Business is right in seeking to push the ANC and the DA to remain the stable core at the centre of the seventh administration, but the factors influencing whether this happens are complex — and have more to do with party politics and personal ambition than the fate of the country.
No-one can predict how the GNU’s first big crisis will play out over the coming weeks, but there are factors outside the actual budget process tugging at the two parties, which reopened talks to find each other amid the impasse.
This political crisis could not have come at a worse time. US President Donald Trump has turned global trade on its head, with his “liberation day” tariffs announcement last week. As Singaporean Prime Minister Lawrence Wong put it this week in a message to his own citizens, the move will “spell trouble for all nations”.
“The likelihood of a full-blown global trade war is growing. The impact of the higher tariffs plus the uncertainty of what other countries may do next will weigh heavily on the global economy. International trade and investments will suffer, and global growth will slow,” Wong said in a candid analysis of the US’s latest move.
Aside from the 30% tariffs slapped on South Africa by its second-largest trading partner, it is also in the Trump administration’s political crosshairs, as seen in the expulsion of former ambassador Ebrahim Rasool and the revived bid in Congress last week for a complete review of ties between the US and South Africa.
It is against this global backdrop that an already limping South Africa is moving into internal political instability. This will hit business confidence and investor sentiment hard, rendering the unicorn of 3% growth impossible — though it was pushed for by business and the government in their far-reaching alliance launched in President Cyril Ramaphosa’s first term.
Business leaders have been mobilising resources to work with the government on reforms in logistics, energy, and crime and corruption. Some leaders wrote to Ramaphosa and DA leader John Steenhuisen, calling for cool heads and for the continuation of a reform-driven, pro-growth seventh administration.
While business leaders have not specified support for any single party, the alternatives to the DA in the GNU could see the reform agenda falter. These include an unstable ANC minority government; a GNU with small parties ratcheting the ANC’s support up to just 51% in parliament; or a tie-up with the EFF or the MK Party, or both. The last option, dubbed the “doomsday coalition” by the DA, would hit business confidence and investment, compounding the impact of global knocks.
While Ramaphosa has publicly told business to stay in its lane, the FM understands that both the ANC and the DA have taken the letter seriously.
The ANC mustered the vote in parliament last week to put through finance minister Enoch Godongwana’s March 12 budget, which included the contentious 0.5 percentage point VAT hike. It was supported by non-GNU parties ActionSA and Build One South Africa, as well as GNU partner Rise Mzansi, after talks between the ANC and the DA collapsed ahead of the vote. The DA on Thursday launched a legal challenge to the budgeting process, seeking to interdict the VAT hike from taking effect on May 1 and overturning parliament’s adoption of the fiscal framework.
Now the ANC and the DA are in talks within their structures and have tentatively reopened talks with each other, ostensibly to salvage the GNU in its present form.
The ANC’s national working committee met on Monday, and the DA’s federal executive committee met last Friday but did not finalise discussions. As it stands, sources in the DA have told the FM it would prefer to be pushed out, rather than leave of its own accord.
However, there are also internal dynamics at play in the party which could culminate in it opting out sooner rather than later.
In the midst of negotiations last year to set up the GNU, the DA was split between two options. The first was full-blown participation in the GNU through taking up government positions (which happened), and the second — favoured at the time by federal council chair Helen Zille — was for the DA to support the ANC in a minority government, with a “confidence and supply” agreement in place.
The ANC, however, wanted a broad coalition government. The DA pushed for the two large parties to enter a two-way agreement, but the ANC proceeded to invite all parties into the tent.
Those opposing the DA’s entry into the government have been bolstered by the budget impasse. There are fears that there will be few results to show voters if it continues to have little say in big-ticket items such as the budget.
ANC negotiators are understood to have been frustrated at what they saw as the DA’s constant shifting of the goalposts during talks — but negotiations hit a brick wall when the party insisted that its deputy finance minister, Ashor Sarupen, be delegated specific powers to oversee the day-to-day running of Ramaphosa’s flagship presidency project, Operation Vulindlela. It also wanted its deputy minister of trade, industry & competition to have a role in reviewing the regulatory framework to ease the administrative burden on business.
