Intra-African trade: On the AfCFTA

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

My column this week is an abridged version of the article I wrote for the March 2018 issue of African Business magazine on the AfCTA, which African heads of state are scheduled to sign in Kigali, Rwanda, on 21 March 2018. The complete version, with comments by experienced executives and analysts, can be found in the magazine (available at newsstands).

After about two years since the signing of the Sharm-el-Sheikh Tripartite Free Trade Area (TFTA) agreement in June 2015, which brought together member states of the Southern African Development Community (SADC), East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA), trade ministers from all of Africa’s 55 countries, including those of the Economic Community of West African States (ECOWAS) which already have a Common External Tariff, met in Niamey, the Nigerien capital, in early December last year to agree final terms for the African Union’s Continental Free Trade Area (CFTA). They made some good progress; by and large. A formal signing of the trade deal by heads of state is expected in March. There are still a few pending issues, though. They are yet to agree on tariffs on all goods, for instance. But on services, they successfully closed the book.

Intra-African trade recovers
The objective of the CFTA is primarily to engender more intra-African trade; currently 15 percent of the continent’s total merchandise trade. When compared with intra-regional trade in other continents – 67 percent in Europe, 58 percent in Asia and 48 percent in North America – this is quite low. Efforts, thus far, at improving the low trade interactions within the continent, have not been quite effective, clearly. There are signs of improvement, though. According to most recent data from Cairo-based African Export-Import Bank (Afreximbank), intra-African trade grew by 8 percent in the first nine months of 2017; with Guinea, Ethiopia, Burkina Faso, Equatorial Guinea, and Sierra Leone in the lead. This is definitely better than the marginal 0.6 percent growth to US$156.94 billion recorded in 2016. Even so, there is still much road to cover before intra-African trade recovers to the 2013 peak level of US$174.9 billion. And as recent as 2015, intra-African trade growth was almost 9 percent. Afreximbank attributes the latest recovery to rising commodity prices, “improved regional trade across regional economic communities and some countries’ increased focus on promoting intra-African trade”. There is beginning to be a paradigm shift it seems.

One big step but…
Otherwise, it could be rightly averred that after the typical jamboree around continental initiatives like the CFTA, the various heads of government could again probably just go back to their capitals and do whatever they like. Things could be different, this time around, though: the need for improved intra-regional trade relations is now almost existential. With additive manufacturing, automation and other fourth industrial revolution innovations likely keeping developed economies at an insurmountable advantage yet again, African manufactures would probably only thrive in the future if they are traded within the continent. And since it is only by trading more with each other that this could be achieved, African governments would need to ensure hassle-free market access for African-made goods. This is the underlying motivation behind the CFTA.

Challenges remain, however
Negotiations on such important issues like intellectual property rights, some tariffs, what constitutes proper competitive behaviour and so on, are still pending. Besides, there is the bigger issue of how African countries would extricate themselves for constraining bilateral and multilateral trade agreements with developed economies, which at first glance, seem beneficial to African countries, but on further scrutiny, would be found to be ultimately detrimental to their long-term industrial development. The European Union’s Economic Partnership Agreements (EPAs) are top among them. Considering the likelihood that African-made goods would ever be as competitive as foreign ones is quite slim, African countries would in addition to trading more with each other also need to exclude outsiders with as much zeal; for a while, at least.

Disunity elsewhere
Should the CFTA vision be realised, intra-African trade could increase by at least 50 percent over the next five years, some estimate. A market of more than 1.2 billion people with a combined GDP of $2.2 trillion is a far stronger bulwark against limiting external trade forces than the tiny ones that inevitably get overwhelmed in negotiations with humongous countries – even as stand-alone economies – like America, Britain and China. Incidentally, even these countries who already trade a great deal within their respective continents, are becoming increasingly isolationist. So, just as African countries are beginning to find trade unity, previously globalist and more integrated ones abroad are beginning to flirt with insularity.

