News in South Africa 5th November:

1. ANC gets 46% in local elections:

South Africa entered new political territory on Thursday as most voters turned against the ANC for the first time in the democratic era.

ANC gets 46% in local elections
Image taken by: Element5 Digital

The ANC suffered a historic loss, ending the elections with 46% of the vote, followed by the DA with just 21.8%, the EFF with 10.4% and the IFP with 5.7%. 

It is the first time the party of Nelson Mandela has received less than half of ballots cast in any election in the continent’s most industrialised nation.

Ramaphosa attended the official results declaration ceremony in Pretoria reminding elected officials that “if we are to make this a new and better era, we, as leaders, must put aside our differences and work together in a spirit of partnership and common purpose”.

The immediate impact of Monday’s voting is local, as parties set about horse-trading to build coalitions in towns and cities.

The national showing masked broader trends, which saw the ANC lose massive support in major cities, while hanging on to smaller towns.

Voters Monday elected 213 councils, and the ANC won majorities in 161 of them. About one-third of councils had no majority.

The rest were divided among the main opposition Democratic Alliance, and the Inkatha Freedom Party, which is popular in KwaZulu-Natal.

However, the biggest vote in the local government elections was the choice not to vote at all, analysts say.

Of the 26 million registered voters, only 12 million pitched up to throw their support behind a political party.

According to analysts, the stay-away was certainly to the benefit of the DA and other smaller parties, who made gains in former ANC strongholds. This points to the writing on the wall for the ANC’s political majority and sets up a critical and highly contentious national vote in 2024.

2. The rise of coalition governments:

While the ANC dips, opposition parties fail to pick up the slack, overall, South Africa will from now on see coalitions galore.

South Africa’s 2021 local government elections were momentous. They mark the first time that the now ruling party and erstwhile liberation movement, the African National Congress (ANC), slipped below the 50% milestone of the vote.

Overall, the parties retained their positions relative to one another. The largest was the ANC; in second place the official opposition the Democratic Alliance (DA) followed by the Economic Freedom Fighters (EFF), the Inkatha Freedom Party (IFP) and the Freedom Front Plus (FF+).

The results raise the real possibility that the ANC could be looking at another defeat in the 2024 general elections. This is despite the fact that opposition parties usually do best in municipal elections and the ANC does best during general elections.

The poll pointed to a steep decline in voter interest. It was the lowest percentage poll ever in South Africa’s democratic epoch. This indicates that some citizens feel alienated from the political elite regardless of party, and sceptical of the ability of any incoming municipal government to deliver.

It is ironic that ANC supporters punished Cyril Ramaphosa given that he’s the ANC leader who has done most to purge kleptocrats from the party and the government, and appoint new, ethical prosecutors to bring the corrupt to trial.

But the voters clearly want to first see the results of this before voting for the ANC again.

Overall, South Africa will from now on share the situation of other countries with proportional representation electoral systems – coalitions galore – unlike two-party systems such as the UK and US.

The more splintered outcome of the poll means that there are likely to be many more coalitions that will need to be formed. But these will only last if enforced by the national executives of the parties concerned. Written treaties are not infallible – the DA and United Democratic Movement had that in Nelson Mandela Bay since the previous local election in 2016 – but will certainly minimise breakups.

Such contracts need to specify dispute resolution mechanisms, in addition to actual policy compromises.

Right now, the national executives of both the ANC and DA will be debating tough judgement calls. If they form municipal coalitions with each other, will this alienate voters to whom each marketed their party as a bulwark against the other? Also, in five years’ time, can each persuade their followers that successes were only due to them, and failures due only to their coalition partners?

These hard choices will be paramount in Johannesburg, Tshwane and Nelson Mandela Bay.

3. Data on effectiveness of vaccines:

The Pfizer/BioNTech vaccine reduced the risk of being hospitalised or dying from Covid-19 in SA by more than 90%, according to a real-world study by SA medical scheme administrator Discovery Health.

It found people who had received both shots of the two-dose jab had a 92% lower risk of hospitalisation and 94% lower risk of death from Covid-19 than those who had not been vaccinated, up to three months after immunisation. Even a single shot offered significant protection, reducing the risk of hospitalisation by 73% and the risk of death by 79% after 14 days.

