Ramaphosa’s first 100 days And what it tells us about the shape of the South African state June 6, 2018 2 Rhamaphosa's first 100 days The Shape of Ramaphosa’s Presidency Cyril Ramaphosa came to power in South Africa 100 days ago facing a huge challenge: restore the Graphing the key changes – and credibility of the Presidency and put key remaining question marks South Africa back on the growth ▪ Cronyism and looting are now off the track after almost a decade of agenda disastrous rule and entrenched corruption by Jacob Zuma, whose ▪ Radical economic transformation is not years in power came to be known ▪ State-led hostility against the private as “state capture”. Even for someone sector is out with as varied a skill-set as Mr Ramaphosa’s - who has succeeded ▪ But a mixed economy, not free-market approach, replaces it as a trade union leader, politician and businessman – the challenge to ▪ Economic policy and state‐owned deliver what has been dubbed enterprises are no longer primarily “Ramaphoria” is enormous, for he geared to rent seeking needs to align this to society in a ▪ But what replaces this economic way that has rarely been done. approach is less evident His political geometry, employing a careful ▪ Political risk should recede but political distribution of power in his cabinet and noise and complexity are here for the benefiting from consultation with concentric medium term kitchen cabinets, is both hazardous and necessary. Mr Ramaphosa has moved with ▪ That means rule of law, including both determination and deliberation to start property rights, remains embedded rebuilding confidence in the Presidency and government in what he calls the “New Dawn.” ▪ Nefarious policy making is out, but Mr Ramaphosa’s conundrum of renewing a political and regulatory complexity divided party after winning with slim majority remains subject to court challenges to and trying to win a clear mandate in the next deal with policy certainty election will show that his agenda is clear, but how far he can go is less so. © BRUNSWICK GROUP 2018 3 Rhamaphosa's first 100 days An investment summit is planned for August 2018. To prepare the ground, Mr Ramaphosa has appointed three private-sector envoys, and one from the public sector, to comb the globe for investment and to indicate that South Africa is open for business and the state friendly to local and foreign providers of capital. Smaller private-public sector summits have been convened on youth employment, and small and medium-sized enterprise development. Networks, [prime] ministers and kitchen cabinets Mr Ramaphosa is not operating with a single formal cabinet but is drawing on concentric networks built up over decades. His networks are from both trade unions and business. When Mr Ramaphosa faces an issue or a governance challenge, he activates these networks. A Presidency of summits In addition, he has vested significant authority in a pair or compacts of cabinet ministers whose roles appear akin to prime ministers. These are Public Enterprises Minister Pravin As much as his agenda, it is Gordhan and Mineral Resources Minister Gwede Mr Ramaphosa’s style that is different. Mantashe. From his perch at Public Enterprises, Mr Gordhan is a de facto anti-corruption czar. He is He has varied facets to his political assembling a war-room at Public Enterprises to make persona. One is an ability to negotiate major changes at state-owned enterprises. across interests. It is a characteristic honed Mr Mantashe is leading Mr Ramaphosa’s efforts to by his years as a trade union negotiator ensure that land becomes an asset and not a liability of and his role as chairperson of the his presidency. Mr Mantashe is the de facto land affairs minister, and Mr Ramaphosa’s envoy on land along Constitutional Assembly and of the with the ANC MP Mathole Motshekga, and MP Vincent National Planning Commission. Smith, who will chair the constitutional review committee that is the centre of debate on expropriation It is thus unsurprising that convened summits already without compensation. The Public Works Deputy shape his presidency. He has drawn together disparate Minister Jeremy Cronin is operating as intellectual to interests to begin negotiating the outcome of drive more clear and focused land redistribution policy consultative approach to land, mines regulation, and legislation without the need for a constitutional jobs etc. amendment on expropriation. A smaller, second process ensured that the negotiations for a new mining charter — as contained in an amendment to the Minerals and Petroleum Resources Development Act — were taken out of court and onto negotiating tables. In this way a protracted battle in mining was contained and brought back to negotiation. Gwede Mantashe, now Mineral Resources Minister, has failed to pass a new Mineral and Petroleum Resources Development Act (MPRDA) in the first quarter of 2018, but there is goodwill between state and industry. © BRUNSWICK GROUP 2018 4 Rhamaphosa's first 100 days Cabinet reshuffle, disabling networks