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FACTBOX-Political risks to watch in South Africa

Source: Thomson Reuters Foundation - Mon, 11 Feb 2013 11:09 GMT
Author: Reuters
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By Jon Herskovitz

JOHANNESBURG, Feb 11 (Reuters) - South Africa faces a confidence crisis as simmering labour strife, chronic unemployment and growing corruption have led to credit ratings downgrades and sent the rand to its weakest in about four years.

President Jacob Zuma has tried to reassure investors, but critics say his leadership is ineffectual in the face of South Africa's problems.

Zuma's ruling African National Congress (ANC) has put legislation before parliament that could add more regulation to a labour market rated as one of the world's most restrictive while stepping up punishments on those who try to expose graft.

LABOUR UNREST

Major mining firms Anglo American Platinum (Amplats) and Harmony Gold are looking to cut about 20,000 total jobs after seeing production and revenue drop during an unsettled turf war between rivals unions.

Zuma's ANC, which has close ties to one of the unions, is having trouble keeping a lid on the quarrel, setting the stage for another year of violent labour strife, which could slow the growth of Africa's largest economy.

What to watch:

- Whether Amplats and Harmony make good on threats to sack workers and if other mining firms follow suit.

'MARIKANA MASSACRE'

Zuma's government could come under greater scrutiny as more details emerge about abuses in the Aug. 16, 2012 shooting at Lonmin's Marikana platinum mine in which 34 protesters were killed by police in the deadliest security incident since the end of apartheid.

Testimony of police planting evidence and shooting workers in the back has raised questions about police commissioner Riah Phiyega, a relative unknown handpicked last year by Zuma to reform a force beset by allegations of corruption and brutality.

What to watch:

- Fresh testimony from the official commission of inquiry, where further evidence is expected that could embarrass the government.

MINING TAXES

The ANC has called on mining firms to pay more to help it finance social welfare programmes, which could place another burden on companies hit by labour friction. The ruling party's most-discussed measure is a windfall "resource rent" tax.

The government also plans laws to make iron ore and platinum miners sell "small amounts" of output to local processors at a discount to diversify the economy and create jobs.

What to watch:

- The plans still lack detail and should be fleshed out early in the year.

CORRUPTION

South Africa has slid in Transparency International's perceived corruption gauge from 38th in the world in 2001 to 69th in 2012, with many worried the government is ignoring deals that benefit the politically connected.

The Zuma administration has placed before parliament a raft of legislation critics say would make it easier for corrupt officials to hide graft while setting up a small and largely unaccountable cabal around the president who would control the flow of classified information.

What to watch:

- Growing protests from the poor, angry at graft and government performance. Protests could destabilise the ANC.

STATE OF THE NATION

Zuma delivers an annual major policy address called "State of the Nation" on Feb. 14, when he is expected to lay out plans for more welfare and infrastructure spending that could put further strain on the finance ministry's efforts to rein in the deficit.

Zuma, who is seeking re-election next year, may also lay out other populist policies to build support for the poll that could undercut recent pro-business messages.

What to watch:

- The amount of new spending and any plans to punish mining companies for cutting jobs. (Editing by Matthew Tostevin)

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