South Africa's Election Will Be a Referendum on Pro-Business Policies

6 MINS READMay 1, 2019 | 00:00 GMT
People in Johannesburg walk past an election poster promoting the African National Congress on April 28, 2019.

People in Johannesburg walk past an election poster promoting the African National Congress on April 28, 2019. The May 8 general election will serve as a referendum on Ramaphosa's rule and, by extension, his pro-business and anti-corruption tilt.

  • South Africa's May 8 general election will indicate whether President Cyril Ramaphosa and his relatively pro-business, anti-corruption policies have a public mandate.
  • Success at the polls will strengthen Ramaphosa's reform agenda, allowing him and his allies to more forcefully tackle burning problems like ineffective Eskom's overhaul.
  • An underwhelming ANC performance will likely embolden more populist elements in the party to increasingly wrest control from Ramaphosa's moderate allies.
  • The election will help determine the fate of critical business policy proposals, such as the controversial expropriation of land without compensation.

South Africans celebrated Freedom Day on April 27, the day marking the 1994 election that officially ended the country's apartheid era and kicked off a new social and government order. Now, exactly 25 years later, as the country prepares for its May 8 general election, the question of South Africa's future political and economic directions weighs heavily. The African National Congress (ANC) has been the country's dominant political party for the past two and a half decades, and it's almost guaranteed to remain in power. But the election could reveal that South Africans' faith in the party — and their current President Cyril Ramaphosa — is declining. A strong public mandate for Ramaphosa's ANC would encourage his efforts to implement pro-business, anti-corruption policies. But if the party's margin of victory is slim compared to rivals, South Africa's government could begin embracing less efficient and business-friendly policies.

The Big Picture

South Africa is a continental heavyweight and a hegemon in southern Africa. Nevertheless, despite its relative advantages in Africa, it struggles with mass unemployment, concentrated wealth, corruption and declining government institutions. More and more, President Cyril Ramaphosa and his allies in the ruling African National Congress are developing and proposing methods to improve these issues. The question is whether the country's electorate will empower Ramaphosa to enact his policies.

The President's Gamble

Since being appointed president in early 2018, Ramaphosa has attempted to clean up the ANC and the South African government at large, both of which had grown increasingly corrupt and bloated under his controversial predecessor, Jacob Zuma. Ramaphosa hoped to bring an "economic miracle" to South Africa, increasing investment and creating more jobs. But though he has made some progress in shutting down ineffective state-owned enterprises and engaging with South Africa's skeptical business class, most of the country's economic markers are still underwhelming. Ahead of the May 8 polls, unemployment remains stubbornly high, high-level government corruption allegations are revealed almost daily, foreign direct investment is low, and rolling blackouts are regularly crippling part of the country.

The ANC has been losing electoral ground to rivals for several election cycles now, but despite South Africa's poor political and economic outlook, the ANC will likely leverage its strengths to remain the country's dominant party, much as it has in the quarter century since the end of apartheid. As the ANC made sure to remind South Africans during Freedom Day, the party led the fight against apartheid. Its liberation credentials remain unparalleled. And in the years since 1994, the ANC has built up a mammoth electoral machine capable of reaching nearly all corners of the country, including crucial remote rural areas. Its ability to offer jobs and goods or services in exchange for votes is unparalleled in the South African political arena.

Ramaphosa hoped to bring an "economic miracle" to South Africa, but most of the country's economic markers are still underwhelming.

Meanwhile, the country's opposition parties, while maturing, remain leagues behind the ANC in terms of political machinery. The center-right Democratic Alliance has been growing quickly over the years but is riven by internal quarreling and could even perform worse this time around according to some polls, especially since it doesn't have a controversial adversary like Zuma to energize its base against. The far-left Economic Freedom Fighters, on the other hand, may scare the ANC with its leftist bona fides and its ability to reach some of the ANC's more traditional union bases, but its message has so far only resonated in limited mining regions like Gauteng.

What Does "Winning" Really Mean?

The ANC will almost certainly win May 8. But the party's margin of victory will be a valuable signal for where South Africa's government is heading in the next decade, serving almost as a referendum on Ramaphosa's rule and, by extension, his pro-business and anti-corruption tilt. Will the ANC continue to bleed its electoral share to opposition rivals, or will it hold its own or even increase its voter share?

South Africa's Population

ANC election success appears likely based on consistent recent polling that pegs national support at around 56 percent, but if the party hits close to or exceeds the 65.8 percent vote from its 2014 election victory, Ramaphosa and his allies in the ruling party will be in a very strong position to forcefully tackle some serious issues. Crucial among those would be overhauling Eskom, South Africa's embattled electricity monopoly. Unions have already voiced their willingness to challenge the government if it attempts reform that could lead to future privatization or job losses. But as electricity prices have skyrocketed over the years, Eskom's workforce has become more bloated and its quality of service has plummeted. If his party experiences electoral success, Ramaphosa will likely pursue the tough and long-term measures needed to make the country's electrical grid reliable once again, despite union objections.

Waiting in the Wings

On the other hand, if the ANC loses substantial support as compared to the previous election and members of its important electoral bases stay home from the polls (youth voter registration is down significantly), this could spell trouble for Ramaphosa and his allies, even within their own party. Though Ramaphosa beat out former President Jacob Zuma's chosen successor, Nkosazana Dlamini-Zuma, in 2018, Dlamini-Zuma's more populist wing of the ANC remains large and holds many roles in the president's Cabinet. An underwhelming election performance would embolden the ANC's populists while weakening Ramaphosa and his allies, likely forcing them to cater to more populist policies or else be usurped.

If a surging populist ANC wing weakens (or eventually removes) Ramaphosa, it could encourage more extreme, rapid land expropriation policies.

This potential policy shift may play out in discussions about the controversial issue of land expropriation without compensation. Ramaphosa and his moderate allies have slowly tried to make progress toward implementing limited land expropriation in a way that wouldn't damage agricultural output or spook foreign investors — for example, by focusing on giving up land owned and unused by the government, or by absent owners. However, no land expropriation rules have been formalized, and if a surging populist ANC wing weakens (or eventually removes) Ramaphosa, it could encourage more extreme, rapid land expropriation policies. This could seriously damage South Africa's economy by disrupting agricultural production and threatening investors. Indeed, the faction that supported Zuma during his 2009-2018 tenure has consistently demonstrated a willingness to forgo economic efficiency and pro-business policies in favor of black economic empowerment (and, some argue, personal enrichment).

Even though the ANC's victory in the May 8 election is likely preordained, the polls are an important signpost along South Africa's political journey. Ramaphosa is facing the first true assessment of his governance since being appointed president at the beginning of 2018. Should he achieve a popular mandate, his government will continue efforts to weed out corruption, repair the electrical grid and promote economic policies that stimulate the economy. But if support for him and his allies has declined, more populist ANC leaders will fight to pursue policies that are socially liberal and economically inefficient.

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