Sunday Times E-Edition

WIESE Ramaphosa exit would be sad

Business calls for cool heads as president weighs his options

By DINEO FAKU

● Retail billionaire Christo Wiese has urged the government to stick to its economic reform programme as uncertainty intensified on Friday about the future of embattled President Cyril Ramaphosa.

“Everyone is holding their breath to see what the outcome will be. Personally, I would be very sorry to see Ramaphosa go, but politics is a funny game,” he told Business Times.

Should Ramaphosa step down, Wiese said he hoped that whoever was appointed successor would continue to implement his economic reform programme.

“I’m hoping there are enough people supportive of his policies that they will stay on the course he has set,” Wiese said.

“One is always concerned because we score so many own goals. The country has so much to offer; we are just making so many mistakes.”

On Wednesday, an advisory panel established by parliament recommended a full investigation over Ramaphosa’s alleged failure to properly report a burglary at his game farm in 2020 — during which he says $580,000 hidden in a sofa was stolen — and potential violations of the constitution.

The section 89 panel, chaired by former chief justice Sandile Ngcobo, concluded that the president may have committed serious misconduct by exposing himself to a situation involving a conflict between his official responsibilities and his private business.

Since the panel’s report became public, there have been growing calls for Ramaphosa to resign. On Tuesday, MPs will vote on whether to adopt the report.

A meeting of the ANC’s national executive committee on Friday, where Ramaphosa’s future was due to have been discussed, ended prematurely when it referred the matter to the party’s top six leaders and the national working committee for deliberation first.

The political uncertainty pummelled the rand on Thursday and threw markets into turmoil.

By the evening the currency had weakened to R17.58/$, R18.47/€, and R21.54/£. On Friday, the currency pared some of the losses, strengthening to R17.26/$ before retreating to R17.48/$ early in the evening. Government bonds were also hammered with yields, which move inversely to the securities’ prices, rising sharply.

As the country remained on tenterhooks, Brait announced on Friday that it had decided against proceeding with an IPO of Premier Group, the food manufacturing company, on the JSE, because of the prevailing volatility.

“Premier received a significant amount of investor interest and support for the business. However, the South African capital markets (in particular over the last 48 hours) have not been conducive to supporting a successful IPO,” Brait said in a Sens statement.

Brait has said Wiese’s Titan group and Rand Merchant Bank — the underwriters of the proposed listing — would acquire 50% of Premier for R3.5bn if the offering didn’t proceed, while it would hold the remainder.

Wiese said the sooner there was political stability, the better it was for the markets and the country. “You can imagine it’s not an ideal time to do a listing and we just went with Plan B.”

Other business leaders and commentators are also concerned about the “unintended consequences” of the findings of the panel that probed the Phala Phala scandal.

Colin Coleman, former CEO of Goldman Sachs Sub-Saharan Africa, said his primary concern if Ramaphosa were to resign was maintaining stability amid a host of other destabilising factors, including the release of Chris Hani’s killer Janusz Walus, the potential return of former president Jacob Zuma to jail, and the ANC’s elective conference that starts on December 16.

Coleman said cool heads were needed to manage the situation and prevent the country from imploding.

“Whatever transitional arrangements are made, we should optimise the stability of the country. To the extent that the president resigns, I am not concerned about policy changes but regression in governance. We should maintain and deepen the focus on anti-corruption, and inclusive growth policies in the South African economy,” he said.

While this was not the worst scandal the country had faced, the situation was still a big concern, he added.

“My worry is there could be a change in

direction of governance in this country. Is the scale of this crisis worse than other crises I have seen in my lifetime? No. But certainly the danger signs are flashing bright red for the country.”

Coleman said many countries, including the UK and US, also faced crises from time to time.

“The specific of our crisis is that we have a tinderbox of issues like high unemployment, economic exclusion for the majority, on top of which is now our political crisis, and that combination … is very dangerous, so cool heads are needed to stand up and support a smooth transition and stability.”

Martin Kingston, chairman of Rothschild & Co in Africa, said the bigger question was the uncertainty over whether the president would resign or not.

“The worst that can happen at the moment is the situation in which we find ourselves, which is one of considerable uncertainty.

“Uncertainty creates volatility and it undermines confidence by the electorate at large, and domestic and international investors, all of whom want clarity and predictability in their lives so they can take personal and institutional decisions.”

Kingston said the country needed to ensure as stable an environment as possible in the midst of considerable uncertainty “where the president has a critical manifestation of economic reform or structural reform which is central to addressing many of the challenges we have as a country”.

Business Unity South Africa CEO Cas Coovadia said members feared that the economic reforms initiated under Ramaphosa’s watch could be derailed.

“We had been critical that the reforms were not happening quickly enough, but of late there had been some movement in things like embedded energy, and he made some progress in dealing with corruption and state capture,” Coovadia said.

“We are concerned there may be a shift from that, and given the dynamics of the ANC at the moment, including different factions in the party, we are concerned that that could create more political instability.

“It could derail further implementation of critical issues that need to be implemented and it could make it difficult for business to work,” Coovadia said, adding that political structures should be making decisions that are in the national interest.

Raymond Parsons, a professor at the North-West University Business School, said regardless of the political options on the table now, South Africa’s economy would inevitably end 2022 on a “highly elevated level of economic and policy uncertainty”.

He said that while the process that had unfolded so far was to be applauded as constitutional democracy at work, the way it is politically managed would ultimately determine the degree of collateral damage to investor and business confidence.

“Political stability is essential. Business and investors are therefore already deeply worried about its unintended consequences for investor confidence and consequent jobrich growth,” Parsons said.

“Prolonged uncertainty might shave another percentage point off the Reserve Bank’s already low GDP growth forecast of 1.1% in 2023, and growth may indeed even dip below 1% next year in an overall worstcase scenario,” he added.

Donald MacKay, CEO of XA Global Trade, said while it was too early to determine the impact of a possible Ramaphosa exit, a less likable successor could be bad for trade in the long run.

“I think trade will take a long time to change patterns, but in the long term if Ramaphosa leaves and is replaced by someone who our trading partners do not like as much as him, then absolutely we could find problems with our partners in the US and EU, but that is very difficult to predict at the moment,” MacKay said.

Should Ramaphosa resign he will become the third president to step down before the end of their tenure, following Jacob Zuma and Thabo Mbeki. — Additional reporting by Caiphus Kgosana

Business Times

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2022-12-04T08:00:00.0000000Z

2022-12-04T08:00:00.0000000Z

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