Zuma's hold on South Africa's ANC will weaken

Significance

Yet Zuma's speech failed to restore his credibility, which has suffered several blows in recent weeks. Nor did it reassure investors and rating agencies, despite a threatened credit rating downgrade to 'junk' status.

Impacts

• A credit downgrade would significantly raise the share of debt servicing as a share of overall spending, crowding out other priorities.
• It would also drive significant portfolio outflows -- since many institutional investors are barred from sub-investment grade sovereigns.
• Increasingly, anti-Zuma ANC factions will use opposition argot warning of "state capture" by corrupt elites to discredit him.