South Africa

Elections could fundamentally change South Africa’s trajectory 

The 2024 elections could see the ANC lose its majority for the first time in 30 years, fundamentally altering South Africa’s political and economic trajectory.

This is according to Efficient Wealth managing director Dr Francois Stofberg, who said the upcoming elections could lead to the first coalition government in South Africa.

He said recent polls suggest a significant shift, with the ruling ANC potentially receiving less than 51% of the vote. 

“Such an outcome could lead to the first coalition government, which would fundamentally alter South Africa’s political and economic trajectory,” Stofberg said.

If the ANC’s support falls to around 46%, the party would likely form a coalition government, maintaining a degree of control but sharing power. 

“This coalition might not necessitate a significant shift from the ANC’s current policy direction,” he explained. 

“However, the coalition would have to navigate shared ministerial positions and potentially conflicting priorities, which could introduce policy uncertainty.”

The economic implications of such a political shift are profound. However, he does not anticipate drastic economic disruptions, as policies are expected to maintain a degree of continuity.

He said investor confidence could be tested by political adjustments and their subsequent policy impacts. 

There is already some investor uncertainty in South Africa, as high international oil prices and the ongoing effects of El Niño are predicted to sustain inflation levels at around 5.2% for 2024.

While there may be a gradual decline thereafter, the South African Reserve Bank might hold interest rates steady until the latter part of 2024, reflecting a cautious approach.

Rating agency Moody’s recently said South Africa may struggle to make much more progress on resolving the country’s longstanding challenges if a coalition government emerges after elections this month.

“These include stimulating years of sluggish economic growth, curbing chronic power shortages and reducing very high unemployment,” said Aurelien Mali, vice president – senior credit officer at Moody’s.

“The current government has made incremental progress on these issues.”

Mali said that while the ANC is expected to remain the largest party, dropping under 50% of the vote will force it to form a coalition government.

“The strength or otherwise of the new administration’s mandate – and any concessions to minor parties needed to secure support – could make the already complicated management of fiscal, economic and social policy objectives even more difficult,” Mali said.


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