By Peroshni Govender
JOHANNESBURG (Reuters) - South African President Jacob Zuma's ability to administer tough measures needed to revive a struggling economy could be hampered by his efforts to pacify communists and labour in the ANC's fractious alliance.
As Zuma's ruling African National Congress celebrates its 98th anniversary on Saturday, its alliance with communist and labour union allies is suffering from growing infighting, mainly over policy, which threatens to change the make-up of the alliance that helped end apartheid.
The communists and unions, who helped bring Zuma into power last May, want economic policies to shift to the left and Africa's biggest economy to abandon the pro-business stance that has endeared it to investors.
Investors will be focused even closer on South Africa this year as the country hosts the 2010 soccer World Cup -- the first time the tournament is hosted in Africa.
South Africa exited its first recession in 17 years in the third quarter of 2009 but the pace of the recovery is slower than other countries. Business confidence fell in December and household and corporate finances remain tight.
Zuma's government has repeatedly said existing policies will remain in place, but has sought to appease the ANC's allies by encouraging debate over points of contention.
NO MORE "MR NICE GUY"
Analysts said it was now time Zuma provided strong leadership.
"Zuma is trying to be 'Mr Nice Guy' and rule by a process of consensus. It's a form of governance by endless compromise but lacks vision," said veteran political analyst Allister Sparks.
"My concern is that ... in trying to keep them together that negates what is needed; and that is strong leadership."
The South African Communist Party and unions under the umbrella of giant labour federation COSATU also want the mandate of the central bank to be broadened to include job creation and inflation targeting scrapped.
Zuma is under pressure to deliver on election promises made last year, including drastically reducing unemployment which stands at about 25 percent after last year's recession slashed nearly one million jobs.
Due to the economic downturn, Zuma was unable to meet his pledge of creating 500,000 new jobs last year.
The ANC government also faces pressure to improve basic services. Violent riots erupted in several poor townships across the country last year as residents protested over the lack of running water and electricity.
Addressing poor education and public healthcare, as well as high levels of crime are other issues Zuma must grapple with to convince his supporters their plight has not been forgotten.
But in trying to appease everyone, Zuma risks spreading himself too thin and could end up alienating both ordinary South Africans and foreign investors already worried about possible policy shifts.
"Zuma is all things to all people (and) that is something that confuses investors," said Razia Khan, head of research for Africa at Standard Chartered Bank. "They are never quite sure where he sits on different issues."
(Editing by Marius Bosch and Giles Elgood)
