SA Election 2024 – We Could Be Celebrating

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The SA election was concluded peacefully and accepted by most, which in itself is a triumph, given the huge divide in the electorate and the large changes in party support. In our opinion, the result was near perfect, with the ANC garnering a lowly 40% and the weakening of the EFF to 9%, mostly thanks to the MK and Jacob Zuma. The DA maintained a respectable 21% and retained its majority in the Western Cape.

The result was not what the investment market expected. In the three months leading up to the election, there was real concern that a low ANC result would lead to a probable alliance with the EFF. A doomsday scenario emerged, which saw the R/$ spike out to 19.3. As we drew closer to the election, the expectation was that the ANC would manage close to 50% before forming a coalition with IFP, a far cry from an EFF coalition and thus not doomsday. The R/$ strengthened to 18.1 and SA Bank shares shot up 10% in a month.

But the market was dead wrong. The ANC attained a low 40% and market panic set in again as anti-DA coalition voices rose within the ANC ranks, and an EFF/MK coalition was not “off the table”.  The R/$ spiked out to 19 and the Bank shares are now down 5%.

With the ANC seriously humiliated and wounded (only 1 in 7 eligible voters voted for the party), it is desperate to survive and needs to make some astute decisions to reverse its demise leading up to 2029.

The ANC has opted for the route of a government of national unity (GNU), which at the outset seemed the typical “spineless” Ramaphosa easy option of trying to please all. The initial thought is that this will be one big mess with no constructive decision making. However, given the large diverse views between parties and the complexities of forming a formal coalition within a short period of time, a GNU is probably the most sensible path forward. In addition, partnerships will be formed within the GNU and at least accountability will be at the forefront.

Yet the way forward still lies with the ANC, whom many feel, cannot be trusted. However, for the ANC to survive, the only possibility of a real future lies in working to regain support through job creation and service delivery, as elocuted by voters who turned their back on the party. This can only take place with much improved economic growth through partnering with political parties that put this at the forefront of their agenda.

It is no secret that Ramaphosa and some senior ANC members want a DA coalition, but the leftists in the ANC do not support this. Some remark that the GNU is a facade for eventually partnering with the DA.

Our understanding is that the DA has not been very demanding in its ANC coalition talks and ultimately wants to position itself to ensure policies are adhered to, corruption ends, and government functions effectively.

Ramaphosa is known to be a negotiator and a peacemaker, so now may be his time to sensitively guide the country through a myriad of complexities and onto a road of economic growth and ultimately a better place for all.

But a week in politics is a long-time as we wait and hope that Ramaphosa maintains the presidency by 16 June. Our view is that we will have a more positive outcome, but currently, local investment markets are “understandably” too sceptical as they lean towards a negative future.

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