With the ANC having very few economic achievements to boast about as May 29 looms large, the party’s campaign for political survival was hit last week with new unemployment figures, further highlighting the inability of successive administrations to establish an enabling environment for job creation.
Work opportunities are the main priority issue for voters. Therefore the old political adage “It’s the economy, stupid” remains the core backdrop for the political shenanigans that are about to unfold after the counting of the votes.
As voters contemplate their party choices, the eventual outcome of the election will play a crucial role in either kick-starting a flatlining economy or derailing even the limited progress that has been made in recent years to arrest the decline.
With so many scenarios for diverse coalitions and governing agreements, analysing the potential effect of the election result on the broader economy is fraught with uncertainties and inconsistencies.
An overarching issue for the ANC — not just because of the 2024 vote — is the party’s own confused vision about what type of economic policy is required for the country.
The old battles of socialists and statists vs economic pragmatists remain. Over the past two decades, the ANC has squandered its own ideological integrity by presiding over a largely failed state-owned entity sector, thereby destroying the credibility of the much-vaunted developmental state model it clearly wished to have expanded.
With the destruction of value now evident in key sectors such as energy and transport and logistics (among many others), the state simply has been incapacitated.
In recent months, a desperate President Cyril Ramaphosa has led the charge to engage in partnerships with the private sector to address many of the most immediate deficiencies. Indeed, this frantic collaboration with the business community from a governing party that long tried to go it alone in key deliverables does seem to be bearing fruit. But the election outcome will test its longevity.
Because of the devastating degradation of energy and logistics, improved delivery will take many years to turn around. Therefore, the results of the May 29 vote will be crucial in maintaining the momentum already achieved. This is precisely why the many governing scenarios can have a dramatic impact on fostering progress or returning to regression.
First prize for Ramaphosa would be for the ANC to secure a 50%-plus outright victory. While this will still make the president vulnerable, as his poll result will be substantively weaker than in 2019, it will enable the ANC to regroup. It will also be seen as relatively positive for the private sector in that a majority government may be more stable and predictable than the unknowns of a potentially messy coalition.
With the survival of Ramaphosa and his eagerness to continue the collaboration with the business community, some policy continuity is likely, albeit within a still-confused — and perhaps even more divided — ANC.
A stronger EFF (or even MK) result will shift the ideological momentum to a more radical perspective leaving a wounded, muddled and perplexed ANC analysing its options
Markets will react favourably to this type of “same-same” style of governance but, again, this may just be short-term relief at having avoided even worse possible outcomes.
For the ANC, scraping over 50% of the votes may be the best it can hope for, but it will be governing on borrowed time in the full knowledge that it is now highly vulnerable among the electorate.
This unease will either spur the party on to more rapid regulatory and policy reform or degenerate into a blame game, with factions baying for the end of the Ramaphosa leadership team.
So, while there might be short-term relief, the ANC will need to cement a real economic recovery or face the next five years amid further economic and political decay.
Of course, this scenario will be better for markets than a severely weakened ANC seeking out a governing agreement with the EFF. The real risks here are manifold and run the full gamut, from rescinding the independence of the Reserve Bank to the (partial) nationalisation of banks and a renewed debate about aggressive land reform.
But the real issue will be a lack of confidence from both domestic and foreign investors. South Africa requires deregulation, but with this reregulation scenario the commitment and positivity from the business community to assist in rebuilding the country will be sorely tested, and likely evaporate.
The internal confusion within the ANC over economic policy can create some impetus for this worst-case scenario, and vigilance is required.
Revolutionary fervour and an overlapping series of populist policy sympathies can push elements within the ANC to seek out co-operation. The worse the ANC does in the election, the weaker the Ramaphosa faction will be, leaving a leadership void within the ANC.
Indeed, a stronger EFF (or even MK) result will shift the ideological momentum to a more radical perspective, leaving a wounded, muddled and perplexed ANC analysing its options.
