Cape Town - The results of
Wednesday’s local government elections are unlikely to have a major impact on
how rating agencies view South Africa, according to Jugal Mahabir, senior lecturer in
public economics and finance at the University of Johannesburg.
“Ratings agencies
will look at the overall state of the economy, which is not that good at the
moment,” he says. “They are not too convinced that the macroeconomic policies
put in place by national government is stimulating the economy.”
Local government
elections don’t have such a significant impact on the overall economy and a
change of government at local level does not change the structure at national
government level, where macroeconomic policy is determined.
Rating agencies will, however, consider whether the local government elections were fair and
peaceful.
Coalition governments bring pros and cons
The 2016 local
election seems different from previous municipal polls in that it has the biggest
number of political parties contesting at 200, plus the largest voters' roll
since 1994.
Some opinion polls
indicated that coalition governments are likely to be formed in metros such as
Nelson Mandela Bay, as it is unlikely that one political party will have an
outright majority.
But coalition rule
has its own set of challenges. Mahabir said political theory suggests parties that don’t have majorities in a council will result in greater
efficiencies and service delivery, as the opposition is better placed to hold
the ruling party accountable.
“However, during my
time at the Financial and Fiscal Commission I worked out the overall
efficiency of municipal expenditure to find out how much money is being wasted
by local government. In my analysis, I found that municipal councils that had a
majority party were more efficient than councils that were not controlled by a
majority party,” he said.
“It suggests that
stronger opposition, such as split councils or councils where there were no
outright majority, actually derailed the decision-making processes.
“This was probably
due to continuous arguments and blocking of decisions, whereas when a party
held a majority, it appears that they got decisions through much more smoothly.”
Mahabir said there
have been instances where political infighting has resulted in municipal
budgets not being passed.
“If we consider this in a South African context, coalitions may not bring greater stability to a municipality,” he said.
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