The local findings are consistent with a US study published in The Lancet in October, which found the effectiveness of two doses of the Pfizer vaccine against hospitalisation remained high even at six months, at 93%. The findings emphasise the importance for SA of rapidly scaling up coverage.

SA had by November 3 administered 22.8-million vaccine doses and fully immunised 31.7% of the adult population with either the two-dose Pfizer vaccine or the single-shot Johnson & Johnson jab.

The government had hoped to vaccinate 70% of adults by the end of the year, but Discovery Health’s projections estimate it will reach only 52%, said CEO Ryan Noach. “That is of course a concern for lives and livelihoods, because vaccination is the most important tool we have to return to normal life,” he said.

The SA study included more than 1.2-million adults who had received the Pfizer vaccine and covered the period from the start of the government’s vaccine rollout on May 17 to September 23.

The time frame is significant because it coincided with SA’s third surge in infections, dominated by the highly transmissible Delta variant, said Noach. “This must be one of the largest [real-world] studies [into] Delta and vaccine effectiveness,” he said.

4. Tax for junk food proposed:

The Healthy Living Alliance (HEALA) has proposed the expansion of South Africa’s health promotion levy to include ultra-processed foods.

Commonly known as the ‘sugar tax’, the health promotion levy currently adds about 11% to the cost of sugary beverages to help curb the country’s sugar consumption, which health experts say is fuelling a rise in non-communicable diseases including diabetes, high blood pressure, and obesity.

In its presentation made to the National Treasury ahead of the Medium Term Budget Policy Statement (MTBPS) on 11 November, HEALA noted that the Department of Health is currently in the process of defining ‘healthy food’ via front of package food warning label regulations. This could be expanded to help define product expansion for a new levy on ultra-processed foods, it said.

HEALA said that increased revenue can support greater investment into social grant programmes, including:

  • An increase to the Child Support Grant to at minimum meet the food poverty line (R624) and extend it to pregnant mothers;
  • Extend the Covid-19 support grant;
  • Enact a Basic Income Grant (BIG).

The group has also called on Treasury to double the current health promotion levy to 20%, which it says will bring in an additional R2 billion in extra revenue.

Other proposals made by the group include:

  • Subsidising/reducing tax on nutritious foods;
  • Requiring/enabling healthy food environments in all public institutions in places such as schools and hospitals;
  • Ensuring implementation of the National School Nutrition Programme at all schools;
  • Strengthening and enforcing regulations on marketing products to children and mothers.

5. How to tackle private SOEs:

Questions are starting to arise on how state-owned companies will be run when they are no longer public-owned, as is the case with SAA.

A number of South Africa’s state-owned enterprises (SOEs) have a long history of battling issues such as poor management and high levels of debt that have put a substantial strain on the country’s national budget.

This is particularly true for SOEs that have had to rely on government bailouts to keep afloat. The government has been resolutely looking for ways to alleviate the financial burden of many SOEs and turn their situations around.

For South African Airways (SAA), the government’s strategy is to sell a 51% stake in the struggling airline to the Takatso Consortium. This is geared to help the enterprise recover from years of debt as well as the negative impact of Covid-19 which has affected airline operations due to travel restrictions.

This means the Takatso Consortium will take a controlling shareholding stake of the airline and the South African government has now become a minority shareholder.

However, this decision introduces a number of considerations for SOEs in the future.

While the situation with SAA is unusual, it could become more common among other SOEs if it proves to work in rectifying the financial challenges of the national airline.

Three key questions

This novel situation raises three key questions around the running and regulation of entities that were publicly owned and are now privately run.

  • How do shareholders work together in this new private-public dynamic?
  • How will competition be protected in this new entity?
  • How will government deal with shareholder funding?

If the South African government’s decision to sell a major stake in SAA becomes a trend among SOEs, we will need new rules set out to govern these new entities in order to ensure that the interests of both private companies and the public are protected.

All information sourced from articles posted by: ENCA, Fin24, BusinessDay, BusinessTech, and Moneyweb.

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