Actions speak louder
In any case, the trade barriers that really require attention on the continent would barely surface in negotiations or be amenable to them. For instance, infrastructure, the financing deficit (US$93 billion per annum) or terrible state of which, add to logistical costs and retail prices, is one of the reasons why African goods are not competitive. Non-tariff barriers like that would require not just collaboration between African governments but a sense of initiative by each of them. And even as the raison d’etre of the CFTA is palpable, would there be similar enthusiasm in implementing it?

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://businessdayonline.com/intra-african-trade-afcfta/

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AfCFTA: Nigeria could have declared but not signed

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

What could have made Nigeria’s president, Muhammadu Buhari, suddenly change his mind about the African Continental Free Trade Area (AfCFTA) agreement? I pondered this question with some emotion. More than any other continental gathering and epoch, the signing ceremony was perhaps the greatest symbol yet of African unity; in recent times, at least. And Nigeria was conspicuously absent. (No, the presence of the foreign minister does not suffice.) More than when the Organisation of African Unity (OAU) was established more than half a century ago and later transformed into the African Union (AU) almost forty years later, the AfCFTA is perhaps the one concrete step Africans have taken since then to take charge of their destiny. Unless Africans trade more with themselves and in fact block outsiders for a while, the automated industrial world that is already afoot would forever put a lid on any attempt by the continent to lift itself out of its technological backwardness. To be clear, one is not suggesting that Africa should shut itself from the world as it tries to master what are increasingly obsolete technologies. Not at all. But under the current global trade order, there is little chance for Africa to catch up with Europe, America and indeed Asia without greater trade interaction within the continent and indeed some protectionism. Even for those developing countries in Asia already taking over from China, if advances in automation, robotics and additive manufacturing continue at the current pace, there might be little need for their services in the future. In that future, a huge population is not likely to be much of an advantage as currently assumed: robots would likely make up for the demographic shortfall quite easily.

Concerns could have been raised and negotiated earlier
If Africa is currently dependent on the developed world, the imminent new world is likely to make that dependence permanent. So while not a one-fit-all solution, an instrument like the AfCFTA that engenders intra-African trade is one of a few options available to African leaders to buy the continent some time to catch up with the rest of the world. If our basic needs, whether food or simple manufactures, can be catered for within the continent, we stand a better chance of determining our future. Unlike the European Union’s Economic Partnership Agreements (EPAs), for instance, there is little chance that even smaller African countries would not benefit from the AfCFTA. But that is only one side of the argument. Some African countries have a larger manufacturing base than others. The AfCFTA would immediately offer them tremendous advantages. So what? Is that to forever be our excuse? Another point raised is that the EPAs, which countries like Nigeria have not been enthused about, and have not signed, could via the AfCFTA, be put in effect. How so? If all African countries can trade freely with one another, the European Union, say, would not need to enter an agreement with all the countries on the continent. It would only need one to agree and effectively European goods would be able to move through the continent via that one country. These are genuine fears. But surely the Nigerian “professionals” who negotiated the agreement were aware of these. And surely, they could have put in measures to prevent such an occurrence. Incidentally, Nigeria, which raised its concerns belatedly, via its manufacturers’ association and labour unions no less, was in charge of the negotiations, and could easily have ensured that its concerns were addressed. Besides, the other continental giant, South Africa, had similar concerns. As such, the AfCFTA that was signed by 44 African countries recently could easily have been one that addressed such concerns during the earlier negotiation stage.

