By Vernon Wessels
Signs of a late surge in support for the African National Congress (ANC) ahead of the election suggests the party may be able to retain control of the government without needing the backing of radical groups like the Economic Freedom Fighters (EFF).
After years of poor service delivery and looting of state assets, many predicted the ANC would face its reckoning in this year’s elections. Polls in April showed the ANC’s support at below 40%, prompting analysts to worry the party would need to form unstable coalitions with populist parties to claw back over the 50% mark.
Political analyst Ralph Mathekga says it seems people are resigning themselves to the thought that the stability of the ANC is better than a coalition with radical parties. “The opposition looks like they’re still sitting passively to collect the crumbs from the falling ANC [when] they should’ve been making inroads,” he says.
In the days leading up to the election, the ANC’s support has risen, if not by enough to push it over the 50% mark.
A poll released by the Social Research Foundation (SRF) on May 26, three days before the election, had the ANC at around 43%, based on a voter turnout of 60%, which seemed the most reasonable assumption. Notably, this had climbed from 36.5% on April 15.
Support for the DA had declined to 24%, from a high of 31% six weeks earlier, while support for the EFF remained largely stable at 10%.
Perhaps the biggest surprise of this election has been the remarkable support for the uMkhonto WeSizwe Party (MKP), a new organisation started by former president and corruption accused Jacob Zuma, which was polling at 12.3% on May 26.
This implies that the ANC will have to enter into a coalition — something which has proven disastrous for the country’s largest cities. The battle for control of top positions like the mayor, city manager, the treasury, has resulted in heated exchanges and bogged down council meetings. Johannesburg is on its fifth mayor since November 2021.
For the business sector, as well as the stability of pension funds, quite how this plays out will be keenly watched.
Iraj Abedian, an economist and Chief Executive of Pan-African Investment and Research Services, said the outcome of the vote in KwaZulu-Natal, traditionally a hotbed of violence and this year’s battleground for the poll, is crucial for national stability and economic growth.
Zuma’s party has been making inroads into the province thanks to his strong base in the province, while the Inkatha Freedom Party (IFP) is seeking to regain the control it lost to the ANC in 2004.
“An outcome that gives the ANC around 45% will be the best for the country,” says Abedian. “It would allow continuity as the ANC will form a coalition with the IFP and a couple of other smaller parties.” Abedian said.
Hopefully, the ANC will feel “chastised enough to self-correct, however slowly.”
Abedian says that bringing the IFP into the national government in exchange for a coalition between it and the ANC in Kwazulu-Natal would be vital. “Of course, this presumes that the IFP and ANC will manage to garner sufficient voter support to form a coalition,” he added.
While “market-unfriendly tail risks” have eased in recent weeks, the status quo suggests that investors should be selective in their investment choices, said Sarah-Jane Alexander, a portfolio manager at Coronation Fund Managers, which manages about R400bn in South African assets.
Coronation looks for companies that are growing revenues, managing costs effectively and can gain market share despite economic conditions. These include stocks such as Capitec, FirstRand, PSG Konsult, ADvTECH and Dis-Chem.
The manager expects South Africa to remain in a low-growth environment regardless of the election outcome, so it recommends investors use their 45% offshore allocation to achieve better risk-adjusted returns.
“The structural impediments to growth remain pretty much unchanged,” Alexander told Today’s Trustee.
“That includes three decades of underinvestment in infrastructure, poor performance of our infrastructure, poor educational outcomes, an unproductive labour force, and a weak education system. It’s hard to sketch a scenario with a meaningful uptick in growth.”
Still, a higher vote for the ANC implies a less destructive path than a coalition with the EFF.
This is because Malema said the EFF would only collaborate with the ANC if Floyd Shivambu, its deputy president, were appointed finance minister. Last year, Shivambu was docked nine days’ pay for failing to declare an R180,000 payment from a company implicated in looting the collapsed VBS Mutual Bank.
Both the EFF and MKP share ideological similarities with the ANC but adopt more radical stances on issues such as the nationalisation of the central bank, advocating for government control over mines and banks. They also go further than the ANC on land expropriation, arguing that the state should own all property and dominate every sector of the economy.
Mathekga says the upside of the ANC forming a coalition with smaller, more moderate parties is that it might push the governing party into adopting more centrist policies, rather than sliding towards more radical policies which spook investors.
“They know exactly why they struck out with losing votes,” Mathekga said, “it’s because they do not deliver.”
