Politics

South Africa's ANC is about to elect its new leader

Key Points
  • South Africa's ruling African National Congress is set to announce a new leader on Monday
  • The two frontrunners are current President Jacob Zuma's ex-wife Nkosazana Dlamini-Zuma (NDZ) and Deputy President Cyril Ramaphosa, a businessman and former trade union leader who is also one of the country's richest men
  • While polls have placed Ramaphosa ahead for the vote in Johannesburg, one analyst told CNBC that Zuma could use his influence to ensure that NDZ wins the leadership
These two candidates have a real chance of succeeding Zuma
VIDEO1:0301:03
These two candidates have a real chance of succeeding Zuma

South Africa's ruling African National Congress (ANC) is set to announce its new leader on Monday, with the winner likely to be the country's next president.

The announcement is expected around midday London time and comes after the party's five-yearly national conference which began Saturday.

The two frontrunners are current President Jacob Zuma's ex-wife Nkosazana Dlamini-Zuma (NDZ) and Deputy President Cyril Ramaphosa, a businessman and former trade union leader who is also one of the country's richest men.

While polls have placed Ramaphosa ahead for the vote in Johannesburg, Martin Roberts, deputy head of Africa at analysis firm IHS Markit, suggested to CNBC that Zuma could use his influence — be it financially or legally — to ensure that NDZ wins the leadership. She is viewed as a proxy for the incumbent president, though she has insisted that she is standing as a candidate in her own right.

Candidate for South Africa's ruling ANC leadership Nkosazana Dlamini-Zuma addresses her first campaign rally on September 24, 2017, in Harding, South Africa.
Rajesh Jantilal | AFP | Getty Images

NDZ "represents a continuation of the status quo and a move towards full-blown populism," Emad Mostaque, co-chief investment officer at emerging market specialists Capricorn Fund Managers, told CNBC. She promises "radical economic transformation," though critics say that she has provided little detail as to how this will be facilitated.

"A Ramaphosa victory would undoubtedly be welcome by local and foreign investors as he represents a level of certainty and economic orthodoxy that they would find reassuring," Mostaque said, explaining that the candidate's pledge to fight corruption and potential as a reformer "should lead to an appreciation of the rand and domestic names."

Struggling BRICS-member

South Africa, one of Africa's largest economies and once an economic bright spot, has witnessed its fundamentals plummet this year on the back of allegations of state capture continuously trickling into the public domain.

South Africa's ANC to elect new party leader at conference
VIDEO1:5701:57
South Africa's ANC to elect new party leader at conference

Finance Minister Malusi Gigaba slashed the country's economic growth outlook for 2017 down from 1.3 percent to 0.7 percent in October. Last month, ratings agency S&P Global cut its assessment of the BRICS-member's local currency debt to "junk" status. BRICS comprises five major emerging economies: Brazil, Russia, India, China and South Africa. The rand is currently trading nearly 2 percent lower against the U.S. dollar year-on-year.

Given South Africa's bloody apartheid history, ANC leadership is widely viewed as a shoo-in for the South African presidency, elections for which are due in 2019.

But, Zuma's unpopularity could mean that any ANC missteps enable the opposition Democratic Alliance (DA) to win power. The DA already controls the economic hubs of Johannesburg and Pretoria, as well as the tourism hotspot of Cape Town.

What next for Zuma?

Zuma could find himself in a precarious position should he lose control of the ANC. The president's popularity has plummeted given the ongoing allegations of corruption against him, of which there are nearly 800 charges dating back to 1999.

South African President Jacob Zuma, Nkosazana Dlamini-Zuma, Deputy President Cyril Ramaphosa and Zweli Mkhize during the African National Congress' policy conference on July 5, 2017, in Johannesburg, South Africa.
Masi Losi | The Times | Gallo Images | Getty Images

Should Ramaphosa win, Ben Payton, head of Africa at Verisk Maplecroft, told CNBC that Zuma's friends could "quickly abandon him once it becomes clear that the president has lost his political capital." He added: "It could not be more obvious that anyone who stays close to Zuma will be vulnerable to corruption accusations."

But a new ANC leader does not necessarily equal a clean slate for South Africa just yet. "There is certainly a risk that Zuma will try and push through certain deals before he leaves office," Payton said, citing a contract with Russia to build nuclear reactors, which would "potentially benefit Zuma's son, who has a stake in a uranium mine."

Roberts wrote in a note Tuesday that prolonging Zuma's grip on power would "increase economic damage and the likelihood of ratings downgrades." He added that a Ramaphosa loss "would prolong political instability and deepen the impact of damaging economic decisions."