By Joe Brock
PIETERMARITZBURG, South Africa (Reuters) - Singing and dancing with hundreds of supporters in his Zulu heartland, South African President Jacob Zuma didn't look like a man facing the biggest challenge to his leadership since he came to power nearly a decade ago.
Zuma drew unprecedented criticism from the top echelons of the African National Congress last week when he fired respected finance minister Pravin Gordhan and other cabinet members in favor of loyalists, opening a division in the party that has ruled since the end of white-minority rule in 1994.
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In a gamble that could split the party further, Zuma is now expected to start seeking support from the ANC grassroots for his chosen successor to be picked at a national conference in December. Zuma is expected to endorse his former wife, ANC politician Nkosazana Dlamini-Zuma.
The two rival factions that have emerged in the ANC since Gordhan's dismissal are now focused on winning the vote at that conference, party sources told Reuters.
Crowds chanted Zuma's name on Saturday after he unveiled a new housing project in a poor suburb of Pietermaritzburg.
Voters in places like this want basic services, and feel disconnected from investors and politicians who condemned the removal of intellectual technocrats like Gordhan.
"There was no mistake. All the president did was give another minister a chance," said Lindokahle Mbele, a 29-year-old construction worker who supports Zuma.
"The president is saying he will address youth issues. What people need is housing and assistance at school. Black people didn't receive assistance. I think now they will get help."
As they seek party and public backing, Zuma and his new Finance Minister Malusi Gigaba have promised "radical socio-economic transformation".
Few details have emerged but it is expected to include pledges to redistribute land and wealth to poorer black South Africans who are frustrated by the racial inequality that persists 23 years after the end of apartheid.
It will be difficult, however, to implement reforms in a divided ANC and with the economy expected to take a hit after Zuma's cabinet reshuffle unsettled investors.
"What 'radical transformation' entails is still unclear to many outsiders," said Jeffrey Schultz, economist at BNP Paribas.
The rand has fallen six percent in the last week. Credit ratings agencies, who liked Gordhan, are expected to downgrade South Africa to "junk" status soon.
Zuma faces a difficult period, with protests against him planned in cities this week and a possible vote of no confidence in parliament.
He was meeting with the highest layer of the ANC, known as the "Top Six", on Monday for what were expected to be heated talks. Three of the six, Deputy President Cyril Ramaphosa, Secretary-General Gwede Mantashe and Treasury-General Zweli Mkhize, all openly criticized Zuma for sacking Gordhan.
Most analysts expect Zuma to survive until the December conference when his second term as ANC leader ends. He is due to remain national president until 2019.
Zuma's priority is to ensure his chosen candidate succeeds him as party leader so he can complete his presidential term and avoid scrutiny over corruption charges his opponents would like reinstated, ANC sources told Reuters.
Zuma's faction would back former African Union Chairwoman Dlamini-Zuma, while a rival section of the party will likely support Ramaphosa, a trade unionist turned business tycoon.
"He is trying to set the stage to anoint his successor," political analyst Prince Mashele said.
The December vote will involve thousands of ANC members. At least 90 percent of them will come from ANC branches where Zuma is strong.
Removing Gordhan was popular with parts of Zuma's faction, who say the finance minister was too cozy with investors they associate with white elites who control much of the country's wealth.
Zuma was praised by the ANC Youth and Women's Leagues, both important in rallying support among outlying party branches. Many of the incoming ministers have strong local constituencies.
"MASTER OF REGIONS"
Zuma, a prisoner with Nelson Mandela on Robben Island, is mocked in parliament for his bumbling English but he has a 'man of the people' appeal. He can rouse crowds when he speaks in Zulu and leads traditional song-and-dance.
"Zuma is a bread-and-butter politician," Dougie Oakes wrote in the Sunday Tribune, a popular newspaper in Kwa-Zulu Natal.
"While his foes argue about his suitability to be president, his team of loyalists have been busy, quietly wrapping up his support in the regions."
Zuma will face a strong internal fight ahead of the December conference with opponents likely to remind ANC branches of the personal scandals that contributed to the party achieving its worst ever local election results last year.
The Constitutional Court last year ordered Zuma to repay nearly $580,000 in inappropriate state spending on his country estate.
Zuma's opponents say he sacked Gordhan to take control of the treasury so he can use state funds to grease an ANC patronage system that will secure votes for his successor.
Zuma justified sacking Gordhan to the "Top Six" with an intelligence report that claimed the finance minister was colluding with Western banks to bring down the economy.
Gordhan described it as "absolute nonsense" and Ramaphosa also dismissed it.
The anti-Zuma section of the party will be watching the economic impact of the cabinet shake-up and proposed reforms.
If ratings downgrades and loose fiscal policy push up inflation and unemployment, even Zuma's supporters in the ANC may fear losing their constituencies.
"This is his second term. The unemployment rate is still rising," said Andile Memela, an unemployed youth who lives in a Zuma stronghold in Kwa-Zulu Natal. "I think it's time for him to step down as president."
(Additional reporting by Siyabonga Sishi; Writing by Joe Brock; Editing by Giles Elgood)