Missed history
More importantly, the event was so monumental that for President Buhari not to have attended was a great disservice to the nation. Mr Buhari says the decision was in the best interest of the nation. He could have attended nonetheless, show support for the so-called “Kigali Declaration” and ask for time to consult on the other two agreements. The foreign ministry must take full blame for not advising as such. Or did it and was ignored? South Africa’s president, Cyril Ramaphosa, attended, and gave perhaps one of his best speeches yet, and probably the best of all the speeches at the ceremony. He signed the Kigali Declaration to celebrate the epoch and declared his country’s firm intent to join the free trade area while asking for some time to consult with stakeholders back home. Besides, why did the Nigerian Labour Congress (NLC) and Manufacturers Association of Nigeria (MAN) wait till a deal had been reached before raising their concerns? There was some talk about the authorities not being responsive to their enquiries. That is complete nonsense. Had they been as enthused and loud much earlier as they were once the agreement had been finalized, their concerns would definitely have been points for negotiations. To add to the anomaly, the federal cabinet approved the AfCFTA with little opposition. Quite frankly, I thought it was really strange and most unfortunate that we failed to show up for a party we virtually organized. What Mr Ramaphosa did is what you get when you have competent functionaries advising you. He attended his party, poured himself a drink, raised his glass with his contemporaries and took a sip. He did not have to eat the food. To use the Nigerian parlance, he packaged the food given to him at the party as a “takeaway.” The event was too important to miss. For the record, Mr Buhari’s absence at the AfCFTA was a diplomatic blunder. Irrespective of any likely redress or compromise we might seek in the future, history was made in Africa on the 21st of March 2018. Without us.

Funding Ramaphosa’s plan

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

See you again somewhere”. This was likely outgoing finance minister Malusi Gigaba’s response to a reporter’s question about whether he would be delivering the 2018 budget speech on 21 February. In myPremium Times column ahead of President Cyril Ramaphosa’s maiden State of the Nation Address (SONA) titled “Ramaphosa’s priorities” (see link viz.https://opinion.premiumtimesng.com/2018/02/16/ramaphosas-priorities-by-rafiq-raji/), I advised that he should be replaced. Opposition Economic Freedom Fighters (EFF) leader Julius Malema was not as polite: “The first thing he needs to do is fire Malusi Gigaba we can’t have a delinquent as minister.” Market participants would almost certainly be more than a tad disappointed if Mr Gigaba delivers the budget speech on Wednesday. Although the notice is short, it is important that just as there is now a breath of fresh air in the Union Buildings, there should be similar freshness at the Treasury. Mr Ramaphosa’s “new era” requires that someone similarly well-tested takes the reins at the finance ministry. Besides, the plan announced by the president in his SONA almost certainly means the budget that was being prepared while former president Jacob Zuma was still in charge, needs to be revised significantly, if not rewritten from scratch.

Many promises, little money
Mr Ramaphosa’s excellent speech last week touched on key issues like jobs, local content, digitization of industry, and so on. These were, however, just high level highlights with little detail. Thus, coming just about a week afterwards, the budget is an opportunity for the fiscal authorities to elaborate more on the president’s vision; an action plan, so to speak. This is important because after Mr Ramaphosa’s widely-applauded speech, questions were raised about how he planned to fund his new initiatives. Mmusi Maimane, leader of the main Democratic Alliance (DA) opposition party, put it rather well: Mr Ramaphosa gave “a speech filled with a lot of promise but as we would see in the budget…very few amount of money to implement”. New proposals like the paid internship programme and small business and innovation fund would have to be budgeted for certainly; that is, if the new president wants to maintain his credibility. Never mind that it remains to be seen how the similarly recent free higher education policy would be financed. It would also be interesting to see how much of the proposed efficiencies, like reducing the number of government agencies and streamlining procurement procedures, would be actioned.

Raise taxes, sell SOEs, lose weight
To put the authorities’ finances back in shape, some tough measures would be required. So, earlier assertions by Mr Gigaba like there being no need to raise the value added tax (VAT) to fund free higher education is simply wishful thinking. In any case, he was probably playing to the gallery. Public debt is already about 54 percent of GDP (2017/18) and expected to be over 60 percent in a couple of years. Debt servicing is expected to be about 15 percent of revenue by 2019/20, from 13 percent most recently; and should rise over the next 3 years by about almost the same rate of 11 percent. Clearly, additional borrowing to make up for projected revenue shortfalls of R50.8 billion in 2017/18, R69.3 billion in 2018/19 and R89.4 billion in 2019/20 would be antithetical to the almost existential need for fiscal consolidation. At the very least, the debt level must be kept below 60 percent of GDP to avoid a crisis. In the medium-term budget policy statement (MTBPS) in October, the Treasury estimated spending cuts or tax hikes of about 0.8 pct of GDP would be required to achieve this goal; about R40 billion for 2018/19. So the issue is not so much about whether there would be tax hikes but how much. In any case, new money could also be found from selling inefficient state-owned enterprises; of which there are quite a few. Besides, there is still much more that could be done to cut costs. The cabinet and public service are bloated, for instance. All in all, my forecast for the budget deficit over the next three fiscal years is about 4 percent of GDP; which would still be an improvement from the revised expected outcome of 4.3 percent for the 2017/18 fiscal year.

