Scenarios for after the May election
More important than predicting the exact result of SA’s May vote is to understand the nature of the government that will be formed in its aftermath.
If all polls conducted by prominent groups in SA are averaged, support for the ANC is slipping to near 40%, that for the DA is stable around 25%, the MK party of Jacob Zuma stands at nearly 10%, and the EFF is also near the 10% mark. The moonshot pact grouping of opposition parties collectively polls below 40%.
In Gauteng the ANC is in the 30 percentiles, with the DA not far behind. In the Western Cape, on the provincial ballot the DA’s majority is thin. In KwaZulu-Natal four parties are each polling in band between 20% and 30%.
These numbers will settle over the next month, and as they do predicting the results of the election will become more straightforward. However, anticipating what the politicians will do with those results to form a new national government will remain more difficult, and is ultimately a great deal more important.
To start finding an answer it is helpful to think in terms of three different types of results — listed below from the least to the most probable given current poll numbers.
The first of these would see the ANC secure a majority of above 50%. Through much of 2022 and 2023 the ANC was polling near 50% of the vote. It is chiefly only the rise of the MK party that has pushed its number nearer 40%.
Should something happen to interrupt the MK party’s trajectory, ANC support may recover to the high 40 percentiles.
The party also has a track record of surging in the final weeks of a campaign to wrest a few percentage points off the centrist opposition. Should the ANC result surprise analysts at over 50%, assume that President Cyril Ramaphosa will continue in his role for at least another year, markets will be welcoming, and there will initially be, at most, limited changes to government policy and fiscal management.
The second type of result is where the ANC secures 45%-49% of the vote. If this happens it will seek to build government with smaller parties. Again, Ramaphosa will most likely continue in his role, for a while at least, and there will initially be modest changes in policy.
The third type of result is one where support for the ANC is nearer or even below 40%, meaning it has likely suffered landslide defeats in Gauteng and KwaZulu-Natal. Myriad new governance options will then emerge, each with the potential to drive policy and economic fundamentals in a series of divergent directions.
A sense within markets is that if May 29 delivers this kind of result, the ANC might call a government of national unity. Ramaphosa, who may stay to give birth to this new administration, might call a national convention of parties in an effort to find sufficient consensus to start crafting a new national development plan. Government responsibilities and cabinet portfolios would be shared, and at a somewhat superficial level the thinking is that newly found consensus will secure a degree of political stability and economic reforms.
The thinking goes that National Health Insurance (NHI) and expropriation policy risks will then be forestalled, mining policy will be much improved, the trend towards private rail, port and electricity operators will accelerate, the currency may strengthen to levels below R17 to the dollar, the fiscal risk premium will lessen — meaning bond yields decline — and the central bank will find itself with more space to cut interest rates. Economic growth rates might then double from the forecast 1.5% of GDP to nearer 3%.
MIDDLE GROUND
While that sounds seductive, such a unity government would be fraught with risks for opposition parties if it is not accompanied by a far more profound willingness by the ANC to entertain fundamental policy reform than anything that has been on display over the past five years. Short of fundamental reform, such a unity government would fail to sustainably raise basic living standards. Voters would become disillusioned, and opposition parties — in having signed up for the project — would risk being considered jointly complicit in SA’s continuing decline.
Far from its initial promise, the unity government offer could become a device with which to degrade the competitive advantages of centrist opposition parties. This risk will weigh heavily on their post-May 29 decisionmaking. Yet flatly refusing to entertain a unity government invitation will also be fraught with risk for the central opposition bloc if in practice it brings about an ANC-EFF-MK coalition and its consequences.
A solution of sorts might be found in the middle ground between the “shotgun marriage” extreme of an ANC-DA coalition on the one hand, and a blanket refusal to entertain a unity government proposal on the other. Halfway between these extremes is what might be called a confidence and support agreement. Such an agreement could enable an ANC minority government to be anchored in office by centrist opposition parties in exchange for the chairmanship of key parliamentary oversight committees and the like.
The opposition might then conditionally oppose votes of no confidence in the executive and aid in passing the budget. This would allow a relative balance of power to be struck.
The ANC would not be vulnerable to an EFF takeover or the surrender of assets and patronage to that party, and beyond that a collapse into becoming a rural and regional organisation centred on the north of the country.
The broader opposition would be largely immune from the fallout risk of governance failures or the accusation that it enabled the feared ANC-EFF coalition.
If this courtship holds, the relationship might graduate to dating, where modest reforms ensure and, far into the future, a marriage might take place. Throughout the process the public should understand that the ANC and DA represent quite different constituencies — the DA a multiracial established middle class urban bloc, and the ANC an aspirant black emerging middle class bloc — and that they are therefore not competing directly for voters, even as their distinct supporters share common aspirations that can only be met through a common set of policies.
BALLOONING DEBT
The most feared consequence of a near 40% result for the ANC is that it delivers a coalition with the EFF and possibly MK. In this event Ramaphosa may exit. Policies such as NHI will be accelerated. Fiscal prudence is likely to be lost. The currency will shed value in leaps. Fixed investment levels would sink to single digits as a share of GDP as the deficit and national debt balloon.
Basic staple prices would rise to levels far beyond the affordability of poor households. The ANC and EFF would be in a race to curb a free 2029 national election.
Getting investment and related estimates right for SA through the short and medium term will require knowing the answer to which of these outcomes (and myriad subtle but important variations on these themes) is most likely to flow from the May 29 election result.
VOTERS WOULD BECOME DISILLUSIONED, AND OPPOSITION PARTIES WOULD RISK BEING CONSIDERED COMPLICIT IN SA’S CONTINUING DECLINE
RAMAPHOSA MIGHT CALL A NATIONAL CONVENTION OF PARTIES IN AN EFFORT TO FIND SUFFICIENT CONSENSUS