Election’24: What happens if the ANC is forced to share power? – Michael Cohen

In the upcoming May 29 elections, South Africa stands at a political crossroads. The African National Congress (ANC), long a dominant force since its inauguration under Nelson Mandela in 1994, faces significant challenges amidst rampant poverty, unemployment, and infrastructural decay. Public disillusionment grows as corruption and mismanagement tarnish the ANC's legacy of dismantling apartheid. With opinion polls predicting the possibility of the ANC losing its parliamentary majority for the first time, South Africa might enter a tumultuous phase of coalition politics. This shift could deeply impact the nation's policy direction, affecting citizens, businesses, and investors alike..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..By Michael Cohen .___STEADY_PAYWALL___.For the past three decades, South African politics have been defined by the African National Congress. After taking power under Nelson Mandela in the first multiracial elections in 1994, the movement shaped the nation's new identity, dismantling discriminatory laws, extending basic services across color lines and opening up the mainstream economy to the Black majority. .Today, a party that's grown accustomed to crushing electoral wins finds its hegemony is fraying. South Africans who long overlooked the ANC leadership's shortcomings due to its achievements in overthrowing apartheid rule have run out of patience. The country faces rampant poverty and mass unemployment, rolling power blackouts, collapsing road, rail and port infrastructure and endemic crime and corruption. Opinion polls suggest voters may punish the ANC in May 29 elections by denying it a parliamentary majority for the first time, thrusting the country into a new era of coalition politics. If that happens, the party will need to embrace a culture of messy trade-offs and difficult compromises over policies and appointments, with repercussions for citizens, businesses and investors alike. .Almost 28 million people have registered to cast ballots in the election of the 400-member National Assembly, which chooses the president, and the nine provincial legislatures. Final results are expected by June 1. .Here's what you need to know about the vote: .Read more: MAILBOX: ANC doesn't focus on growth anymore, only consuming.The ANC's Legacy.The ANC is Africa's oldest political movement, with roots dating back to 1912. During its first 15 years in office, the party oversaw the longest period of economic growth on record and increased access to free housing, clean water and electricity. The biggest blot on its record in that period was foot dragging in providing AIDS drugs during President Thabo Mbeki's tenure. A study by the Harvard School of Public Health concluded that the delay probably caused the premature deaths of more than 330,000 people between 2000 and 2005. .It's been mostly downhill since Jacob Zuma took over as president in 2008 and presided over an era of endemic corruption known as state capture, during which more than 500 billion rand ($26 billion) of taxpayer funds was looted, according to government estimates. The ANC forced Zuma from office in 2018. His successor Cyril Ramaphosa has replaced a number of key officials and sought to rebuild key state institutions, but has still struggled to turn the country around. .The economy has expanded by just 0.3% a year on average over the past decade — well below what was needed to maintain living standards for the growing population. The unemployment rate stood at 32% at the end of 2023, and the income gap between rich and poor is wider than anywhere else in the world, according to available data compiled by the Thomas Piketty-backed World Inequality Lab. .Almost daily rolling blackouts have frustrated citizens and disrupted the economy, and the dysfunctional freight-rail system and ports hobble exorts. Ramaposa is trying to tackle those problems by increasing purchase of power from private producers, making it easier for companies to generate their own electricity and enabling private train operators to use the state logsitics company's tracks. .He's also increasing the size of the police force to try and bring crime under control. Over 80 people are murdered in South Africa each day, with the per-capita homicide rate more than five times the international average. .The Challengers.The main opposition Democratic Alliance and 10 smaller rivals have banded together to form a business-friendly bloc known as the Multi Party Charter, which aims to form a coalition government after the vote. Polls suggest the odds that it will be able to form a majority without involving the ANC are slim, though its members could take control of some provinces. .The Economic Freedom Fighters party is a potential king-maker. It has increased its share of the vote in every election it has contested since its formation in 2013 by Julius Malema, a former ANC youth leader, and most opinion polls show the trend is likely to continue. Currently the third-biggest party, the EFF wants to give the government a bigger role in the economy, including by placing all land under the custodianship of the state and nationalizing mines. Its populist rhetoric and confrontational style — its lawmakers have disrupted proceedings in parliament and brawled with security officers — have found resonance among many poor, Black township residents, whose living standards have improved little since apartheid ended. .The wild card in the election is the uMkhonto weSizwe Party, or MKP, which