Ramaphosa’s GNU cracks

The Democratic Alliance (DA) has voted against the Government of National Unity’s (GNU) budget, putting its future in the coalition government in question.

While much of the drama on Wednesday (2 April) focused on whether the budget would pass, markets were more concerned about how the DA would vote and what it would mean for its place in the GNU.

Ahead of the budget, leaked audio from an ANC caucus led by President Cyril Ramaphosa made it clear that the party would view the DA’s vote against the budget as it “(defining) itself outside the GNU.”

The president argued that a party in government couldn’t also be an opposition party. It couldn’t vote against that government’s budget and then expect to draw from it afterwards.

Delivering his budget debate speech, finance minister Enoch Godongwana was more direct, calling it a “line” that must be drawn.

“I don’t think you can vote against a budget, and tomorrow you want to go and be part of its implementation,” Godongwana said.

“It can’t be. You’ve got to draw a line at that point.”

While the ANC has given no indication that it would try to expel anyone from the GNU, it has made its position clear—that parties who are opposed to the GNU should see themselves out.

However, the DA has accused the ANC of crossing its own lines and sidestepping the GNU in handling the budget vote.

The party said that it had tried to negotiate with the ANC within the GNU, but instead of engaging, the ANC opted to seek support outside the government.

In doing so, it got buy-in from ActionSA—a minority party led by ex-DA members—which ultimately helped the budget pass the finance committee and the National Assembly without full support of the GNU partners.

Delivering his speech ahead of the vote, DA MP and spokesperson on finance Mark Burke said that in doing so, the ANC itself had crossed a line in the sand, and this was “a serious infraction”.

Burke said that the DA would not enable the “worst parts of the ANC”, even if it meant exiting the GNU.

“We joined this GNU government to drive the growth and jobs agenda, not to enable the worst parts of the ANC,” he said.

“For that, it has to turn to ActionSA. If we’re forced to exit this government for driving a growth and jobs agenda, then so be it.”

While the DA hasn’t specified if it will leave GNU, that prospect has unnerved investors and weighed on the rand. Many view the position as untenable.

Markets are worried

A possible break in the GNU has driven anxiety in the markets. The rand has come under pressure, tanking 1.62% and losing around 30 cents to the dollar on the day.

There are fears that should the DA’s involvement in the GNU end, the hole would be filled by anti-business and market-unfriendly parties like the Jacob Zuma-led MK Party or Julius Malema’s EFF.

Notably, the Freedom Front Plus—which is also part of the ruling alliance—also voted against the fiscal framework.

If it, too, heads for the door as a result of the break, it would leave the GNU wide open to invite the EFF and MK Party.

Both the EFF and MK have stated that they will only be part of the GNU if the DA and FF+ are out.

However, the National Assembly vote showed that it is possible for the ANC to lead a small majority, even against the DA, MK Party and EFF combined.

This would require bringing in ActionSA and BOSA—another small party led by an ex-DA member—on a more official basis.

So far, the only indication the DA has given of its next steps is that it will take the matter to court.

DA leader John Steenhuisen said his party would file a legal challenge against the passing of the budget in the High Court because proper procedures weren’t followed. 

While there is still scope for a compromise to be reached further along in the budgetary process, it will be tricky for the main parties to continue working together, given the prevailing acrimony.

In addition to clashing on the budget, the coalition’s members have been at odds over a series of laws spearheaded by the ANC.  

The DA has objected to legislation to achieve universal health insurance, which it says is unconstitutional and unaffordable, as well as amendments to an education policy it fears will hurt Afrikaans-language schools.

The party also wants adjustments to a land-expropriation law signed by Ramaphosa in December that makes it easier for the state to seize property in the public interest.

(With Bloomberg)