demands. If such mobilisation does occur, the outcome will depend on business’s ability to engage creatively with the stated goals of mobilised ANC members. South African business has considerable experience in responding to popular demands in a manner which enhances possibilities for co-operation and there is reason for confidence that, if necessary, business will rise to the challenge again.
It is worth noting here that one consequence of the Zuma ANC presidency may be enhanced expectations that business demonstrate its commitment to addressing poverty. Again, however, previous business experience in showing a willingness to address social problems suggests that the new environment, if it does materialise, is one which business is equipped to play a constructive role. In fact the one sure reality is that the new ANC leadership, having emphasised the lack of governmental delivery in “the fight for a better life for all”, faces the same set of daunting and often seemingly intractable challenges as the Mbeki administration: energy security, education, crime, health, housing, land reform and so on. Business has a track record of innovation, partnership and delivery on social issues and there is scope for taking this further.
While the succession contest prior to Polokwane was often heated, it left the workings of government largely unaffected. The stakes have, however, been raised considerably because the ruling party and government are now under different leaderships who are still far from finding a way of co-existing. Current indications suggest that, despite tensions between the new ANC leadership and the Mbeki government, the former is committed to allowing the current government to finish its term. Nevertheless, tensions within government prompted by the new ANC leadership’s desire to see ANC policy swiftly translated into law and public policy could prompt tensions through 2008. It is clearly not in the country’s interests – and certainly not those of business – that the effective functioning of government be impaired by conflict between the ruling party and government.
Continued engagement between business and government may reduce the potential damage. The critical challenges of growth, fighting poverty, containing inflation and competing in a tough global economy remain. If South African business can make positive contributions to each of these challenges they will be well placed to help shape the national debate and deal with the countries political leadership. While the new environment will require particularly sensitive political management by business, there is again reason for confidence that South African business’s recent history of negotiating its way through a volatile political transition will equip it to respond to the challenge in a way which will ensure that business continues to operate in a manageable environment despite enhanced political volatility.
In sum, the change in ANC leadership has created a new fluidity which will again challenge business to respond effectively. While complacency about the uncertainties introduced by the change would be inappropriate, it provides at least as many opportunities as threats. Much will depend on business’s ability to engage in the national debate.