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      The coming crisis of Zuma's ANC: the party state confronts fiscal crisis



            Rising state expenditure threatens to outstrip the South African government's ability to pay. This danger is merely a symptom of and challenge to the predatory characteristics of the ‘party-state’ erected by the ruling African National Congress (ANC), notably as they are exhibited under the presidency of Jacob Zuma. The ANC government is increasingly looking to an oil and gas bonanza to avoid a ‘fiscal cliff’, while Zuma himself is driving a nuclear power future which threatens to bankrupt the economy. The latter strategy conforms to the party's greater disposition to corruption and patronage. Key parastatals have become headed by Zuma cronies; family and friends have been awarded government favour; and Zuma's personal interests intrude upon the governance of parastatals, the South African Revenue Service and the functioning of constitutionally protected agencies such as the office of the Public Protector. The Zuma government's repudiation of accountability highlights an official drift to secrecy. However, the increasing limitations of ANC economic policy combine with growing discontent in society to place the party's political hegemony at risk – but Zuma's presidency has compromised the ANC's capacity for internal reform.

            Translated abstract

            [La crise à venir de l'ANC de Zuma : l’État-parti fait face à une crise fiscale.] Les dépenses croissantes du gouvernement menacent de dépasser la capacité du gouvernement sud-africain à payer. Ce danger est simplement un symptôme et un défi liés aux caractéristiques prédatrices de « l’État-parti » érigé par l'African National Congress (ANC) au pouvoir, notamment comme elles sont montrées sous la présidence de Jacob Zuma. Le gouvernement ANC cherche de plus en plus un filon pétrolier ou gazier afin d’éviter un déséquilibre fiscal, tandis que Zuma lui-même se lance dans le développement de l’énergie nucléaire, ce qui menace de mener l’économie à la faillite. Cette stratégie est conforme à la disposition du parti à favoriser la corruption et le patronage. Les organismes parapublics clés sont dirigés par les amis de Zuma ; la famille et les amis se sont vus octroyer les faveurs du gouvernement ; et les intérêts personnels de Zuma s'immiscent dans la gouvernance des organismes parapublics, le service des impôts sud-africain et le fonctionnement d'agences protégées par la constitution telles que le bureau du protecteur du citoyen. Le rejet par le gouvernement de Zuma de la responsabilité montre une dérive officielle vers le secret. Cependant, les restrictions accrues de la politique économique de l'ANC s'associent avec le mécontentement croissant dans la société et placent l'hégémonie politique du parti sur la sellette – alors que la présidence de Zuma a compromis la capacité de l'ANC à réformer en interne.

            Main article text

            Philip Haslam, co-author of a book on Zimbabwe's hyperinflation, has warned that while the amount of money-printing in South Africa is low at the moment, the country is set upon a dangerous path of increasing its debts and running up high trade deficits:

            Total South African government debt excluding social security obligations is R1.55 trillion, equivalent to more than R100,000 owed per household. This excludes about R2.5 trillion in corporate and personal debts, which are likely to grow with the major public works spending being planned in the next few years. SA is on a path of debt grown that cannot be sustained for much longer. We have not yet had a debt crisis that triggers money-printing on a large scale, but the lessons that Zimbabwe provides cannot be ignored. (Haslam 2014)

            Haslam's fears provide an important focus for analysis of a looming financial crisis confronting the ANC government. However, his implied suggestion that the crisis would be resolved by the government cutting costs and imposing financial restraint fails to grapple with the contradictory dilemmas imposed upon the ‘party-state’ whereby, since 1994, the ANC has steadily extended party control over all major organs of government and parastatals. Supposedly pursued to promote national development objectives, the party-state has in practice become the vehicle of private interest for party elites, presently constructed around loyalty to President Jacob Zuma (Southall 2013).

            The neoliberal development model that was pursued by the democratic government from 1996 constructed an alliance of ‘old’ economic and ‘new’ political elites that was enabled to prosper upon the back of a global commodity boom, facilitating an extended period of reasonably rapid economic growth. This enabled the post-apartheid ANC in government to secure its position not only by massively increasing ‘social delivery’ to its mass constituency, but by constructing a formidable machinery of patronage based upon its ability to allocate state resources. However, with the collapse of the commodity boom since 2008, the ANC's development model has come under increasing strain: growth has collapsed and with it state revenues. Under President Jacob Zuma the ANC is looking to resolve this crisis by deepening exploitation of the country's mineral and energy reserves, combining this with a commitment to foreign-backed nuclear power. However, these strategies are illusory, more likely to deepen the fiscal crisis and burden future generations with massive government debts than to return the economy to growth. As a result, an ANC, which under Jacob Zuma has increasingly assumed predatory characteristics, faces being starved of resources, and may resort to increasingly desperate measures to maintain itself in power.

            South Africa: fiscal crisis and economic decline

            On 22 October 2014, Zuma's new Finance Minister, Nhlanhla Nene, introduced his first mid-term budget statement, which urged cuts in government spending and increases in taxation. This was versed not in terms of ‘austerity’, but as a more politically acceptable strategy of ‘fiscal consolidation’. Since the global downturn in 2008, the government had been confronting the twin challenges of rising indebtedness and declining tax revenues. In order to finance the government's ambitious plans for infrastructure development and to protect social delivery, there would be need for a reduction in government spending, the capping of pay increases for public servants, the freezing of vacant posts, the reduction of funding for state-owned entities and even the sale of ‘non-strategic assets’ (SAnews 2014 ).

