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South Africa in uncharted waters with ANC set to share power

Antony Sguazzin, S'thembile Cele and Ana Monteiro, Bloomberg News on

Published in News & Features

South Africa’s ruling party looks set to fall short of securing a parliamentary majority for the first time since surging to power at the end of apartheid three decades ago, ushering in a period of uncertainty with a coalition partner needed to retain control.

The African National Congress is on course to win 42% of the votes cast in Wednesday’s national election, according to projections based on early results. That would be a massive 15.5 percentage point drop from the last vote five years ago.

If the state-owned Council for Scientific and Industrial Research’s modeling proves accurate, the ANC will probably need to team up with one of its biggest rivals to cross the 50% threshold, with its market-friendly main opposition the Democratic Alliance one of the chief options. The ANC could also join forces with one of two populist parties, who back the nationalization of mines and banks, unnerving financial markets concerned about the likely hit to investment.

The rand plunged as much as 2% on Thursday before paring losses and trading at 18.65 per dollar by 1:07 p.m. in Johannesburg. Stocks also tumbled, with the FTSE/JSE Africa All Share Index falling as much as 2.3%. The yield on local-currency bonds maturing in 2035 rose 17 basis points to 12.2%, a five-week high.

“This is watershed moment for South Africa and has the potential to redraw the political map,” said Daniel Silke, the director of Cape Town-based Political Futures Consultancy. “It ushers in an era of substantial uncertainty for South Africa as the ANC will be forced to choose its political bedfellows and the economic orientation that it will present to the country over the next five years.”

The CSIR model, which has a 2% margin of error and proved broadly accurate in previous elections, was run using declared tallies from 8.24% of voting districts.

 

The model also shows that:

•The Democratic Alliance, currently the main opposition party, is likely to win 22.3% support nationally.

•The populist Economic Freedom Fighters is on track to garner 9%.

•The new uMkhonto weSizwe Party, which is led by former President Jacob Zuma, is expected to win 12.8%.

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