Fitch unit writes off MPC’s election chances
Fitch Solutions’ research arm, BMI, has dismissed the chances of a DA-led coalition of political parties mounting a successful challenge against the ANC’s reign. It says the potential of the multiparty charter (MPC) is undercut by the readiness of its two largest parties to consider post-election alliances with the ANC.
Formed almost a year ago, the MPC is the DA’s ambitious attempt to consolidate fragmented opposition, promising to capitalise on the ANC’s dwindling electoral support and reshape the SA political landscape. It has signed up 11 political parties.
Despite polling at 30%, the MPC’s unity is threatened by the DA and IFP’s flirtation with postelection alliances with the ANC, potentially fracturing the coalition’s electoral base, said Lara Wolfe, senior Sub-Saharan Africa risk analyst for BMI.
“There are multiple reasons we are sceptical about the MPC but some of the main ones are, first, the two largest parties in the MPC — the DA and the IFP — have already announced that they would be willing to break out of this coalition to form an alliance with the ANC post election,” Wolfe said in a webinar on Wednesday.
The MPC’s ideological diversity also raised questions about its policy coherence, risking presenting a muddled vision to voters and weakening its electoral appeal.
“The multiparty charter is very ideologically spread, which likely reduces its credibility in the eyes of voters and poses significant headwinds towards any efforts to form policy,” she said.
Several snapshots of public opinion before the May 29 election show the ANC is on course to lose ground to the EFF and other smaller parties such as the IFP and Action SA, a relatively new anti-corruption party led by former Johannesburg mayor Herman Mashaba.
The ANC has been steadily losing its support nationally, amid widespread discontent over corruption, poor delivery of basic services and a stagnant economy that has led to one of the world’s worst unemployment rates.
Results of polls, including from Ipsos, suggest there could be no outright winner in the election, paving the way for the formation of coalition government at national and provincial levels — uncharted territory for post-apartheid SA.
“Our core view is that the ANC will lose its parliamentary majority … We believe that the ANC’s vote share will slip to around 45%, which would result in the party being compelled to form a coalition with a smaller party or parties but allow the ANC to remain the main policy driver.
“Should our core view play out, we would expect President Cyril Ramaphosa to remain president and leader of the ANC, ensuring high levels of policy continuity.”
BMI also laid out two distinct paths, each with its own set of consequences for the nation’s future, if the ANC’s vote share dips below 40% and if it chooses the EFF or DA as its coalition partner.
An alliance with the EFF could signal a shift towards more expansive fiscal policies, with the possibility of a wider fiscal deficit. Such a coalition
THE MPC ’ S UNITY IS THREATENED BY THE DA AND IFP ’ S FLIRTATION WITH POST-ELECTION ALLIANCES WITH THE ANC
might temper the pace of GDP growth, which has already been harmed by load-shedding, weak consumer spending and dysfunctional rail infrastructure.
“We see the EFF push for greater social spending on grants benefits and more spent on SA’s ailing state-owned enterprises,” Wolfe said.
Conversely, a coalition with the DA could introduce a more conservative fiscal approach, potentially narrowing the deficit and injecting vigour into the GDP growth trajectory, BMI said in a report prepared for the webinar.
“A coalition with the DA might initially create uncertainty among investors due to potential policymaking slowdowns.
“However, if they manage to agree and start to pass policy, it would likely result in a decline in social spending, higher fixed investment and greater investor confidence,” Wolfe said.
The rand, a barometer of the country’s economic pulse, could experience volatility depending on the coalition outcome. An ANC-EFF coalition could unsettle the markets, leading to depreciation of the currency, while a partnership with DA holds the promise of stability and could bolster the rand.
An ANC-EFF government would likely sidle up to Russia and China, turning its back on the West. Alternatively, an ANCDA coalition could pave the way for warmer relations with the West, enhancing diplomatic and economic exchanges, BMI said.