South Africa’s big game of ‘wait-and-see’

 ·20 Nov 2023

With the National Elections around the corner, South African businesses are biding their time.

According to RMB Chief Economist and Head of Research Isaah Mhlanga, there are four scenarios for next year’s election.

Firstly, the ANC gets above 50% of the votes and does not need to form a coalition government.

“Under this scenario, the current policy trajectory – with reforms in energy, logistics, water and safety and security, among others – continues at the current slow pace,” Mhlanga said.

In the second scenario, the ANC gets between 45% and 50% of the vote and can form a coalition with smaller parties – and avoid working with the DA and EFF.

At panel discussions that included sell-side economists (from investment banks) and the buy-side (portfolio managers) that Mhlanga partook in, experts believed that the second scenario was the most likely.

In the third outcome, the ruling party joins the EFF in a coalition.

“This outcome was viewed as holding the potential for a more populist government with a potential slowdown of current reforms. The prevailing view was that markets would sell off if this happens,” Mhlanga noted.

Lastly, the ANC and DA could join forces to form a coalition. This was seen as the least likely by the experts, despite probably having the best overall outcomes for the ountry.

Amidst this uncertainty around the 2024 election, businesses are stuck in wait-and-see mode.

Coalition government likely

Research from the Brenthurst Foundation showed that the ANC is likely to form a coalition in 2024.

“The ANC’s support has dropped from the 48% measured in November 2022 to just 41% in October this year with voters citing joblessness, corruption, load shedding, and crime as the country’s largest problems.”

Although only 23% of respondents said that they would vote for the DA, the Multi-Party Charter (MPC) – containing the DA, IFP, ASA, FF+ and more – would get 36% of the votes.

The majority of respondents (74%) also said that they would be happy to see a coalition government

“The ANC faces serious political competition with the formation of the MPC, an alliance of opposition parties that includes the DA, IFP, Action SA and FF+, with a five-point difference between the combined vote of the MPC and the ANC,” the survey said.

“Although the MPC had been in existence for less than two months at the time of this survey, half of respondents recognised its brand.

“A quarter of respondents said they were more likely to vote for an opposition party following the launch of the MPC. This suggests there may be significant voter support upside in greater name recognition for the MPC and greater clarity on its policy focus and narrative.”

That said, an ANC-EFF coalition has also garnered support.

Responding to the question “which coalition government do you prefer?”, it was a tie between the MPC and the ANC-EFF coalition at 21%.

Read: Election poster rules – what political parties can and can’t do for 2024

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