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SOUTH AFRICA
  • Preliminary results from yesterday's election are already leaning towards a coalition bonanza, exceeding 2016's 27 hung municipalities as the ANC looks set to poll below 50% for the first time since 1994.
  • This brings forward the spectre of a possible EFF kingmaker in many municipalities, and a concerning populist element creeping into SA's political framework for the next 5 years.
  • This may make delivering market-friendly reforms and a more austere fiscal approach more challenging for Ramaphosa and stalling on more left-wing concepts such as land expropriation without compensation more difficult.
  • The EFF is also famously known for its insistence on the nationalisation of SA's mining industry and the SARB. Here, increased EFF influence would be a broadly negative scenario for the Ramaphosa administration as it seeks to embark on a long-delayed structural reform agenda to encourage foreign investment and boost employment amid the current unemployment crisis (34.4%).
  • Moreover, it may embolden the anti-Rampahosa "RET" faction of the ANC to continue running interference to sully Ramaphosa's chances of another term in office.
  • The effects of the pandemic and wide unemployment boiled over in July with the social unrest and rioting, and reflects the stark economic realities on the ground with 74.8% youth unemployment in 15-24 year olds - creating room for more populist ideologies to grow.
  • Hence, these coalitions will become more important than ever in determining SA's trajectory going into the 2024 elections, and will be monitored closely in the coming days.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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