But, amid the worst of all options, there remains a better way. And it will be reliant on the ability of Ramaphosa and his allies to read the tea leaves of the South African economy responsibly.
Given the party’s weakened post-election state, there will be an added responsibility on Ramaphosa to choose a governing structure that presents not only stability but also attempts to restore national unity in the process.
A result that is on the fringes of 50% is an opportunity for the president to draw into government a variety of parties keen on enhancing the public-private partnerships and workstreams already formalised.
Amid a weak result for the ANC there would be substantial opportunity to shift the negative trajectory and sentiment around the country through the strategic choice of coalescing political participants.
To this end, a much broader ANC-multiparty charter, further enhanced with the inclusion of some parties outside the umbrella opposition body, offers the country a real chance of an economic reboot — not to mention having more than 75% of all South Africans represented directly in government.
But the theory for this requires from the ANC political vision, ideological pragmatism and a more purposeful Ramaphosa, prepared to take political risks on policy.
Unfortunately, the recent period of ANC governance does not augur well for such a leap of faith, yet pressure from investors and key interlocutors within the ANC-supporting business community can play a critical role in lobbying.
If the status quo with its stagnant growth rate, declining per capita income, shifts to dependency and cronyist tendencies continue, the future is predictably bleak
Ultimately, this election presents a chance to set the country on a different political and economic trajectory.
Populist options and their manifold failures are well documented in the annals of countries worldwide. The fragility of the domestic South African economy will be set back decades if the institutional and financial independence of key sectors are attacked.
The country requires a substantive industrialisation policy, but this can be achieved only through confidence-building domestic financial (regulatory) and taxation policies that encourage business rather than repel it.
In addition, the country should not simply view its Brics partners — Brazil, Russia, India and China — as solutions to investment and infrastructure problems. Courting Western investment should run in parallel to encouraging responsible investment from China, among others in the more powerful global south.
One thing is for sure: the next five years require a shift in thinking. The election will probably determine just how likely a better outcome will be.
Should the momentum shift significantly to populist parties, the ANC may well feel that for it to stay in power, its own economic policies need to pivot further in that direction. Should the broader grouping of centrist parties do well, there will be more internal justification within the ANC to pursue a more market-friendly approach.
Worryingly, with no real clarity following an ANC-led outcome of a weak majority government or “benign” coalition with acquiescent political partners, decision-making becomes more diffused and difficult.
Policy uncertainty has already led to an increasing suspicion about South Africa as a viable repository for investment. For this to be overcome, a welcome mat needs to be rolled out to all, amid key reforms in the privatisation of failing state assets, accelerating public-private partnerships in key deliverable areas and critical energy, labour and security restructuring.
A progressive commitment to clean energy will form the backbone of essential reforms and will require “dirty energy” gatekeepers to take a back seat. A weak ANC-led administration may well find such reforms a bridge too far and even strain the already damaged internal cohesion.
In addition, the effects of a weaker ANC vote on key constituencies will need to be analysed closely.
A loss of critical trade union support will unnerve a party built around a core alliance with the unions. A weaker ANC will also offer fewer patronage opportunities, severing links with key benefactors and rent-seekers. Furthermore, a wounded ANC will unnerve a bureaucracy often peppered with cadres whose linkages to power may well be diminished.
That South Africa finds itself, three decades after liberation, at a political and economic crossroads is a given. With plenty of downside risk in the coming vote, there also remains considerable upside. Our politicians on all sides of the aisle will be tasked with making critical decisions on potential partnerships — as uncomfortable as it might well be.
It’s an election in which few may be satisfied with their performance. But if those on the pragmatic side of the aisle can prevail, there remains a pathway to progress. However, if the status quo with its stagnant growth rate, declining per capita income, shifts to dependency and cronyist tendencies continues, the future is predictably bleak.
Can our politicians grasp the nettle at this historic juncture? How the votes fall will determine their sense of vision or their quest for power at all costs.
* Silke is director of Political Futures Consultancy
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.