This weekend, the ruling South African party, the ANC, will decide the leadership of the party. By monday we know who the ANC will put forward in the presidential elections of 2009. Current ANC president Mr. Thabo Mbeki is not eligible for re-elections, since he is currently in his second term; but as ANC president he could keep on controlling the powers and handpick himself his successor in 2009. Technically, the new president of South Africa will only be voted in 2009. But since the ANC controls more than 70% of the votes, the decision will be made this weekend. Current president Mr. Mbeki is the most prestigious political leader on the African continent. He has done well in managing the South African economy, which has achieved an unprecedented growth the past 8 years. Yet, despite this success, the benefits of this growth have not reached the poor. Poverty remains an increasing major problem of South Africa. Currently Mr. Jacob Zuma, 65 is the frontrunner for this weekends elections. He was fired by current president Mr. Mbeki as deputy president of the country last year over corruption allegations and positions himself as a champion of the poor. He is also a Zulu, the largest black tribe. The last two presidents Mr Mandela and Mr Mbeki were both Xhosas.
With a wide margin of about 1.000 votes Mr. Zuma is nearly sure of a victory next weekend. Yet, he has not clearly articulated his policies. Many of his supporters have openly called for the nationalization of Africa’s mainstream industries and mines. Which makes investors very nervous over the possibility of a populist left president like Venezuela’s Hugo Chavez. Investors hope that Zuma’s attempts to reassure investors -recently on a trip to the US- are signs he will turn out more like Brazilian president Lula than Chavez. Lula came to power 6 years ago on a leftist platform and then proceeded with reforms that have made Brazil an emerging markets darling. Rating agency Moody’s is not too worried: “Zuma has never taken a different position on economic policy than that which was generally agreed by consensus among policy makers”. Yet the future is uncertain with a slowing economy and interest rates hitting 14,5% by the end of December. Unemployment is over 25% (the unofficial rates would even be 40%) and thus many argue that a fiscal loosening, as suggested by Zuma, could do the country good, especially when spending is directed to education and infrastructure as well as medical spending tackling the AIDS epidemic. South Africa has worked hard the past decade on a countercyclical monetary policy, so it should be able to spend more if growth slows.
The Lula scenario might be just what people are hoping for.
