South Africa: South Africans back Ramaphosa despite disillusionment with the ANC
May 21, 2019
Despite a setback at the polls for his African National Congress (ANC), incumbent President Cyril Ramaphosa secured a clear mandate from South African voters on 8 May to continue pursuing his reform-minded economic agenda. As broadly projected by pollsters, Ramaphosa’s ANC won 58% of the vote (2014: 62%), a comfortable majority for the political behemoth once led by Nelson Mandela but its weakest national-level outturn in the post-Apartheid era nevertheless. Looking ahead, while the result firmed Ramaphosa’s grip on power, especially within the ANC, analysts expect the clearest guidance on the next government’s economic priorities to come with his upcoming cabinet announcements and state-of-the-nation address.
Historically-low voter turnout reflected widespread disenchantment with the ANC. That said, the incumbent party largely contained losses to the populist, left-leaning Economic Freedom Fighters (2019: 11% of the vote; 2014: 6%); analysts had expected a more noticeable swing given the EFF’s recent momentum. Democratic Alliance (2019: 21%; 2014: 22%), the main opposition party, also shed some support to the political flanks. Notably, Ramaphosa’s popularity appeared to save the ANC more than a few seats at both the national and provincial levels.
South Africans, disaffected by years of sky-high unemployment and flagrant corruption, voted overwhelmingly in favor of Ramaphosa and his pro-growth economic platform and promises to crack down on graft and state capture, cut red tape and promote greater transparency within government. Ahead of any major announcements, however, it remains to be seen how Ramaphosa will tackle the escalating crisis at Eskom. Although the government has committed to a ZAR 69 billion (USD 4.9 billion) bailout package for the state-owned utility, which is expected to push the fiscal deficit to 4.4% of output this year, some analysts fret that additional support could still be necessary.
Commenting on the result, analysts at Goldman Sachs noted:
“The ANC limited its losses nationally and in key provinces, owing largely to Ramaphosa’s popularity, and also to the relative weakness of the opposition parties. Market reaction to last week's results was relatively positive, and the focus now will be on the policy agenda of the new administration. […] Because the ANC’s performance was in line with expectations, the result tells us little about internal party dynamics or the president's ability to command sufficient support within his party to execute his agenda. For a clearer signal on this question, we look to [his upcoming] cabinet announcements and state-of-the-nation address.”
Analysts at Nomura, meanwhile, were less equivocal:
“After assuming the presidency in February 2018, Ramaphosa was forced to take a cautious approach in making some key bureaucratic appointments and addressing state-capture concerns. In this regard, we thought a successful showing for the ANC in parliamentary elections would be crucial for Ramaphosa to assert his agenda on the ANC and make progress on structural reforms. [All told,] we think the ANC’s improvement from its 2016 [municipal] elections performance will strengthen Ramaphosa’s hand on these fronts.”
As it stands, with another majority for the ANC set to run through the forecast horizon, growth is seen accelerating to 1.2% this year—down 0.2 percentage points from last month’s forecast. Next year, growth is seen ticking up to 1.7%.
Author: Christopher Thomas, Economist