            The media were full of praise for Nene's statement, although they noted that it was extremely light on specifics, and registered concern that this might be due to his lack of political clout in government (he is the first post-1994 Finance Minister not to be a member of the ANC's National Executive Committee). Previously, the respected Financial Mail (2014) had issued a similar warning. Citing a recent paper by academic economists (Rossouw et al. 2014), it reported upon an apparently inexorable rise in the number and cost of government employees. Those in employment in central and provincial government had risen by 27% between 2005 and 2012, but their average per capita remuneration had doubled in that period. Total state employment had gone up by 13%, but the remuneration bill had increased by 76%. Meanwhile, whereas social grants had increased from 12.6% to 14.2% of total government revenue between 2008 and 2012, civil service remuneration had increased from 31.7% to 42.2%. Together, grants and remuneration had gone up from 44.3% of revenue to 56.4%, leaving just 43.6% for everything else. If they continued increasing at present rates, they would absorb all government revenue by 2026.

            The Financial Mail observed that the dangers of this trajectory had long been recognised, yet wage settlements had routinely outpaced inflation for some years. Even if there were sharp increases in income and corporate tax, and a marginal increase in VAT, this would defer a ‘fiscal cliff’ for only two to three years, given severe limitations upon the country's tax base. The editorial ended on a gloomy note:

            The historian CW de Kiewiet once said that SA progressed through economic windfalls and political disasters. Might SA avoid its own fiscal cliff through some future windfall? Perhaps, but the Jacob Zuma presidency has been marked by policy choices and failures of implementation that will render economic windfalls ever more unlikely, even impossible. (Financial Mail 2014)

            The 1994 democratic settlement undoubtedly imposed profound limits upon the ANC's freedom of economic movement. It steered the ANC into acceptance of apartheid-era debt. It provided for an extensive expatriation of capital in the name of free markets. It was founded upon confirmation of existing property rights (albeit providing the state with a degree of wriggle-room for appropriation of private assets in the public interest). Furthermore, it facilitated the corporate sector striking a deal with the incoming ANC elite, offering them employment, places on boards and investment opportunities (later to be enshrined as Black Economic Empowerment, BEE). In turn, the government responded with abandonment of its 1994 election manifesto, replacing the mildly collectivist Redistribution and Development Programme with the neoliberal Growth, Employment and Redistribution (GEAR) Programme in 1996. This argued the necessity of economic liberalisation, relaxation of financial controls and privatisation of state-run industries if a hitherto heavily protected economy was be rendered globally competitive. This confirmed the continuing centrality of the minerals–energy complex (MEC); enjoyed the support of big business; confirmed growth as fundamentally premised upon the extraction of minerals; allowed export of profits in order to ensure ‘investor confidence’; and geared the privatisation and restructuring of state assets to furthering BEE. GEAR also located the National Treasury at the heart of government, with a restructured South African Revenue Service (SARS) aligned in strong partnership to ensure increased flows of revenue to a government which had expensive popular needs to attend to (Fine 2012).

            GEAR was to be challenged and changed, for ‘neoliberalism’ elicited massive opposition amongst the ANC's own support base, notably within the South African Communist Party (SACP) and the Congress of South African Trade Unions (COSATU), both of which were in formal alliance with the ruling party. Consequently, it was be supplemented or succeeded (the government itself never seemed quite sure which) by later policy shifts identified by a bewildering array of acronyms. In particular, the government was to reorient its strategy towards privatisation. While it maintained its commitment to the privatisation of many aspects of ‘service delivery’, notably at local level, it drew back from the transfer of major parastatals into private hands. Black capital was insufficiently advanced to purchase them; there was reluctance to transfer them to foreign corporates (the most likely buyers); and above all, the government swiftly recognised that they granted it enormous capacity to allocate jobs, management positions, investment and procurement opportunities around the country. The parastatals therefore became central to what the ANC pronounced was a ‘developmental state’ whereby the state would play the leading role in partnering private capital in the pursuit of economic growth (Southall 2007; Pitcher 2012).

            ANC economic management provided a marked improvement over the last, disastrous decades of National Party (NP) rule, replacing negative with mildly positive growth for an extended period – until the global crisis from 2008 reduced the expansion of the economy to a crawl. Certainly, too, ANC rule provided for an impressive extension of social grants to many (the old, the disabled, and so on) in the bottom half of society, allowing for a significant alleviation of poverty. However, ‘neoliberal success’ was counterbalanced by ‘development failure’ (Segatti and Pons-Vignon 2013, 538).

            According to the Presidency, unemployment remains rampant, at between 25% and 36%, according to definitions utilised; a staggering 52% of the population fall below the official poverty line; per capita expenditure of R2676 of the poorest 10% of the population contrasts with R178,369 for the richest 10%. This translates into just over 50% of national income going to the top 10%, while the poorest 40% take just 5% (RSA 2013). According to Goldman Sachs (2013), fully 85% of the majority African population remain poor, with some 15 million people living on less than US$2 a day. Meanwhile, Credit Suisse has reported that South Africa has some 47,000 dollar millionaires, with the wealthiest 10% of the population owning more than two-thirds of the country's household assets (Business Day 2014b). Notwithstanding significant rates of black upward mobility, such patterns are heavily overlain by race. Furthermore, given a low savings rate, capital tends not so much to accumulate, as to ‘just move around’: because of a whole series of developments (including capital flight and resources boom and bust), capital in South Africa merely keeps level with economic growth (Chait 2014).

