South Africa’s election outcome scenario

South Africa is gearing up for its upcoming elections, just 29 days away, and the economic implications are at the forefront of the discussion. François Conradie, Lead Political Economist at Oxford Economics Africa, outlined the various scenarios that could unfold based on the election outcomes. According to Conradie, there are four main scenarios being considered. The first scenario, which is highly unlikely, involves a multi-party coalition assembling a majority. The more probable scenarios include the ANC securing over 45% of the vote, allowing it to form a government in coalition with smaller parties like the IFP, PA, GERD, and Al-Jamaa. This outcome is seen as the baseline scenario by many in the markets, leading to minimal shocks in asset prices and currency fluctuations. However, growth is expected to be sluggish due to supply constraints in the near term, gradually improving from 2026. The two other likely scenarios involve the ANC receiving around 40% of the vote, necessitating alliances with either the EFF or the DA, each with distinct policy implications for the economy. In case the ANC falls below 50% and has to form a coalition government, there are concerns about fiscal and economic reforms. Should the ANC align with the EFF, policies may focus on land reform and driving growth through state-owned enterprises, potentially leading to wider budget deficits, increased government debt, and strained relations with the private sector. On the other hand, an ANC-DA partnership could result in more liberalization, fostering job creation and increased investments. The business community, particularly foreign investors, typically favors liberal governments with minimal interference in business operations. Efficient local governance and measures to combat corruption are also crucial factors for business sentiment. The uncertainty surrounding the election outcomes makes it challenging to predict the exact policy directions and their impact on the economy. However, businesses are hopeful for outcomes that prioritize economic efficiency and tackle corruption effectively. Overall, the election results will shape the economic landscape of South Africa in the coming years, with various scenarios offering different prospects for growth and investment.