Find growth
In the October MTBPS, Mr Gigaba highlighted key fiscal risks to be further revenue shortfalls, compensation budgets, rising debt service costs, funding gaps in infrastructure and social services, and financial deteriorations. As commodity prices have been ascendant lately, there could be some improvement in revenue, at least. Even so, the economy would need to start firing from all cylinders to speed up lacklustre growth in recent years. At below 1 percent in 2017 and likely just a little above that this year, there are limitations to how much more taxes can be extracted without some incremental economic growth. Mr Ramaphosa has identified mining, agriculture and tourism as the sectors to provide additional output. But even if he backs his positive rhetoric with action like one expects, it would take some time before the gains materialize.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz.http://www.businessdayonline.com/funding-ramaphosas-plan/

Ramaphosa priorities

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

This Valentine’s day past, former South African president, Jacob Zuma, likely disrupted the evening of many Africa economists. Although I made a determined effort to stay off my phone, I could not help doing so when my date happened on a close friend and had to briefly exchange pleasantries. And since we were hitherto waiting on a queue for the advertised “food special” at the cinema – the “potato chips and chicken” ended up being popcorn, by the way – I did what is considered normal these days: I took a look at my Twitter account. It was just in time for the breaking but sad news of the death of Zimbabwean opposition leader, Morgan Tsvangirai. Momentarily, I thought to myself: could this be a sign of what to expect from Mr Zuma’s imminent press conference? One could not be too sure: in a rambling interview earlier in the day, Mr Zuma literally dug in his heels. True to type, he did not vouchsafe his decision to give way for his deputy and freshly minted ruling African National Congress (ANC) party leader, Cyril Ramaphosa, until the very end. Such was my irritation during what seemed like another defiant speech, as I tried to also enjoy the “Black Panther” movie I was watching in tandem – the context of which should have similarly provided a hint about what was about to happen – I made up my mind Mr Zuma was about to take everyone on another merry-go-round. I had an odd feeling subsequently, deciding to take just one last look at my phone: Mr Zuma had resigned. It was with some restraint that I managed to get a hold of myself. Like most South Africans, I was quite relieved. Things moved quickly afterwards. Next day, Mr Ramaphosa was unanimously elected unopposed by the parliament and sworn-in hours later. Today (16 February), the new president shall be delivering his first State of the Nation Address (SONA). It could also perhaps be the first disciplined one in quite a while.

Momentum, momentum
So, what should Mr Ramaphosa’s priorities be? Tackling corruption should be topmost, for sure. Before Mr Zuma’s capitulation, and perhaps as a means to that end, the elite Hawks police unit made major arrests at the home of the wealthy Indian-born associates of the former president; the infamous “The Guptas”. They epitomize the rot that permeated the Zuma administration, the so-called “state capture”, which involved using their well-known friendship with the former president to peddle influence; determining who gets government tenders and even appointing ministers. This newfound momentum in the anti-corruption fight is directly attributable to Mr Ramaphosa’s “new era”; that is, even as he was still deputy president then. One day now into his presidency of the Republic, he must do his utmost to sustain the momentum; especially as his honeymoon period is likely to be just days, not weeks. A way he could immediately signal he means business would be to immediately reshuffle the cabinet he inherited. Many would be more than a tad disappointed if finance minister Malusi Gigaba is not replaced before budget day on 21 February, for instance. Considering the short notice, an experienced replacement would be needed. In this regard, there have been suggestions former finance minister Trevor Manuel might be tipped for the job. Mr Manuel’s morning jog with the president yesterday (15 Feb) on the promenade by the gorgeous beaches in Cape Town adds to speculations he might be the stopgap choice. Regardless, a new finance minister must be one that market participants like, trust and respect.

