Ramaphosa has promised to speed up the transfer of land to black people, but has stressed the need to preserve food security.
JOHANNESBURG, South Africa, March 28, 2018 – South Africa’s new president Cyril Ramaphosa will need to call on all his dealmaking skills to overhaul ailing state-owned firms and tackle land reform if he wants to capitalise on Moody’s decision not to downgrade the country’s debt to junk.
Moody’s said its decision to keep South Africa’s rating at investment grade reflected its view the country’s institutions would regain strength under more transparent and predictable policies – though the new government had to stay on track.
Since replacing Jacob Zuma in February, Ramaphosa has reappointed the finance minister his predecessor fired in 2015, sacked some ministers allied to Zuma, put another respected former finance minister in charge of struggling state-owned firms and suspended the head of the revenue service.
“It’s a big deal,” political analyst Ralph Mathekga said about Moody’s decision. “What he has been able to achieve in two months is to reverse some of Zuma’s influence in key sectors. The message he sent is: ‘I can do more’.”
After his whirlwind start, Ramaphosa’s challenges now include keeping the unions on side as the government overhauls cash-strapped national carrier South African Airways (SAA) and heavily indebted state power utility Eskom.
Perhaps his stiffest test will be to push through land expropriation, as promised, to address racial disparities in ownership – while keeping the left wing of the ruling African National Congress (ANC) on board and not scaring off investors.
Parliament passed a motion last month seeking to change the constitution to allow land expropriation without compensation. Ramaphosa has promised to speed up the transfer of land to black people, but has stressed the need to preserve food security.
“A big deliverable is to initiate the land debate under his leadership to control the narrative and discourse. Should he fail to do this, he runs the risk of undoing the good work already done,” said Daniel Silke, director of Political Futures Consultancy.
Ramaphosa’s negotiating skills have been respected for decades, ever since Nelson Mandela turned to the former trade union boss to lead the successful negotiations to end white minority rule.
More recently, Ramaphosa had to strike a fine balance between applying pressure on Zuma to go, while still affording him a dignified exit. Now, same analysts say land reform is Ramaphosa’s litmus test.
“Are we over-estimating Ramaphosa’s ability to deal with this land issue? It is undoubtedly one of his biggest challenges. Investors are worried about this and watching him very closely,” said independent political analyst Nic Borain.
When it comes to South Africa’s struggling state-run companies, Ramaphosa will need to perform a similar balancing act and he has already named respected former finance minister Pravin Gordhan as minister of public enterprises.
Eskom and SAA are both weighed down by massive wage bills but the country’s powerful unions are likely to dig in their heels at any attempt to cut jobs, especially with elections looming in 2019.
Influential labour leaders, sections of the ANC and the opposition Economic Freedom Fighters are also likely to balk at any moves to partially privatise the companies, which is one strategy backed by the Treasury.
South African Airways runs one of Africa’s biggest fleets but years of operational losses have left it on the brink of bankruptcy. It needed a bailout in July to repay debt and 20 billion rand ($2 billion) in state guarantees to keep it afloat.
Eskom received a 5-billion rand loan in February from the state’s Public Investment Corporation (PIC), which holds a large amount of government bonds and ranks as Africa’s biggest investment fund, or it would have defaulted on its debts.
“There is going to be some tension when these job cuts are announced. It is a delicate balance because it could impact the support base of the party ahead of next year’s elections,” said Borain.
Still, Ramaphosa has already taken the politically risky step of raising value-added tax (VAT) for the first time since apartheid to try to reduce the budget deficit and analysts say he is unlikely to back down on reforms.
“He did not give in to populism on the VAT; this was a good example of him having to do something unpopular but necessary,” Borain said. “He is known to be a good negotiator.”
Finance minister Nhlanhla Nene expressed hope on Monday that S&P Global Ratings and Fitch might also look favourably on South Africa during upcoming reviews, saying investors he had met at a roadshow in London before Moody’s decision were upbeat.
