Political Risk Analysis - Power Handover Likely, But Little Structural Change - MAR 2018

BMI View: While our core view remains that President Jacob Zuma will depart office before the end of his term in 2019, and ANC party president Cyril Ramaphosa will take over as president of the country, we see a significant risk of a rocky or prolonged transition proce ss. Even after Ramaphosa has taken office, the need to balance the priorities of two increasingly divergent factions of the ANC will undercut scope for significant structural reform in South Africa.

Divisions within South Africa's ruling African National Congress (ANC) will continue to pose headwinds to policymaking in the months ahead, following a closely fought victory by Cyril Ramaphosa at the party's national elective conference. Indeed, while business-friendly Ramaphosa won the role of party president, three of the six top leadership slots went to legislators from the rival, pro-Zuma wing of the party. Similarly, the national executive council - the ANC's highest decisionmaking body, was split between pro and anti-Zuma party members.

Ultimately, we continue to believe that President Jacob Zuma is more likely than not to leave before the end of his term, limiting the long-term risk of two centres of power in the country. However, given the strong showing by the pro-Zuma wing of the party at the national elective conference, we believe Zuma's exit will come on his own terms less. Moreover, significant political compromises and trade-offs are likely to be necessary on the part of Ramaphosa to maintain the appearance of party cohesion.

Ramaphosa Victory But Strong Showing From Pro-Zuma Wing
ANC Top Six Votes, By Delegate Count
Note: Red = candidates more aligned with anti-Zuma/reformist camp. Blue = candidates more aligned with pro-Zuma/traditionalist camp. Source: Local news sources, BMI

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