Failure not an option
At Mr Ramaphosa’s election in parliament yesterday, there was unprecedented unity; a breath of fresh air in a hitherto rancorous chamber. Of course, MPs from the ultra-leftist Economic Freedom Fighters (EFF) could not resist adding a little drama to the proceedings: after instigating a brief provocation, they staged a walkout. This was not totally surprising. In any case, at a press conference just a few hours before the presidential election, Julius Malema, the EFF leader, promised decorum by his “fighters” during Mr Ramaphosa’s SONA, today. Even so, Mr Malema still took aim at his ANC counterpart, accusing him of myriad misdemeanours, including his handling of the Marikana massacre of protesting mineworkers; victims of which are yet to be compensated. As far as the fiery EFF leader was concerned, palpably miffed at suggestions he might return to the ANC now that Mr Zuma is out of office, the problem was never just the former president but the ANC itself. So, like the main opposition Democratic Alliance (DA) party, the EFF would rather parliament be dissolved and fresh elections called. There is little chance of that happening. For now, all the opposition parties are keen to give Mr Ramaphosa the benefit of the doubt. Their conditional support is, however, predicated on the expectation that his “new era” would be a far cry from his predecessor’s unusual ways.

Mr Ramaphosa, It is time

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

This Sunday past, as I watched – on television, of course – Cyril Ramaphosa, the president of South Africa’s ruling African National Congress (ANC) party, chuckle slightly to a remark by the clergyman officiating the mass at St. George’s Cathedral in Cape Town, ahead of his much expected speech to celebrate Nelson Mandela’s centenary hours later, and thereafter adopt a solemn look while standing for the part of the service that required that posture, I could not help but think the man, if only for a moment, must have thought to himself: here I am, almost three decades after carrying a microphone for Mr Mandela during his first speech just after his release from prison, about to deliver a speech in the great man’s memory. The irony must also have struck him, I thought, how the people in the church hall and perhaps millions at home and elsewhere watching him on television, probably did not care very much for the dead as they were about knowing whether he had finally come to a resolution with embattled South African president, Jacob Zuma. Judging from his body language, I thought he likely had finalised a deal; hoping dearly his speech would not disappoint.

Earlier that Sunday, news also broke that senior executives of the ANC would finally meet on Monday (12 February), after failing to meet as planned last week. It was supposed by most that should a resolution not have been reached with Mr Zuma by the weekend, that would be the meeting at which the party decided they had had enough. The foul mood of most of the upper echelons of the party towards Mr Zuma was already palpable, after an audio clip of remarks by ANC treasurer Paul Mashatile at the recently held Mining Indaba was leaked to the media last week. Mr Mashatile revealed in very clear terms that had the party’s executives met the week past, Mr Zuma would have been recalled. Such is the angst amongst a majority of South Africans and indeed within the ANC towards Mr Zuma now that should the party officials prove spineless on Monday, it would not only be Mr Zuma who would have a need for worry, but the party executives as well. Besides, should the ANC not move quickly, the opposition might take the initiative from them and thereby jeopardize the party’s prospects in future elections. Needless to say, there would be much relief if the Union Buildings in Pretoria get a new chief this week.

