Phala Phala saga adds fuel to Mzansi’s fire

As President Cyril Ramaphosa’s Phala Phala drama unfolds, economic and agribusiness uncertainty levels have surged, casting a cloud over investment and business conditions in South Africa. However, some say this could also be a good time for risk takers to put their money behind the country’s agricultural sector.

South Africa has been in the grips of the Phala Phala saga – or what has been referred to as the biggest political story of the year – since June this year.

Ever since the Section 89 panel report found that Ramaphosa may have violated the Constitution, politicians have been running around like headless chickens trying to come to terms on what should happen next. All while the country’s economic future takes a weird turn.

According to political analyst Theo Venter, Mzansi is already coming to terms with a very depressed business and economic climate, and Ramaphosa’s farm scandal is adding fuel the fire.

Downward spiral

“Everyone was looking at a handsome decline in the diesel costs with the strengthening rand and a declining oil price. But now with the rand declining again, we might just miss out on a few cents on the diesel price,” he says.

This is especially the case, at a time when diesel is a necessary commodity for farmers who are planting.

“The most important issue is that it brought uncertainty in economic thinking. [And] the one thing that people want in the economy and that business people would like is predictability, so that [they] know where things are going,” Venter explains.

ALSO READ: Drop in diesel price brings rare good news

To invest or not to invest…

While the African National Congress’ Integrity Commission is set to break its silence over Ramaphosa’s Phala Phala alleged robbery today (Friday, 9 December), the saga has brought a lot of uncertainty to South Africa’s doorstep.

Venter refers to it as the “vuca effect”, a combination of volatility, uncertainty, complexity and ambiguity.

“The ANC is now forcing itself to take a document that may have some truth to it and kill it in parliament. This vuca situation brings a lot of uncertainty, which means an investor that is not clear in his mind about the future of the country, will just go elsewhere or will opt against further investments due to the risk associated with uncertainty,” Venter explains.

In contrast, if you are risk taker in the economy, this is the time to invest, he adds.

“When everybody else is turning away, those with the guts and understanding of the agricultural sector [will] now buy a new farm. Those are the people you will have to watch.”

When asked whether he thinks investment into agriculture would increase, Venter says it is going to be a wait-and-see situation. At least until the four-day ANC conference, scheduled for Friday, 16 December, is over.

And politically?

The ANC camp is divided about the future of their boss with some members of parliament expected to vote against the adoption of the Section 89’s Phala Phala report.

“If the ANC opposed the adoption of this document, then it means that the process stops there, because if they do not adopt the document, there is nothing to investigate,” Venter explains.

Meanwhile, a parallel process has also emerged with Ramaphosa filing a notice of motion at the Constitutional Court against the Section 89 panel.

Venter says, what is interesting to note, is that the committee responsible for developing the report cannot be taken to court. This is for the simple reason that the committee no longer exists.

“The life of that committee existed from the day it was appointed until the day it provided the report. The president is now taking the speaker to court, saying that that report which you are going to discuss, is null and void.”

‘Cyril will most probably survive’

Venter does not, however, believe that the constitutional court will take a final decision at such short notice, which means that the process is going to continue for some time.

In the end, the ANC will use its majority in parliament to stop the report and the opposition parties will put up a fight against it, predicts Venter.

Who will the next president be? Venter is of the view that Ramaphosa will survive this saga. The question, however, is in the event that of him surviving the panel report, what will he do in the new year?

“Will there be a cabinet reshuffle and will some of the people battling with him severely, will they be dropped? I think that the wait-and-see will last until very early 2023.”

ALSO READ: Tough times for meat lovers, farmers this festive

Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.