20110614
Reuters
JOHANNESBURG (Reuters) - Julius Malema and the ANC Youth League he heads appears to have embarked on a campaign to limit President Jacob Zuma to one term as leader of South Africa's ruling party, union leaders say.

The anti-Zuma group is supported by wealthy members of the ruling African National Congress (ANC) and fronted by Malema, whose calls for farm seizures without compensation and the nationalisation of mines in the world's biggest platinum producer have worried investors.

Malema, who will be re-elected youth leader later this week, helped Zuma rise to power in 2007 but his demands for sweeping policy shifts and racist remarks towards the white minority have put him at odds with the president.

"If they succeed in this campaign, the ANC as we have known it will be history," The Sunday Times quoted COSATU's Secretary-General Zwelinzima Vavi as writing in a union document.

"Our country we love so much will go straight down the direction of a banana republic. The current challenge of corruption will be institutionalised with a risk that the very country will be sold to the highest bidder."

The youth league is considered kingmakers in the ANC and has been used in the past by senior members to drive policy changes and launch leadership races.

While alliance members COSATU and the communists appear to back Zuma, his supporters fear the split may jeopardise his chances when the party holds its leadership election next year -- and by implication another term as president of Africa's most powerful economy, which holds elections in 2014.

POWERFUL SUPPORT

Analysts say Malema has presidential ambitions, and replacing Zuma is a step towards ensuring his policy demands materialise. A change in leadership would allow his supporters to exploit lucrative government deals.

"Malema is not getting what he expects from Zuma. Some very powerful and rich people in the ANC and the country support him," an ANC member who did not want to be named told Reuters.

"If Zuma is out of the way, they can benefit more from government deals."

Investors are concerned by what appears to be rising levels of corruption and opportunism by senior ANC officials.

"I think this rent-seeking and patronage culture is of a level of concern that we haven't seen before," said Anne Fruhauf, southern Africa analyst at Eurasia Group in London.

She said there were some reservations about Zuma's government with many investors taking different views.

Bond and stock market investors consider South Africa a lucrative investment opportunity and mostly shrug off nationalisation calls as "noise".

"But on the private equity side, investors have begun to complain that South Africa, especially the mining sector, is becoming uninvestable," Fruhauf said.

Zuma's supporters blame Malema's antagonistic comments towards minorities -- including repeated singing of an apartheid-era song that advocates shooting white farmers, and calling the white leader of the opposition party a "monkey" -- for a drop in support in May's local government elections.

Support for the ANC fell five percentage points in the elections from 67 percent in 2006, with a surge in support for the main opposition DA who promised better basic services.

Blade Nzimande, Secretary-General of the South African Communist Party and Higher Education Minister in Zuma's cabinet said Malema's populist rhetoric divided the nation and was becoming a threat to the democracy won in 1994 after decades of white minority rule.

"This demagogy constitutes the greatest threat not just to our electoral performance but also to our hard-won democratic achievements," he said.