South Africa

Parliamentary Caucus

President’s men face ANC caucus showdown on SAA stance

Pravin Gordhan and Cyril Ramaphosa address members of the Western Cape Farming Sector on November 1, 2014 in Cape Town, South Africa. (Photo by Gallo Images / Foto24 / Nasief Manie)

In a potentially damaging development for President Cyril Ramaphosa – with possible negative consequences for the South African economy – Pravin Gordhan has been summoned to defend his actions over SAA to the ANC parliamentary caucus.

A parliamentary caucus meeting agenda, sent to ANC MPs by ANC Chief Whip Pemmy Majodina, states that Public Enterprises Minister Pravin Gordhan is due to explain his current stance on South African Airways on Thursday 21 November.

Senior caucus members supportive of President Cyril Ramaphosa and his efforts at inserting fiscal discipline say there are many ANC MPs who state openly they believe Gordhan, Finance Minister Tito Mboweni and, by extension and association, Ramaphosa himself do as they please policy wise, without proper consultation of or mandate from ANC structures (such as, but not limited to, the caucus) and in open defiance of policy decisions taken by the 2017 ANC conference at Nasrec, which is binding on all ANC members, including members of Cabinet.

Many in the dissatisfied grouping reject Mboweni’s and Gordhan’s view that the country cannot afford another R2-billion SAA bailout.

Those in the unhappy corner also favour agreeing to striking SAA unions’ demand for salary increases despite the fact that the airline is currently financially bankrupt.

Thirdly, they are also not in favour of privatising SAA, be it partially or fully – a measure repeatedly endorsed by Ramaphosa as a way to turn the tide on the airline’s growing debt burden.

Sources in the Ramaphosa camp worry that the machinations behind Thursday’s caucus discussion are aimed at an eventual caucus move to back the R2-billion SAA bailout, SAA salary increases as demanded by unions, a limitation on job cuts and opposition to privatisation in any guise.

It is not currently clear whether the Ramaphosa faction or their critics enjoy majority support in the caucus. Lobbying is under way but there are worries in the Ramaphosa camp that efforts to ensure Gordhan’s Thursday caucus speech is a friendly, informative talk, supported and accepted by caucus, may fail and a caucus vote might be lost.

Because policy on SAA’s financial discipline and bailouts is so integral to the fiscal approach defining Ramaphosa’s politics, it would be a big win for the president’s supporters if those undermining him could be dealt a blow in caucus.

But, for the same reason, it could be deeply detrimental to Ramaphosa, his presidency and his ability to lead decisively if his critics achieve what will amount to a debilitating motion of no confidence by the ANC caucus in core policies of the Ramaphosa-Gordhan-Mboweni political mission.

An adverse caucus vote on Thursday could trigger three important consequences for the president, the two ministers and the financial resources of every South African.

Victory for the president’s critics on Thursday would embolden and give momentum to those in the party plotting Ramaphosa’s downfall – and could turn him into a lame duck president lacking a decisive policy mandate.

The same goes for Mboweni and Gordhan and their political capital. If the caucus rejects their policy, any such policies will be moot if they require parliamentary approval. A parliamentary majority would be unattainable if ANC MPs were bound by a caucus decision.

The most important potential consequence of such a decision will be on South Africa’s sovereign credit rating. It will ensure the country is downgraded to junk status in February by Moody’s, the only major ratings agency not to have done so thus far.

Unflagging and often unsung efforts of senior South African government officials and business leaders to avoid that calamity have been rooted in the standing Ramaphosa, Gordhan and Mboweni have earned internationally, and the credibility they add to South African efforts to establish and maintain a fiscal discipline lost in the Zuma era of poor governance and state capture.

Junk status would guarantee an outflow of billions of rands from the local economy as many investment funds are bound to disinvest from junk-status nations. They have no choice in the matter. Junk status also makes borrowing more expensive, which will add to South Africa’s economic woes and make it harder to get out of the current economic hole – which, much as many people struggle to comprehend it, essentially means the state kitty is almost empty.

South Africans will watch Thursday’s ANC caucus meeting as a possible first step in imminent efforts to unseat Ramaphosa. And whether the president succeeds or fails will be central to South Africa’s economic well-being in the medium term. DM


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