Neo Ralefeta

Neo Ralefeta

Treasury Structuring

How did we get here? Taking a look back at Nasrec 2017

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Source: Business Day publication - 9 January 2019

Unity was a big theme after the ANC’s General Elective conference which was held at Nasrec in 2017.

 

For the first time in history, the ‘Top 6’ was elected from two different slates – one being the Cyril Ramaphosa slate and the other being the Nkosazana Dlamini Zuma slate. At the end, we ended up with what was a 50/50 power split.

 

Slates are important in that, in general, they represent individuals who share a common view on policies and how South Africa should be governed. That is the first red flag. One would think that the party (the ANC) would all be on the same page regarding policy and a way forward out of the struggling economy, lack of service delivery and corruption.

 

Needless to say that although the notion of unity was at the forefront, it was always expected that there was going to be a level of friction between the individuals that had come from different camps. Cyril Ramaphosa had his work cut out for him from day one.

 

It wasn’t too long after the conference when Ace told his fellow comrades that they should be patient, they will have ‘their ANC’ back in 5 years. That set the scene for what was to come. More importantly, it created a confusing political narrative where the president came out to say something and the SG held his own press conferences to deliver completely differing messages.

 

On one hand the SARB was to be left independent, on the other it had to be nationalized and embark on quantity [quantitative] easing – essentially suggesting that the SARB should print money to support government programs. We know the story around a lot of money chasing few goods, and the effect that could have on inflation, interest rates and the currency.

 

It has been a mess, an inter-party cold war and the citizens have been the biggest losers.

 

Last week it all came to a head when we saw Ace being suspended. The ruling here was that he should ‘step-aside’ and see his criminal case through before he could continue with ANC duties. He remained defiant and didn’t take this lying down. He launched a counter suspension, where he attempted to suspend ANC and the country’s president Cyril.

 

Ace even dialed into the weekend’s ANC National Executive Committee Zoom meeting. Would have been interesting to see what would have happened had this meeting been held in person. His removal from the meeting this past weekend came down to a less dramatic click of a button.

 

The ZAR strengthened on the back of Ace’s suspension which reminds us that political risk is a real thing when it comes to market movements. What is perceived as good news feeds directly into the market, and the converse is also true.

 

The next ANC National conference is due to be held next year, where we’ll be back to slates and politicking, all in the quest of gaining control of the ANC and inevitably, as things currently stand, the country.

 

South Africa’s political situation remains fluid, and the yield curve remains suspended, whilst waiting on the political scene to lead it in any direction.