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South Africa celebrates 30 years of democracy in 2024. At the same time, the country goes to elections which may see the ruling ANC voted out of power or forced into a national coalition.
JUSTICE MALALA outlines the main political and economic trends for the year ahead.
The year 2024 will mark a major turning point for South Africa. Even if there isn’t a change of power at the top of our politics, the balance of political and economic forces will shift significantly, meaning that the way the country is run will change after the elections.
The ANC, if it stays in power, will be subject to many other influences, including having to consult coalition partners. Business will have a stronger voice given its backing of political players outside of the ruling party.
The ANC will not lose outright, but other voices will grow in significance. No one will have outright power, and no one will have a veto. The country will need a unifier, or a set of unifiers, at the top.
Here are eight political and economic trends for 2024:
On December 5, 2023, StatsSA released data showing that the SA economy shrank 0.2% from the second quarter to the third and 0.7% year-on-year. The contraction was worse than economists had estimated. The reaction from the currency markets was immediate: the rand hit R19/$ for the first time in weeks as economists digested the disappointing numbers.
This is the new normal for SA: political shocks will come thick and fast in the 2024 election year, accompanied by economic data that may not always be favourable, and this will lead to volatility all round. It’s a year to remember the Zulu expression Bekezela (hold tight). We have lived with volatility for a while now. It will stay with us.
The election date is likely to be announced on February 8th, 2024, at the State of the Nation address by President Ramaphosa. The months following that will be marked by intense electioneering, marked by political noise that overwhelms the news cycle. It is only after Election Day that some sanity will return, and focus will shift to business and renewal of the economy.
If the numerous polls that have been done so far are to be believed, there is a strong likelihood that the ANC will fall below 50% for the first time. For those who have bemoaned the economic mess we have experienced under the ANC these past 14 years, a multi-party coalition that focuses on the economy would bring cheer.
Even if the ANC falls below 50% but manages to form a coalition with a pro-market party such as the IFP and others, that will bring cheer to the market and analysts. All this depends on the coalitions that are struck post-election.
As the world has become a harder place to navigate as the post-Cold War liberal consensus has unravelled, the SA government has flip-flopped on foreign policy. Under President Cyril Ramaphosa, SA claimed to be non-aligned and yet shamelessly identified itself as a friend of Russia even as that country invaded and attacked Ukraine in 2022.
As that conflict escalated, the ANC then got into a frosty diplomatic stand-off with key economic partner the USA amid claims that we were supplying arms to Russia. These tensions have chilled diplomatic and economic relations with the West, and may continue to affect SA and its standing – plus investment flows – in the world.
On the upside, the inclusion of major new countries in the Brics bloc – where SA has become quite influential - could attract major new investment from the likes of Saudi Arabia and China. However, given SA’s track record, we should be ready to see a worsening of relations with the West and closer ties with Russia and the Brics grouping.
Every election brings with it populist rhetoric. It is in the nature of politicians to see a microphone and make outlandish promises which may lead to worry and concern among investors. This is, as Reserve Bank governor Lesetja Kganyago has said, just part of the “political season”.
“I think by now we’ve had enough elections to know that, around this time of the season, there are these kinds of noises,” he said in November.
The year 2024 will have even more political noise because we have a real election on our hands – for the first time in 30 years political power may shift. So, we should all keep calm and carry on! It’s the season of noise. And it will pass.
In his State of the Nation address in February 2022, President Ramaphosa promised to “forge a comprehensive social compact that would join all social partners in a common programme to rebuild our economy and enable higher growth” within 100 days. He had been talking of such an alliance for five years, yet there was nothing to show for it.
Sadly, business leaders are getting tired of promises. They want to see action on the economy. In December the leaders of car manufacturers Ford and Volkswagen said South Africa’s persistent logistics (Transnet) and energy (Eskom) crises are a “slow poison” that is making SA an undesirable location for manufacturing cars.
The two were echoing leaders of businesses such as MTN, Old Mutual, Astral Foods and many others who have been frustrated by government’s lethargy in acting against corruption and crime that is collapsing the economy and key state-owned enterprises.
We expect to see further discord between Ramaphosa and business leaders, who will increasingly support current opposition parties and new aspirants such as former chairperson of FirstRand Roger Jardine and RiseMzansi’s Songezo Zibi. The cosy relationship between business and the Ramaphosa administration will become increasingly strained.
In 2016 opposition parties made a spectacular advance in SA politics. The Democratic Alliance managed to cobble together coalitions to take over the cities of Joburg, Tshwane, and Nelson Mandela Bay. Many political observers believed that the DA’s success in running the City of Cape Town would be replicated in the hinterland, but this has not happened.
Coalitions have largely been disastrous, with little or no cohesion between them. The EFF flip-flopped between supporting the ANC and the DA.
The spotlight will now be on the opposition at national level whether they play among themselves and build an opposition coalition, or whether they throw in their lot with the ANC. Whichever way it goes, it will be bad for the ANC. Those within the ANC who hate the DA will leave if there is a DA-ANC alliance. The same goes for an ANC-EFF alliance.
The EFF and the Patriotic Front have beaten the populist drum in SA recently, and have seen support rise for their stances on various issues. Populism is on the rise across the globe, where fascistic leaders have risen to the top in places like the Netherlands, Italy, and where even in the USA former president Donald Trump may likely be reinstalled in the 2024 elections.
In SA, the main sentiment driving populist movements is immigration, with many SA citizens frustrated by the ANC government’s consistent support of Zimbabwe’s Zanu-PF and the policies which have collapsed the country’s economy and driven millions of citizens of that country across the border to seek jobs and refuge in SA.
Movements such as “Put SA First” and Dudula have attacked foreigners and are gaining traction in Gauteng townships. The Patriotic Alliance has run specifically and vocally on a xenophobic ticket, and its message will become louder as elections loom closer.
Whatever party wins the 2024 elections, the truth will dawn on SA that power can change hands and can do so quickly. That will mean that whoever is in charge must work hard – and fast. That can only mean good things for the economy, the country, and its people.
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