Good news for South Africa’s new cabinet – with big changes coming

Following two weeks of dramatic, and often very public, negotiations, President Cyril Ramaphosa is reportedly ready to announce his cabinet.

According to reports by the City Press and The Sunday Times, citing people close to the negotiations, a deal has been struck between the DA and the ANC over cabinet positions, which now only needs to be approved by party leadership.

City Press reported that the DA has been offered the Agriculture and Rural Development portfolio in lieu of the ‘withdrawn’ Trade and Industry offer, which the party’s negotiators are said to be in favour of.

Combined with six deputy minister positions in key portfolios like Finance, the DTIC and Energy, among others, this would give the DA significant influence in major economic clusters.

The Sunday Times, meanwhile, reported that key ministries are set to be split to limit this influence. This includes splitting Land Reform from Agriculture, and Mining from Energy.

Spanner in the works

While reports point to the new cabinet of the GNU being all but sealed, until Ramaphosa makes his announcements, nothing is final.

The so-called “progressive caucus”, which includes the EFF and Jacob Zuma’s MK party have also entered the picture at the 11th hour, seeking to form a different Government of National Unity with the ANC – one which explicitly excludes the DA and the Freedom Front Plus.

Both the EFF and the MK shunned the GNU when Ramaphosa first invited all parties to join.

Initially, only the DA, ANC and IFP answered the call, signing a formal ‘agreement of intent’ – which was enough to get the majority needed to re-elect Ramaphosa as president and the specified speaker and deputy speaker.

The EFF refused to engage at all, on the basis that the DA was involved. The MK said it would only talk to the ANC if Ramaphosa was out of the picture.

However, now that the cabinet is close to being settled, both parties are trying to woo the ANC away from its deal with other parties, offering it the same majority as the current GNU, but with its members.

Numbers game

By 24 June, the signed GNU, led by the ANC, included 10 parties, which gives the grouping 287 out of 400 seats, which accounts for 71.75% of the total.

The last parties to join the bloc—the UDM, Al Jama-ah, and the PAC—were previously part of the MK-led “progressive bloc.” They publicly stated that their intention behind joining the GNU was to weaken the DA and other parties within the government formation.

This progressive bloc is now left with MK, the EFF and the African Transformations Movement (ATM) and United Africans Transformation (UAT).

Notably, these parties have a combined 113 seats. If the ANC were to switch allegiances, the bloc would rise to 272 (68%), which is more than the supermajority (two-thirds) needed to make sweeping changes, including changing the country’s Constitution. Other parties would also undoubtedly follow the ANC to a new bloc.

However, the MK and EFF in particular are viewed by markets as incredibly anti-business and bad for economic reform. Also, while the EFF has put forward a claim that it is pro-Constitution and rule of law, the MK’s entire election manifesto is about tearing these down.

As was seen during negotiations this week, markets are extremely sensitive to the political leanings and manoeuvrings of the parties who are about to form government, and a 180-degree turn from the ANC would throw local markets into chaos.

According to Bloomberg, any agreement on forming a cabinet will be welcomed by investors who anticipate the combination of the ANC under Ramaphosa and the centrist DA will lead to an acceleration of economic reforms needed to address the nation’s energy crisis, fix its collapsing ports and railways, and reduce crime and corruption.

Other market analysts and finance experts have pointed to an ANC-DA GNU as the best bet for South Africa to see real change and economic growth.

In multiple pre-election reviews, any outcome involving the EFF (and then MK) in government was viewed as a ‘worst case scenario’.

Read: The worst-case election result that would send investors running