Unity government nears cabinet agreement, boosting market optimism

South Africa’s African National Congress and Democratic Alliance are nearing an agreement on ministerial posts to form a coalition government. The ANC has increased its offer to six positions, while the DA has reduced its demands to six or seven. Investors are optimistic about reforms to address the energy crisis, infrastructure, and crime. The rand has risen 3.9% this month amid hopes for policy continuity and economic growth.

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By Antony Sguazzin and Ntando Thukwana

South Africa’s two biggest political parties are nearing agreement on the number of ministers each party would have in their efforts to form a broad coalition government with other smaller parties, people with knowledge of the matter said.

The African National Congress, which lost its majority for the first time in last month’s elections, increased its offer to the Democratic Alliance for six ministerial posts as of late Sunday from an initial three, said the people who asked not to be identified as they’re not authorized to comment on the matter.

The centrist Democratic Alliance, which obtained the second-highest number of votes, has reduced the number of posts it’s seeking to six or seven, after initially requesting about 10, though there are still disagreements over the seniority of the positions to be allocated to the DA, the people said.

The make-up of the executive is being closely watched by investors anticipating an acceleration of reforms needed to address the nation’s energy crisis, fix its collapsing ports and railways, and reduce crime and corruption. South African financial assets have rallied this month on optimism that the new government will continue to implement pro-growth policies.

“We have a golden opportunity to turn the trajectory of the country around,” Busi Mavuso, the head of lobby group Business Leadership South Africa, said in an interview with broadcaster 702 on Tuesday. “There is much that is not going right in our country at the moment. We need economic growth. I think this is an opportunity for us to do that.”

The rand has gained 3.9% so far this month, while bonds and stocks have rallied on optimism about policy continuity. The currency advanced 0.1% at 8:40 a.m. in Johannesburg.

‘New Discussions’

In a letter sent by the DA to ANC Secretary-General Fikile Mbalula on Sunday, the DA expressed its preferences for portfolios, listing 11 ranging from the minerals and energy, transport, trade and industry to the public works ministries. The party also proposed that a member of the DA should be appointed deputy president, according to the letter that was confirmed by DA officials.

DA spokesman Richard Newton declined to comment on the number of posts the party has been offered, but said negotiations had moved on since the letter had been sent and that the party remains committed to talks on forming a new executive.

“We’re not walking away from anything at this point and negotiations have continued,” Newton said by phone. “There’s a lot of new discussions that have been taking place.”

ANC spokeswoman Mahlengi Bhengu-Motsiri didn’t answer a call and a text message seeking comment. In a statement, the party criticized the leaking to the media of political parties’ demands for cabinet positions and suggested that the tactic was hindering the process of appointing the executive.

“Negotiating through leaking demands to the media is an act of bad faith and this practice will not help the cause of any party,” the ANC said. “The government of national unity cannot be held to ransom by any single party. The people need a government to be established sooner, rather than later.”

The party reiterated that the appointment of the cabinet is the prerogative of President Cyril Ramaphosa. An announcement on the appointments is “drawing close,” the party said.

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