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Johannesburg - The general election result meant there was no leadership or policy shock to the ANC and President Jacob Zuma could now see out his term until at least the 2017 party elective conference and most likely until the 2019 election, London-based financial firm Nomura said on Friday.
Peter Attard Montalto, an analyst on South Africa at Nomura, said the vote share for the ANC came despite a jobs crisis in the country, service delivery issues and the usual fault lines that were so often talked about.
Early on Friday evening the DA grew its vote share to 22 percent compared with the ANC’s 62 percent.
“The election was not the bite point for a change in policy. It means that the existing cleavages and contradictions of ANC microeconomic policy will be further dug into, two steps forward in some directions, two steps back in another,” he said.
“This is why we are now watching carefully for the personnel choices in the cabinet and policy implementation issues on the recent slew of legislation and how the government treats its role in the economy with them.”
Montalto said, however, with this level of support (over 62 percent), and the ANC declaring it had a strong backing from the people for what it was already doing, Nomura expected policy to continue with business as usual.
Daniel Silke, a Cape Town-based independent political analyst, said in his updated keynote on Friday that the ANC tripartite alliance was more vulnerable and divided as more competition for the hearts and minds of voters was set to become a reality.
Economic stagnation continued to be fuelled by persistent unemployment, while low growth rates were compounded by labour unrest and inter-union rivalries, Silke said.
“Economic pressures are exacerbated by persistent political and leadership questions surrounding the presidency of Jacob Zuma. The ANC will move to promote the contentious National Development Plan (NDP) as the cornerstone of its vision for the future,” he said.
“But opposition to the plan and a move to establish a more socialist workers’ alternative to the ANC can gain traction and shift the domestic political equation.”
Silke said internal personality and policy differences had culminated in tensions within the broader alliance, particularly within Cosatu. And, new political parties like Julius Malema’s Economic Freedom Fighters offered South Africans more political choices than ever before. In addition, the DA was still looking to play an enhanced role in the future South Africa and steer the country towards its policy options.
Annabel Bishop, the chief economist at Investec, said on Monday that policy uncertainty was negatively impacting the incentive for the private sector to invest or start new business, with one example being the divergence between government communications on nationalisation and the Mining and Petroleum Bill.
Econometrix, a firm of economic consultants and analysts, said the polarisation towards both left and right posed interesting scenarios regarding the conduct of future economic policy by an ANC government.
It said: “On the one hand, one might argue that to the extent that the ANC has lost a little bit of ground, while the DA has gained considerably, might compel a future government to take cognisance of the need for market-related policies that move away from socialist dogma.”
Zuma’s detractors say he is wasteful and point out that his government is bloated with 34 ministers and 32 deputy ministers. They say this is a reward for party loyalty and cadre deployment.
It remains to be be seen whether Zuma will this time scale down his government.
However, Gwede Mantashe, the ANC secretary-general, said during the campaigning period that the government would create a separate ministry for small businesses.
There is a danger here that the new ministry will overlap with the ministry of trade and and industry, and the ministry of economic development.
The Mail & Guardian has reported that the government plans to create a department of information after the elections, but it is not clear what form it will take.
The manifesto of the ANC promised the creation of 6 million job opportunities. However, it does not spell out what exactly a “job opportunity” is. The opposition says if this is referring to the Expanded National Public Works Programme then these are not jobs but short-term employment.
The new administration will also have to grapple with the problems in education and the skills shortage. It will have to come up with a clear programme for attracting foreign investment.
Nomura said while foreigners had been investing in South Africa throughout the 20 years of freedom, outflows by locals had upset this and not only increased current account vulnerability, but withdrawn capital from the local economy.
“We have an issue with that, not because capital outflows are intrinsically or morally wrong, but because it is indicative of the assessment of local capital holders through the period of South Africa’s prospects versus the rest of the world.”