South African CEOs believe ANC will lose majority

A recent survey found that around 80% of South African CEOs believe the ANC will lose its majority in the upcoming elections and are concerned about an ANC-led coalition.

This was revealed by Merchantec’s CEO Confidence Index for the first quarter of 2024, which has collated the views of CEOs of listed, large private and multinational companies in South Africa since 2009.

The Q1 2024 Merchantec CEO Confidence Index asked CEOs about their predictions on political developments.

South Africans are set to vote for a new national government on 29 May 2024, with many polls indicating that the ANC is at risk of losing the majority vote for the first time since the party took power.

Should the ANC not get an outright majority, it will need to enter into a coalition with another party, like the EFF or DA, to make up the majority vote.

When asked, “Will the ANC’s support fall below 50% in the upcoming elections?” an overwhelming 79.7% of CEOs said it would.

“The responses highlighted a shared concern among CEOs over the current political direction and its impact on the business climate,” the report found.

A significant number of the CEOs expressed a desire for change, with some calling for economic reforms and a pivot away from ideologies detrimental to market freedom. 

“We need to allow the free markets to take the reins. Privatise all SOEs,” one CEO stated.

Several of the CEOs’ comments focused on the importance of voter demographics, with hopes that the younger generation will become more politically active and the older generation will reconsider their longstanding loyalties.

“Anticipation of an ANC-led coalition has raised concerns about further entrenching anti-business sentiment, which could worsen the outlook for South Africa,” the report said.

Merchantec’s head of M&A Buy Side, Myles Waldeck, told KayaBiz that developing coalition governments in Johannesburg has shown that smaller parties can become kingmakers.

“There can be a lot of movements and crossing the aisle, and business is a little bit scared because typically in an election year, there’s more rhetoric, there’s more posturing, and sometimes it gives a negative business sentiment,” he said.

“The business community’s perspective, as captured in this quarter’s CEO Confidence Index, is a call for political change and economic revitalisation,” the report said.

ANC/EFF coalition

The CEOs’ concerns echo those of Investec chief economist Annabel Bishop, who said an ANC/EFF coalition is a worst-case scenario outcome for the 2024 elections.

This is because this coalition could see many businesses leave South Africa or close down.

Bishop said an ANC/EFF coalition would likely lead to debt default on excessive state expenditure and huge job losses in the country.

“An ANC/EFF coalition is seen leading to the severe down case, with the likelihood of debt default on excessive state expenditure, while private sector corporates would most likely depart from South Africa under an EFF regime or close down, with huge job losses,” Bishop warned.

She explained that income tax from corporations and high-income earners and the value-added tax on their spending are the key funders of the state’s revenue and, therefore, its expenditure. 

“The collapse of the private sector would also see the banking and rest of the financial services sector collapse,” she warned.

“A collapse of the financial services sector would see the collapse of the ability of government to issue more debt, as its source of borrowings is eradicated (mainly the domestic private sector) under severely ramped up state control.”


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