South Africa’s economy will suffer greatly should the ANC enter into coalition with the EFF after the election, economists predict.
An ANC/EFF coalition will cause South Africa’s political-economic risk profile to deteriorate, with corruption and threats to the rule of law mounting once the EFF joins the ANC in government.
The ANC/EFF coalition will have over 230 seats in the National Assembly and will be free to appoint the president and government the member parties agree on. After some posturing and threatening, the ANC votes for the EFF’s choice of speaker, in return for the EFF’ vote for President Cyril Ramaphosa to serve or, at least, start a second full term as president, he expects.
They believe the ANC/EFF coalition government will struggle to rejuvenate the economy and sustainably create jobs and while public sector jobs might expand, the private sector will find it difficult to operate and inclusive economic and job growth will remain elusive. The weaker currency will lead to fuel price increases and transport inflation will move the consumer price index up steadily, Van der Linde writes. “Our forecast in this scenario is for CPI inflation to average 5.6% in 2025, compared to 5.0% in our baseline forecast.”
Louw says political regime risk is the risk pillar that increases most significantly from their baseline and points out that this deterioration is due to the muddied coalition history between the ANC and EFF in local government, characterised by infighting, policy gridlock and instability.
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