President Cyril Ramaphosa needs to secure a solid majority in the 2019 national elections if he’s going to have the support he needs to execute his reform strategy for South Africa – but the national vote is one thing keeping the president up at night.
This is according to Colin Coleman, head of sub-Saharan Africa at Goldman Sachs Group, discussing the election outcomes on Bloomberg.
Coleman said that the ANC and the presidency will keep its eye on three major factors in the upcoming election, which will determine its way forward.
The first is the national vote – where Ramaphosa will need to secure well over 55% of the vote to effectively pursue his reforming ‘modernisation’ plan for the country.
A support level above 60% would indicate that the current leadership has the necessary support from the people of the country. However, the opposite is also true, with support levels below 55% showing that the people have lost faith in the ANC’s ability to reform.
The second factor keeping the pressure on Ramaphosa is the party’s provincial performance – whether the party can hold onto Gauteng and KwaZulu Natal, or lose it to the opposition like the Western Cape.
With less power in key provinces, the ANC will be hard-pressed to implement its reforms without facing hurdles and obstacles from opposition parties.
The third pressure point is the EFF.
“The Julius Malema factor – if they (the EFF) outperform, while the ANC underperforms, it’s a very strong signal that populism is on the rise in South Africa.”
Coleman said a combination of these three factors is very bad news for the prospects of modernisation and reform, and Ramaphosa would find it very difficult to put in place his “dream team” in government.
From a market point of view, an underperformance would lead to downward pressure on all asset classes in the country – equities, currency and debt.
“The reverse is also true – if (Ramaphosa) outperforms, there will likely be a rally in the market. Either side of the book-ends, you will see a sharp reaction in the market,” Coleman said.
If there’s a 55% outcome for the ANC, the analyst said the country can expect “more of the same” in terms of what the country has experienced over the last year or two.
The market, ratings agencies and many businesses are hoping for a solid mandate for structural reform, Coleman said, which would be at around 60% of the national vote.
Estimates of support for the ANC range from 51% to 61%, with the opposition Democratic Alliance garnering between 19% and 24%, according to surveys by polling firms and research institutes.
Malema’s Economic Freedom Fighters, currently the third-largest party, is seeing support of 11% to 14% polls show.
Several pre-election polls have been run in 2019, showing a wide variety of results for the three big parties.
The latest poll, from the Institute of Race Relations, showed the ANC support base dropping to as low as 49.5% nationally, and the EFF rising as high as 15%.