            The ANC would have us believe that these distorted patterns are overwhelmingly outcomes of the legacy of apartheid, yet there is ample evidence that they are also the product of ANC elites’ predatory behaviour and poor governance.

            There are numerous problems with uncritical citation of global indicators. Even so, the broad trend is clear. South Africa has recorded a steady decline in standards virtually across the board as measured by indices pertaining to the ease of doing business, corruption, adherence to environmental standards, democracy and so on. Most tellingly, although South Africa has recently improved its rating according to the UN's Human Development Indicators (0.629 in 2013 versus 0.604 in 2005), it has only fractionally improved on its overall performance from as far back as 1980 (0.621) (Van Onselen 2013).

            More evidence of decline is provided by the stark failures of the parastatals. Virtually all of them appear to be confronting crises of performance. Above all, Eskom, the state-owned electricity supplier, is struggling desperately to keep the nation's lights on. Decisions taken by the Mbeki government to cut back on investment in new power stations rebounded with a power crisis in 2008, which dramatically affected industrial production. Subsequent efforts to increase electricity generation capacity by building new power stations have been hampered by government reluctance to concede Eskom's demands for price rises, resulting in continuing lack of adequate investment (prospects for which have recently been worsened by Standard & Poor slashing the utility's long-term debt rating to ‘junk bond’ status) (Business Day 2015, March 19). Although new coal-fired power stations are being constructed, notably at Medupi in Limpopo, Kusile in Mpumalanga and Ingula in KwaZulu-Natal, potentially improving power supply significantly for a period, their completion has been seriously delayed by underperformance by key contractors and continuous labour disputes. Meanwhile, failures of maintenance at existing power stations have seriously interrupted electricity supply, with the result is that the country is faced with years of electricity shortages, with rolling blackouts scheduled for an indefinite period, with hugely negative consequences for minerals and industrial production. Faced by a major catastrophe, the Eskom board has become paralysed by political infighting, with four senior executives placed on suspension by the non-executive Chairman, Zola Tsotsi; the board seeking to eject him; and Tsotsi fighting back, claiming the personal backing of Zuma, but ultimately losing a vote of no confidence.1

            Tales of woe are replicated at other parastatals. Despite successive ‘turnaround’ strategies, South African Airways (SAA) continues to be run at a huge loss, needing to be perpetually bailed out by the treasury. The South African National Roads Agency (SANRAL) pressed ahead with expensive upgrades of motorways in Gauteng involving installation of an expensive ‘e-tolling’ system by an Austrian company, only to be confronted by angry road users, the majority of whom have refused to pay. Although SANRAL has strenuously denied it is nearing bankruptcy (City Press 2013), its financial crisis continues. In turn, the South African Post Office, unable to meet competition posed by private courier services, changing Internet technologies, and supermarkets’ moves into financial services, has similarly incurred a spiralling debt since 2012. Attempts to cut costs by using labour brokers to recruit temporary workers resulted in a major three-month strike which paralysed postal services in late 2014 (although all this did not prevent top managers recently awarding themselves a recent 26% pay rise) (Southafricatoday.net 2014 ; Dickinson 2015). So it goes on, from one parastatal to another, public industries becoming a heavy drain on the fiscus (albeit with occasional exceptions).2 Ironically, perhaps, the more the parastatals remain dependent upon serial bail-outs by the Treasury, the more the latter is likely to cave in to mounting calls in the media for privatisation, contradicting the ANC's preference for public-owned entities to be driving the developmental state (Kane-Berman 2014).

            The ANC's role in working with the private sector is little better. According to the much celebrated National Development Plan (NDP), the state, business and labour are meant to work harmoniously if developmental aspirations are to be realised (Buthelezi 2014). However, although the basics of the collaborative partnership between the state and large-scale capital remain in place, there can be no doubt that the relationship has deteriorated since the early days of democracy (Southall 2013, 213–217).

            The ANC accuses large-scale capital of having gone on an ‘investment strike’, referring to accumulating financial reserves held in corporate accounts, but corporate leaders evince a declining faith in the government's ability to manage the economy, and look increasingly to invest outside the country. Business moans about a rising regulatory burden imposed by such policies as BEE and equity employment; it despairs of limited electricity supply; it rails against government incapacities, inclusive of a marked failure to pay its bills on time (if at all). Above all, business laments the influence of trade unions, citing labour militancy, high strike levels and an ‘inflexible’ labour relations regime as impacting negatively upon ‘the investment climate’.

            The state counters that it has hugely improved the corporate governance regime, and that implementation of its competition laws has led to the disciplining of various corporate cartels. However, its failure to regulate rash levels of unsecured lending by African Bank (supposedly one of black business's historic successes), led to its collapse and bail-out by the Reserve Bank and the Treasury in mid 2014 (Coppola 2014).3

            Nor do the ANC's own finances inspire much confidence. Although state funding of political parties with representation in legislatures is transparent, the sources of party funding otherwise remain shrouded in secrecy. Yet it is known that the ANC is the recipient of donations from friendly foreign parties and governments; it receives regular favours from parastatals; it holds investments in companies which secure contracts from government; and it leans heavily on corporations to solicit donations (Jolobe 2010; Southall 2013, 277–292). Prior to its Polokwane national conference in December 2007, the ANC was sitting on assets amounting to more than R1.75 billion (Jolobe 2010; Southall 2013, 277–292). Recently, however, it has been reported that the ANC is broke – or at least, struggling to pay its bills. As a result, it is putting pressure upon civil servants it has deployed to public office to donate portions of their salaries to the ANC, and is looking to retrench staff from its headquarters. The solution it seems may be to transfer party costs to the taxpayer. According to one source, Gwede Mantashe, ANC secretary-general, is said to have suggested to ANC headquarters staff that the party might be able to find them alternative jobs in government (Mail & Guardian 2014d; Business Day 2014a).

