South Africa’s Fractious ANC Meets on Reeling State Firms

Amogelang Mbatha and Paul Vecchiatto

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The South African ruling party’s top decision makers met to discuss how to deal with ailing state-owned companies whose deteriorating finances have emboldened critics of President Cyril Ramaphosa.

The executive committee of the African National Congress gathered against the backdrop of renewed power cuts, flagging economic growth, calls for changes to the cabinet and public spats between senior ANC leaders on the implementation of policy resolutions. Cash-strapped entities like South African Airways that are draining state finances will be the focus of the discussions that began Friday.

The talks come after a week in which Ramaphosa, 67, drew renewed criticism for the slow pace of economic reforms, including from the country’s main business lobby group and Finance Minister Tito Mboweni. That preceded the president’s announcement he’ll skip next week’s World Economic Forum in Davos to focus on “pressing domestic priorities.”

South Africa Running Out of Time on Reforms, Business Lobby Says

Known for his pro-consensus leadership style, the gathering offers Ramaphosa an opportunity to cement his credibility by being more assertive about accelerating reforms and protecting state finances, said Susan Booysen, director of research at the Johannesburg-based Mapungubwe Institute for Strategic Reflection.

“Ramaphosa has to come out as the leader of the ANC and stand up and say: ‘I am your elected leader, this is what you’ve got,’” she said. “He needs to show decisive leadership because this is not the time to debate, it is a time that demands decisive action.”

Renewed Blackouts

Ramaphosa has faced increasing calls from within the ANC and its ally the Congress of South African Trade Unions to remove Pravin Gordhan, 70, from his post after the debt-ridden state company that generates about 95% of South Africa’s electricity, resumed rolling blackouts on Jan. 4. That was despite Ramaphosa’s assurance last month that outages wouldn’t resume until mid-January.

The renewed power cuts prompted Deputy President David Mabuza to say on Jan. 9 that Ramaphosa had been misled -- an indirect criticism of Gordhan, who is in charge of state enterprises and the Eskom Holdings SOC Ltd. board. The next day, Jabu Mabuza resigned as Eskom chairman.

The criticism of Gordhan, who is seen as an ally of Ramaphosa, signal a realignment within the ANC that could erode the president’s tenuous control of the party, according to Ivor Sarakinsky, a professor at the University of the Witwatersrand’s School of Governance in Johannesburg.

“There’s a realignment within the ANC, with Mabuza starting to look beyond Cyril Ramaphosa as his ally,” he said by phone. “Ramaphosa is going to have to back Pravin Gordhan to the hilt, because he needs Pravin Gordhan to hold the line in terms of cleaning up state-owned entities. Without Gordhan there, it’s going to be a feeding frenzy.”

The ANC’s internal factional battles over policy implementation came to the fore this week when the party cautioned Mboweni for his comments on Twitter bemoaning a party policy resolution in 2017 to nationalize the South African central bank.

“It is our view that Comrade Tito should act with care and be cautious at all times on matters of policy given his position as the Minister of Finance, including subjecting himself to the overall Communications Protocols of the African National Congress,” party national spokesman Pule Mabe said in a statement.

To contact the reporters on this story: Amogelang Mbatha in Johannesburg at ambatha@bloomberg.net;Paul Vecchiatto in Cape Town at pvecchiatto@bloomberg.net

To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Paul Richardson, Gordon Bell

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