The EFF, a relatively new party on South Africa’s political landscape, has gone from a minority of radicals out of the 2014 national elections, to a vital component of South African politics in 2016.<\/p>\n
The EFF emerged as the kingmaker in the local elections, wielding enough power to sway council votes in favour of the DA or the ANC. The party has publicly stated it would support parties in opposition to the ANC – but would deal with votes on a case-by-case basis.<\/p>\n
“The EFF\u00a0therefore remains incredibly important,” Attard Montalto said.<\/p>\n
Nomura\u00a0noted that the EFF’s decision to stay away from coalitions came as a surprise, and would likely upset much-needed stability in key economic hubs such as Tshwane and Johannesburg.<\/p>\n
2. Local government\u00a0could\u00a0be chaos<\/strong><\/p>\n With very few outright majorities coming from coalitions in hung municipalities across the country, governance is going to be unstable, if not chaotic.<\/p>\n “Somehow nothing seems certain,” Attard Montolto said.\u00a0“For example the EFF is asking for a different mayoral\u00a0candidate for Johannesburg than Herman Mashaba, who ran for the DA in the elections.”<\/p>\n “There is the issue of the AIC and the uncertainty over how the EFF will treat each vote\u00a0and the budget act in council adds uncertainty. Then there is the issue of the EFF\u2019s\u00a0internal stability – that is even before we get to the minutiae of the workings and stability\u00a0of the DA coalition.”<\/p>\n The analyst said that we would have to wait until after the first council meetings and the elections of mayors to get a better grasp of how things will go.<\/p>\n “Ultimately, the need for service delivery may bring all opposition parties together, including the EFF, but this seems a challenge.”<\/p>\n 3. The results are not exactly investor-friendly<\/strong><\/p>\n Attard Montalto\u00a0said that\u00a0the market is still overestimating the \u2018good news story\u2019 from the local\u00a0elections.<\/p>\n “For example, a minority DA government in Johannesburg hamstrung by the\u00a0EFF vote-by-vote jockeying is at significant risk of being less of an investor-friendly\u00a0outcome than the investor-friendly ANC mayor Parks Tau outcome,” the analyst\u00a0said.<\/p>\n Where there could\u00a0be a potential \u2018good news story\u2019 is the DA providing more\u00a0efficient government and service delivery in Nelson Mandela Bay – but that is only because the party has the coalition power to make solid decisions there.<\/p>\n In economic hubs like Tshwane and Johannesburg, the outcomes are still very much up in the air, which is not an environment investors like.<\/p>\n 4. The ANC’s response to the loss will be damaging<\/strong><\/p>\n “Markets are underestimating the chances of an ANC policy reaction to\u00a0regain support, a reaction, which is directly correlated with the number of metros they\u00a0lose,” the analyst said.<\/p>\n This response has already been seen taking place: soon after the election results were announced, the ANC executive moved to a 4-day meeting to discuss the outcome.<\/p>\n Coming out of the meeting were plans for the party to refocus its policies in a more populist direction – almost echoing the narrative of the EFF – specifically to restructure budgets to assist the poor and focus on job creation.<\/p>\n While these policies are nothing new, the big loss in the local election may push the ANC to pursue the populist route more aggressively – something ratings agencies earlier in the year warned the party against doing, as it would cost the economy dearly.<\/p>\n A more populist ANC still in power nationally, could have a more damaging outcome for the economy, and is one of the elements Nomura projects will send the rand to R17 to the dollar by year end.<\/p>\n 5. Things aren’t going to change for a while<\/strong><\/p>\n While the election results dawned a new, complicated period of politics for South Africa, the ANC remains very much in power, has rallied behind president Jacob Zuma, and looks set to follow its political path into 2017.<\/p>\n Nomura noted post-elections that Zuma has shown he is in control of the party, and would likely stay as president to 2018 before his preferred successor takes over.<\/p>\n “Fundamentally,\u00a0we think\u00a0markets are overestimating the chances of the ANC losing power nationally and in\u00a0Gauteng in 2019 under a new ANC leader,” Attard Montalto said.<\/p>\n “As we published after the elections the status\u00a0quo is here for some significant time to come, and may turn out to be more messy than\u00a0expected.”<\/p>\n Zuma has united the opposition \u2018enemies\u2019 against the ANC<\/a><\/strong><\/p>\n DA announces coalitions with smaller parties<\/a><\/strong><\/p>\n EFF coalition demands included removal of Zuma and \u2018Die Stem\u2019<\/a><\/strong><\/p>\n![\"Coalition](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2016\/08\/Coalition-make-up.png\")
<\/a><\/p>\nMore on South Africa’s coalitions<\/h3>\n