            Avoiding the cliff?

            Prospect of a broke government and a broke ruling party remind of us of Moeletsi Mbeki's warning not so long ago that the ANC would be confronted by its own equivalent of the Arab Spring by around 2020. By then, China's minerals-intensive industrialisation phase would be completed, mineral prices would fall and the South African government would find itself having to cut back on social grants (Mbeki 2012). The prediction may be queried on various grounds, yet its basic thrust is undeniable: unless the government comes up with new ways to boost industrialisation, production and employment, it will face a financial crunch and have to face the political consequences. It is therefore little wonder that the Treasury is already looking to cut costs and increase revenue.

            One option would be to increase taxes upon the very rich. While the extent of revenue this would raise would be quite limited in itself, sympathetic commentators argue that belt-tightening at the top would encourage trade unions to be more amenable to limiting wage demands, engaging in social dialogue and improving South Africa's competitiveness and productivity (Lipton 2014). Certainly, such a strategy points in the right direction, in terms of both social justice and policy common sense – yet it also points to a long haul ahead. However, it is a strategy which would demand some sacrifice by elites, and to that extent its proponents may battle to be heard.

            Nene may propose that to avoid falling over the fiscal cliff, the government needs to cut back – yet simultaneously the ANC is worrying about the forthcoming 2016 local government elections. Evidence from the 2014 general election suggests that its control over key metropolitan councils, notably in Gauteng and the Eastern Cape, is at risk. So, at least in the short term, the response to Treasury calls for restraint is likely to be muted. In the long-term, however, the ANC is looking to resource bonanzas (de Kiewiet's ‘windfalls’) to dig itself out of trouble.

            Two strategies stand out. First, while waiting for an upturn in global commodity markets that would boost mining, the government is placing major emphasis upon exploration for oil and gas resources. This includes, notably, the grant of permission for investigation of fracking for gas in the Free State, with all the attendant dangers to the purity of already scarce short supplies of water and against considerable popular opposition. Similarly, it is pushing hard against community protest to proceed with environmentally controversial mining options along the Wild Coast, in former Transkei (Fig 2013; Clarke 2014). Beyond that, the government is deeply engaged in conversations with major international oil giants to tap offshore oil and gas reserves. According to one report, citing official optimism, the prospects are ‘staggering’. Supposedly, the ‘unlocking’ of resources tied up in the oceans has the potential to contribute R177 billion to GDP in 20 years from now, a massive increase upon current levels. These figures were cited when President Zuma launched Operation Phakisa (Sesotho for ‘hurry up’) in Durban in October 2014. Borrowed from Malaysia, this adopted an approach called ‘Big Fast Results’ involving getting all the relevant ‘stakeholders’ together in one place, and not letting them leave until they could agree on resolving problems that might be holding them back (Forde 2014).

            With such prospects in view, why go nuclear? ‘It's part of the energy mix,’ explains Jeff Radebe, Minister in the Presidency (Mail & Guardian 2014e). He was merely reiterating the determination of major actors, notably the Department of Energy (DoE) and Eskom, to pursue a nuclear future. The DoE promulgated a Nuclear Energy Policy in June 2008, and declared that it had reached a point of no return in its energy-building programme in early 2013 (Gottschalk 2014). However, the National Planning Commission, which drafted the NDP, warned the government against pursuing a nuclear strategy (Mail & Guardian 2013, 2014e). It was also reported that the then Finance Minister, Pravin Gordhan, insisted that adding to the existing Koeberg nuclear power station would be financially unaffordable (Mail & Guardian 2014e, 2014a). COSATU also expressed its alarm, joining not a few within the ANC itself who were voicing their concerns (COSATU 2014). Consequently, the DoE was persuaded to revisit the Integrated Energy Plan, which supposedly serves as the overarching plan for the country's energy future. However, paradoxically it simultaneously insisted that its nuclear plan was not up for review and was non-negotiable (Gilbert 2013). Gordhan was duly shipped out of Finance to preside over Local Government after the 2014 election, with the less politically powerful Nene put in his place.

            Zuma had meanwhile assumed personal responsibility for overseeing nuclear policy, and brought in one of his most loyal acolytes, Tina Joemat-Pettersson, to head the DoE. Then, in October 2014, the Russian nuclear company, Rosatom, and the South African government announced an intergovernmental agreement that purportedly ‘laid the foundation for … large-scale nuclear power plants procurement and development of South Africa based on the construction in South Africa of new nuclear power plants with Russian VVER reactors with total installed capacity of up to 9.6GW’ (up to eight reactor units) (Hunter and Faull 2014).

            The announcement took even the majority of ministers and the ANC NEC by surprise. Sources indicated that Zuma had negotiated the deal with his Russian counterpart, Vladimir Putin, at the BRICS summit in July 2014 and finalised it during a trip the former made to Moscow in September. Given the weight of allegations that Zuma had profited corruptly from the notorious 1998 arms deal, which any nuclear deal with Russia would dwarf, the Putin–Zuma meeting inevitably aroused further suspicions about the President's probity (City Press 2014; Rand Daily Mail 2015).

