Election results may weaken Zuma’s position inside the ANC: Fitch
Fitch Ratings says that the pronounced drop in support for the ANC in the nationwide municipal elections increases the risk of more populist government policies.
The ratings agency cited early results showing that the ANC’s share of the vote fell to 54.4%, from 62% in the previous municipal elections, its worst showing since 1994.
The share of the opposition Democratic Alliance (DA) rose to 26.2% from 24%, and support for the radical Economic Freedom Fighters (EFF) stood at 7.9%, only moderately above the 6.4% in the 2014 national election (the EFF was founded in 2013).
The initial results also suggested that the ANC failed to obtain an absolute majority in four of the eight large metropolitan districts: Cape Town (already held by the DA), Johannesburg, Nelson Mandela Bay and Tshwane.
“This suggests that South African politics has become more competitive and constitutes a setback for the ANC,” Fitch said, adding that its base case remains broad policy continuity.
“Municipalities have no role in macroeconomic policy-making, but such a blow to the ANC’s traditional predominance could have an impact on policies, depending on the political repercussions and the conclusions that ANC leaders draw,” it said.
The results may weaken President Jacob Zuma’s position inside the ANC, because the outcome may be attributed to a scandal about state funding for the refurbishment of his private residence and court decisions to reinstate corruption charges, Fitch said.
“However, Mr Zuma has built a strong network of support in the ANC’s upper echelons, and there have been no clear signs that a majority of leaders could withdraw their support before the ANC conference in December 2017 that will choose his successor as party president and presumptive ANC candidate for the South African presidency in 2019.”
Fitch warned that there is a risk that the ANC turns to more populist policies to address rising voter dissatisfaction with perceived insufficient improvements in living conditions since the end of Apartheid.
“This, it said, “could include costly spending measures that could require breaching expenditure ceilings or redistributive regulatory policies that might undermine economic growth.”
Increased in-fighting within the ANC could divert political energies from policy-making, and we think it most likely that the national government will continue without major changes to policies, Fitch said.
“This would entail no substantial progress on structural reforms that could accelerate sluggish trend growth, but also no measures that could seriously threaten fiscal sustainability,” it warned.
Reactions to the dismissal of Finance Minister Nhlanhla Nene in December last year underlined that there are political risks to departing from the policy of debt stabilisation.
A more populist stance could alienate greater numbers of black middle-class voters, and the limited gains of the EFF, which runs on a platform of radical wealth redistribution, point to the limited effectiveness of populist political strategies, Fitch said.
More on elections
DA clinches Nelson Mandela Metro – final count
Loading ...