This article first appeared in Moneyweb.
The ANC is on target to win next month’s election. The big question is whether it loses Gauteng.
The ANC is heading into next month’s election fielding several candidates whose names have surfaced in the Zondo Commission of Inquiry into state capture. Despite the Eskom electricity crisis and a constant stream of corruption-related news pointing to senior levels of the ruling party, the ANC is still expected to win the upcoming national election, perhaps even bettering the 54% it won in the 2016 election.
Speaking at a pre-election debate in Sandton this week chaired by Peter Leon of Herbert Smith Freehills, independent elections analyst Dawie Scholtz said the ANC, based on polling and by-election data, should win about 56% of the national vote. Cyril Ramaphosa’s assumption of the presidency may have arrested the slide in ANC support suffered under former president Jacob Zuma, but this is by no means certain.
The party manifestos make for riveting reading, with very little attention given to how parties are going to fund their schemes. Investment expert Martin Kingston says looking at all the free stuff on offer from the EFF, he’d be inclined to vote them, but with one caveat: “How do we pay for it? All the parties believe in something called a free lunch. They all disregard the fact that we are challenged by a lack of a competent and capable state and that undermines the prospects for the country. At the heart of this problem sits cadre deployment.”
Leon described the upcoming election as the most consequential for SA since 1994.
The ruling party should perform better in certain areas such as Limpopo, Ramaphosa’s home province, urban Gauteng, where the president’s approval rating is strong, and the Eastern Cape, but will under-perform in Kwazulu-Natal, where his approval rating is lower.
The EFF stands to have a great election, perhaps even doubling the 6.6% they won in the last election. Scholtz says the party is on target to win 9-12% of the national vote.
The Democratic Alliance (DA) should match or slightly exceed the 22% it secured in the last election. This depends on voter minority turnout, which is traditionally high among suburban voters. There is some attrition from Afrikaners who don’t like the DA’s position on land reform, to the benefit of Freedom Front Plus (FF+). This was reflected in two recent by-elections in traditionally strong Afrikaner areas, where the DA lost about 20% of its support, mainly to the FF+.
The wild card here is black middle class voters in Gauteng, who have been deserting the ANC since 2011. Lumkile Mondi, Wits University lecturer and economist, says the number of black middle class voters who turned out for the DA in the last election could double this time around, with some of this support going to other parties. Much of this turnout will be driven by dissatisfaction with rising living costs. “The ANC here (Gauteng) is a sitting duck, particularly around the cost of living. The black middle class is forming the view that the ANC cannot manage the economy.”
Is the ANC in danger of losing Gauteng, largely due to the surge in support for the EFF and DA?
Scholtz says the ANC won 46% of the Gauteng vote in 2016, so it should secure 48% in a national election. The ANC won 87% of black vote in Gauteng in 2011, but this fell to 78% in the 2014 election and 69% in 2016. The real question is whether the ruling party is facing an irreversible attrition of support from its traditional black voter base.
Suburban turnout in Gauteng was 78% in the last election, against 71% for townships, and should remain more or less the same this time, as voters turn out to express their dissatisfaction with Eskom power outages and a constant stream of corruption news from the Zondo Commission.
The Western Cape looks like a reasonably safe bet for the DA, which can withstand a 10-15% swing in voter allegiances. Again, much depends on voter turnout. There was a 71% suburban turnout in the last election in the Western Cape, against 53% in townships. This time Scholtz believes it should secure 53-55% of the vote in the Western Cape.
SA is stuck in a long-term trend of very low economic growth going forward, underpinned by the structural problems such as lower revenue collections, and lack of human capital that defines the democratic state, says Mondi. “Embedded in the economy is a sense that there is only one way for blacks to create wealth and that is through preferential procurement. This is coming out of the Commissions (of inquiry). Preferential procurement is a poisoned chalice. The state has created an enabling environment and opened opportunities for black people where they can go out and become professionals or earn their living the criminal way, through political power.”
The message the ANC is sending by retaining members suspected of corruption is that it is willing to put its own interests ahead of the Constitutional state. Ramaphosa is no reformer, and the list of candidates the ANC is fielding is not going to push the reforms needed to get growth going again, says Mondi. A notion gaining traction in SA is modern monetary theory, or the idea that printing money is not a bad idea. Advocates of this theory point to the Netherlands, Portugal or Ireland where debt-to-GDP ratios are far higher than they are in SA.
State-owned companies have become the seat of corruption and cadre deployment. For Eskom to be fit for purpose means job losses, says Kingston. The power utility is currently in a death spiral, characterized by falling revenue, rising interest costs and a shrinking customer base that requires constant increases in electricity tariffs. Kingston adds that Ramaphosa is unlikely to attract anything like $100 billion in foreign investment so long as property rights are in question.
There are 26.7 million people registered to vote, more than half of them women. The stakes in this election are perhaps higher than at any time in the last 20 years. At the start of the Zuma reign in 2009, economic growth was a respectable 4%. Last year it slipped to 0.8%.
Government debt has increased from 30% of GDP in 2009 to 53%, and unemployment has gone from 23% to 27% over the same period. Corruption has desecrated the ruling party, prompting three presidential commissions of inquiry and two rating downgrades.
A taste of what the three main parties are offering:
ANC: Amend Section 25 of Constitution to allow expropriation of land without compensation (EWC), but in a way that promotes economic development, agricultural production and food security. It plans to create 275,000 new jobs a year, and allocate 30% of government procurement spend on small businesses and cooperatives. It will also fund a national student financial aid scheme, fight corruption and encourage foreigners to stay in their own countries through incentives to African states. Many of these are hold-overs from the last party manifesto.
DA: The party also talks about land reform by ensuring those entitled to land receive it by way of direct ownership; secure borders, honest police; speedier service delivery. It, too, plans to fight corruption, introduce a job seekers allowance, national civilian service for unemployed matriculants, and a new funding model for deserving students. It plans to promote better economic growth by removing red tape, exempting small businesses from certain labour and BEE laws, and implementing tax amnesty for small business.
EFF: In addition to EWC, all land to fall under state custodianship for equal distribution for all; foreign ownership of land prohibited; food for local consumption must be produced locally; all unemployed graduates will be placed in jobs relevant to their qualifications. Schools will be provided with facilities such as swimming pools and driving schools, with free tablets for every learner; all fees for higher education abolished, all student debt cancelled; free accommodation and free public transports for students; social grants doubled; sovereign wealth fund will partner with foreign direct investors to maximise job creation.