            Far more worrying were the limited details which emerged about the deal. Supposedly it was going to be ‘vendor financed’ (or as was reportedly explained by one in-the-know minister to the Treasury, ‘we don't need to pay for it’). In other words, Russia would loan South Africa R1 trillion to pay for the deal. As operating costs for nuclear energy were presented as low, this would be repaid from sale of the electricity to consumers. Once the loan was repaid, nuclear energy would become a virtual ‘cash cow’ for the government, the operator and any private investors. Yet by when would the loan be repaid? Opponents immediately pointed out that, apart from the potential environmental dangers of the nuclear option, the announced cost of R1 trillion was probably a serious underestimate (Green Audits 2015; Gottschalk 2015). International experience indicated that cost overruns for the building of nuclear power stations are generally between 50 and 200%, hugely increasing the price of electricity for consumers in the future. In all likelihood, this would put electricity out of reach of the poor (Paton 2014a). It would also massively increase the level of national debt and, as one editorial put it, ‘cripple South Africa’ (Mail & Guardian 2014e).

            In the event, the government had to backtrack somewhat on the Russian deal, as both French and Chinese competitors jumped into the fray, and officials had to claim that the announcement with Rosatom had been merely a statement about proceeding with negotiations. Yet few doubt that it is the Zuma government's firm intention to forge ahead with a Russian deal, despite fears that the short-term gain of vendor financing will entail long-term pain for future generations. For the ANC, however, a Russian nuclear deal might provide much needed sustenance. Further, the government appears convinced that ‘going nuclear’ will increase its influence and prestige internationally (Gilbert 2013).

            The party-state, private accumulation and political unaccountability

            In 1994, the incoming ANC government faced acute dilemmas. Its historic purpose demanded that it embark upon racial redistribution and redress, yet it needed to underpin this with growth. For many commentators, the abrupt transition from the RDP to GEAR was to prove the original sin of the ANC in power. However, those who made the decision had to balance satisfaction of popular needs against the necessity of retaining the collaboration of international and domestic capital. Arguably, therefore, the ANC government's original sin was not so much the choice of economic strategy that it made, but the manner in which it made that choice: not by internal debate within the Alliance, but by top-down imposition of GEAR upon a surprised party. Whatever the merits of the argument, it endorsed a tradition of unaccountable elite decision-making which had been one of the hallmarks of the apartheid regime. Just as the rise of the security state under PW Botha had been shrouded in secrecy, so the ANC was to increasingly resort to similar behaviour. Indeed, the drift to unaccountability was integral to the rise of the ANC's ‘party-state’.

            The foundations of an ‘ANC party-state’ were laid under the Mbeki presidency. The deployment of party loyalists to high posts in the public service, the placing of parastatals under effective ANC control, and the move to the private sector of ANC elites all took place in the cause of gaining control of the ‘commanding heights’ of the state and economy. Even so, Mbeki's authority was primarily founded upon a centralisation of power under the Presidency, with the party playing second fiddle. However, while this worked to coordinate government and to rein in wayward tendencies in the provinces, it simultaneously alienated hungry provincial party barons. It also earned Mbeki an unenviable reputation for being out of touch with ordinary people. This was to culminate in his ousting as ANC president by Zuma, who was presented by his supporters as a champion of the poor, at Polokwane in December 2007.

            As state president, Zuma has avoided the temptation, to which Mbeki had succumbed, of wanting to micro-manage ministries. In key areas, of little personal concern to him, he has appointed ministers, and allowed them to get on with their job. Crucially, however, he has retained strong personal control by appointing those loyal to him to ministries which pertain to his political and personal well-being. Notably, these have included the ministries in the security cluster, communications, and public sector management. Above all, however, he has ensured that his primary power base has remained the party rather than the state (although increasingly these have become intertwined) (Politics staff and de Wet 2014). In turn, the ‘party-state’ revolves around extensive networks of patronage and neo-patrimonialism.

            Under the NP, governments directed resources to Afrikaner enterprises, while the expansion of Afrikaner-dominated parastatals favoured rent-seeking by party supporters. The saving grace of this system, before it degenerated into an era of looting of the state by the white elites as democracy loomed, was that it was substantially ‘developmental’ in so far as it underpinned the partnership of state and capital that forged the MEC (Hyslop 2005; Fine and Rustomjee 1996). In contrast, the ANC's rule has become overwhelmingly predatory.

            The ANC's neo-patrimonial rule has deep roots. Historically, its development was infused with personalistic politics (Lodge 2014). Then, during its time exile, it became not only a dispenser of employment, welfare, education and scholarships to many who had fled South Africa, but was to become deeply entangled with criminal networks (Ellis 2013). Equally, however, it rests upon the imbalanced nature of the political economy which the ANC inherited: a strong private sector under white domination, largely beyond the new government's reach, but which was serviced by strong parastatals, responsible for around 15% of GDP, and which together made the state the country's single largest employer. Alongside its assuming power over the state machinery, the ANC now also gained control over the extensive resources which the parastatals wielded. In the context of a grossly skewed economy in which the ANC's black majority constituency bore the burden of systemic inequality and acute shortage of jobs, the ANC's ‘party-state’ was to develop into a huge employment agency.