and SoE reforms By reshuffling the cabinet forced Premier Mahumapele’s with the new board appointments reshuffle and removing ten resignation, thus slowly of the SOEs. consolidating his position in the ministers implicated in state At the South African Revenue ANC and dismantling patronage Services (SARS) the commission of capture, Mr Ramaphosa has networks in ANC provinces. brought credibility and Inquiry headed by Supreme Court Mr Ramaphosa has lived up to of Appeal Judge Robert Nugent, authority to government. expectation on reforming state assisted by respected lawyer He has steadily started disabling the owned enterprises that were Michael Katz, is expected to submit crony networks that had become hollowed out with poor governance a final report by November. The the effective purpose of and has changed the boards of Inquiry will focus on the period of government. One of the major risks three state-owned enterprises at between April 2014 and the end of on his horizon is the so-called the heart of the state-capture story: March 2018, linked to suspended Premier League. This is the name Denel, SAA, SA Express, Transnet SARS head Tom Moyane’s tenure, given to the powerful block of and Eskom. Parliament has kept up who is in addition facing disciplinary provincial leaders in the African the pressure on state-owned proceedings. enterprises with a succession of National Congress who have The President has also confirmed public inquiries, especially leveraged their control of provincial the creation of review panel to deal procurement practices. budgets to build substantial political with allegations of corruption in the clout. The three are: Deputy Minister Pravin Gordhan’s mandate state security agency and to root President David Mabuza (previously to address problems in SOEs, out the compromised shadow state Mpumalanga premier); the ANC rebuilding and strengthening created by Former President Zuma. secretary-general Ace Magashule governance, rooting out corruption, The head of State Security, Arthur (previously Free State Premier) and restoring their financial position and Frazer, who was implicated in Former North West Premier Supra ensuring that they fulfil their corruption dealings, was moved to Mahumapelo. Ramaphosa’s economic and developmental Correctional Services and is now administration in taking over the mandates is slowly bearing fruit. subject to a court challenge by the provincial government of North The appointment of Phakamani Democratic Alliance to force him West due to service delivery Hadebe as Group Chief Executive of out of government completely. protests and corruption; ultimately Eskom was widely welcomed along © BRUNSWICK GROUP 2018 5 Rhamaphosa's first 100 days 4 points of risk in the country during Ramaphosa’s the resolution: that it will not be Winter first 100 days as president. Labour, allowed to harm food security and business and communities are growth. When he speaks to rallies There is always a rise in protests in working to forge a new social and to mass gatherings, he winter in South Africa. The compact around job creation, which emphasises expropriation which is a character of his presidency - that will form the basis for a broader wildly popular symbol of a wider “Ramaphoria” -has also raised compact around growth, redistribution of wealth. expectations and this may impact development and transformation. on political stability. Mr Mr Ramaphosa will hold a Job The recent ANC land summit, which Ramaphosa’s rise has also Summit in September to produce invited civil society to participate in emboldened provincial interests in far reaching measures to create its deliberations to develop a provinces run by the iron fist of the jobs. The joint initiative wiil involve position on land expropriation Premier League. The Mahikeng all social partners in finding social without compensation, was protests against Supra compacts on jobs and examples of unprecedented. The ANC National Mahumapelo are replicated on a collaboration and partnerships to Executive Committee, the party’s smaller scale in Mpumalanga and investigate recent agreements on a highest decision-making body, the Free State, where different national minimum wage and labour agreed to consult traditional leaders factions see an opportunity to stability and broader society before ratifying loosen the stranglehold on the consolidated position that was provincial tenders, so more tabled by the summit on using networks can benefit. Election 2019 Section 25 in the constitution to implement the policy of Ramaphosa is quickly moving to cut The last opinion polls put the ANC expropriation without off money flows by clamping down support at 50% if an election were compensation. Mr Ramaphosa and on access to provincial finances. to be held today. It is going to be a the ANC Committee on land reform This is most visible in the North tough campaign for the ANC seems to be accepting legal West, which has been placed under although the impact of Mr consensus that the constitution administration.