A Season of Uncertainty and Promise: SA Political Prospects to 2019 & Beyond Public Affairs Strategic Communications 16 February 2016
In this Presentation… 1. About FTI Consulting 2. Status Quo 3. Likely Future Scenarios 4. Immediate Term: Key SONA Take-Outs on Approach to the Economy 5. Recommendations 2
About FTI Consulting: Globally, In Africa and in South Africa
NYSE-Listed Firm Advising Advising Across the Globe, in SA and across Africa 4,400+ Professionals Deployed in 26 Countries, with offices in South Africa and affiliates in 30+ other African countries FTI Consulting South Africa Offices in Johannesburg and Cape BEE Level 2 certification – July Town 2015 Team of experienced media, investor, public affairs and strategic communication consultants Economic Consultancy started in April 2015 4
Our Public Affairs practise exists in our Strategic Communications Segment, which is supported a broad range of capabilities from other segments of our company Economic Strategic Corporate Finance/ Forensic & Restructuring Consulting Litigation Consulting Communications Technology Bankruptcy Support Services Antitrust & Competition Business Insurance Claims Corporate Communications Computer Forensics & Economics Investigations Interim Management Compliance, Monitoring & Digital and Consumer Business Valuation Receivership Communications Discovery Consulting Investment Banking Center for Healthcare Construction & Environmental Crisis Communications E-discovery Software & Litigation Support Economics and Policy Solutions Services Employee Engagement and Office of the CFO Intellectual Property Dispute Advisory Services Change Communications Managed Review Performance Improvement International Arbitration Financial & Data Enterprise Financial Communications Predictive Discovery Analytics Private Equity Advisory Labor & Employment Litigation Communications Financial Services Restructuring/Turnaround Public Policy M&A Communications Services Forensic Accounting & Regulated Industries Public Affairs Advisory Services Transaction Advisory Services Securities Litigation & Risk Global Risk & Investigations Restructuring and Financial Valuation & Financial Advisory Management Practice Issues Services Shareholder Activism and Health Solutions Proxy Advisory Insurance Strategy Consulting & Intellectual Property Research Trial Services 5 5
Status Quo
Where Are We Now? Rapid Wjat are the Implications for Building Trust Between Business and Govt? What are the likelihood of policy changes and greater policy certainty? Successions of • Nenegate Capitulations for • #FeesMustFall President Zuma • Nkandla What Are the Likely Leadership Succession Scenarios? Repeat in 2017? SONA & Budget • February 2016 Local Best probability Government • August 2016 for a leadership Election change? ANC Policy • June/July 2017 Conference ANC Elective • December Congress 2017 • 2018, 2019 & Quo Vadis? Beyond 7
3 Key Drivers of our Political Future The ANC’s ability to grapple with it’s electoral fortunes The polarising potential of the ANC succession race ANC performance on the economy, municipal delivery, education and social welfare 8
3 Likely Future Scenarios
The way these drivers interact could lead to one or a a hybrid of future scenarios (1) • The ANC slows drop offs in electoral support by winning back some urban and black middle Scenario 1: class support during the 2016 local government elections. • The President regains his powers of enjoinment and unites his supporters behind An Anointed Nkosazana Dlamini-Zuma. Successor: • Likelihood of replacement for cabinet members in key portfolios arise after the LGE and for replacing the Deputy President after the 2017 elective conference, with President Zuma remaining in his position. “Continuity • Fiscal discipline is stays in the balance as SOE reform yields to nested interests, subverting social and delivery spending and becoming ever more entrenched and more challenging to & Change” reign in as the 2019 election approaches. 10
The way these drivers interact could lead to one or a a hybrid of future scenarios (2) • ANC haemorrhages middle-class and urban black support, with a protest-ridden election campaign failing to return many election candidates to office. Scenario 2: • Spurned ex-local government councillors and 2019 election hopefuls help swing constituencies toward supporting Deputy President Ramphosa as the alternative. The Sitting • President Zuma does not endorse a successor in favour of party unity. Duck: • Zuma completes his term increasingly with Ramaphosa as the de facto President, albeit with the latter careful not to draw backlash from sections of the Tripartite Alliance sympathetic to the President. “Delayed • No “Prague Spring” after 2017 as Ramaphosa will need time to tighten his grip on power, making only gradual policy and implementation change likely. Change” • Policy decisions on state intervention in the economy remain highly politicised and subject to heavy NEC direction, but social services and delivery improve slowly. 11
The way these drivers interact could lead to one or a a hybrid of future scenarios (3) • ANC haemorrhages middle-class and urban black support, with a protest-ridden election campaign failing to return many election candidates to office. Scenario 3: • Spurned ex-local government councillors and 2019 election hopefuls help swing constituencies toward supporting Deputy President Ramphosa as the alternative. The • Sentiment against President Zuma in the tripartite alliance escalates through a series of dynamic moments and he is either recalled in line with the 2008 precedent or adopts a de Figurehead: jure role in favour of Deputy President Ramaphosa becoming the de facto leader of the country. “Quick • A “Prague Spring” follows until the (re)constitution of a Ramaphosa government after the election. Change” • Chances appear good for a return to fiscal discipline and more productive spending. Municipalities perform well as opposition parties seek to prove themselves, while the ANC makes social welfare and education the cornerstones of its bids to improve life for the poor. 12
Options for the business community and external institutions Implementation and policy inertia is likely to continue in substantially the same way until at least the installation of a new government in 2019, unless President Zuma adopts a de jure role in favour of a Deputy President with a strong mandate acting as the de facto President. Business leadership through open policy contestation Consensus built from outside in by dynamic demonstration of policy consequences 13
Immediate Term: Key SONA Take-Outs on Approach to the Economy
SONA: Lost Opportunity or Signs of Better Times to Come? 4 Alarm Bells • Expedited EIA’s and • NEDLAC agreement other approvals yet to reduce strikes & to emerge violence • RIA’s gathering • Phakisas dust • Mining Industry • Policy uncertainty Recurring emphasis task team Leader’s in mining, tourism. on ever elusive Declaration to save Land reform and common narrative InvestSA/One-stop jobs energy between business, Shop approach government and labour Implementation of PRC Report on SOE’s under Dep No tough fiscal Pres good, but • Again under IMC consolidation speech suggests • Replacement of prioritised • Cost-cutting President hesitant boards measures symbolic to address capture • Partial or full • Drought relief not of SOE’s directly privatisation of touched upon SOE’s • #FeesMustFall • Replacing ignored unqualified executives 15
Slogan Central: Little progress on Government’s 9-point plan on the economy 1.) Resolving the energy challenge; 2.) Revitalising the agricultural value chain; 3.) Beneficiation through adding value to mineral resources; 4.) More effective implementation of higher impact industrial policy action plan; 5.) Encouraging private sector investment; 6.) Moderating work place conflict; 7.) Unlocking the potential of SMMEs, cooperatives, townships and rural enterprises; 8.) Reform of state owned companies, broad band roll out, water sanitation and transport infrastructure; and, 9.) Operation Phakisa, which aims to grow the ocean economy - such as the shipping and storage of energy products. 16
Conclusions & Recommendations
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