            The political ‘deployment’ of people to posts has translated into an extensive network of ANC patronage, the rise of ‘big men’ (and not a few women) across the state at all levels (national, provincial and local) who allocate political goods to followers in return for their support. Further, with ‘political connectivity’ having become critical for individuals to access employment, opportunities and state resources, the boundaries between party and state have become comprehensively blurred. One consequence has been extensive penetration of party factionalism into state institutions, this regularly paralysing their efficient functioning. Another has been constant turnover of senior civil servants who are regularly replaced by ministers if they fail to toe the line (but who continue to collect their salaries).4 Another has been the burgeoning of cronyism, nepotism and corruption (Lodge 2014; Beresford 2015). All these tendencies developed under Mbeki, rising to a crescendo during his succession struggle with Zuma, when key state organs became the site of vicious intra-ANC factional battles. Even so, the Zuma presidency has taken them to new heights.

            First, the President himself has used his office to enrich himself and those around him. His family has acquired well over a hundred directorships of companies or close corporations; individual family members have acquired high positions in the civil service; his numerous relatives have proved wonderfully adept at acquiring state contracts; and his friends, the Gupta family from India, have acquired a level of backroom influence which has seemingly brought huge private and business rewards (Southall 2011; Southall 2013, 298–301). However, it has been the extravagant upgrading of Zuma's private residence at Nkandla, in KwaZulu-Natal, at a cost of R248 million, at state expense which has aroused public outrage, numerous media probes, and three separate enquiries (by the Public Protector, a ministerial task team on security and an ad hoc parliamentary committee). However, as yet, despite a strongly critical report by Thuli Madonsela, the Public Protector (or ombudsperson), there has been no satisfactory answer to the fundamental question of how to distinguish justifiable expense (relating to ensuring Zuma's security as president) from expenses which have benefited him personally and for which accordingly he should be held responsible. Nor indeed is any resolution in sight, for the ANC-dominated ministerial task team and ad hoc parliamentary committee have determinedly sought to clear the president of all blame, while Zuma himself has continued to deny any responsibility for the inflated costs. As a party, too, the ANC has risen as one to defend Zuma, directing a vicious campaign of vilification against Thuli Madonsela. At present, the Nkandla saga continues, its end uncertain. However, the ANC's determination to shield the president depicts a concern to neutralise anti-corruption initiatives and to protect those around him who benefit from the largesse of the party-state.5

            Second, Zuma has used his position to extend his direct influence over key public positions. Recently, for instance, major controversy has dogged the role of one Hlaudi Motsoeneng, who was appointed acting Chief Operating Officer (COO) of the South African Broadcasting Commission (SABC) in 2011. He was to pursue what one commentator was to term the ‘Zuma-ification’ of the public broadcaster (Davis 2014). However, his behaviour was to be referred to the Public Protector, who found that he had lied about his qualifications, abused his power to grant himself and other employees large pay rises, and purged senior staff at huge cost. As a result, she issued instructions that he be subjected to disciplinary proceedings and a new COO appointed (Public Protector 2014). In response, however, Motsoeneng was to be confirmed in his post by two other Zuma loyalists, Communications Minister Faith Muthumbi and SABC Board Chairman Zandile Tshabalala. Ultimately, their decision was taken to the High Court by the opposition Democratic Alliance, only for the court to rule that while it did not deem the Public Protector's recommendations to be binding on the state, any decisions not to implement them would have had to have been made on rational grounds (February 2014) This ambiguity has destined the particular matter to end up in the Constitutional Court, but meanwhile ‘Zuma-ification’ continues (Mail & Guardian 2014g).

            Controversy has similarly surrounded the President's treatment of Lynne Brown, who after her appointment as Minister of Public Enterprises after the 2014 election seemed determine to turn ailing parastatals around. She soon became embroiled in complicated battles with boards and senior executives at both Eskom and SAA, clashing with Zuma acolytes. At Eskom, she tangled with key individuals who had allegedly directed tenders to businesses owned by the Guptas. At SAA, she found herself in conflict with the board's chairperson, Dudu Myeni, a close Zuma associate.6 Ultimately, Zuma humiliated her by transferring authority over both Eskom and SAA, along with the post office, away from Public Enterprises to the office of the Deputy President, Cyril Ramaphosa, although ultimately Myeni was induced to resign (Paton 2014b).

            Meanwhile, paralysis is gripping SARS. Under the directorship of Pravin Gordhan as Tax Commissioner before he became Minister of Finance after the 2009 election, SARS was thoroughly modernised, became extraordinarily efficient in combating tax evasion, and earned itself a public reputation for probity. However, after Gordhan left for the Treasury, SARS was to become subject to severe internal wrangling. One of these conflicts involved a ‘rogue’ intelligence unit, set up illegally within the organisation, to monitor prominent figures in business and public life suspected of not paying their dues. This was to become entangled with suspected criminality (including the unit's alleged establishment of a brothel).7 However, what seems to have brought it down, leading to disciplinary and possible criminal action against its head, Johann van Loggerenberg, was when it apparently overreached itself by spying on Zuma and other members of his circle.

