EXCLUSIVE: Cyril Ramaphosa on how to fix SA's economy

If the ANC’s policy conference provided one clear signal, it is that Cyril Ramaphosa, the former head of the National Union of Mineworkers and the country’s deputy president, is now the front runner to succeed SA’s hopelessly compromised leader, Jacob Zuma.

Before last week’s conference the leadership race was wide open, with Ramaphosa (64) seen as even money against Zuma’s pick, his former wife Nkosazana Dlamini-Zuma (68). But Zuma’s faction experienced a series of embarrassing defeats on key issues at the conference.

This gave Ramaphosa, a lawyer and former chairman of Bidvest, the advantage on a platter; Zuma’s hitherto-dominant faction is creaking under an avalanche of scandals — most notably involving the president’s friends, the Guptas.

The policy conference, while a disappointment for those expecting fireworks, did deliver on one key aspect: it illustrated starkly that the fightback against Zuma’s shadow state of patronage-based politics is most certainly on.

This week, in an interview with the Financial Mail to outline his views on the economy, Ramaphosa said those who argue that the policy conference provided nothing concrete are misguided. "For the first time in many of the conferences I’ve attended, the economic discussions were in depth and focused on what needs to be done at a practical level, and not just a broad theoretical level," he says.

While he says previous policy conferences did discuss the need to "deconcentrate our economy", the tangible steps discussed to address this were "definitely new and went beyond the usual tired statements ..."

"The time for talking is over. As Bill Clinton put it, it’s the economy, stupid," he says.

The first intervention is to revamp the competition laws to spur new entrants and investment. "The Competition Act is going to be looked at, to assess whether the concentration of control and ownership is holding back growth and blocking new entrants. We looked at what the US did to break up monopolies: it wasn’t a smash and grab process, but it looked at ways to encourage competition and bring prices down," he says.

Banks, which are dominated by the big four, would appear to be in the firing line here, as would sectors such as telecoms.

But government is itself part of the problem. The World Bank’s 2017 "Ease of Doing Business Survey" ranks SA midtable, at 74th out of 190 countries. But when it came to "starting a business", SA is 131st, as it takes 43 days to launch a new enterprise here.

Ramaphosa seems alive to this, saying government’s job is to "create a conducive environment for people to invest in SA".

As part of this, he says another practical step discussed at the conference was to look at ways to use incentives to encourage innovation in the economy, including tax breaks.

"There could be all of that. We’ve never fully talked about this at previous conferences, ways to drive growth and how best to use your incentives," he says. "So I would challenge those who said there was nothing new at this policy conference."

It sounds reassuring. But it doesn’t chime with the mixed signals from other areas of government, illustrating why business feels it is living in a schizophrenic environment.

Most pointedly, mining minister Mosebenzi Zwane introduced a new mining charter that was nothing less than an assault on the industry. On June 15, when it was gazetted, mining stocks shed R51bn in value as foreign investors cut and ran.

But Ramaphosa suggests the charter won’t be implemented in its current form. "We discussed it at length and we now need to reach a level of consensus with investors, so the industry buys into the vision. The state is not the only player in the sector; there are those who bring capital, as well as communities and labour. So now there has to be a sit-down with all the role players and concerns must be addressed."

Ramaphosa’s pragmatic approach won’t please Zuma’s more nationalist-orientated backers, which includes ministers such as Zwane as well as key ANC provincial leaders, known jointly as the Premier League.

But this faction is now critically weakened, having lost almost every battle they undertook at the policy conference.

The first tussle Zuma’s faction lost was a bid to suppress the presentation, by secretary-general Gwede Mantashe, of a scathing diagnostic report on the state of the party. Zuma did not want Mantashe to present the report, which details the impact of scandals from Nkandla to the various cabinet reshuffles and corruption on the ANC’s image. As an indication of his paranoia, the Financial Mail understands that Zuma sent his backers an SMS in a failed bid to block the report.

In the end, the diagnostic report set the tone for the six-day gathering, addressing the key debates right off the bat.

The phrase "white monopoly capital" came under intense debate. Zuma’s faction lost, with nine of the 11 commissions rejecting it in favour of identifying "monopoly capital" (minus the racial tag) as the problem.

Ramaphosa says the decision was consistent with the ANC’s nonracial character.

"Look, we need to base our economic approach on the view that monopoly capital is the enemy of our revolution, and the colour is not the issue. Having said that, capital has always been white in this country, so we do need to speed up the process of empowering black South Africans so they can be real role players."

Though finance minister Malusi Gigaba has dropped the phrase "radical economic transformation", Ramaphosa believes it has a place in contextualising SA’s mission. "That phrase has been taken out of context. But I think people have internalised that we really do have to radically transform the economy. The problem is that the term was bastardised. As we now see with Bell Pottinger’s apology, it became a ruse for people to carry out their evil intentions. But the term itself, and the mission, is an important one."

But jettisoning the phrase "white monopoly capital" is a blow for Zuma’s faction, which thrives on a divisive nationalist narrative in which slogans are a quick fix.

Having lost the issue at the conference, Zuma backers didn’t want to let the issue die. Leaked footage of a caucus meeting after the discussion showed ANC provincial chairmen including Supra Mahumapelo (North West) and Sihle Zikalala (KwaZulu Natal) urging delegates to go back to branches and lobby for the issue to stay on the table. The ANC Youth League, also entrenched in Zuma’s group, said the idea of white monopoly capital "must still be extensively discussed by structures of the ANC".

