South Africa Elections: More of the same or a twist in the tale?

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This week, we discuss electoral developments in South Africa as the country prepares for general elections in May. We also spotlight money issues in Zimbabwe, with the rollout of a new currency to tackle persistent hyperinflation.

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South Africa Elections: More of the same or a twist in the tale?

Photo by June Luna Immigration Attorneys

On May 29, South Africans will head to the polls for general elections. The vote for President is indirect, with citizens directly voting for the 400 members of the National Assembly, who then elect the President. So, instead of displaying presidential candidates, the ballot will feature images of party leaders.

The spotlight of the elections is on leaders of the three largest political parties: President Cyril Ramaphosa of the African National Congress, John Steenhuisen of the Democratic Alliance, and Julius Malema of the Economic Freedom Fighters.

The Economic Freedom Fighters (EFF)

  • led by Julius Malema, the EFF stands as South Africa’s second-largest opposition party. Malema, aged 42, a former youth leader of the ANC, is an outspoken critic of the ANC government’s policies and has increasingly become a popular choice among young people.
  • In the 2019 elections, the EFF secured 10% of the total votes but a recentIPSOS survey suggests they are expected to attain up to 19.6%. The EFF promises to repossess white-owned land, nationalize mines and banks, as well as create social housing and welfare grants.

The Democratic Alliance (DA)

  • Under the leadership of John Steenhuisen, has announced ambitious economic plans, including the use of robust social protection programs to lift 6 million South Africans out of poverty, ensuring quality healthcare for all, halving the rate of violent crime (including murder and rape) and creating 2 million jobs.
  • Despite recent challenges, including the departure of several long-term members, Steenhuisen remains optimistic about the party’s prospects in the upcoming elections.

The African National Congress (ANC)

  • As the two opposition parties challenge the ruling party’s hold on power, the ANC has reaffirmed its commitment to addressing public dissatisfaction with its leadership.
  • The ANC’s promises include enhancing support, training, and education for youths to boost employment opportunities, improving the delivery of social services such as water and sanitation nationwide and tackling corruption issues within the public sector.

Policy Alignments

Significantly, the three major parties are aligned on the need to revamp the power sector, find millions of employment opportunities for the people and tackle violent crime across the country but only the EFF has been vocal about redistribution of wealth/assets or nationalization of assets – a statement of intent that has not been received warmly by South Africa’s business community.

What to expect

  • Support for the ANC has dwindled over the years, largely attributed to government inertia and inadequate action to tackle the high unemployment rate (currently at 32%), together with allegations of corruption and embezzlement of billions of public funds dating back to the era of former President Jacob Zuma. Concerns have also been raised regarding mismanagement and underinvestment in state-owned electricity suppliers. The electricity crisis over the years has made matters worse for the ANC. Recent surveys from IPSOS indicate a likely decrease in ANC support in the upcoming elections, a drop from 57% in 2019 to less than 50% presently. This is a significant concern for businesses, investors, and policy observers.
  • Political change, possibly in the form of a coalition, could be on the horizon for South Africa. While the ANC, in power since 1994, is expected to lead the vote count, it may not secure an outright victory and may need to form a coalition with other parties. With the EFF’s well-publicized stance on assets redistribution and nationalization, the ANC could be forced in the direction of the ‘safer but strange’ coalition with the DA.

Data Vault: Zimbabwe launches new currency

Zimbabwe has announced plans to launch a new currency, the ZiG or Zimbabwe Gold, which will be the country’s sixth currency since 2008. The ZiG is set to officially enter circulation on 30th April and will be fully backed by $285 million in cash and gold.

It is believed that the move for a new currency is designed to tackle hyperinflation that has troubled the country and impacted economic activities. As of March this year, the retiring currency, the Zimbabwean dollar, had lost over 55% of its value to inflation.

Source: Tradingeconomics. Analytics by Policy Vault.

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