Dangerous delay
In my Premium Times column late last week titled: “South Africa: Mugabe 2.0” (see link viz.https://opinion.premiumtimesng.com/2018/02/09/south-africa-mugabe-2-0-by-rafiq-raji/), I wondered why Mr Ramaphosa did not seize the opportunity to recall Mr Zuma when he had the chance. One analyst thought the ANC president’s deliberateness was strategic and aimed at “neutralizing, encircling Zuma”. I was not totally convinced, averring that had Mr Zuma been in Mr Ramaphosa’s shoes, he would not have hesitated to seize the first solid opportunity to oust an opponent; especially as the longer Mr Zuma stayed, the greater the probability of an opening for a counter move by the Zulu man. The variables increase with each delay, I added. I particularly thought the notion that Mr Zuma was already done for before an official resignation, recall or impeachment was presumptuous if not cheeky. Still, senior officials of the ANC urged patience over the weekend.

High tension
Regardless, pressure is mounting on the protagonists in the transition talks to come to a quick resolution. Party grandees have been expressing concern at the seeming lack of urgency. Opposition parties desire a no-confidence vote in parliament this week. A faction of the ANC, the so-called “#ZumaMustGo” movement, has asked South Africans not to show up for work on Monday (12 February), advising they join a planned protest to pressure Mr Zuma to resign. In light of these, the smooth transition Mr Ramaphosa seeks risks being jeopardized the longer the negotiations take. In my remarks on the goings-on for an article by American broadcast television network, NBC News, (see link viz.https://www.nbcnews.com/news/world/south-africa-s-next-leader-cyril-ramaphosa-faces-plenty-challenges-n845431), I provide reasons for the great expectations behind a potential Ramaphosa-led South Africa. The investment and business community has probably never been this confident about any post-apartheid ANC leader. This has a downside: the fact they see him as more predictable and sensitive to their interests would not endear him to the masses. Thus, Mr Ramaphosa would inevitably need to similarly dish out some patronage like his imminent predecessor; that is, if he hopes to retain the support of the ANC base. He would also need to appeal a little bit to populists who might otherwise switch to more left-leaning parties like the Economic Freedom Fighters (EFF). Ideally, the leader South Africa needs should have the erudition of former President Thabo Mbeki, the grassroots appeal of Mr Zuma and the negotiation and business acumen of Mr Ramaphosa. The current ANC leader falls short on at least two of these qualities, clearly. But he has the one quality that really matters now: competence.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/mr-ramaphosa-time/

South Africa: Mugabe 2.0

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Deputy president Cyril Ramaphosa cleared his diary for Friday and the day after (10-11 February), his office announced. Of course, the events of interest were those that related to his duties as president of the ruling African National Congress (ANC) party and not as deputy leader of the Republic. As preparations are afoot to celebrate the Nelson Mandela centenary (#Mandela100) on Sunday (11 February), Mr Ramaphosa was slated to attend buildup events on these days. So what was so pressing that would prevent the party president from attending what are quite important party events, you likely wonder. Hold that thought a moment. Not too long after, the party announced its senior officials would also not be participating in the #Mandela100 buildup programmes. I have your attention now, don’t I? Well, I would, if you have not been similarly following the twists and turns around the push to get South African president Jacob Zuma to resign from office. But if you have, you probably now hope Mr Ramaphosa would not prove to be spineless yet again. The supposedly savvy party leader would probably take great exception to this characterisation. But quite frankly, people are beginning to get impatient with what seems like a limited sense of urgency on his part. This is my sentiment, of course. Like the frustratingly nail-biting wait that presaged the resignation of former Zimbabwean president Robert Mugabe, the South African “transition” is turning out to be similarly intriguing. I do not mean that in a complimentary manner.

