As ANC votes, South African poor feel party has passed them by
* Worries of entrenched poverty if ANC stays its course
* ANC policies seen as eroding competitiveness
* ANC failings reflected in cities such as Botshabelo
BOTSHABELO, South Africa, Dec 14 (Reuters) - A billboard of a smiling President Jacob Zuma reminds Botshabelo residents his ruling ANC will hold an important meeting down the road next week to shape the future of South Africa.
But behind the giant poster, people see little to smile about: sprawling shanties, dirt roads and rampant unemployment in the town of 200,000 speak volumes about the party's failings since it took over with the end of apartheid in 1994.
Zuma is poised to win a fresh term as leader of the African National Congress (ANC) at its electoral meeting that runs from Sunday to Thursday in the nearby city of Bloemfontein, putting him on a path to serve as the country's president through 2019.
That is a prospect that worries everybody from ratings agencies to Botshabelo residents, who say Zuma's government has not done enough to fix corruption, a broken education system and the unemployment that is dragging down Africa's biggest economy.
"We are sitting on a time bomb. ANC policies have taken us to the brink of disaster," said Khokhoma Motsi, 52, who heads the Botshabelo Unemployed Movement, which tries to find work for thousands of people in the city.
Botshabelo, which means "Place of Refuge", was set up as a dumping ground for displaced blacks by the apartheid government and remains a soul-less, unloveable place.
In some ways, the ANC has made great strides, connecting most residents in places like Botshabelo to the electric grid, providing running water and building hundreds of thousands of homes, the newest with toilets and solar panels.
"Our projects, our plans are geared towards creating an environment that enables the district to flourish," said Qondile Khedama, ANC spokesman for the Mangaung district where Botshabelo is located.
However, the city's official unemployment rate is 56 percent, more than double the national rate.
Its overcrowded schools struggle to find qualified teachers and textbooks while most of its residents appear destined for permanent underclass status with no chance to escape poverty.
"These ANC conferences have come and gone, putting people into positions for their own sake, not for the sake of the poor the ANC has pledged to help," Motsi said in the one room plywood hut used by the group.
CORRUGATED TIN KIOSKS
Nelson Mandela's former liberation movement, which turned 100 this year, has helped many blacks shut out of the economy during apartheid move into the middle class.
Between 2001 and 2011, average household income has more than doubled, well outpacing inflation, while doors once closed to the black majority have been forced open through affirmative action programmes.
But a large section of the 52 million population has been left out, with official data showing nearly 40 percent of South Africans live on less than $3 a day.
Income disparity, ranked as among the highest in the world, has only grown bigger under Zuma, 70, a Zulu traditionalist with little formal education.
The future also looks bleak for the first generation to go through the post-apartheid education system, ranked as among the worst of 144 countries surveyed in the World Economic Forum's Global Competitiveness Report - well over 100 places behind neighbouring Zimbabwe.
About half of this generation is destined for a lifetime without formal employment, according to a study by the South African Institute of Race Relations.
Yet the ANC is poised to stay in power for years to come because of its role in bringing down apartheid, which helps assure it overwhelming support among the black majority.
Most disgruntled black voters choose not to vote rather than cast ballots for the main opposition Democratic Alliance, seen as the party of white privilege. Past attempts by disaffected ANC politicians to set up credible rivals have flopped.
Botshabelo resident Sabelo Baza, 25, has lived most of his life under ANC rule. He carved a niche in the informal economy by buying vegetables and fruit at a supermarket and selling them at a makeshift kiosk of cardboard and corrugated tin to those too poor to make the trip themselves.
"I was an ANC supporter but I have given up on them. They are making themselves rich but we have no jobs and no money."
None of the residents that Reuters spoke to said they supported the ANC, although many credited the ruling party with some positive influence in areas such as housing.
LOSING PACE, LOSING JOBS
The bulk of the jobs in Botshabelo are in an industrial area set up under apartheid that is now home to textile and electronics firms.
Even though the industrial park has about 90 percent occupancy, according to the Free State Province, working hours and positions are being cut. Companies complain that ANC policies have driven up the cost of unskilled labour.
The ANC, in a governing alliance with labour federation COSATU, has backed union-friendly laws that have made the labour market among the most restrictive in the world, with one of the worst rates for overpaying unproductive workers, according to the Global Competitiveness Report.
As a result, South Africa has priced itself out of many industries where it was once competitive.
Zuma's government has proposed a raft of reforms to tighten the labour market further to appease its labour allies, even though a report commissioned by the presidency said the changes would lead to massive job losses.
COSATU's 2 million members have been a powerful vote-gathering machine for the ANC but the alliance has also started to grate on many union members, who feel labour bosses are more interested in politics than workers on the shop floor.
This anger led to the most damaging strikes since the end of apartheid earlier this year when more than 75,000 workers in the crucial mining sector launched a wave of wildcat strikes that paralysed platinum and gold production.
Analysts expect the turmoil to flare again.
"Policy makers are not listening and even if they were listening, they would take the wrong actions and diagnose the problem incorrectly," said Loane Sharp, a labour economist at employment agency Adcorp.
Botshabelo, like many impoverished parts of South Africa, has been rocked by "service delivery protests", in which residents typically blockade streets and square off with the police to complain about the way the ANC is running their town.
The number of such protests averaged 21 annually in the five years before Zuma took office in 2009 but that has jumped to more than 110 since then, according to monitoring group Municipal IQ.
South Africa devotes billions of dollars a year to eradicating poverty through better schools and job training but large sums never make their way to their intended targets because they get siphoned off by corrupt officials.
There is little accountability on the ground. The Auditor General found that all the municipalities in the Free State Province, which is home to Botshabelo, were unable to keep track of money going in and out.
The state auditor said more than 90 percent of municipalities nationwide were unable to keep their books in order.
For some, like Botshabelo activist R.J. Sethibe, the rot is so severe they have been forced to do the unthinkable - abandon the ANC and join the opposition DA.
"I grew tired of the ANC only delivering empty promises to the people. Corruption is too high and accountability too low," he said. "Things will only become worse if Zuma stays in office."