Middle-class voters may punish ANC | Fin24

Middle-class voters may punish ANC

Aug 08 2018 11:41
Andile Ntingi

Ancient Greek philosopher and scientist, Aristotle, famous for being Alexander the Great’s tutor, once wrote “no state will be well administered unless the middle class holds sway”.

The middle class has for years been an important but politically-dormant strata of South African society, but soaring costs eating into the group’s income are awakening it. 

From fuel, food, clothes, medicines, rental, education, to electricity and water, the costs of these services and products are skyrocketing. 

The high cost of living, a stagnant economy, and rising unemployment are forcing the middle class to stand up to government policies that are threatening its financial position.

In 2016, the tension between the middle class and government came to a head in Gauteng, the country’s richest province, where residents used the ballot in municipal elections to punish the ruling ANC for presiding over the imposition of an unpopular urban e-tolling system, which has increased transport costs for motorists and businesses. 

Middle-class residents, backed by poor residents who often protest about poor service delivery, abandoned the ANC at the 2016 local government elections, resulting in the ruling party losing control of the two important Gauteng metropolitan municipalities of Tshwane and Johannesburg, and coming within a whisker of losing Ekurhuleni. 

The ANC also lost control of Port Elizabeth, the largest metropolitan city in the Eastern Cape, to a coalition of opposition political parties.

Once again, the ANC-led government is facing renewed discontent from the middle class ahead of the 2019 general elections. 

This time there is unhappiness about the hiking of value added tax (VAT) and rising fuel prices, which have rocketed to R16.03 per litre and are expected to climb higher. 

Opposition parties have jumped on the fuel price outrage and are using it to pressure the government into reducing the fuel levy by R1 to ease the pain on motorists. 

Having learnt its lesson in the 2016 municipal elections, the ANC has indicated its support to review the fuel levy. 

At the beginning of the year, government had to make minor concessions after it increased the VAT rate (for the first time in 25 years) from 14% to 15% in order to raise R23bn to partially fund the R57bn implementation of free tertiary education for poor students. 

Government was pressured to find ways to lessen the impact of VAT on consumers through expanding the basket of zero-rated basic food stuffs.

Before the e-toll revolt, the middle class in South Africa wasn’t rebellious as it was able to absorb costs on the back of the growing economy, commodities boom, low interest rates, and rising incomes. 

This revolt was the first serious pushback against the ANC government since our country’s political transition in 1994 from apartheid to democracy. 

It led to motorists frustrating efforts by South Africa’s roads management agency, Sanral, to collect e-toll fees to repay the debt of R18.9bn the agency borrowed from capital markets to upgrade Gauteng’s freeways ahead of the 2010 Soccer World Cup. 

With Gauteng residents defaulting on e-tolls, government is considering to scrap the programme altogether. 

Part of the reason why the middle class initially was unwilling to stand up to government is because of the rapid growth of this class after 1994; the implementation of black economic empowerment (BEE) policies and affirmative action strategies saw educated black people ascending to high-paying jobs in public and private sectors previously reserved for whites under apartheid rule.

These highly-skilled professionals are important to politicians because they drive productive investment and consumption spending. 

In other words, they are an important pillar on which our economy rests. 

In South Africa, according to a research paper published in May 2013 by economist Justin Visagie, middle-class households earn a monthly income of between R5 600 and R40 000 after tax. 

Households that earn above R40 000 per month (after tax), the so-called elite, constitute the top 4% of the highest-earning households in the country. 

Due to escalating costs of living, Standard Bank is reporting that it is repossessing 600 vehicles per month from defaulting vehicle owners – this figure is up 40% compared with last year. 

Absa, on the other hand, finds that the majority of defaulters are in the income bracket of between R12 000 to R15 000 a month. 

With the official unemployment rate having worsened to 27.2% in the second quarter of this year, compared with 26.7% in the first quarter, South Africa could find itself in a situation where it is unable to lift the poor into the middle-class strata. 

After all, the most ideal society is the one that has a middle class that outnumbers the poor.

Governments the world over measure the success of their economic policies by how effectively they are able to lift millions of poor people out of poverty and into the middle class. 

In South Africa, the ANC has been credited for growing the black middle class, who are loyal voters of the party. 

These loyal voters may look at other electoral options next year if the economic slide continues unabated. 

They punished the ANC in 2016 and they won’t hesitate to do it again in 2019.

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.
This article originally appeared in the 16 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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