The Zuma-Premier League group also pushed for "land expropriation without compensation", but only a watered-down version emerged, to be taken back to the branches.

An insider described the Zuma group’s position as "land expropriation without comprehension" as they weren’t able to justify their argument. It was the same with other issues, like the Reserve Bank’s mandate.

Though Zuma backers say the proposal to "nationalise the Reserve Bank" is a victory, that’s untrue. Those loyal to Zuma wanted the Bank’s entire mandate to be reassessed and were roundly defeated on this score.

Speaking to the Financial Mail, Zikalala says his province still wants the NEC to investigate changing the Bank’s mandate. Mahumapelo says the Bank’s role should not be confined to inflation-targeting but must incorporate a "developmental agenda".

"What we need to do is to look at the governance structure of the Reserve Bank [which] must be amended," he says.

Ultimately, buying back the smattering of Reserve Bank shares from private shareholders is meaningless, as they cannot influence policy anyway. But the Zuma faction didn’t seem to grasp this.

Enoch Godongwana, ANC head of economic transformation, says the Bank’s independence is sacrosanct and won’t be tampered with. Rather than buying back shares from Bank shareholders, he says the ANC should prioritise building schools and roads.

Though Ramaphosa argues the policy conference did present practical solutions, the question is whether the interventions are enough, in an ailing economy that would be lucky to grow 1% this year, and with unemployment at a record 27.7%.

EFF leader Julius Malema, for one, says the conference was "useless" as there was no firm ANC resolution on "resolving the recession and taking us out of junk status".

Ramaphosa says critics are confused. "They want to see the silver bullet now, but there’s a process to develop policy. This was just wetting the soil, talking as a farmer. By December, you’ll see rock-solid practical solutions and it’s only then that the ANC can be judged in terms of policy," he says.

Maybe. But the tricky part is that December’s leadership conference will determine who’s in charge — and policy will be steered by the winner of that tussle.

If Ramaphosa wins, analysts believe it’ll be a more centrist economic policy; if Dlamini-Zuma wins, she’ll carry the baggage of Zuma’s nationalist-focused, patronage politics.

If last week’s conference is anything to go by, Dlamini-Zuma is weaker than ever. Entering the venue on the first day, she clutched onto ANC stalwart Winnie Madikizela-Mandela, and there were no attempts by delegates to take pictures with her as she stoically made her way to the stage to take her seat at Zuma’s side. Her contribution on policy issues was also limited. In one economic transformation commission, she stood up to extol the virtues of Zuma’s nine-point economic plan, but was mum on the "radical economic transformation" his backers were fighting for.

Sources at the meeting said: "She was flat, simply talking policy that is already there."

Her backers seem equally haphazard, including the ANC Women’s League, which brought a delegation double the size it was allotted by Luthuli House. Women’s League leader, the bumbling Bathabile Dlamini, retarded gender equality by a few decades by arguing that men were needed in its delegation as women sometimes became "emotional during debates".

For Zuma, a man who values loyalty before all else, there are now disturbing signs his own backers may be deserting him.

During a plenary session at the conference, Mpumalanga chairman David Mabuza — seen as part of the Premier League — ended up siding with the anti-Zuma faction. His first intervention was in the fight over Mantashe’s report. While delegates from his province sought to block it, Mabuza walked up to the chair, Baleka Mbete, and withdrew their opposition to it.

Later, during the debate on white monopoly capital, he was the tie-breaker, backing the view that the race tag be excluded.

What took place on the sidelines of the conference was also significant. Zweli Mkhize, ANC treasurer-general and a candidate for the deputy presidency on Ramaphosa’s ticket, actively capitalised on SA’s economic challenges. Mkhize met CEOs from the financial and motoring sectors to discuss ways to speed up transformation in their sectors — a savvy move from a man who, though anti-Zuma, may emerge as a compromise candidate.

There are now a few critical events in the next five months that hold the key to who will become SA’s next president.

First, provincial conferences in the Eastern Cape and Free State will act as a barometer of each faction’s strength.

Second, a court case in KwaZulu Natal in August could set aside the election of Zuma ally Zikalala as the province’s chairman.

Third is parliament’s no-confidence vote in Zuma. Mbete, as speaker, must decide whether to hold a secret ballot, which could result in some ANC MPs eschewing party discipline to vote with their conscience. It’s a tough call for a woman who harbours her own presidential ambitions as her decision could expose further cracks in the ANC.

For now, all eyes are on Ramaphosa, who deftly sidestepped questions about the leadership race in his interview with the Financial Mail.

His supporters, particularly those in Cosatu and the SA Communist Party (SACP), realise how dangerous the next five months will be. They are keenly aware that should Zuma realise he is on the back foot, the December conference could descend into chaos and even be postponed.

This is partly why SACP members (who want Zuma to resign) are debating whether the party should independently contest the 2019 election.

Last week Jeremy Cronin, the SACP’s outgoing deputy general secretary, said: "If the ANC thinks it’s going to get more than 50% on the current trajectory, locked in so visibly and manifestly into a Saxonwold family, then it’s dreaming."

Either way, Ramaphosa’s slate has much work to do. Mantashe will be a key ally, given that it is lore that you cannot win an ANC conference without the backing of the secretary-general.

The war for the soul of the ANC is now being fought. Ramaphosa has indicated he’s prepared to get into the cage with Zuma and take off the gloves, which can only be good for the country.