Little reprieve
In my BusinessDay column ahead of the earlier scheduled 8 February State of the Nation Address (SONA) titled: “Dirty Zuma exit fight inevitable” (see link viz.https://www.businessdayonline.com/dirty-zuma-exit-fight-inevitable/), I wondered what leverage Mr Ramaphosa would have left if he were to allow Mr Zuma deliver what is perhaps the most important speech in the political calendar. I thought it would make nonsense of the new party leadership’s talk of a “new era”, for sure. They thought so too, it seems; not that it was not already palpable to anyone with half a brain. Attributing a need to ensure decorum at this year’s SONA, in light of disruptions by opposition MPs in the recent past ones, parliament speaker Baleka Mbete announced a postponement two days before the earlier scheduled date of 8 February. Of course, all and sundry knew the real reason for the postponement. Mr Ramaphosa needed time to put pressure on Mr Zuma to vacate office. A planned meeting of the party’s executives, which had it held, would have almost certainly called for Mr Zuma’s recall, was also shelved. Why not just recall him and go ahead with SONA on 8 February, some wondered. It was suggested that perhaps Mr Ramaphosa was being mindful of likely ethnic-based violence in Kwazulu-Natal, where Mr Zuma hails from, in the aftermath of a rash recall decision.

Incidentally, the South African Communist Party (SACP), an ally of the ANC and member of its tripartite alliance, alleged Mr Zuma planned to fire Mr Ramaphosa as deputy president; a move he would have needed to make before what would have been a recall decision by the party executives at their shelved meeting. A vociferous denial by the president’s office of any such plans only added to the strength of the SACP’s scoop. This is because in the past, when the presidency denied so-called rumours and speculations, there usually came a time not long after, when what was hitherto a denied “rumour” suddenly became policy. Just like that. There is a recent example. A while back, there were reports the government-run pension fund for public workers would finance a bailout for loss-making power utility, Eskom. Although the possibility was not totally ruled out, the impression given by the finance ministry was that such a contemplation was simply in the light of brainstorming about financing options for the ailing utility. Now under better management, the treasury probably supposed it would not cause much uproar if it went ahead this time around. I do not want to focus overmuch on Eskom and the clearly sub-optimal allocation of public pension funds to it; about $8.3 billion in total now. But you certainly get the point about how “rumours” about Mr Zuma’s plans, no matter how outrageous, should be taken seriously. It was believed Mr Zuma would have replaced Mr Ramaphosa with his ex-wife, Nkosazana Dlamini-Zuma, who incidentally challenged the deputy president for the party leader post. It needs pointing out here, though, that the Zimbabwean parallel does not extend to Ms Dlamini-Zuma: unlike Grace Mugabe, she is very accomplished and a party grandee in her own right; having been minister and chairperson of the African Union Commission in the past.

Do it now
In light of the foregoing and what we know about Mr Zuma, imagine one’s surprise that Mr Ramaphosa seems not to be aware of his vulnerability. In his most recent press release, he acknowledges a “transition” is ongoing but does not indicate when it would be finalised. Some say the delay is because Mr Zuma desires immunity from prosecution. Considering Mr Ramaphosa has ruled out granting his erstwhile principal a ‘get out of jail free’ card, especially as he may not necessarily have the power to do so, it begs the question of what is really responsible for the protracted exit process. Worryingly, the longer it takes to get Mr Zuma out of office, the weaker Mr Ramaphosa looks and in fact becomes. Because unlike the Zimbabwean case, he does not have an army to force Mr Zuma’s hands. Additionally, he does not yet have the full command of the ANC party structure. With Mr Zuma still able to make last ditch efforts to buy support and in fact delay for longer Mr Ramaphosa’s accession to the country’s presidency by exercising his constitutional powers to hire and fire any member of his government, the ANC president seems bizarrely relaxed. Mr Ramaphosa should pick up the pace.

Dirty Zuma exit fight inevitable

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

It is hard to wonder what the ruminations of South African president Jacob Zuma was as he watched his deputy, Cyril Ramaphosa, take his place on the global stage in late January at the World Economic Forum in Davos. Now president of the ruling African National Congress (ANC) party, Mr Ramaphosa, is nominally Mr Zuma’s boss. Effectively, it is not so simple. A party president is most effective if he or she is also president of the Republic. This refers to the specific South African case, where it is the political party that deploys cadres to government when it secures power. The imperative for Mr Zuma to give way for Mr Ramaphosa cannot be overemphasized. True, Mr Zuma’s tenure as president extends to 2019. And should he decide to hold on, and is not recalled by his party or impeached, he would be able to serve his second and last term in full. Were that to happen however, it would be at the expense of the well-being of longsuffering South Africans. Firstly, Mr Zuma is fighting corruption charges. Secondly, his continued stay would entrench increasingly intractable differences within his party. Thirdly, the ANC needs time to repair the damage done by Mr Zuma if it hopes to be victorious in the 2019 polls.

