South Africa Vote Rocks ANC as Big Cities Reject Status Quo

Johannesburg, South Africa, Capital Markets in Africa: South Africa’s ruling African National Congress trailed the main opposition party in four of the country’s biggest cities, including the capital, as results from local elections showed rising discontent among urban voters over a flat-lining economy and scandals surrounding President Jacob Zuma.

While later results from its traditional strongholds in the townships around Pretoria, the capital, and economic hub Johannesburg may buoy the ANC vote, the election marks a swing to the Democratic Alliance in two key cities in the nation’s richest province, Gauteng.

“It has lost ground in the urban middle-class areas, and in a country that is rapidly urbanizing, that is a threat to the ANC,” Nic Borain, a Cape Town-based political analyst and adviser to BNP Paribas Securities South Africa, said by phone. “To get below 60 percent and to lose two metros would be a serious failing for the ANC, even one metro.”

Still widely credited for ending white-minority rule, the ANC now faces almost daily demonstrations over the failure of the government it leads to fulfill promises to create jobs, address poverty and improve living standards. Unemployment is at 27 percent, the central bank anticipates zero growth this year and the nation’s credit rating is at risk of being cut to junk by S&P Global Ratings in December. A succession of graft scandals implicating Zuma, 74, has also fueled discontent.

“There’s more fluidity in our voting public as they judge parties on what they deliver in reality on the ground rather than on their historical trajectory or their emotions,” Daniel Silke, director of Cape Town-based Political Futures Consultancy, said by phone. “It’s more about delivery today than about the liberation struggle.”

The DA led in Tshwane, the municipality that includes Pretoria, with 43.5 percent of the vote, while the ANC had 42.6 percent, early tallies released by the Independent Electoral Commission show. In Johannesburg, the ruling party had 40.8 percent support compared with the DA’s 43.4 percent.

The DA was also ahead in the Nelson Mandela Bay municipality, which includes Port Elizabeth, with 50.6 percent support, compared to the ANC’s 38.5 percent, and looks set to increase its majority in Cape Town.

With 9.1 million, or about 60 percent of the estimate of votes cast nationally in Wednesday’s election counted as of 12:50 p.m. on Thursday, the ANC had 54 percent of the total support, followed by the DA with 27.3 percent, according to the commission. The Economic Freedom Fighters stood at 7.6 percent.

Investors Wary
The ANC has pledged to curtail the budget deficit and improve the management of state companies to defend the investment-grade rating. Yet investors are still wary about its plans to introduce a national minimum wage, give the state a bigger role in the economy and to take a free stake in new oil and gas ventures.

The DA plans to remove policy uncertainty to attract investment, improve public-sector fiscal management, support small businesses in creating jobs and reform the labor market so that it’s more flexible and enables companies to create positions more easily.

Rand Gains
The rand strengthened 1.2 percent to trade at 13.7393 per dollar at 2:39 p.m. in Johannesburg, the best performer of 24 emerging-market currencies monitored by Bloomberg. It’s still down about 40 percent since Zuma took office on May 9, 2009.

The ANC may win 54 percent of the overall vote, its worst showing since it swept to power under Nelson Mandela in 1994, a poll released Aug. 2 by research company Ipsos showed. The ANC won 62 percent support in the last national elections in 2014, and currently controls Tshwane, Johannesburg and Nelson Mandela Bay outright.

With no party expected to pass the 50 percent mark in all three centers, Africa’s most-industrialized country may need coalitions to run key municipalities in its richest province, Gauteng. The partial results may not be an accurate indication of the final outcome as counting from rural areas and townships where the ANC has historically had more support tends to take longer.

Difficult Predictions
“Many of the townships are not yet in,” Gwede Mantashe, the ANC’s secretary-general, told broadcaster 567 Cape Talk. “It’s difficult to make predictions with the results trickling in.”

With more than half of the results in, voter turnout stood at 58 percent, similar to the last local government election five years ago, said Stuart Murphy, the commission’s national manager of electoral matters.

The DA currently controls Cape Town and won 22 percent of the vote in 2014, while the EFF secured 6.4 percent. While the DA’s pledge to make it easier to do business is diametrically opposed to the EFF’s call for the nationalization of mines, banks and land, both parties have said they are open to forming coalitions with each other but not the ANC, increasing the likelihood of municipalities falling into opposition hands.

“We are confident that we will keep all the metros that we’ve kept before,”Jessie Duarte, the ANC’s deputy secretary-general, said in Pretoria. “We are not worried at all.”

Source: Bloomberg Business News