South Africa stands at a crossroads as it approaches the upcoming May 29 election, with political uncertainty fueling investor anxiety. Opinion polls indicate a historic shift, with the African National Congress (ANC) projected to receive less than 50% support for the first time. This outcome could necessitate the formation of a coalition government, raising questions about the ANC’s future governance dynamics.
The prospect of coalition-building raises concerns among investors, who are accustomed to the ANC’s longstanding rule. The key question is whether the ANC will ally with smaller parties that would allow it to retain full control or opt for partnerships with alternative political forces.
In the event of significant support loss, the ANC may consider aligning with the leftist Economic Freedom Fighters (EFF) or a new party led by former President Jacob Zuma. EFF leader Julius Malema has sought to allay investor fears, emphasising in interviews that his party’s policies should not be a cause for concern.
As South Africa navigates uncharted political territory, the outcome of the election and subsequent coalition negotiations will have far-reaching implications for the country’s economic and political landscape. Investors are closely monitoring developments, mindful of the potential impact on market stability and investment opportunities.