was formed late last year. It is backed by Zuma, who fell out with the ANC and is wildly popular in his home province of KwaZulu-Natal — the country's second-most populous region. The new party wants to increase the power of tribal leaders and make all tertiary education free. Opinion polls show the MKP drawing votes away from the ANC, EFF and Inkatha Freedom Party, which is the country's fourth-largest party and draws most of its support from Zulu speakers in KwaZulu-Natal. .Read more: Election'24: Is the ANC-MPC coalition the "least worst option"? – Katzenellenbogen.Key Issues in the Election.Welfare grants: Almost half of the population of 62 million receive a 350-rand monthly stipend, introduced during the coronavirus pandemic. The ANC has repeatedly extended the payment and has said it may introduce a permanent income grant, if the country can afford it. The DA says that while it will support the most vulnerable, it will focus on creating the conditions for private enterprise to flourish and create jobs. The EFF has undertaken to double all grants, without saying where the money will come from. Land reform: The ANC has long promised to address racially skewed land ownership patterns, but progress has been limited. It tried to amend the constitution to make it easier for the state to take land without paying for it, but failed to secure the necessary support in parliament. More recently, its lawmakers pushed through a new law with the same goal, which is still awaiting the president's signature. The DA has pledged to ensure property rights are respected, while the EFF says it will accelerate land reform. National health insurance: Last year, parliament approved enabling legislation for the phased rollout of universal national health insurance, a plan that's aimed at providing quality treatment for the 85% of the population who have no medical cover and rely on a decrepit public system with too few doctors. That law is also awaiting Ramaphosa's sign-off. The DA has said the plan is unaffordable, and it will implement a healthcare model that improves the existing services and facilities, and guarantees everyone a basic level of care. The EFF intends focusing on strengthening the primary healthcare system and building more hospitals and clinics..Read more: BNC#6: Hlabisa Q&A – ANC has proved a failure over 30 years, every vote counts in May.Post-Election Scenarios.Predicting the election result with any degree of accuracy is impossible. In numerous instances around the world, pre-election polls have proven wrong. In South Africa, the various parties' likely share of the vote varies widely in different polls, and the MKP's recent entrance into the race adds to the uncertainty. .Ramaphosa has said the ANC is confident of winning outright, and that it isn't entertaining the idea of coalitions. Should it win slightly less than 50% support, however, it would probably rope in one or more minor rivals to continue governing. One likely candidate is the Good party, whose leader Patricia de Lille serves as Ramaphosa's tourism minister. Others are the Patriotic Alliance and Al Jama-ah, which have worked with the ANC at the municipal level. .If backing for the ANC falls to around 45%, the IFP could emerge as a partner. It is a member of the Multi Party Coalition, but its leader Velenkosini Hlabisa has said he's open to joining "a government of national unity" if that's what voters want. One possible trade-off would be for the IFP to agree to support the ANC at national level in exchange for the premiership of KwaZulu-Natal, althought Hlabisa said he isn't open to such a barter. .The ANC may have to team up with either the DA or the EFF if its support plunges to the low 40% or 30% range. DA leader John Steenhuisen has said he'd consider an alliance with the ANC to prevent the "doomsday scenario" of it tying up with the EFF, although that's not his preferred option. Malema says it shouldn't be difficult for the EFF and ANC to find common ground on policy matters. A survey by the Social Research Foundation indicates that an ANC-DA alliance would be the one favored by most South Africans. .The ANC could also seek to form a minority government, but it would be severely constrained when it comes to adopting policies and legislation. .The Market View.Despite the ANC's poor record, the risk it will be forced to share power in an unstable coalition has raised angst among investors. Foreign investors have dumped more than 37 billion rand of South African stocks so far this year, while the nation's dollar bonds have been the biggest laggards in developing markets. Investors would favor the ANC tying up up with the Democratic Alliance over any other party, because it would boost the changes of a more business-friendly administration. .The biggest anxiety is that the EFF becomes part of the government and forces through policy changes, including the expropriation of land without compensation and increased spending on welfare. This is considered a fairly unlikely scenario. .There's also concern that Ramaphosa, who is more popular with investors than other top ANC figures, could be forced from office by the party if it performs particularly badly. .Read also:.Multi-party Charter teeters amidst talks of cooperation with ANC🔒 WSM: The ANC's foolish moves against Zuma, MKANC could retain a stranglehold on SA's future even if it loses the majority in 2024 elections – Ivo Vegter.© 2024 Bloomberg L.P.

Election’24: What happens if the ANC is forced to share power? – Michael Cohen

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