Looking at the election results on Friday afternoon, South Africa is in unchartered and uncertain waters with the Rand and the markets volatile as everybody waits to see how the chips will fall, economists say.
The rise of the MK party is remarkable with the number of votes outside of KwaZulu-Natal particularly significant and largely responsible for the loss in votes for the ANC as the established opposition parties failed to make significant inroads, save for the PA and EFF in the Northern Cape. “The Rand remained volatile throughout the day and closed around a one-month low against the dollar. Volatility was always expected and yesterday’s ranges are not out of line given the levels of uncertainty around the election outcome. The Rand is set to remain volatile over the next two weeks as parties negotiate a national coalition.”
“The challenge for new coalition governance at the national and provincial levels must be to ensure that South Africa implements the reforms necessary to get it back on a good economic track after several years where a great deal of economic ground has been lost.” “Most of the post-election configurations with the ANC will find the updated National Development Plan recommendations valuable for this purpose, assuming that there is a desire to create a favourable economic environment within which the private sector can flourish.”However, if the existing ANC approach to the implementation of policy and projects does not improve and remains entirely unchanged, South Africa will not be able to break out of its current ‘low-growth trap’ of 1% to 1.