Businesses send urgent message to Ramaphosa

South African business leaders have written to the leaders of the country’s two biggest parties imploring them to settle their differences and keep the ruling coalition intact. 

The collapse of the government, which is hanging by a thread following a dispute over the national budget, would lead to job losses and impact growth, the business leaders said, a copy of the letter seen by Bloomberg read. 

The letter was sent to South African President Cyril Ramaphosa, who is also the leader of the African National Congress, and John Steenhuisen, head of the Democratic Alliance, by the leaders who are part of a delegation that works with government to drive economic growth.

They include Adrian Gore, the chief executive officer of Discovery Ltd., and Duncan Wanblad, the leader of Anglo American Plc. 

“We have a great deal to lose. A collapse of the Government of National Unity could reverse the gains we have achieved,” the leaders wrote.

“We therefore write to you with a simple plea: Stay the course. stay in the room. Hold the line. Keep building. Compromise.”

South Africa’s Government of National Unity (GNU) has been brought to the brink after a massive falling out between the DA and ANC over the 2025 Budget.

Both parties accuse the other of crossing over a hard line during negotiations on how to proceed with South Africa’s spending plans, and acting in bad faith.

On Wednesday (2 April) the DA voted against the budget, on of two GNU partners to do so, but by far the biggest. The ANC, meanwhile, managed to find support from smaller parties made up of ex-DA members outside the GNU.

The ANC drew a hard line on the budget vote, with Ramaphosa saying that the DA “defined itself outside the GNU” by going against its partners.

The party argues that the DA cannot be in government and also in opposition, and DA members of cabinet cannot implement a budget they are against.

However, the DA accused the ANC of acting in bad faith by seeking support for the budget outside the GNU while negotiating with the party. By its account, the ANC were the ones to break the alliance first by doing so.

Ramaphosa has reportedly called a cabinet meeting on Monday (7 Arpil) where the future of DA ministers in government will be brought into question.

Markets have not responded well to the saga.

South Africa has much to lose by having the GNU fall apart, with the alliance being one of the core foundations of the stunning turnaround in sentiment towards the country since the 2024 elections.

The pairing of the DA and the ANC was seen as the best possible outcome for South Africa, with the GNU seen as pro-business and pro-reform, restoring some credibility to the once-majority party.

Should the DA leave the GNU, markets will focus on who fills the space left, with none of the options being as positive or stable as it currently stands.

The GNU could proceed with smaller parties like Action SA and Bosa – the parties that supported the ANC in passing the budget – replacing the DA.

This would maintain the GNU’s perceived centrist position, but the grouping would lose its supermajority in parliament and potentially lead to disruptions down the line as the interests of 9 smaller parties come into play when passing legislation.

The GNU could continue, but as a minority coalition; it would introduce significantly more instability as passing legislation would require buy-in from those outside the grouping – as was the case with the budget.

In a worst-case scenario for businesses and markets, the GNU could invite leftist and populist parties like the MK Party of EFF into the coalition, which would likely spell the end of the grouping’s pro-business and pro-reform stance.

Business leaders have now been explicit about which path forward they hope the country will take.

(With Bloomberg)