ANC risks fraying SA’s international trade, geopolitical interests with unfavourable coalitions

President Cyril Ramaphosa at the National Results Operations Centre at Gallagher Convention Centre. GCIS.

President Cyril Ramaphosa at the National Results Operations Centre at Gallagher Convention Centre. GCIS.

Published Jun 7, 2024


Analysts have warned that South Africa is between a rock and a hard place, with future economic progress and stability hinged on the decisions political leaders make before the swearing in of the new government administration later this month.

It’s a process that was rendered strenuous when the ANC failed to win the required 50% majority in the May 29 elections, in a bid to retain its governance mandate.

South Africa is holding its breathe that the ANC does the right thing by coming up with a governance framework which requires the participation of one or more rival political parties.

The fact that the ANC differs ideologically with the parties is making the job and choices all the more difficult, yet it is on the economic, international trade and geopolitical front that the impact will probably be more pronounced.

In an interview with “Business Report” yesterday, Professor Ursula van Beek, of Stellenbosch University’s Centre for Research on Democracy, said South Africa was in an unenviable position, perhaps more important than at any period after independence.

“If the ANC forms a collation government that is unfriendly to the markets and starts implementing populist solutions, the dire economic situation in which the country finds itself will move from bad to hopeless,” Van Beek said.

“We stand at the fork in the road, with one way leading towards the inevitable prospect of reckless populism and an economic implosion, and the other moving towards political stability, pragmatism and democratic renewal.”

The ANC appeared to show an inclination towards a government of national unity (GNU) but the balance of forces within the party could result in a different scenario if the proposal was opposed.

An outright coalition with the DA was seen as economically sound but politically incorrect while a tie up with either the EFF and or the uMkhonto weSizwe Party (MKP) could saddle President Cyril Ramaphosa with huge radical policy shifts.

Van Beek said a less problematic option might be a GNU where several reasonable political parties co-operate after having agreed on a set of common values.

She said those might include, among others, respect for the Constitution and the independence of the judiciary and the media.

“The bottom line is that South Africa needs to become an attractive and welcome place for investors,” she said.

“The new government will have to ensure policy certainty, develop robust public-private partnerships and utilise the private sector’s capacity and capital. Just like China and India have done.”

Other experts viewed a partnership between the ANC and the DA as presenting a complex dynamic in terms of South Africa’s geopolitical positioning.

Lara Wolfe, a senior analyst at BMI, a Fitch Solutions company, told “Business Report” that while the ANC had maintained close ties to Russia even against the backdrop of the Russia-Ukraine war, the DA was more clearly pro-Ukraine and anti-Russia.

Moreover, Wolfe said, the DA had not always been supportive of BRICS and had labelled it an increasingly unholy alliance that jeopardised relationships with SA’s biggest trading partners in the West.

“A DA partner advocating for enhanced economic co-operation with the US and the EU is likely to bolster trade relations with Western nations, which could help to decrease South Africa’s reliance on China, its largest trading partner.”

On the flip side, Wolfe said, an ANC and MKP coalition would largely result in a continuation, rather than a radical shift, in South Africa’s foreign policy orientation.

Wolfe said the MKP’s platform aligned with the ANC’s engagements, advocating for solidarity with nations such as Russia, Cuba and Palestine, and an intensified collaboration with the BRICS countries.

That included potential exploration of alternative financial systems and settlement mechanisms.

“The next few days will be interesting for South Africa from an economic, international trade and geopolitical perspective,” she said.

“As the country’s political parties map a framework forward, it is imperative that they keep South Africa’s economic and trade interests a priority.”