ANC begins coalition talks as Ramaphosa eyes South Africa unity government

The African National Congress, still reeling from the worst election result in its history, began a frantic round of talks aimed at building a stable coalition that could involve the formation of a national unity government.

President Cyril Ramaphosa has hinted at an alliance with parties other than Jacob Zuma’s uMkhonto weSizwe, or MK, party, the big winner in last week’s vote which has campaigned expressly on changing the constitution.

The ANC won just over 40 per cent, well short of expectations and a drop of 17 percentage points from the last election in 2019, forcing it into talks over a coalition agreement in order to retain power.

People close to Ramaphosa say he is leaning towards a broad arrangement, possibly a unity government, that would include the market-leaning Democratic Alliance, the second-biggest party, as well as the Inkatha Freedom party, based in the vital province of KwaZulu-Natal, the second-most populous.

In a speech on Sunday evening, Ramaphosa praised the vote as “free, fair and peaceful”, adding that “our people expect all parties to work together within the framework of our constitution”.

However, there is substantial opposition within the ANC to any alliance with the DA, which many regard as a white pro-business party. Paul Mashatile, South Africa’s deputy president and a possible challenger to Ramaphosa, is opposed to a deal with the DA, which is pressing corruption charges against him.

Gwede Mantashe, the energy minister who has backed Ramaphosa in the past, may favour a pact with Julius Malema’s Economic Freedom Fighters, according to party insiders and political analysts. The party, which supports nationalisation and land expropriation, was beaten into fourth place by Zuma’s MK, but at 9.5 per cent still has nearly enough MPs to give the ANC a working majority.

The ANC has 159 MPs in the new parliament, with the DA at 87, MK on 58 and 39 for the EFF. Other small parties, including the Patriotic Alliance, with 9 seats, could be persuaded to join an ANC-EFF alliance, according to political analysts.

The firebrand Malema has moderated his tone in recent days in what many view as a gambit to woo the ANC, which expelled him from the party more than a decade ago. He has said that securing the finance ministry and speaker of the National Assembly for the EFF are the conditions of his support.

Zuma, who has hinted at the possibility of violence if the election is not rerun, has said he would not deal with the ANC unless it sacked Ramaphosa, whom he blames for hounding him through the courts and out of the party. “MK wants Ramaphosa’s head on a chopping block,” said Mmusi Maimane, leader of the small Build One South Africa party.

An ANC insider said there was deep division about which direction to take. A move towards the DA would be a victory for ANC “reformists” but a defeat for those who want a more radical transformation of the economy. “The battle lines are very clearly drawn,” he said.

Frans Cronje, a political analyst, said the key to a national deal lay in Zuma’s province of KwaZulu-Natal, home to the majority of South Africa’s Zulus.

South Africa’s biggest ethnic group has largely thrown its weight behind Zuma not because of his policies, Cronje said, but the perception that the former president had been persecuted by the ANC leadership.

“The ANC needs to send a signal to the Zulu nation, ‘we respect you’,” Cronje said. “That’s how you put the pin back into the hand grenade of KwaZulu-Natal.”

The rand, which fell last week as the election result came in, dropped further to R18.80 against the US dollar on Monday, before recovering some ground as talk of an ANC-DA coalition increased.

However rating agency Moody’s warned that the era of coalition governments in South Africa may usher in a period of “political and policy uncertainty”.

“A coalition government could complicate the execution of fiscal, economic and social policies that would help address South Africa’s structural credit weaknesses, such as slow economic growth, inefficiencies in the energy and logistics sectors, and high unemployment,’’ it said.

Zahabia Gupta, S&P’s South Africa analyst, said that if a government was formed through “an unstable coalition or with a party that pushes policies of nationalisation or dilutes the independence of institutions” such as the central bank, then this could be bad for the country’s ratings. This was a reference to MK and EFF, which both support such measures.

But Gupta also said that if a coalition leads to faster momentum to implement reforms, which would help South Africa’s GDP growth rate move beyond 2 per cent, then this would be positive.