Get out of jail free card
The primary concern of Mr Zuma is likely how to avoid going to jail. Finishing out his term guarantees he would not have to worry about that for another two years. Of course, he could secure a deal to avoid prosecution by leaving earlier. But that would be hugely unpopular. Even so, such is the strenght of the desire to see him gone that South Africans might not mind overmuch if he is allowed to retire to his Nkandla homestead in peace. What is concerning is that a typically clever Zuma is reported to be obstinately insistent on finishing his term. Local media report Mr Zuma would rather be recalled or impeached than resign. He is not being totally irrational. On the recall, he still has allies in the top echelons of the ruling party, who despite his waning power are surprisingly still loyal to him, albeit they have begun to hedge their bets. ANC secretary-general Ace Magashule, a staunch Zuma loyalist, may not be one of those, though; albeit it may be because he faces scrutiny for corruption as well. Party treasurer, Paul Mashatile, is in the Ramaphosa camp, at least; calling for Mr Zuma to step down as recently as late last week. The positions of the two top men is indicative of the entrenched and sharp divisions within the so-called “top 6” of the ruling party. So, a recall would be difficult but not impossible. But Mr Ramaphosa is believed to be averse to such a move. After the Constitutional Court ruled in late December that clear and precise impeachment modalities be instituted by the legislature, a potential Zuma impeachment should be pretty straightforward; if it ever comes to that. But were it to happen, it could take time. Thus, it would be much easier if Mr Zuma simply resigned. In any case, an umpteenth no-confidence vote is scheduled for late-February. Considering the narrower margin in favour of Mr Zuma in the last vote, there is a greater probability that he might not be so fortunate this time around.

Fickle power
What is potentially pitiable is how Mr Ramaphosa would likely increasingly become undermined the longer Mr Zuma stays in office. Surprisingly, Mr Ramaphosa has thus far been making excuses for his seeming timidity in taking on Mr Zuma frontally. He desires instead that Mr Zuma’s dignity be guarded. Ironically, Mr Zuma was not so gracious when he found himself in a similar position. After winning the party’s presidency in 2007, Mr Zuma moved swiftly against Thabo Mbeki, the country’s president at the time; albeit Mr Mbeki still managed to hold on for another nine months. And even afterwards, Mr Zuma had to wait till after the 2009 general elections before becoming president. It is believed Mr Zuma desires another “Kgalema Motlanthe arrangement” in exchange for leaving office early. (Mr Motlanthe held the fort after Mr Mbeki’s resignation.) Reports suggest his idea of another “Motlanthe” is his ex-wife, Nkosazana Dlamini-Zuma, the candidate Mr Ramaphosa beat to clinch the ANC presidency. Mr Zuma had one advantage back in 2007, though: the table was not as divided as it is today. Should Mr Ramaphosa choose to recall Mr Zuma, he would need to bring the president’s allies onside. There are indications he is beginning to win them over. The problem is that Mr Ramaphosa is not moving fast enough. Worryingly, his momentum may suffer great peril if anybody other than him delivers the state of the nation address (SONA) on 8 February. Mr Zuma knows this. So does Mr Ramaphosa. Because when he was recently asked about the dilemma in Davos by Zainab Bedawi, one of the anchors of Hardtalk, a hard-hitting interview programme by the BBC, his response was a palpable departure from what was a smooth interrogation hitherto: he took a very deep breath before answering; betraying his erstwhile take-your–time rhetoric. It is probable these considerations were put to Mr Zuma when the ANC’s top officials met him this past weekend. Whether they got his attention is another matter.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz. http://www.businessdayonline.com/dirty-zuma-exit-fight-inevitable/