How an ANC-EFF coalition could impact SA’s economy

WHILE many South Africans are cheering the dawn of a more competitive political era and an election process that was remarkably free and fair, South Africa’s democratic state remains fragile.

What is now crucial is just how the ANC interprets the outcome. And it’s an outcome of very mixed messages for the governing party.

In comparison with the national election in 2014 (since the EFF had already been formed) these local elections saw the DA grow by 21% (from 22.23% to 26.90%) and the EFF by 29% (from 6.35% to 8.2%).

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In other words, the two parties that together squeezed the ANC did so more or less evenly. But the DA and EFF could not be more diametrically apart on policy, principle and political performance.

So while the ANC can talk about being introspective and listening afresh to the voters, the key issue is what type of political message has been sent. Much clearer for the ANC is the message voters sent about governance.

Poor policy and delivery performance at both local and national levels were sure to be high on the set of criteria voters chose to punish the ANC.

And ongoing weak leadership, party factionalism and the role of President Jacob Zuma will also be right up there. A combination of governance and leadership failures at both local and national level is easy to spot.

The ANC has to enter coalitions to secure SA's most hotly contested metros.

What do voters want?

Not so easy is what political message voters sent to the governing party. Were they moving towards a more liberal social-market economy (or the ‘equal opportunity’) message of the DA, or did they like the populist and redistributive message from Julius Malema?

Although a full numerical and geopolitical analysis of swings has yet to be done, the virtual dual shifts away from the ANC muddy the water as to which side of the ideological equation the ANC may shift to.

This issue is not only important in assessing the orientation of future economic and social policy, it also has a bearing on the vexed issue of coalition partnerships that at the time of writing have yet to be finalised.

Julius Malema’s divorce from the ANC has always felt like a family feud gone severely wrong – grim in the short term but always with the potential for some type of uneasy reconciliation.

While Malema has recently expressed his unwillingness to enter into negotiations with the ANC should there be hung councils, the familial links will remain important as both parties review part animosities in order to take power.

ANC alluring to EFF?

The ANC continues to have the power of patronage behind it that could be very alluring to many in the EFF. The EFF may also see this as a chance to take their newfound strength and really influence the ANC from the inside as the days of Jacob Zuma rapidly wane.

Ultimately, an agreement between the ANC and EFF shuts out the DA from the country’s economic and symbolic heartland – and this has to be the first prize for an ANC staring down the possibility of losing Gauteng in 2019 and becoming a more rural political entity.

Will Julius Malema go with the DA or ANC in cities such as Johannesburg?

And there is still much synergy in economic policy outlook between the EFF and ANC. The language of labeling ‘white monopoly capitalism’ for all the wrongs in the world – and attempting to destroy it - is shared across both parties, albeit in different degrees.

When you add the familial links and priority for the ANC to keep the DA as far from power as possible, an ANC/EFF arrangement looks more likely. Should this be the case, the short-lived euphoria of the markets and rise in the value of the rand might be stunted.

READ: Markets 'react positively' to SA election outcome - analysts

Any coalition arrangement with the EFF may result in some policy and budgetary compromise for the ANC. It would be a shift to the populist left to appease their newfound coalition partners. This would put at risk South Africa’s ratings and would endanger economic reform in the country.

Furthermore, our local election always had and will have national ramifications. It’s not just metro or municipal economic policy that can be influenced, but the national sphere as well.

Finally, in such a scenario there are winners and losers. Yes, the EFF will be real kingmakers but the moderates like Paul Mashatile, David Makhura and Parks Tau will be the losers. And so would Pravin Gordhan and his team – waiting with eagerness to secure some important policy reforms to prevent that looming downgrade.

READ: ANC risks shifts to populist policies, warns Fitch

Whie the EFF may keep the ANC in power, any rapprochement will also have its consequences. Pandering to coalition partners to keep them on board – and the EFF would always feel it could push the coalition boundaries – can unleash a backlash from the ANC’s pragmatists.

It’s a scenario that might provide a short-term solution, but don’t assume coalition government means stability – especially when these bedfellows are involved.

* Daniel Silke is director of the Political Futures Consultancy and is a noted keynote speaker and commentator. Views expressed are his own. Follow him on Twitter at @DanielSilke or visit his website.