            Subsequently, Ivan Pillay, a Deputy Commissioner under whom the rogue unit fell, has also been subject to disciplinary actions. Pillay's fate was reportedly sealed by his insistence that the ANC pay customs duties on the importation of T-shirts on behalf of the ruling party just before the election. The importer, described as a Taiwanese-South African businessman, shares the same lawyer as Zuma, and is facing a R500 million tax probe (Mail & Guardian 2014b). Presently, although the new Tax Commissioner, Tom Moyane, has promised an organisational renewal, there are fears that he is the instrument which will refashion the revenue service in a manner favourable to the President and powerful politicians (Mail & Guardian 2014f; Qobo 2015). Following his appointment, a number of high-ranking officials have been suspended, others have resigned (Marrian 2014). Such concerns are rendered more acute by similar ructions occurring within the Hawks, where the suspension by Police Minister Nkosinathi Nhleko of its commander, Lieutenant General Anwa Dramat, was perhaps prompted by his launching criminal investigations of influential political figures.8

            A third major tendency under Zuma has been the drive for greater unaccountability. Again, this was already well entrenched before Zuma took office. As already noted, GEAR was imposed upon an astonished party in 1996 without internal consultation. Similarly, the 1998 arms deal, whereby the government signed up for the purchase of hugely expensive corvettes, submarines, fighter aircraft and helicopters from German, French, British, Swedish, Italian and South African consortia, was shrouded in secrecy. Subsequently, all efforts to uncover alleged massive corruption were to be consistently blocked by the Mbeki administration. Above all, these led to the taming of the previously robust parliamentary committee on public accounts. Ultimately, however, it was successful prosecution of one of the key players in the arms deal, Schabir Shaik, by the then independent National Prosecuting Authority (NPA) which led to Zuma's removal as Deputy President by Mbeki in September 2005, this after indications in court that he may have solicited arms-deal-derived bribes. Zuma was subsequently to overcome this setback via his campaign for the ANC presidency, leading to Mbeki's own final downfall in September 2008. However, by then Zuma, his lawyers and his political supporters had become adept in trumpeting his innocence and adopting a ‘Stalingrad’ policy of challenging each and every move by the NPA to prosecute him through the courts. Prior to the 2009 election, just before his ascension to the state presidency, dubious pressures were placed upon the then acting head of the NPA to have the case against him dropped (Southall 2013, 158–164).

            Zuma's concerted efforts to avoid personal accountability have translated into wider efforts to further limit political accountability. The attempted removal of nuclear policy from public scrutiny is at one with a much wider pattern of declining government transparency. The one major exception has been the establishment of the Farlam Commission to examine the events leading up to the Marikana tragedy, where 34 striking mineworkers were shot dead by police in August 2012. So appalling was the disaster that the government had little option but to render the process wholly open, although its enthusiasm for transparency will doubtless have been diminished by the demonstrable litany of lies and inconsistencies which have characterised appearances before the Commission of senior members of the police.

            Far more satisfying for the ANC has been the commission appointed in 2011 to investigate corruption allegations surrounding the arms deal. Zuma himself appointed this in order to pre-empt a likely court order that he establish such a body after activist Terry Crawford-Browne had doggedly pursued demands for full investigation of the deal right up to the Constitutional Court. Crawford-Browne's arguments were convincing, and the government feared that the Court might not only conclude in his favour, but impose the terms upon which such a Commission should be established. Accordingly, Zuma chose to appoint a commission upon terms which he himself would set. It was established under the chairpersonship of Judge William Seriti, whom it was widely thought he could trust.

            Seriti was appointed to sit with two other judges. By mid 2014, the Commission's work remained uncompleted. The two judges appointed to sit with Seriti, two advocates employed as evidence leaders, and other senior legal figures had all resigned along the way, the thrust of their complaints being what they regarded as Seriti's lack of judicial neutrality whose outcome would seemingly be to protect the ANC, particularly Zuma (Mail & Guardian 2014b). Their dissatisfaction was shared by key witnesses denied the opportunity to introduce important evidence. Unsurprisingly, by this time, the commission was widely regarded as preparing to issue a whitewash, and some called for it to be scrapped (Mail & Guardian 2014b).

            As Dale McKinley (2014) has demonstrated, the ANC has already marched far down the road to restoring the securocratic nature of the state. A host of laws have been passed which have sought to limit public access to state information and restrict public rights to congress and protest. Although the Promotion of Access to Information Act of 2000 notionally allows public access to many state records, many requests for information made under its provisions are ignored. Furthermore, successive attempts by the government to pass the Protection of State Information Bill since 2010 (the ‘secrecy bill’), although as yet unsuccessful, have indicated a determination to protect a huge swathe of information held by the state on grounds of ‘national security’, not least by criminalising unauthorised possession of classified information (which would hugely inhibit investigative journalism). Finally, the recent passage of the General Intelligence Laws Amendment Act has provided for the merging of previously separate intelligence structures, domestic and foreign, into a super State Security Agency which has an overarching mandate including ‘political intelligence’, which could result in the monitoring of journalists, trade unionist and political activists. This provided a backdrop to the post-2014 election placing of a diverse set of public media and communication agencies under a new Department of Communications which critics feared would lead to their pursuing a ‘good news’, Orwellian agenda (Phamodi 2014). As concluded by McKinley, post-1994 state-constructed notions of ‘security’ are increasingly clashing with basic rights and freedoms.

            Conclusion: fiscal limits to the party state

            The ANC party-state, the party machine which has fuelled a far-reaching system of political deployment and patronage, is facing an acute financial crisis. Post-apartheid growth was sustained by high international commodity prices and increased demand for South African exports in major destinations, such as China and the European Union. However, the commodity boom is now over, and demand for South African goods has fallen sharply, despite a one-third collapse in the value of the rand over the last couple of years. The Reserve Bank (South African Reserve Bank 2015) warns of a widening current account deficit, declining capital inflows, subdued growth and increasing employment. Even the impact of recently plummeting oil prices is offset by disruptions of electricity supply. The government is presiding over a stagnant economy, increasing costs and falling revenues. Meanwhile, public corporations, hobbled by cronyism and incapacity, are becoming an increasing burden upon the exchequer.

