A generally peaceful election, both national and provincial, was held on 8th May.

President Cyril Ramaphosa has received a mandate for change after the ANC won an outright majority receiving 57.5% of votes. Although this is well down from the 62.1% achieved in the general election in 2014, it does represent a recovery from the municipal election in August 2016 when the ANC only received 53.9% of the vote.

Background

Ramaphosa was elected president of the ANC in December 2017 and president of South Africa two months later following Jacob Zuma’s resignation. Despite his exit from office, a number of Zuma supporters remain on the ANC national executive which has somewhat hindered the new president’s ability to act on corruption and remove any tainted MP’s.

Ramaphosa has since targeted corruption and mismanagement in many state owned enterprises (SOEs). He set out state priorities in February 2019 in his State of the Nation Address and financial priorities in his budget speech a few weeks later. The extent of corruption and mismanagement under Zuma has only recently become apparent in submissions to an enquiry into state capture. Also, the poor state of a number of SOEs has been highlighted by load-shedding and the crisis at Eskom.

The Mandate

With the ANC winning a clear majority in the national election and Ramaphosa gaining popularity since his appointment in February 2018, he now has a mandate to enact. The strength of this mandate within the ANC will shortly become apparent as Ramaphosa is expected to implement a major cabinet reshuffle before the end of the month.

Summary of the National election results

The table below compares percentage votes in the 2019 general election with the 2014 general election and the municipal elections of 2016. This provides an important indication of trends during the Zuma era.

As can be seen from the above table, support for the ANC declined significantly during Zuma’s second term of office. Lack of service delivery, limited inroads into the housing backlog (in spite of many promises) and the realisation of corruption and state capture were major contributing factors to voters switching their allegiance or staying away entirely. It is obvious that both the DA and the EFF benefitted from the ANC’s losses.

Between August 2016 and May 2019 we have seen a strong swing back to the ANC. This can be attributed mainly to the exit of Zuma. The EFF has continued to gain support, some probably from the DA, some due to Malema’s strong speeches and some from new young voters who see some appeal in the Party’s wish list.

The Smaller parties

One interesting aspect of this general election has been the birth of a number of small parties which did not exist in 2014. With many disillusioned voters out there looking for an alternative to the big three, or even a protest vote, it was not surprising to see votes being thrown at any new party offering good ideals or something novel. The number of parties on the national ballot paper increased from 29 in 2014 to 48 in 2019.

The Inkatha Freedom Party, based mainly in Kwazulu-Natal was a main contender in 1994, but its support has dwindled from 10.5% to only 3.4% of the national vote. The Freedom Front Plus Party, targeting largely the Afrikaans farming community, obtained 2.4% of the vote. It would appear that a number of the newcomers were attracted by the financial benefits associated with a seat in parliament. Just 0.25% of the national vote is required to obtain a seat. This equated to only 44,180 votes during the 2019 election. A number of the small parties obtained only one seat in parliament, while many lost their deposit.

Economic impact and outlook

The economic impact of the election is expected to be positive, but will obviously depend on action taken by the new administration and new cabinet, when reconstituted. Market action immediately after the election saw local shares on JSE move higher, especially shares in banks, financials, retail and property. The rand strengthened and bond rates eased marginally. There were no dramatic moves as the above results were generally anticipated.

Ramaphosa now has a window of opportunity to rid his cabinet of tainted members and impose tough economic reforms. However, this window will not remain open indefinitely and investors, both local and foreign, are expecting an early cabinet reshuffle as well as action to stimulate the economy and improve management in the SOEs. Voters also await consequences for those involved in corruption and state capture.

Disclaimer: The views thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.