It’s all about ‘what comes next’ for South Africa

 ·19 Apr 2024

Election polls consistently show the governing African National Conference (ANC) will lose its majority in the May 2024 vote – but markets are feeling jittery about what will happen next.

According to Investec chief economist, Annabel Bishop, with polls showing South Africa entering the age of coalition governance on a national level after May, focus is now turning to what type of coalition will ultimately emerge.

“April’s Social Research Foundation survey (found that the) first-choice is in favour of an ANC/DA coalition, with the ANC/EFF in second place and ANC/MK party in third.

“When second choices are taken into account, an ANC/DA coalition is seen as very favorable,” she said.

However, polls have seen a differing outcome over the last few months, pointing to “marked voter indecisiveness and weak allegiances”, Bishop said.

This also reflects the large number of political parties to choose from and general voter dissatisfaction, she said – compounded by a lack of clarity around coalition perceptions.

The SRF poll in April pointed to the ANC only managing to secure 37% of the vote on a 66% turnout, increasing slightly to 38% at a 60% turnout.

While the ANC achieved around 50% in the SRF polls over most of the past two years, it is now down to just below 40% in the latest SRF polling. Support for the DA and the EFF are roughly in line with polling numbers of the past 36 months.

The DA and EFF were seen at 25% and 11% in both the 66% and 60% turnout scenarios – thus pointing to a lower turnout benefitting the ANC.

Alarmingly, only 50% of the survey respondents said they would definitely vote. Voter turnout has been declining with every election.

Another poll, by newsgroup ENCA and Markdata, showed slightly different results: the ANC at 41.4% and the DA at 20%.

The results of these polls are seen below

What is clear in all the results, though, is that the days of an ANC majority are numbered. Economists and finance experts say much of the sentiment around South Africa hinges on how this is approached.

Should South Africa end up with a more balanced coalition between the ANC and the DA, South Africa could end up with a “good news story”, according to economist Dawie Roodt.

However, if things swing into the extremes with the ANC and EFF teaming up, or even with the Zuma-headed MK Party in the mix, investment and economic sentiment could sour.

The radical, nationalisation policies of the EFF have been negatively received by investors, weakening the rand and adding a risk premium to the bond market.

Bishop said that no matter what coalition emerges, the stability and longevity of the team-up will be in question.

“Once a coalition is formed, there is also concern about its longevity, and this will depend both on the ability of the coalition partners ability to work together, and living standards produced for the voters,” she said.

“With the ANC still largely expected to garner the most votes, a lot will depend on the actual final outcome at the end of May for the type of coalition formed.

“The outcome of the end-May election is uncertain for parties and coalitions, elevating investor uncertainty.”

Read: ‘Good news’ for South Africa is just around the corner – if we stay clear of one thing

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