SA’s Budget crisis proves the ANC needs its coalition partners

Key topics:.Ramaphosa's disregard for coalition partners strains South Africa's unity government.Budget delay sparks concerns over South Africa's fiscal stability and debt crisis.ANC must cooperate with DA to avoid further instability and maintain coalition..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Justice Malala ___STEADY_PAYWALL___.For a protégé of Nelson Mandela, who made working with opponents an art form, South African President Cyril Ramaphosa seems to have learned little. After forming a coalition with the business-friendly Democratic Alliance (DA) and eight small parties in June 2024, Ramaphosa has ignored his partners on key issues, humiliated the DA leader John Steenhuisen, and failed to listen to his biggest cheerleaders in organized business when they urged caution on his implementation of controversial new laws. .All that has brought the overriding positive aspect of South Africa's political landscape in recent years — the formation of the government of national unity (GNU) — to the brink of collapse. On Wednesday, after an emergency Cabinet meeting, the presentation of the finance minister's budget speech was "delayed indefinitely." This is unprecedented in 31 years of post-apartheid, democratic South Africa. The decision came after the ANC tried to ram through a value-added-tax hike from 15% to 17%. The DA balked and markets reacted negatively. .It's easy to understand why: The ANC, which won just 40.1% of votes in the elections last year, has behaved as if it still governed on its own. It not only rammed through legislation that its coalition partners were vociferously opposed to, but seemed hellbent on embarrassing leaders of the DA in the process. It was only a matter of time before things came to a head. .Despite massive opposition, Ramaphosa signed into law a universal healthcare bill whose funding could not be explained and which numerous actors had said was not ready to be implemented. When the DA's Steenhuisen attempted to negotiate with Ramaphosa, the president referred him to the health minister instead. .Ramaphosa did the same with the Basic Education Laws Amendment Act, which focuses on language of instruction in schools and who controls pupil admissions. Much the same happened with the Expropriation Act, which Ramaphosa signed into law three weeks ago and which has drawn the ire of US President Donald Trump. .Ramaphosa's continued intransigence on conferring with the DA made for serious tensions and concerns that the coalition might break. It was clear in the weeks leading up to the budget speech that there were fundamental differences on taxes. Yet Ramaphosa and Finance Minister Enoch Godongwana sat on their hands as Budget Day approached. Ramaphosa only called an emergency cabinet meeting hours before the speech was to be delivered. .Steenhuisen said the last-minute postponement came about because of the failure by the ANC and minister Godongwana "to engage meaningfully." Ramaphosa clearly thought the DA would blink first on tax hikes as it has on previous occasions. His gambit failed, and the consequences could be dire for a volatile currency and an economy that has stalled for 15 years..The abrupt postponement will dent the credibility of South Africa's budget process, leaving investors in the dark about the coalition government's fiscal priorities, plans to tackle debt, and economic reforms. A sustained impasse or failure to pass the budget — the ANC needs the DA to vote for it — could lead to instability. It also raises doubts about the government's ability to rein in debt that Godongwana says has reached unsustainable levels. (South Africa's debt-to-GDP ratio has skyrocketed from 23.6% in 2008/2009 to government forecast that it would reach 75.5% this year. The International Monetary Fund has recommended that the country reduce its debt-to-GDP ratio to 60% over the long term.).All this comes at the worst possible time. Over the past month, South Africa has been in the crosshairs of Trump, who has frozen aid to the country, offered its White minority Afrikaner community refugee status, and spread false narratives about its leadership's actions on land reform. The pain from the US is likely not about to end: Last week, Republican congressmen called for South Africa to be excluded from the African Growth and Opportunity Act trade agreement, which allows duty-free access for thousands of products from 32 eligible sub-Saharan countries to the US. .While the collapse of budget talks rattled markets, the silver lining is that it did not lead to a walkout by any of the parties in the coalition government. It's not the end of the GNU, but a necessary recalibration of power within it. The ANC has over the past eight months flouted Clause 19 of the Statement of Intent (the contract between the GNU participants signed last June), which calls for "sufficient consensus" in decision-making. This consensus exists when "parties to the GNU representing 60% of seats in the National Assembly agree." The ANC (with 40.1%) and the DA (21.8%) need each other to reach sufficient consensus. .The ANC now has to take the DA's views seriously. Ramaphosa can still save the GNU if he and his party recognize that they are senior partners in a coalition, and not the ruling party they used to be. It's time to dial down the arrogance. South Africa, which chairs and hosts the G20 summit this year, needs the coalition to continue. .Having gotten to the brink with this damaging budget fiasco, the two parties may be ready for a more realistic and sober approach. We shouldn't write off the GNU just yet. .Read also:.The 2% VAT hike Treasury kept quiet—And why they pushed for itEWC, BEE setting up Godongwana and GNU for failure – IRR🔒 Palantir shares fall 10% on US defense budget cut concerns.© 2025 Bloomberg L.P.

SA’s Budget crisis proves the ANC needs its coalition partners

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