South Africa: Markets prepare for Zuma presidency

Citigroup is to host a dozen top international fund managers to a private lunch with Jacob Zuma, the deputy leader of South Africa’s ruling African National Congress, in a clear sign the markets are preparing for the possibility the controversial populist will be the country’s next president. 

Mr Zuma has made a remarkable political comeback from two scandals and is now, if not the frontrunner, one of the two clear favourites to be voted leader of the ANC at the party’s elections in December. If successful, given the party’s electoral dominance he would become the country’s president at the next national election, in 2009. 

This would be the most significant turning point in South Africa since the end of white rule in 1994. His alliance with the Communist party and the unions – last week the main union federation Cosatu endorsed his campaign – and his populist reputation have led business people to fret he would lead the country to the left and reverse President Thabo Mbeki’s market-friendly policies. 

His aides insist he would not oversee a U-turn, and as his campaign gains momentum they are making plans for a co-ordinated international marketing campaign. 

On Wednesday, the FT has learned, he faces potentially his most important audience yet when he talks about his economic policies at the Citigroup lunch. “It’s up to the Zuma camp to reach out to try to have people understand what a Zuma presidency would look like,” said Jeff Gable, head of research at Absa Capital. “Investors do not like uncertainty. They know little or nothing about what economic policy would look like under him. His job as the frontrunner now is to start speaking to the stakeholders of the economy and financial markets.” 

South Africa’s stability since the end of apartheid, its developed infrastructure and solid economic performance have attracted increasing interest from foreign investors. It is also seen as a hub for the region. Mr Zuma’s principal rival is old ally turned bitter enemy, Mr Mbeki. While he cannot run again as state president, he is pushing for a third term as party leader primarily, it is believed, to stop Mr Zuma. 

Gus Felix, the managing director of Citigroup in South Africa, said he approached Mr Zuma two months ago. “People are attending this lunch as part of many meetings in South Africa,” he said. “I know they are curious and will be taking notes.” 

Mr Zuma, 65, was Mr Mbeki’s deputy for six years but was fired after his embroilment in a corruption scandal. A graft case against him collapsed but he may face fresh charges. He was also acquitted on rape charges in a separate trial. “He is having ‘quiet’ lunches with business people so he doesn’t come across as a stranger to the world in December,” said one aide. “We are acutely aware there has been an attempt to present him as an ogre.” 

Alec Russell in Financial Times, le 23 septembre 2007