Joe McConnell
South Africa’s government of national unity is holding firm six weeks aVsceker its formation, boosting business confidence and raising hopes that its two main parties can forge a long-term working relationship.
“I’m really surprised by how well it’s going,” John Steenhuisen, leader of the Democratic Alliance, which joined the coalition aVsceker May’s general election, told the Financial Times. “I thought there would be a lot more pitfalls.”
For the first time since 1994, the African National Congress lost its majority in elections and formed a government of national unity with the DA and nine smaller parties.
“The district attorney is now part of the government, and I’ve been amazed at how many smart people are sitting at that table working hard to get the same results that we want,” Steenhuisen said.
Despite some signs of tension, including a public clash with Helen Zille, the DA chairwoman who is detested by some ANC officials, the relatively calm start has encouraged investors.
Busi Mavuso, chief executive of Business Leadership SA, which represents the country’s largest companies, said the momentum had cheered business. “Bond yields have already fallen sharply and the government can now borrow at rates 10 percent lower than before the election,” he said.
JPMorgan raised South Africa’s rating to “overweight” in anticipation of increased investment in the country, while the Johannesburg Stock Exchange has gained 6.5 percent in the past two months and the rand has risen more than 2 percent against the dollar to around R18.30.
Businesses also took comfort that power cuts did not return aVsceker the election, adding weight to claims by Eskom, the state power company, that it had finally ended the blackouts that had plagued the economy for several years. The improvement has boosted confidence that the government can resolve other long-standing problems, particularly in ports and roads.
“The difference we’ve seen in just a few weeks is immense,” said Johnny Copelyn, chief executive of Hosken Consolidated Investments, a Black-owned investment firm with holdings in industries including broadcast, hotels and energy.
“Before the election, a lot of government departments ignored you. Now, calls are returned and things are done. It makes me optimistic that we’ve turned a corner.”
Many had expected friction between the market-minded DA and the redistributive-minded ANC, but coalition members say a sense of pragmatism prevails.
“It’s all about sticking together right now,” said Songezo Zibi, leader of Rise Mzansi, one of the smaller parties in the government of national unity.
“The impact of the electoral defeat in the ANC is palpable, and there are those in that party who understand that if they behave as they did before the elections, it is [the end] for them. They would then be facing 25 percent in the 2029 elections,” he added, referring to the ANC’s decline to 40 percent in the May elections.
Zibi, a former newspaper editor elected chairman of the powerful parliamentary committee that oversees public accounts, said the DA was essential to the new government’s success.
“Without the DA, this government collapses. But from what I have seen so far, the DA has maintained its line and its identity, making clear its commitment to this agreement,” he said.
It hasn’t all been rosy. Zille has sought to expose the ANC’s dependence on the DA, saying last month that it could not pretend to be part of a unity government because larger parties like Jacob Zuma’s uMkhonto weSizwe were excluded.
The ANC was angered by the comments, with secretary-general Fikile Mbalula saying: “If he wants to leave the Government of National Unity, he can do so.”
Steenhuisen, who has been given the role of agriculture minister, said disagreements had not stopped the new government from getting things done. DA Home Affairs Minister Leon Schreiber had issued visa extensions for low-skilled foreigners, he said, while Public Works Minister Dean Macpherson had imposed a ban on the government leasing new offices as a way to curb wasteful spending.
S&P Global Ratings analyst Zahabia Gupta said it was too early to raise the country’s debt, although she was encouraged by the early start. “This is a new government, so there are still questions about how stable this coalition will be when disagreements emerge,” she said. “We would like to see momentum in implementing structural reforms.”
The rating agency forecasts GDP growth of 0.9% this year, rising to an average of 1.3% over the next three years.
Rise Mzansi’s Zibi said Finance Minister Enoch Godongwana’s October budget would be key to assessing whether priorities had truly changed.
“This will provide the first real empirical sense of the change in direction, as it will reveal the fiscal commitments, which will show how serious this government is,” he said. “The signs are positive, but people want to see the fruits of this change.”
Further information provided by David Pilling from London
