South Africa needs Ramaphosa to hold it together

South Africa’s current economic policy trajectory is likely to continue under the new government of national unity, but sceptics are already doubting whether the seventh administration can hold it together and not collapse into petty politics and infighting.
With multiple parties sharing governance, there is potential for enhanced efficiency in certain government departments—provided that government stability remains.
This is the view presented by Chief Economist of the Efficient Group Dawie Roodt, who raised red flags over possible discord among coalition partners within the GNU.
He said some of the opposing ideologies and policy positions of parties within the GNU could cause friction, and it was likely that confrontation around issues of governance would arise.
Speaking to BusinessTech in June—before the GNU was a reality and negotiations were underway—Roodt said that investors and businesses in South Africa need stability, clarity, good administration, and a friendly and secure environment in which to do business.
Now a month later, with the GNU set up and already getting down to business, there is hope that the new government can deliver this. But one of the biggest threats is whether government stability can hold.
The threat of friction
For the first time in South Africa’s democratic government, the African National Congress (ANC) did not receive an outright majority to govern on its own (~40% of the vote), and thus needed to form a co-governing/coalition agreement with other political parties.
The ANC formed a broad-based coalition comprising 11 disparate political parties, who have signed a statement of intent which outlines that the signatories will cooperate “in both the Executive and the Legislature,” subject to agreement to certain principles.
Together, these parties make up 288 out of the 400 seats in the National Assembly (72%), which the ANC said “ensur[es] broad representativity and a strong mandate to govern.”

This saw the parties with some starkly opposing economic ideologies and policy positions—who have been vocal critics of one another—come together to govern in the National Executive and/or Legislatures.
Thus, compromise and a middle ground would be needed to get legislation through and keep a stable government.
Professor Raymond Parsons, economist from the North-West University (NWU) Business School recently wrote that “high-growth economies typically build their prosperity on sturdy and stable political foundations… however, expectations must be tempered, as the range of opportunities will depend on the extent to which political and economic realities can, in practice, be reconciled.”
“The bar of responsiveness and accountability has been significantly raised,” he added.
However, Roodt said there are legitimate doubts as to whether this will be the case.
This is because the ANC has seen a comfortable outright majority government spanning three decades, and, as such, is quite used to being in the legislative driving seat.
The ANC has also emerged from the fraught elections and GNU negotiations as the biggest victor – dominating the National Executive, taking up 55/77 (~ 71%) spots, despite making up only 55% of the GNU.
It also retains control of the most critical economic portfolios and departments while absolutely dwarfing its GNU partners in control of the national budget.

It is important to note that several GNU partners do control some key positions in Parliament, which are both powerful positions in the legislature and crucial for oversight and accountability. However, it is paltry compared to the ANC, which is no longer a majority party.
Maintaining this fortified position in the GNU cabinet, Roodt said that the ANC is highly unlikely to change or compromise on any of its ideologies.
“Because their ideology will not change, their policies will not change,” said Roodt.
“That means that the ANC will keep [pushing] to achieve what the previous ANC government tried to achieve,” he added.
Therefore, the ANC will likely want to persuade parties in the GNU to adopt its policies, given that it has positioned itself as the coalition’s ‘dominant’ party.
“So (things will be) more or less the same,” Roodt said.
Reform on order
While the ANC remains in the driving seat, this has not been characterised as entirely negative by markets and business leaders, especially as continuity does bring some stability and certainty.
There is also the fact that the sixth administration, also under Ramaphosa, pushed for significant reforms in key sectors—even if the threat of economic collapsed forced his hand.
Both Business Leadership South Africa (BLSA) CEO Busiswe Mavuso and Business Unity South Africa (BUSA) CEO Cas Coovadia said that the seventh administration’s priorities need to be continuing the economic reforms initiated in the sixth.
This includes the partnership between business and government on energy, logistics and law and order, as well as the promotion of a free-market economy.
This was echoed by Parsons, who said that “the GNU policy outlook is likely to tilt South Africa towards an investor-friendly stance driven more by considerations of efficiency, stability and consistency… [but] success will ultimately be tested against the extent to which it has deliverables to show over time, including through cooperation with the private sector.”
Roodt said that while a complete change of policy is unlikely given the ANC maintaining much of its driver seat position, where the coalition partners can improve things is “by doing things better – improving efficiency” in the departments in which they control.
With ministers from various political parties in power itching to demonstrate their governance skills to the electorate, this could mean improved efficiency in these departments.
This includes the Departments of Home Affairs, Basic Education, Correctional Services, Public Service and Administration, Public Works and Infrastructure and various others in the hands of former opposition parties.
Additionally, the ANC would also want to prove its hand in its departments to the electorate, including those of Health, which is overseeing the implementation of the NHI, and Electricity, which is tackling load shedding.
“There are a lot of things that can be done on that front,” which would all positively contribute to the economy, said Roodt.
However, Roodt said that this is still not enough in the grander scheme.
“We need real policy changes; but for that, you need another ideology, and that is simply not what the ANC is going to do,” particularly in key economic departments, he said.
“To be honest, I can’t see this lasting five years – I do think that pretty soon we will see some sort of clash,” said Roodt.
Specifically, he said that battle lines will be drawn over corruption, and parties within the GNU will butt heads over accountability and the checks and balances that have been muddied over the years when addressing it.
“The day will come when the DA [and other partners] will have to confront the ANC about these sorts of things, and that would lead to a lot of tension between the coalition partners, which could lead to a collapse of the coalition,” said Roodt.
Cracks have already started showing on a provincial level, where the DA has been excluded from the executive in Gauteng due to a complete breakdown in negotiations with the ANC.
This shows that while there is an agreement at a national level, parties that have formed part of the GNU are willing to leave governance if certain buttons are pushed—which is why some investors and markets are still worried about government instability and whether it will last.
“Much hinges on the degree of good faith and trust invested in the GNU by its participants in order to ensure sustainability,” Parsons said.
“Extraordinary discipline and persistence will be required to defeat the cynics [and] political leadership of a high order will be required for the stability and success of a GNU.”
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