69 / 84
67
November 2017
September 2017 on the competitive nature
of 137 countries in 2017/2018, needs a
closer look. As part of the perfect storm
mentioned earlier, South Africa dropped 14
places among 137 countries from 47th most
competitive economy to the 61st most com-
petitive nation.
These 14 places that we have lost is the
most significant drop since the start of
this annual survey in 2004. What caused
this drop so suddenly in 2017?
Looking at the different pillar measures, it
becomes clear that we have lost our com-
petitiveness because of financial institu-
tions and the integrity of our corporate
governance. It used to be among the best in
the world, but dropped from 11/138 to
44/137 in 2017/2018.
Another reason for the drop in competi-
tiveness was that of institutions of state.
Previously we scored 40/138 and now it
dropped to 67/137. Both numbers show a
global decline in confidence in financial ar-
rangement and governance (KPMG and the
Guptas may be a case in point) as well as
a declining confidence in state institutions
due to issues such as institutionalised cor-
ruption and state capture allegations.
In addition, the WEF Global Competitive
Report publishes a list of issues making it
difficult to do business in a country. For
years the normal culprits in South Africa
were things such as restrictive labour rela-
tions, inefficient government bureaucracy,
inadequate infrastructure, policy instability
and inadequately educated workforce, top-
ping the list.
The 2017/2018 list brings new issues
to the fore and the top five now are:
Corruption, crime and theft, government
instability/coups, tax rates and insufficient
government bureaucracy.
It is in the context illustrated above that
the ANC is preparing for a leadership elec-
tion in December 2017. The intensity of the
leadership contest, as well as the uncertain-
ty about President Jacob Zuma’s exit strat-
egy, causes huge political uncertainty.
Figure 1
is an outline of the two roles
of the ANC in politics. Firstly, it is a politi-
cal party (Green) selecting leaders to
govern and secondly it constitutes a govern-
ment (Blue).
From this figure it is clear that the ANC has
not succeeded in closing the gap between
electing its leadership for the political party
(December 2017) and forming a govern-
ment after an election (May 2019).
This lack of synchronisation between party
leadership and governing leadership (presi-
dent and cabinet) has created the notion of
‘two centres of power’ within the ANC. It re-
fers to one leadership team in Luthuli House
and a different team sitting in the Union
Buildings. This scenario caused the ‘recall’
of President Thabo Mbeki in 2008, a scenar-
io that may play itself out again in 2018 with
regards to President Zuma.
At its 54th National Conference, arranged
for 16 to 21 December 2017, the ANC will
have to do three important things. Firstly, it
will have to amend its constitution, then it
will have to amend and approve its policy
framework and lastly elect the leadership
for the next five years.
President Zuma indicated that he is not re-
electable as president of the ANC and his
second term as State President will also
come to an end in May 2019.
Figure 2
shows
the different possible candidates for the
ANC election in December 2017.
Uncertainty about who will succeed Presi-
dent Zuma has added to the perfect poli-
tical and economic storm in South Africa
– especially due to the corruption charges
and state capture allegations linked to the
Zuma presidency.
At this stage two candidates are looking
like frontrunners, i.e. the Deputy President,
Mr Cyril Ramaphosa, and the ex-wife of
President Zuma, Dr Nkosazana Dlamini-
Zuma.
ANC tradition would favour the sitting dep-
uty president to take over from President
Zuma in December 2017, but the deep run-
ning factions in the ANC makes this predic-
tion extremely difficult. This uncertainty
adds to the view that South African politics
is currently in a holding pattern due to un-
certainty and this situation will continue at
least until late December 2017 and may only
be resolved in 2018.
Figure 2: Different possible candidates for the ANC election in December 2017.