2024 Election Update

24 Jun 2024

Government of National (dis)Unity in South Africa: A Rocky Start

The formation of a new government in South Africa has hit a rocky start. The African National Congress (ANC) has already deviated from Clause 14 of the Statement of Intent it signed with the Democratic Alliance (DA) on June 14, 2024. This clause mandates that parties “work together in good faith and seek to build consensus on the formation of government.” However, the ANC's actions indicate a departure from this agreement.

The ANC has offered the DA a disproportionately low number of cabinet positions and has attempted to include additional parties in the Government of National Unity without consulting the DA. This move seems to suggest that the ANC considers the DA’s role fulfilled after helping to elect Cyril Ramaphosa as President. The future resolution of this impasse remains uncertain.

The DA might realise that entering agreements with partners who negotiate in bad faith is risky and might decide to return to the opposition. In this scenario, the ANC could govern as a minority government, relying on support from parties like the Economic Freedom Fighters (EFF) and uMkhonto weSizwe (MK), or by forming coalitions with smaller parties. While this approach could work mathematically, it would complicate coalition management and increase the demands of political kingmakers.

In response, the DA, along with the EFF and MK, might move to oust Ramaphosa in a vote of no confidence. This could lead to Paul Mashatile being elected as President, forming a coalition government with the EFF or MK, ending Ramaphosa’s political career abruptly.

The ANC's current trajectory presents it as an untrustworthy negotiating partner, fighting to defend its dwindling power. Its declining share of votes results from poor governance that has failed to improve socio-economic conditions for many South Africans, who face high unemployment, stagnating incomes, and deteriorating public services. The envisioned government model suggests continued stagnation, accelerating the ANC's decline.

The Rand, which had strengthened from R18.93 to the US Dollar on June 6 to R17.91 on June 21 amid coalition deal news, is likely to weaken to the R18.30 to R18.40 range due to renewed political uncertainty. Government bond yields, having fallen from 10.983% on June 5 to 9.879% on June 21, are expected to rise. Similarly, gains on the Johannesburg Stock Exchange are likely to reverse.

By-elections: Gauging Political Sentiment

The results of 18 by-elections last week provide insights into current political dynamics. Six by-elections in the Western Cape and 12 in KwaZulu-Natal revealed the ANC's continued decline and potential stalling of MK's momentum.

In uMzumbe Municipality, KwaZulu-Natal, six by-elections were triggered by defections of ANC councillors to MK. The ANC defended two seats, while the IFP won three, and MK secured its first local government seat. MK candidates, however, did not significantly impact other by-elections.

In Cape Town, the DA defended three safe wards and won three seats in Beaufort West, marking its first majority in the town’s municipal council. These results suggest that support for MK and the PA may be soft, with the next major test being the 2026 municipal elections.