JOHANNESBURG. – Even though President Jacob Zuma survived the no confidence vote, political noise will persist leading up to the ANC elective conference in December, which may put pressure on the rand, said an economist.
The rand lost the gains it had made leading up to the vote. It has since stabilised, said Old Mutual Investment Group Economist, Tinyiko Ngwenya.
The vote has only managed to remove short-term uncertainty and all eyes are on the upcoming ANC elective conference.
Professor Jannie Rossouw, head of the School of Economic and Business Science at Wits University, told Fin24 that the narrow margin by which President Zuma won the vote shows that the president’s power grip on the ANC is slipping.
Rossouw said this could mean Zuma’s influence on the ANC’s succession battle may be limited. Sanisha Packirisamy, economist at MMI Investments and Savings, said the focus is now on the elective conference. “With a more significant number of ANC members likely voting in favour of the motion this time around (relative to the past motion of no confidence votes), the results show that there is an escalating internal conflict within the ruling party, which could play a significant role in the December 2017 NEC outcome.”
Ngwenya pointed out that political uncertainty remains a key concern of ratings agencies. This impacts confidence and ultimately the economy.
South Africa has not been experiencing the benefits other emerging economies have following the recovery of the global economy, she explained.
Rossouw added that President Zuma retaining his position has not done anything to remove any downgrade risks. – Fin24.