By Hannah Edinger and Simon Schaefer

In December 2012， as corporate South Africa closed down for the holiday season， more than 4，500 members of the ruling African National Congress （ANC） descended on the city of Mangaung to elect their leadership for the next five years， and ultimately determine the future of South Africas development.

One of two important events in the ANC calendar （the other being the partys policy conference）， the meeting in Manguang， the capital of Free State， generally met expectations in terms of leadership and policy trends. The meeting was also characterized as “l(fā)ess rowdy” than that held in Polokwane in 2007， when President Jacob Zuma took the reins of the ANC from then President Thabo Mbeki.

Since his victory in the 2009 general election， President Zuma has arguably done very little to accelerate South Africas societal development， which still faces serious socio-economic challenges almost two decades after the first ANC electoral victories.

Internal division

South Africa has been plagued by declining social cohesion， high unemployment， rising inequality and increasing frustration among disenfranchised groups. In recent months this has translated into violent protests in the mining， agriculture and transport sectors， and has negatively impacted the nations GDP growth.

Furthermore， the ANC itself has become increasingly divided， with party infighting， corruption， populism， threats of nationalization， a lack of governance and the general ineffectiveness causing people to lose confidence in the organization. It lacks effective leadership and its efforts to foster economic development and advancement in South Africa have been disappointing. This has contributed to a lack of confidence in South Africa among foreign investors， which was recently reflected by the nations credit rating being downgraded by Moodys， Standard & Poors and Fitch.

But not long ago the country pre- sented a united and promising image to the world， successfully hosting the FIFA World Cup in 2010， followed by South Africas 2011 initiation into the club of rapidly growing and thriving “BRIC” economies， now known as the “BRICS” since South Africas inclusion. Despite great potential， South Africa has struggled to live up to expectations.

What lies ahead？

So how is the “status quo outcome” of Mangaung going to shape South Africas economic and political outlook？

President Jacob Zuma was re-elected as ANC party president. This suggests that he will remain president until 2019， as it is expected that the ANC will win the 2014 general election. However， while Zuma managed to defeat his rival Mbeki in 2007 by portraying himself as “the president of the common person，” his more recent actions indicate that he has lost touch with the nations people， 40 percent of whom live under the international poverty line. With his reputation tarnished by various scandals and his questionable track record over the past three years， a likely second term as president will provide an opportunity to redeem himself.

Cyril Ramaphosas win over Kgalema Motlanthe at the Mangaung meeting， making him eputy president of the ANC and a likely vice president pick for the 2014 election， does not reflect the preferences of the common person. Instead， his election has been widely touted as indicative of the rising black middle class （nearing 5 million） – something that the only substantive opposition party， the Democratic Alliance（DA） led by the recently re-elected Helen Zille， has been targeting with great success.

As a highly successful black businessman and second in command at the National Planning Commission （NPC）， Ramaphosas return to politics will be palatable to the markets and bolster international investor confidence in South Africa. His NPC position brings much-needed credibility to the ANCs economic and social policies， particularly given his strong support of the NPCs National Development Plan（NDP） Vision for 2030， which he has identified as a key policy for the future. Containing no broad changes to economic policy， apart from a marginal shift toward a greater “developmental agenda，”the NDP was widely accepted at Mangaung. The question will be how Ramaphosa， amongst others， can bring about the swift implementation of this plan， as uncertainties， including calls for nationalization， have fallen away.

Ramaphosas position could also strengthen the ties between government and business. In comparison to its BRICS peers， especially China， South Africa is at a great disadvantage due to the disconnection and lack of trust between the corporate sector and the government. This particularly hampers the nations competitiveness and its ability to protect its commercial interests abroad， especially on the African continent – a vital and growing market for South African corporations， and an important part of the countrys longterm growth.

Developmental vision

It will be crucial for the Zuma Administration to bring about tangible change in the coming years to satisfy the countrys increasingly impatient population. As the dividends of democracy have been few and far between， South Africa is in need of capable and competent leadership to steer the country onto a winning developmental path. Zumas probable second term as president will need to involve positive changes and a commitment to placing the interests of the population above those of the party. Otherwise， the ANC may find itself facing a rude awakening at the ballot box. The recent labor strikes have only underlined that the ANC has not been able to deliver on the many ambitious promises that it has made over nearly 20 years.

Overcoming its internal divisions and changing how it does business to address spiraling challenges will be important if the ANC seeks to build confidence and foster faster and more inclusive growth. This means more actively striving to achieve the countrys long-term developmental vision， and continuing to court international partners. The ANC will then need to focused on creating employment opportunities for the countrys youth， building a better education system， actively nurturing talent， fostering entrepreneurship and investing in infrastructure and institutions to cre- ate opportunities in leading sectors. The party must dedicate itself to making South Africa a more competitive and prosperous society.

Otherwise， the people residing in the economic powerhouse of South Africa will soon become dissatisfied with their leadership and how their vision has caused the nation to squander the potential that many of its African peers are already unlocking.

（Hannah Edinger is Head of Research & Strategy at Frontier Advisory. Simon Schaefer is Senior Analyst at Frontier Advisory - http：//www.frontieradvisory.com ）