Support to ANC is on the Rise

The national and presidential elections in South Africa will take place on May 29. Voting has already started in abroad as of May 17 and more than 78,000 South Africans living abroad started to cast their ballots over. Most opinion polls in South Africa continue to envisage an ANC victory would still be a surprise on May 29, and a likely ANC-led coalition with the DA and/or other smaller parties would probably run the government. (Note: South Africa does not directly elect the head of the state, but instead parties get assigned seats in Parliament according to their share of the ballot, and then lawmakers choose the president).

It appears one major development which can change the current scene is South Africa’s highest court barring former President Zuma from becoming a member of parliament on May 20. (Note: The Electoral Commission said in a statement that while Zuma’s picture could still appear with other party members on the ballot, his name would be removed from the list of candidates nominated by the uMkhonto we Sizwe Party (MKP)). After Zuma has been barred, who was expected to make a big dent in support for the ANC, it appears ANC is gradually clawing back support.

Despite this, some political analysts also consider that the court judgement would not sway Zuma’s loyal supporters away from voting for the MK, particularly in Zuma’s home province of KwaZulu-Natal. MK party spokesperson Ndlela stated on May 20 that “The judgement does not deter us from what we want to achieve as Zuma is on the ballot as the face of MKP because he is the party president”.

In addition to Zuma’s case, support for the ANC has risen in the last weeks suggesting it may only need a small coalition partner or could win a majority, according to a Reuters piece on May 21. Political analysts underscore that ANC's support is on the rise from the rural areas leading up to previous votes as the leaders tour the country and campaigns continue with pace.  

The recent polls imply the complexity of predicting the outcome of the elections. According to the Social Research Foundation’s latest poll on May 17, it appears ANC may garner 45-46% of the votes, up from 37.7% exactly one month earlier. The polling data put MKP at 10.6% of the vote and Economic Freedom Fighters party (EFF) is at about 8%.

Opinion poll released by Ipsos on April 26 found backing for the ANC was at 40.2%. The Ipsos poll showed EFF polling around 11.5%, down from 19.6% in its February survey, while MKP has the support of 8.4% of voters.

On the basis of the results of the polls, we continue to foresee two potential scenarios for the post-election. The first one, with 40% probability, is a clear ANC victory, particularly it seems ANC may get a late-stage surge that may add to its tally from swing voters, and MKP supporters as Zuma is now barred. The second one (with 60% probability) is an ANC led-coalition either with the DA and/or other smaller parties, which would likely be weaker than a one-party government at least for some time, and less able to undertake necessary fiscal reform policies and deal with power cuts (load shedding). In both scenarios, we think the focus will be the domestic economy, as the unemployment, corruption, poverty, load shedding, financial bottleneck and inequality remain major hurdles.

On the other side of the coin, the dispute on how a likely coalition will be formed remains a hot debate. Taking into account that the current constitution does not spell out how a coalition should be formed, there are alternative ways to be followed. According to a piece by BBC on May 20, assuming the ANC remains the largest party, smaller groupings could informally agree to support an ANC government on a vote-by-vote basis in return for some concessions. Or, at the other end of possibilities, the ANC could enter a formal coalition with some parties, including a written agreement outlining legislative plans and the distribution of cabinet posts. (Note: An opposition coalition is also possible whereas we think this is unlikely as the Multi-Party Charter for South Africa, which have already agreed to form a coalition excluding EFF, would not be able to secure majority of the votes and remove the ANC from the power).  

-          (40%) ANC wins and pursue similar policies: ANC could still get a majority if a swing back to them from abstainers and MKP supporters, or polls are inaccurate – previous elections have seen ex-ANC voters not voting for other parties but rather not voting at all. In this scenario, we believe that President Ramaphosa will keep the current policies implemented, with a stronger focus on socio-economic issues such as reducing unemployment, corruption and load shedding, strengthening government fiscal balance and increasing foreign investments into the country. (Note: According to the ANC manifesto, which was announced on February 24, the party promised to create 2.5 million work opportunities, eradicate corruption, and pledged to boost investment and support the private sector).

-          (60%) ANC-led coalition: In this scenario, we anticipate tough coalition negotiations, and we expect the coalition government would have to seek new policies around an ANC orientation. Taking into account that the DA promised to create two million new jobs, end the power cuts, accelerate privatization, especially in the energy sector, and halve violent crime in its party manifesto, a possible ANC and DA coalition could follow a more liberal framework, with a strong focus on private sector. However, if the ANC do badly, then it could cause internal ANC infighting to adopt some of the EFF or MKP policy, which are market and economically unfriendly. In the worst case the infighting could cause the coalition to collapse and reigniting political uncertainty.

We think how EFF and MKP would perform during the election will be the key determinants, as support to EFF and MKP have eradicated support to ANC. We also anticipate current economic issues like unemployment, sluggish economic growth, and corruption will be very significant, particularly among the young voters below 40 years old, which account nearly 42% of the whole voters.

Despite ANC’s popularity continues to eradicate due to rising cost of doing business and the cost of living, and the country still has need for large domestic and international financing, it seems ANC remains popular particularly in the rural areas.

As noted above, we expect a coalition government at a national level, for the first time in the country’s history. We foresee the coalition formation process could be tough and lengthy and a coalition with an uncertain fiscal and load shedding policy could exacerbate the domestic economic problems. We consider a clear ANC victory is also likely, considering late run by the ANC to receive support from swing voters and MKP supporters.

We see some moderate and temporary political volatility during and after the elections, but this could reignite in the future if the ANC see a lower vote share than expected and cause internal infighting in the ANC.