As the African National Congress (ANC) emerges from the 2024 general election with its lowest vote share in 30 years, the political landscape in South Africa is poised for significant change.
With the ANC receiving only 40.19% of the votes and losing power in KwaZulu-Natal to the Umkhonto Wesizwe party, analysts predict a shift in the country’s governance. A coalition between the ANC and the Democratic Alliance (DA) appears to be the most market-friendly option.
University of South Africa political science professor Dirk Kotze noted that the ANC’s poor performance was anticipated. President Cyril Ramaphosa was unable to reverse this trend, leading to a significant decline in support.
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Kotze emphasized that the markets would favor a DA-ANC coalition, whereas an ANC-MK-EFF coalition would be detrimental to investor confidence.
Independent political analyst Sandile Swana echoed these sentiments, stating that the election has solidified the need for coalition governance in South Africa. The ANC’s dominance is now broken, requiring all parties to adopt a more humble approach.
ANC Secretary-General Fikile Mbalula confirmed that the party was open to discussions with any potential coalition partners.
Meanwhile, DA’s federal council chair Helen Zille expressed a strong determination to avoid an ANC-MK-EFF coalition, which would likely spook investors.
Experts agree that the markets are closely watching South Africa’s political developments, with a DA-ANC coalition seen as the most stable and market-friendly outcome.
Despite the ANC winning the most votes, the significant decline in support from previous elections highlights shortcomings in addressing public concerns.
Both the ANC and DA leadership have acknowledged the need for coalition talks to determine the best path forward for the country.
DA leader John Steenhuisen emphasized the party’s commitment to rescuing South Africa from what he termed a ‘doomsday coalition’ and indicated that exploratory talks with like-minded individuals were already underway.
The 2024 general election marks a turning point in South Africa’s political landscape. With the ANC’s hegemony broken and coalition governance becoming the norm, the markets keenly observe the formation of a stable and investor-friendly government.
A DA-ANC coalition appears to be the most favourable outcome for maintaining economic stability and investor confidence in South Africa’s future.
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