“They insisted that unless their ministers are involved in a meaningful way to drive economic reforms, they will vote against the GNU budget,” an ANC insider tells the FM.
The other frustration was around Steenhuisen’s apparent hesitation to take firm decisions without consulting party strategist Ryan Coetzee, often shifting stances once he had done so. The DA was negotiating on the budget after its perceived losses in battles against sixth administration legislation passed by Ramaphosa, including the National Health Insurance (NHI) Act, the Basic Education Laws Amendment Act and the Expropriation Act. Both the NHI and the Expropriation Act were raised in negotiations around the budget.
The DA is also bracing for its electoral conference next year, where Steenhuisen could face a strong challenge for the leadership. Groupings are lobbying for Cape Town mayor Geordin Hill-Lewis or former Tshwane mayor Cilliers Brink. Steenhuisen is under pressure to deliver on his promise to grow the DA through its participation in the government.
Zille told journalists last week that the DA would not rush its decision on the GNU, due to the potential severe implications for the country. At the heart of the failure of negotiations was the ANC’s unwillingness to share power, she said.
“Yes, you can’t get it all. But the ANC also can’t get it all. It is refusing point-blank to share power. The other parties in the GNU are just supporting and backing the ANC’s plan using their votes.
“That’s not the DA. We are there because we promised South Africans that we were going to rescue South Africa, which, crucially, means getting the economy to start growing again. That is why the plan to grow the economy was central to the VAT negotiations.”
The DA may jump ship if it is convinced that no real reform, tangible to the electorate, will emerge from the GNU, thus rendering its participation damaging to its electoral support.
The hastily agreed statement of intent in the heady post-election days has also come back to haunt the ANC and the DA. In particular, there was an obliquely worded sentence about decision-making in the GNU being driven by “sufficient consensus”, without defining what that would be, who would enforce it, and what the consequences would be for acting outside it.
Yes, you can’t get it all. But the ANC also can’t get it all. It is refusing point-blank to share power
— Helen Zille
A further weakness of the GNU’s functioning is around the so-called clearing house or dispute resolution mechanism, which sources across political parties say is completely ineffective. It is headed by Deputy President Paul Mashatile, but has been toothless in navigating disagreements in the GNU. It does not have formal terms of reference for its functioning, despite these being discussed ad nauseam for months.
This leads to the ANC’s internal dynamics. According to ANC sources, Mashatile is opposed to the DA’s participation in the GNU — vehemently so. Mashatile describes himself as a social democrat and his opposition is at odds with his reputation as a pragmatic politician. However, his public (and private) comments indicate that his stance on the DA is hostile.
“They [DA ministers] did not vote for it [the budget], but I can see that some of them are still working as ministers. I would be ashamed to do that, because where does the budget come from? You run to work as a minister, but you didn’t vote for the budget, you think it’s OK?” said Mashatile, addressing a breakfast briefing hosted by the Ahmed Kathrada Foundation on Monday.
In a leaked audio of an ANC parliamentary caucus meeting on the eve of the budget, Mashatile was equally aggressive in arguing against the DA.
In February last year, Steenhuisen personally laid a criminal complaint relating to News24 reports on allegations of corruption against Mashatile and members of his family spanning two decades. This was after handing over a dossier to Ramaphosa on the allegations contained in the news reports, urging him to act against his “number two”.
This could be behind Mashatile’s rush to see the back of the DA in the GNU, but ANC sources also cite the ANC’s upcoming succession race. Mashatile is a front-runner to be elected leader of the party at its 2027 conference. Ramaphosa loyalists argue that Mashatile wants to push out the DA to bring in the EFF, in a bid to shore up his support in the party ahead of the conference.
Ramaphosa’s allies say the president remains committed to staying the course with the DA but, as a second-term president, even his own faction in the ANC is already looking beyond him to the next party leader.
It is understood that there is a big shift in the number of ANC national executive committee members who support the DA’s continuation in the GNU, compared with last year.
Even Godongwana told parliament last week that the DA no longer has a role to play in the government. “I don’t think you can vote against a budget, then expect to be part of its implementation. It can’t be. We are going to draw a line on that,” he said.
Whether the two parties can find each other remains unclear.
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