            Because the money for keeping the ANC gravy train on track is beginning to run out, the Treasury is mulling over various unpalatable options. One is to rein in the costs of the public sector, whose rapid expansion has served to soak up unemployment. Another is to vigorously attack corruption, calculated to deny the government revenue of between R25 and 30 billion a year. Another might be to streamline the parastatals, perhaps even inviting participation in running them from the private sector. Yet another is to raise taxes, despite the very high level of indebtedness amongst the mass of South African consumers. However, the political dilemma is that all such strategies, whatever their economic merits or demerits, is that they run up against the logic of the ANC's party-state. The approach of the fiscal cliff threatens the continued expansion of public sector employment; it threatens financial limits which will reduce the flow of resources to patronage networks; it threatens to alienate senior management in bloated parastatals; above all, financial cutbacks – implying strict caps on wage settlements and social benefit increases – threaten to widen the gulf between an ANC and its mass constituency of the poor.

            Unsurprisingly, the ANC government claims to be responding to the crisis with radical shifts in policy involving, inter alia, speeding up land reform, enhancing service delivery, introducing a minimum wage, increasing job creation and unlocking energy constraints. Furthermore, as explored in this article, it is placing major hopes upon its unlocking an oil, gas and minerals bonanza, alongside committing to foreign deals for construction of nuclear power capacity. Certainly, few governments would be prepared to leave energy and mineral potential untapped. However, any untrammelled rush to exploit such resources raises fears that major environmental concerns and opposition will be brushed aside and corners cut to facilitate rapid exploitation, with few guarantees that any bonanza will actually come about, far less that it will serve to address South Africa's developmental deficits. Yet even the risks of an oil and mining bonanza will be dwarfed by the dangers posed by the nuclear option which, environmental and sustainability issues aside, could literally bankrupt future generations whilst lining the pockets of this generation's politicians.9

            The Zuma presidency has exacerbated all the dilemmas which confront the ANC. In uniting behind him, the Alliance placed its weight behind a deeply flawed champion who had no ideological commitments except to his own survival and benefit, and to the wider advantage of his family and friends. Not only have patterns of patronage been further entrenched, but the independence, integrity and accountability of key state institutions have been systematically undermined as Zuma has fought continuing battles to save his own skin. Unsurprisingly, the Alliance has suffered body blows as a result. The SACP has become deeply embedded in the cronyism of the party-state and has lost popular credibility. Zuma first nurtured the rise of Julius Malema, but after falling out with him and securing his expulsion from the ANC, now faces the Economic Freedom fighters, which poses a significant challenge for support amongst the poor and disaffected black middle class. Meanwhile, COSATU – a long-term mainstay of the ruling party – is in the process of fracturing, its more radical elements deeply disillusioned with the Zuma ascendancy and now threatening to promote a social-movement-backed alternative to the ANC. Zuma's presidency has cast a dark shadow over the ANC's record, and deeply compromised its prospects for internal renewal and reform.

            Note on contributor

            Roger Southall is Professor Emeritus, Department of Sociology, University of the Witwatersrand. He is author of Liberation Movements in Power: Party and State in Southern Africa (University of KwaZulu-Natal Press and James Currey, 2013) and a forthcoming book on The New Black Middle Class in South Africa.

            Disclosure statement

            No potential conflict of interest was reported by the author.



            Much of the fighting seems to revolve around commercial procurements. ‘Control commercial and you control all tenders,’ commented a senior executive (Mail & Guardian 2015b).


            Denel, the state-owned arms manufacturer, has recently become profitable, many suspect via sales to countries with a dubious respect for human rights.


            ‘Fuck the poor,’ commented former African Bank top executive Tami Sokutu when criticised for presiding over a lending regime which sucked many borrowers into unsecured debt (Sunday Times 2014a).


            Only 19 out of 45 government departments had a Director-General (the highest level within the public service) that completed a full five-year term of office between May 2009 and May 2014 (Mail & Guardian 2014c).


            For Madonsela's report, ‘Secure in Comfort’, see News24 2014. For a summary of the insults heaped on her head, see Van Onselen 2014.


            Myeni, who amidst this crisis was revealed to have faked her academic qualifications (SABC News 2014), was Chairman of the Jacob Zuma Foundation and was coyly referred to in the press as once having been involved in a ‘romantic relationship’ with the President.


            Public enthusiasm for the brothel was dampened when it was revealed it had been run for private advantage rather than for public profit.


            At time of writing, Dramat had successfully challenged his suspension in the courts. The battle continues.


            Zuma's State of the Nation speech on 12 February 2015 stressed the government's commitment to proceed with the nuclear option. The Mail & Guardian (2015a) next day claimed that the ‘Russian nuke deal’ includes provisions that South Africa will not be able to conclude subsidiary deals with other countries without Russian permission; that it will indemnify Russia from any liability resulting from accidents; and that it will give Russians tax breaks with nothing in return.


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            Author and article information

            Review of African Political Economy
            Review of African Political Economy
            March 2016
            : 43
            : 147
            : 73-88
            [ a ] Society, Work and Development Institute, University of the Witwatersrand , Johannesburg, South Africa
            Author notes

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            Page count
            Figures: 0, Tables: 0, Equations: 0, References: 67, Pages: 16

            Sociology,Economic development,Political science,Labor & Demographic economics,Political economics,Africa
            patronage,ANC,Zuma,crisis,unaccountability,crise,corruption,manque de responsabilité


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