S&P downgraded South African local currency debt to “junk” in November citing a deterioration in the economic outlook and public finances. Fitch cut its rating in April to sub-investment grade after Zuma fired Gordhan as finance minister. S&P will publish its review on May 25. Fitch has not given a date.
“I want to call this a honeymoon phase – and it is for that reason that we cannot be complacent about it,” Nene told Talk Radio 702.
This week we have seen the price of the fall of President Jacob Zuma, the cleaning of the State Owned Enterprises has hopefully started. That can be said because of the actions of the Gupta Family owned corporations as so many of them has suddenly applied for “Business Rescue”, you can wonder what that means, therefore, I went to law-firm who can explain what the Business Rescue means.
Werkmans Attorneys said this: “The aim of business rescue is to restructure the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis or results in a better return for the creditors of the company than would ordinarily result from the liquidation of the company (section 128(1)(b)(iii))”. So the initial idea behind it is to make adjustments to either secure the companies or secure the creditors, when coming from Gupta businesses meaning the changes of government contracts and litigation’s following the change of President.
Sudden Optimum Coal Terminal Limited, Optimum Coal Mine Limited, Tegeta Exploration and Resource Limited, VR Laser Service Limited, Koornfontein Mines Limited, Confident Concept Limited, Shiva Uranium Limited and Islandsite Investment One Hundred Eighty Limited. We should anticipate in the coming days and weeks, that Oakbay Investment and Oakbay Resources will run insolvent too. As these companies has dried the funds of Eskom and other state owned businesses with shady deals made under the Zuma administration.
We can just imagine the state suffering from this, as the Business Rescue tools buys the companies and investors time, while they have already moved away the funds and needs new liquidation to save it. Smart move by the foreign investors, who used their relationship with Zuma to bleed the nations out of money. They started the companies in the years before Zuma took power in 2006 and 2007. The Shiva Uranium is the oldest company, but the others are very new and made for the age of Zuma.
This will hurt many of the current leaders within African National Congress (ANC) who has also been regarded and parts of the deals, this being Molefe and Gigaba. Des Royeen should also struggling at night and wonder why he was part of it. That ANN7 and Transnet should also worry, all things connected with the Gupta’s should be shaking, Sahara Computers and what else of companies they deliberately made to gain fortunes and spin their stories. It should be hurt and within time, they will ask for rescue too. As the funds and contracts with the state stops.
We can just wonder how many more Estina deals there been in the different states of South Africa. As long as the creditors, the banks and the HAWKS continue to pursuit the lost cash. Now that the Zuma cannot stop their investigations, hopefully more whistle-blowers and more covers will be showed in public. So that the State can get their funds back and also prosecute the ones who has stolen money from the public.
All of this will hit hard towards the finances of South Africa, the service delivery of the state owned corporations, as they was dealing with them directly to secure coal or other services. We can just wonder, how the effect will be in the long run. How the ANC will manage and who has to go because of it. Who will be implicated and who has to answer for the shady deals done in secret so the Indian businessmen could earn fortunes on rigged arrangements. Peace.
Now that President Jacob Zuma resigned on the 14th February 2018, there is questions to what it will lead too. On the 16th February the African National Congress (ANC) and the Members of Parliament sworn-in Cyril Ramaphosa as their new President. Who after long days of drama all week was waiting for Zuma to step down. So Ramaphosa could become his successor. He did so and resigned so that he couldn’t be impeached by the Parliament on the 15th February, as Economic Freedom Fighter (EFF) Julius Malema, who wanted that vote and the Parliament Speaker blocked Democratic Alliance (DA) Mmusi Maimane, who wanted to dissolve the Parliament because of this. So, the opposition didn’t get their will from the ANC. But the years of fighting Zuma is now done, though it is starting to shift. Still, the opposition should want the judiciary and authorities to investigate Zuma and his associates futher. Not for retribution, but to make sure justice is served.
