South Africa’s ruling African National Congress (ANC) is poised to ink a ‘nonaggression’ pact with the radical Economic Freedom Fighters (EFF) party. Smarting from the loss of popular party campaigner former President Jacob Zuma, and fearing a massive hemorrhage of ethnic Zulu voters in 2019, the party is moving to embrace Malema. Between 2012 and 2017, 65% of all lost ANC party members hailed from Zuma’s stronghold, KwaZulu Natal province.
An ANC-EFF pact will shift the general national policy orientation in a radical leftward direction to the detriment of foreign investors. In exchange for the EFF’s support for the ANC to govern several hung municipalities, and in the 2019 polls, the ANC will agree to support some of the more radical policy platforms of EFF’s leader Julius Malema, a former ANC youth executive. While Malema was virulently opposed Zuma and helped trigger his ouster, he has maintained excellent working relations with President Cyril Ramaphosa and his deputy, David Mabuza.
The early 2018 ascension of billionaire ex-trade union executive Ramaphosa to the presidency delighted foreign investors who had grown tired of the seeming incompetence and cronyism of the Jacob Zuma era. However, a tactical electoral alliance between the ANC and EFF ahead of the 2019 polls will dramatically alter the country’s future policy trajectory in a hostile non-friendly investor direction.
The EFF favors a wider fiscal deficit, higher corporate taxes, the expropriation of white owned lands, a nationalization of the mining sector and a de-privatization of the country’s central bank. Its quasi military structures envisage a more militant Castro/Mao-style political revolution. Since taking office Ramaphosa has backed the EFF’s land expropriation bill. He may yet be politically coerced to support more radical measures ahead of 2019 poll. 2018 may yet see the country’s credit fall into junk status amid renewed capital flight.
Despite the early 2018 un-ceremonious ousting of Zuma by the ruling African National Congress (ANC), in favor of Ramaphosa, which delighted the international investment community, the recent moves by Ramaphosa to cover his left flank by moving to embrace the EFF, will ultimately shift the country’s policies beyond its current relatively center-left position, jeopardizing the country’s relative economic stability.
South Africa’s big banks, who own the lion’s share of immovable assets such as land, are likely to be hardest hit by the ANC’s leftist move.
