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South Africa: ANC win positive for financial markets Featured

News Reports / Saturday, 11 May 2019 20:13

The margin of the ANC’s election victory is within the range anticipated by most analysts and has buoyed financial markets. President Cyril Ramaphosa is now expected to implement structural reforms to revive an economy that has expanded by less than 2% annually for the past four years.

The rand gained for a fourth straight day against the dollar on Friday, advancing 1.3% to 14.1597. Government rand bonds firmed.

The ruling party has Ramaphosa to thank for halting its decline. The ANC won 57.5% of the votes cast in May 8 national elections, the final tallies show. The party looked to be in danger of losing its majority when its support slipped to a record low of 54.5% in municipal elections three years ago, as many of its supporters boycotted the vote in protest at then-President Jacob Zuma’s immersion in a series of scandals.

Ramaphosa won control of the ANC in December 2017 and became president two months later after the party forced Zuma to step down to stem a loss of support. Since taking office, he’s named a new chief prosecutor, instituted several corruption inquiries, fired several top officials implicated in wrongdoing and pledged to ensure that those responsible for looting state funds will be jailed. His public approval rating stands at 65%, a survey conducted by research company Ipsos before the election shows.

"Ramaphosa’s popularity, particularly among constituencies that were deserting the party under Zuma, appears to have played a major role in convincing voters to give the ANC another chance," said Mike Davies, the founder of political-advisory company Kigoda Consulting. "Ramaphosa’s promises to address corruption, jobs and inequality have resonated amid ongoing voter skepticism of what opposition parties offer."

The main opposition Democratic Alliance won 20.8% of the national vote, a 1.4 percentage point dip on its share five years ago, and the populist Economic Freedom Fighters 10.8%, a 4.4 percentage-point increase.

Lawyers for 27 smaller parties asked the Independent Electoral Commission for an independent audit of the results and to delay their declaration after allegations of voting irregularities emerged – requests the panel rejected. More than 20 people were arrested for trying to vote more than once.

The ANC scraped through to retain control of the Gauteng province, which accounts for a third of the nation’s gross domestic product, and includes Pretoria, the capital, and the economic hub of Johannesburg. The ruling party lost both cities in 2016, with the DA taking control with support from smaller parties. The ANC also retained its majority in seven other provinces, while the DA kept control of the Western Cape.

Ramaphosa, 66, is an accomplished politician. He founded what was the country’s biggest labour union, helped negotiate an end to white minority rule and draft the country’s first democratic constitution. He built up a fortune in business after losing out to Thabo Mbeki in the race to succeed Nelson Mandela as president in 1999.

Ramaphosa returned to full-time politics in 2012, when he won the deputy presidency of the ANC, and took the top party post after fending off a challenge from Nkosazana Dlamini-Zuma, Zuma’s ex-wife and favoured successor.

With Zuma allies securing a number of other top party posts, Ramaphosa’s hold on the ANC looked tenuous and there was speculation that a bid could be made to topple him at the party’s next elective conference in 2022 – a scenario that now looks unlikely given the ANC’s electoral victory.

"The message we take from this election is that the people’s confidence in the ANC is returning and that we need to correct our mistakes," Jessie Duarte, the ANC’s deputy secretary-general, told reporters.

"South Africans want public representatives with integrity who do not place their personal interests above those of the people they are elected to serve."

Source: Bloomberg

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