Cape Town - With the ANC under the control of newly elected party president Cyril Ramaphosa and the government under the control of President Jacob Zuma, the two centres of power could disrupt policy and economic progress, leaving SA in a state of "policy paralysis", Sanisha Packirisamy, an economist at Momentum Investments, said on Tuesday.
In her view, potential trade-offs between key policy objectives supported by the two factions could have a further negative impact on the South African economy. At the same time, the results of the ANC elective conference could have a positive impact on consumer and business sentiment, but higher confidence levels will only be sustainable if the new leadership under Ramaphosa can rebuild trust between government and the private sector, according to Packirisamy.
To avoid "policy paralysis", a commitment to fiscal discipline, addressing governance and financial problems at state-owned enterprises and tackling state capture would be needed. This would also sustain higher consumer and business confidence levels, in her view.
Packirisamy said an early recall of Zuma before the end of his term would likely be viewed as positive by the market. It would, however, require the consent of the so-called Zuma-faction.
The stakes also remain high in the run up to the 2019 national elections, where the ANC faces threats from opposition parties, including the Economic Freedom Fighters (EFF).
"The extent of the anticipated growth recovery in 2018 and the outlook for South Africa's sovereign ratings will depend on whether or not officials will adopt and enact policies to enhance SA's creditworthiness," said Packirisamy.