Fwd: FW: South Africa election
Iresh Pillay
From: Iresh Pillay <ir...@ersny.com>
Date: Fri, May 10, 2019 at 12:07 PM
Subject: FW: South Africa election
To: Bullhorn Undeliverable <ireshp...@gmail.com>
Best,
Iresh Pillay, CA (SA)
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From: Brian Davidson <brian.d...@fathom-consulting.com>
Sent: Friday, May 10, 2019 12:02 PM
To: Iresh Pillay <ir...@ersny.com>
Subject: FW: South Africa election
Election thoughts. Something I put together this morning for the rest of the team.
Good morning,
The votes haven’t all been counted yet, but some early conclusions from election are the following:
- ANC will win – but with weaker majority than before (its looking like 58% versus 62% in the 2014 election)
- About 70% of the votes have been counted nationally – but the votes from some large townships are still not in, suggesting the ANC share could rise
- Parliament will elect Cyril Ramaphosa to be the President (he has been President for the last year or so after Jacob Zuma was deposed amid allegations of corruption)
- The main opposition party, the DA, hasn’t done as well nationally as hoped: its looking like 22% and no improvement on last time despite the ANC’s problems
- The DA won the Western Cape and will continue to govern there, but with a smaller majority than last time
- The far left EFF set to get more votes nationally than 2014: 10% now versus 6% then
- The results in Gauteng – the economic and industrial hub of the country – are not finalised; the ANC has a sliver less than 50% - losing that would be a big blow and mean they would need to govern in a coalition
The bigger picture:
- South Africa is one of the most unequal countries in the world
- That inequality is largely along racial lines, with whites holding most of the wealth, although a small, well-connected black minority are now among the wealthy elites too
- The pie is not growing very fast; to deflect away from that (and other issues such as corruption), the ANC seem to be putting more emphasis on how to redistribute that pie (along racial lines and land redistribution without compensation away from wealthy whites) – they are being pulled to towards populism by the EFF
- My hunch is that the land redistribution proposals are not as bad as they might sound, but if the EFF were to get more power, the risk of it spiralling into a Zimbabwe style situation would grow
- Ramaphosa will have a hard job convincing many ANC voters that the ANC lost votes due to the rot under his predecessor’s watch
- A lot of Zuma allies, and populists, are waiting in the wings in the ANC – their power will make Ramaphosa’s reform effort difficult
- Hard to draw left/right lines in South African politics relative to other countries given the racial sensitivities (while anyone on the right would probably vote for the DA, the party was born out of liberal whites who opposed apartheid. The leader of the DA is black)
- South Africa’s brain drain is ongoing with many skilled workers leaving; this has negative economic consequences and there seems to be little plan from the ANC to stop this
I went to a pre-election event the other night. There was a feisty debate in the Q&A: several black women in the audience had a real go at the ANC’s UK Chair and criticised him (and the party) for not having done much to improve the lot of most black South Africans 25 years after the end of apartheid – they also criticised his focus on race. A white man, and ANC voter, told the ANC Chair that he was worried that the party was not achieving better outcomes for the population.
The opposition DA UK Chair was criticised by an EFF voter in the audience for not backing more an expansion of BEE (black economic empowerment) and seemingly cozying up to big business. The EFF want the South African Central Bank to be nationalised.
It all ended with a calm and good-spirited chat among everyone in the pub later, including some of the panellists with members of the audience who at loggerheads during the Q&A. That was nice. I met a few interesting people, including the DA’s UK Chair who is keen to talk to me more about economics.
Brian Davidson, CFA | Senior Economist
Fathom Consulting
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