Why Nkosazana Dlamini-Zuma won the bigger battle

Although Cyril Ramaphosa won the ANC leadership election by a whisker, breaking his 20 year-long wait for being the party’s number one, defeated rival Nkosazana Dlamini-Zuma has won an even bigger prize.

Days after Ramaphosa shed tears for his election victory at Nasrec in Johannesburg, it’s becoming clear that the fate of SA’s economic policies is in the hands of fervent Dlamini-Zuma backers.

Wednesday marked the end of the ANC elective conference, but also the start of the party’s radical public policy shift that mirrors that of the Economic Freedom Fighters.

Dlamini-Zuma lost to Ramaphosa by 179 votes but she won the policy battle, given the ANC’s drastic adoption of expropriation of land without compensation, nationalisation of the Reserve Bank and free-higher education from 2018. These populist policies were Dlamini-Zuma’s rallying calls during her presidential campaign trail, which began after the end of her five-year stint as the African Union Commission chairwoman.

She managed to push all three policies that Ramaphosa is now faced with implementing. Arguably, it will be Ramaphosa’s toughest act as he attempts to balance market expectations that he will propose pro-business and investor policies against the party’s increasingly populist and leftist strains.

So far, Ramaphosa has followed the script, throwing his weight behind the radical proposals. But one line from Ramaphosa’s maiden speech as ANC president might put policy observers at ease: “expropriation of land will be implemented with due care”. Loosely translated, land expropriation isn’t happening, or if it does happen it will be in sync with the Constitution.

But there’s a problem. The newly-appointed 80-member ANC NEC – the highest decision-making body of the party – includes Dlamini-Zuma and her several allies. They include Social Development Minister Bathabile Dlamini, Small Business Development Minister Lindiwe Zulu, Police Minister Fikile Mbalula, Water and Sanitation Minister Nomvula Mokonyane, ANC Youth League President Collen Maine and others.

If Dlamini-Zuma swings the balance of power her way through the NEC members, she might have the clout to push through her policies. After all, President Jacob Zuma has shown us that having your allies in the NEC can help survive many scandals.

Dlamini-Zuma, who has an extensive pedigree in government as a former Minister of Health, Foreign affairs as well as Home Affairs, is part of the radical economic transformation (RET) and white monopoly capital crowd. This crowd believes that SA’s ownership of the economy is still in white hands and lawmakers need to go for broke in reducing inequality and unemployment. What the RET crowd conveniently fails to mention is that these challenges have flourished under the ANC’s watch for 23 years.

Policy proposals for land expropriation without compensation, nationalisation of the Reserve Bank and free higher education were rushed. No cost analysis or a solid funding plan was conducted for all policies. The burden to the state might be enormous: buying out existing Reserve Bank shareholders, finding R40 billion to fund free higher education and buying about R140 billion of debt that is bonded to agricultural land. This will be a death knell for the national fiscus.

The problem is that the state cannot raise the funds needed for its populist policies, even from cutting wasteful expenditure or efficient management of funds, without meaningful economic growth. Already, the National Treasury is scraping at the bottom of the barrel and needs another R50.8 billion to cover the projected revenue shortfall to fulfill its constitutional mandate of service delivery.

The ANC calls its policy plans a move towards becoming a developmental state just like Japan and China. This approach worked in these countries because of a solid relationship between the private sector and government departments, sound economic policies, strict policy implementation, and a zero malfeasance tolerance at state-owned enterprises.

SA is far from becoming a developmental state.

Brought to you by Moneyweb

For more news your way, follow The Citizen on Facebook and Twitter.