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DA Refusal to Form Coalitions Pushes ANC Closer to the EFF, Hung Metros May Slow Reform

SOUTH AFRICA
  • Overnight the DA said it would not look to form coalitions with the ANC in key metros with its track record of corruption and cadre deployment crossing the party's ideological red lines.
  • While this may be a firm stance from the DA on corruption, it pushes the ANC more firmly towards coalitions with the (now kingmaker) left leaning EFF party and away from more market-friendly DA-ANC coalitions.
  • The ANC has said it remains open to cooperation with any party - so with limited options, ANC-EFF partnerships are looking more likely.
  • The upshot of EFF-ANC coalitions is more left-leaning and market unfriendly policy at a time when the ANC desperately needs to kickstart reform to save itself from another dismal voter display in 2024.
  • Moreover, it coincides with a period of more positive fiscal footing with the Treasury poised to press the advantage on its fiscal consolidation amid a robust tax windfall.
  • 66 hung metros makes the task of achieving reform inordinately difficult for Ramaphosa going forward, with party leaders conceding that coalitions make for complicated politics and slow progress.
  • Voters made their grievances clear in this election that corruption and persistent load-shedding have finally trumped the traditional post-apartheid attitude to 'vote for the ANC no matter what' – placing the party on a precarious trajectory going forward.
  • Without structural reform to alleviate acute unemployment problems, the party will continue to slide and see populist elements creep into domestic politics as citizens become more disenchanted with years of broken promises for progress.
  • While attempts to boost energy security through self-generation threshold reforms and efforts to reduce red tape at ports being a positive start, Ramaphosa will need to go above and beyond to stem the ANC's bleeding going into 2024.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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