DIVIDED: President Jacob Zuma during his state of the nation speech on Thursday. He outlined plans to boost the economy, but cannot take actions that will further alienate his own party. Picture: TREVOR SAMSON
DIVIDED: President Jacob Zuma during his state of the nation speech on Thursday. He outlined plans to boost the economy, but cannot take actions that will further alienate his own party. Picture: TREVOR SAMSON

HOW does a politician restore lost credibility? Most find it impossible. Once the relationship of trust with citizens and the world is broken it is harder to recover than it is for a marriage to recover from an affair. So can President Jacob Zuma do it?

It looks doubtful.

The great difficulty for him is that his credibility is shot in too many quarters. Neither the investor and business community nor a large section of the African National Congress (ANC) believes him any more. Both need deep and meaningful assurances, backed by commitments and actions from which he cannot extricate himself if they are to trust him again.

But in trying to win back the one, he inevitably alienates the other. If he does the right things to get the ratings agencies back on side, he risks becoming the ANC president who turned his back on the radical socioeconomic transformation project, the ANC president who cut social spending, raised general taxes, privatised state assets, cut public sector employment and stood up to trade union power.

If he does the other — puts in place a minimum wage that significantly raises earnings across the economy (as well as costs), drives the implementation of National Health Insurance on the back of further taxes, protects public sector workers and expands the state sector into mining and other resources — the president can say goodbye to an investment-grade rating for SA.

Ratings agencies and the investor community are specific about the things they want to see done. They want the share of state expenditure on wages and salaries to be reduced, which means job cuts. They want the government’s contingent liabilities reduced, which means fixing the way state-owned companies are run and reducing the amount of borrowing done, through, for example, the sale of equity stakes to the private sector. They want to see a primary surplus in the budget (revenue less noninterest expenditure) to be persuaded that SA’s debt costs have been brought under control. This means cutting noninterest expenditure or raising taxes or both. And, importantly, they want to hear a credible growth story that will put SA on track to do all of the above.

The ANC and its allies are also very clear on what they regard as a minimum platform. This requires that there are no cuts to social expenditure budgets and that education, health and welfare budgets remain intact. Ideally these should be increased sufficiently to cover the larger wage costs going forward if expenditure on nonwage items such as learning materials and medicines is to be retained.

Maintaining the level of infrastructure spending is equally critical as this has to do with local government service delivery, over which there is a great deal of discontent and social conflict. Other non-negotiables include no public sector retrenchments, National Health Insurance, a minimum wage that significantly raises earnings and the public ownership of all companies that provide essential services.

Some in the ANC — those who can be described as the middle ground — would be comfortable in jettisoning some of these, in particular the last three, all of which can be considered campaigns of the left.

Located in the Treasury and also in control of the ANC’s influential economic transformation committee, these are the individuals who through all the years have provided the necessary assurances to investors that the ANC will always be mindful of the markets and that it is pragmatic and prudent when governing.

But without the left-leaning pillars of its programme, the ANC will be left with little to fight the Economic Freedom Fighters (EFF). Each day provides fresh opportunity for the EFF to expose the ANC’s promise of radical transformation as empty and riddled with contradictions.

It is amid these impossibly conflicting demands and requirements that Mr Zuma would have to fight to restore his lost credibility.

In his speech last Thursday, he tried his usual trick of appeasing both sides.

For business and investors, he promised reform of state-owned enterprises, hinted the state could change the spending-borrowing balance with some privatisation, promised caution on nuclear energy expenditure and made the usual noises about less red tape and greater regulatory certainty.

To the ANC, he promised a minimum wage and hinted that privatisation would take place only in special cases. He obliquely promised to move away from cronyism in state-owned enterprises, which is a source of growing outrage in the alliance.

But the overall result was that he underpromised both.

It is possible and quite likely that the hard words — higher taxes, belt-tightening, privatisation — have been left to Finance Minister Pravin Gordhan and others to utter.

Mr Zuma is famous for shirking responsibility and avoiding being seen to be the one who holds the smoking gun.

If this is the case, and the real hard choices are made by Mr Gordhan and Deputy President Cyril Ramaphosa, whose task it is to oversee the restructuring of state-owned enterprises, this may just be enough for the ratings agencies and investors.

But it is hard to believe that in the areas where Mr Zuma needs personally to act, that he will do so. Much of the mess in the state-owned enterprises is his own doing and it is only he who can undo it by relinquishing ties to the proxies and runners that he has put there.

These networks have been actively assembled — many tied into his notorious friends, the Guptas — and link deep into government departments and state-owned enterprises.

Taking these apart is for Mr Zuma personally impossible. Even where some high-profile placements are changed, they will be replaced with others whose role it is to channel transactions in a certain direction. The rot is too deep, with too many now heavily invested in his patronage machine.

Mr Zuma’s assurance of restoring good governance is, sadly, impossibly incredible.