This week is evidence of how fickle the power is and sudden the reach of power goes away. The Executive Branch that Zuma hold from 2009 until 14th February 2018, one year before his term finished. Proves the volatile state of grandest power. That is also because Zuma and his comrades misused their time, instead of serving the people. They we’re more preoccupied with shady dealings and using state tenders to get kickbacks and graft. The reporting and the revelations has unraveled all sort of scandals that has tormented the presidency. Even if the President had powers to stop investigations and arrests. He still couldn’t stop the embarrassment of his shady dealings and his occupation with securing good deals for friends of his.
This has been evident with the power of the Gupta investor family who has started dozens of businesses, in all sort of markets that are based on government tenders, state owned enterprises and licenses. This being media, energy, minerals, banking and so on. All from Sahara Computers, Oakbay Investments, Oakbay Resources, ANN7 and New Age Newspaper. This is just the well known ones, not the other whose made with other investment portfolios, who surely has made some questionable tradings in the Republic. Since the Gupta based company has used Transnet, Ministry of Agriculture and Eskom for instance to get grand deals, but not delivering due diligence to the SOE’s.
So the Gupta are now in trouble as the Executive Privilege of Zuma is fallen. His basis of power is gone, as Ramaphosa came there and he hasn’t needed the support or supporting Zuma to be a big shot in ANC. That is why the ones who stood close and was appointed by Zuma himself or by help of Gupta’s can now wait their judgment.
The ones that can miss their places in the world are the likes of Bogani Bongo, Mosebenzi Zwane, Lynne Brown, Bathbile Dlamini, Malusi Gigaba, David Mahlobo, Fikile Mbalula, Nomvula Mokonyane, Nathi Mthethwa and Des Van Rooyen. All of these ministers and such can expect to be fired or should resign.
We should expect many of the appointed leaders in both the judiciary and in the ombudsman or public protector to be re-assigned somewhere else, as their independence has been within the reach of the President. They didn’t start using their power until Zuma had lost his power. The SAPS, Hawks and Scorpions should have come quicker against the Gupta and Zuma associates. Also, the SARS should follow the methods into the abuses done, so there are so many loose ties with shady deals, that needs to implicate more people, than most likely Ramaphosa want to see in bracelets. Since the ANC let the corruption happen over the years, not only because of Zuma, but because they wanted to eat.
We know that the power is fickle as Duduzane Zuma and Ajay Gupta are running from the law and there is 1 million rand on their head from the Police. This shows how quickly they went from rich heroes into fugitives. Two weeks ago, even if the public was tired of the stealing form the state, they we’re still Teflon. Now they are Bugsy Malone on the streets.
The South African electorate should hope that the investigations and that the people who has stolen from the state reserves are taken into custody and the pays for their crimes. All these corrupt activity and the hackwork done to make sure the Zuma family could get wealthy and the associates who wanted the same. Zuma should also worry that he could be indicted now and actually pay for crimes. He has enough counts and alleged crimes on him. So he could if charged and could serve time for it. Now that his presidency is over. Unless, he flees with stolen gains to his mansion in Dubai.
The Gupta family knows their in trouble, the Hawks raid and the price on the head of the family members can all meet all the different arms of justice. That the businesses and the tenders are annulled and the forged profitable businesses possibly fail. As other businessmen and other investors who actually not planning to eat government funds, but actually service delivery. Zuma knew he used them, because he would benefit from the agreements. That is why he changed financial minister to fit the deals between Zuma and his associates in Gupta businesses.
Let’s us see how far they can fall, how much punishment the state will give them, as they can now be served by the authorities. Even Zuma can now be touched. That is proven with his fleeing family member Duduzane. Now, let see if they will all fall from the cliff or will be left with scratches. We can hope that Ramaphosa and the judiciary are able together with the investigators to build cases that can actually verify the State of Capture and Denton’s Report. So that the state can follow the shady deals of Gupta’s, I am sure there are more than what has been reported by whistleblowers. The state should do what it can and scrutinize every single tender given to businesses connected to the Gupta family. Peace.