Is a coalition government coming to South Africa?

General elections in South Africa take place May 29 and are poised to be the most closely contested of the democratic era. Disdain for the ruling African National Congress (ANC) has become widespread after three decades in power. Large swathes of the population have yet to see material improvements in their living standards, and the party has been plagued by corruption scandals. 

Latest polls show ANC could lose its majority for the first time since the end of apartheid, with less than 40% intending to vote for the incumbent party. High unemployment, electricity blackouts and persistent crime rates are among the issues weighing on voters’ minds. 

However, it would be premature to dismiss the possibility of the ANC retaining control. It holds several formidable advantages: it is deeply rooted in many communities, and many view it as the only “anti-apartheid” option. The party also benefits from excellent organizational networks and the country’s generous welfare system. The ANC election machine is formidable, and just last week they mobilised the highly popular Thabo Mbeki on the campaign trail. Meanwhile, President Cyril Ramaphosa is popular and consistently polls ahead of the party. Consequently, we expect the sub-40% polling to tick higher as the election date looms.  

That said, all these inherent advantages no longer seem insurmountable, and the centrist Democratic Alliance has emerged as a viable alternative. Another change this election cycle is the level of coordination between various opposition parties, led by Democratic Alliance leader John Steenhuisen. He has created the Multi-Party Charter, an 11-party agreement to form a coalition after the election that has generated interest from voters. A recent poll showed that 38% of those familiar with the Charter would vote for the members of the alliance.

An alternative scenario that is gaining prominence would see the Democratic Alliance support a sub-45% ANC on an ad hoc basis, akin to the National Unity government that was established under Mandela after apartheid ended. This could be good for asset prices.

For now, our base case is the old liberation vote is still strong, and we expect Ramaphosa to be re-elected. However, the ANC may be forced to govern through some form of coalition which will increase overall uncertainty in South Africa’s future direction.