Fitch Ratings Agency
By Mpho Moloi – Fitch Ratings has flagged the “radical agendas” of uMkhonto weSizwe (MK) and the Economic Freedom Fighters (EFF) as significant risks to South Africa’s stability following the national elections held on 29 May. The African National Congress (ANC), which emerged with only 40.18% of the vote, will need to forge alliances with other parties to govern—a scenario that Fitch suggests could have profound implications for the country’s policies and credit profile.
Fitch Ratings revealed that the ANC’s reliance on the Democratic Alliance (DA), MK, or EFF to form a government could lead to various outcomes that may impact South Africa’s fiscal health. The credit rating agency maintained South Africa’s rating at ‘BB-’ with a Stable Outlook in January 2024, but specified that further deterioration in government debt-to-GDP and economic performance could lead to negative rating actions.
Coalition Conundrums
In the race to form a coalition, ANC’s weakened public support may drive the party towards more short-termist policies, potentially jeopardising fiscal consolidation. Prior to the election, Fitch anticipated that the ANC only needed to align with smaller parties for governance, thus ensuring policy continuity. However, given the stronger-than-expected showing by both the MK with 14.58% of the vote and the EFF at 9.52%, the political landscape looks more fragmented.
Potential Coalition Dynamics
Fitch posits that an informal pact with the DA, which secured 21.81% of the vote, might be more feasible than a formal coalition. Historical tensions and key policy disagreements—namely in foreign policy—make an official coalition seem implausible. Should the ANC and DA collaborate, it is expected that President Cyril Ramaphosa could continue his priorities with minimal deviations to the nation’s credit metrics, although fiscal tightening might be intensified.
However, reaching an understanding with MK or EFF could require drastic concessions, given their radical platforms. Both parties campaigned on controversial issues such as large-scale land expropriation without compensation, nationalisation of critical sectors, and increased social grants, posing significant risks to South Africa’s debt trajectory and macroeconomic stability.
Internal Tensions and Alliances
Among the internal discord, senior ANC members have reportedly disclosed advanced coalition talks between Ramaphosa, the Inkatha Freedom Party (IFP), and the DA. Despite this, the ANC’s alliance partner, Cosatu, staunchly opposes a coalition with the DA, citing the party’s perceived adversarial stance on worker rights. Veteran ANC leader Lindiwe Sisulu has further stirred the pot by publicly advocating for a “Black Pact” to counterbalance any potential ANC-DA alliance.
Following a tempestuous election, over 20 political parties lodged legal efforts to halt the Independent Electoral Commission (IEC) from announcing the results due to alleged irregularities, with the MK, Patriotic Alliance (PA), and African Transformation Movement (ATM) among the challengers.
Election Outcomes and Historical Context
In the 2024 elections, the ANC received 6,459,683 votes (40.18%), a decline from previous elections in 2019 where it had secured a stronger mandate. The DA garnered 3,505,735 votes (21.81%), followed by MK with 2,344,309 votes (14.58%) and the EFF with 1,529,961 votes (9.52%).
This election is one of the toughest the ANC has faced, given the necessity of a coalition to govern. White-owned businesses have voiced strong opposition to the EFF’s potential inclusion in government, while black businesses support it.
The ANC has announced a Special National Executive Committee Meeting on 6 June 2024 in Ekurhuleni to discuss coalitions, premier candidates, and the way forward. It is anticipated that significant pronouncements will be made during this meeting, potentially reshaping South Africa’s political and economic future.
_______________________________________
Central News Weekly Edition 055: Download the latest special edition of Central News Print and Digital Newspaper. Top Story : “ANC Chairperson Gwede Mantashe Blames Media for Party’s Decline in Recent Elections”
Download Here:
Read all our publications on magzter:
https://www.magzter.com/ZA/Central-News-Pty-Ltd/Central-News/Newspaper/All-Issues
________________________
Central News also offers Sponsored Editorial Content, Podcasts , Radio / Social Media Simulcast, Video Production , Live Streaming Services, Press Conferences, and Paid Interviews (Video/Audio) etc.
We guarantee exceptional exposure, reach, and engagement, with an excellent return on investment.
Advertisement:
To place your advert on our platforms (Print Newspaper or Digital Platforms) : Please email : sales@centralnews.co.za
For Business Related:
business@centralnews.co.za
Newsroom:
Send your Stories / Media Statements To: newsroom@centralnews.co.za
General Info:
info@centralnews.co.za
Office Administrator:
admin@centralnews.co.za
Whatsapp / Call: 081 495 5487
Website: https://www.centralnews.co.za
Social Media Platforms (@centralnewsza) : Linkedin, Facebook, Tiktok, Twitter, Instagram, Youtube
#centralnewsza