Latest / Stephanomics / South Africa is in Uncharted Waters. What's Next?

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South Africa is in Uncharted Waters. What's Next? · Stephanomics

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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  Speaker 2: Welcome to voter Noomics, where politics and markets collide. The
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  Speaker 2: polls have opened in South Africa's general election, which could
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  Speaker 2: be the most consequential since the end of apartheid thirty
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  Speaker 2: years ago.
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  Speaker 3: The ANC has been at the forefront of South African
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  Speaker 3: politics since Nelson Mandela's release from prison. He was elected
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  Speaker 3: president his party has been in power ever since, but
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  Speaker 3: the current President, Sarah Ramaposa, faces levels of discontent not
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  Speaker 3: seen by any of his predecessors.
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  Speaker 4: The ANC Mandela's party potentially could risk losing their parliamentary majority.
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  Speaker 4: There are lots of other opposition parties fifty one buying
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  Speaker 4: for people's votes, and the people who've spoken to today
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  Speaker 4: are very aware of the power of their vote. They've
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  Speaker 4: seen the change it's brought in the past, and they're
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  Speaker 4: hoping it can help with soaring unemployment, high inequality, and
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  Speaker 4: the crime that has ridden their neighborhood and the country.
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  Speaker 2: This year. Voters around the world have the ability to
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  Speaker 2: affect markets, countries and economies like never before, and we've
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  Speaker 2: created this series to help you make sense of it all.
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  Speaker 2: I'm Adream Woodbridge. My regular co hosts alegra Stratton and
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  Speaker 2: Severy Flanders are out this week, leaving me carrying the can.
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  Speaker 2: So we're going to do something a little different. We're
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  Speaker 2: going to focus this episode on the very significant, incredibly
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  Speaker 2: significant election taking place in South Africa. As you've heard
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  Speaker 2: at the top of the show on Wednesday, votes were cast.
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  Speaker 2: Over the weekend, we will get the results and then
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  Speaker 2: on Monday we'll have a full voter nomics with the
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  Speaker 2: whole crew examining election results and also featuring an interview
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  Speaker 2: with Dhalip Singh, former at Federal Reserve Economists now Deputy
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  Speaker 2: Nationals Curate Advisor at the White House, who, among other things,
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  Speaker 2: masterminded sanctions against Russia. But for this episode, I've invited
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  Speaker 2: Jacqueline Simmons, who is our regional editorial lead, to join
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  Speaker 2: me in the London studio.
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  Speaker 5: Welcome Jackie, Hi, Adrian.
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  Speaker 2: Jackie, give us a sense of what you're you're you're
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  Speaker 2: you're thinking about, Johanna, what's happening in Johannesburg at the moment.
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  Speaker 5: I recently was in South Africa, first in Johannesburg and
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  Speaker 5: then Cape Town. But one of the things that stood
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  Speaker 5: as we convened a dinner with business leaders of various
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  Speaker 5: stripes in Johannesburg, and I was really struck by how
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  Speaker 5: sanguine most of them were about the election outcome and
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  Speaker 5: the idea of a left leaning eff party somehow coming
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  Speaker 5: into government with the an C if it drops below
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  Speaker 5: its majority, you know, a party that wants to nationalize
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  Speaker 5: assets like lands and mines. It didn't really fase them.
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  Speaker 5: They didn't seem to think it would become a reality, which,
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  Speaker 5: by the way, very much tracks with what we're seeing
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  Speaker 5: in the markets and some of the pulling leading into
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  Speaker 5: the vote. But at the same time, they expressed utter
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  Speaker 5: frustration with the status quo, so you know, frustration with
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  Speaker 5: blackouts or load shedding as they call it, their shoddy infrastructure,
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  Speaker 5: bad roads, crime, I mean, it's a really long list.
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  Speaker 5: So you have this dual sentiment with on the one hand,
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  Speaker 5: it's going to be okay, but on the other one,
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  Speaker 5: we're really fed up. So this kind of duality stood
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  Speaker 5: out to me most.
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  Speaker 2: So is that basically is the basic sentiment there that
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  Speaker 2: things can't get any worse and they might get a
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  Speaker 2: bit better.
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  Speaker 5: I think it depends on who you ask. I have
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  Speaker 5: a very good contact in Cape Town, someone who works
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  Speaker 5: in architectural modeling. White votes DA will vote DA, and
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  Speaker 5: he says he's going to do that because the DA
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  Speaker 5: has a proven track record running a province efficiently. But
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  Speaker 5: at the same time, you talk to his black staff,
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  Speaker 5: both at his house and in his business. Now they're
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  Speaker 5: not going to vote. And I did speak to one
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  Speaker 5: of them, and he was clear to me that he
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  Speaker 5: has zero interest in politics. He does not think that
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  Speaker 5: life is going to change marketly whether he votes or not.
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  Speaker 5: And furthermore, I think some of the staff, and I
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  Speaker 5: think this is reflective of our reporting, they don't feel that, yeah,
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  Speaker 5: anything is going to get better for them, that the
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  Speaker 5: conditions have just if anything worsened. They don't see the point.
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  Speaker 2: Now, of course, Jackie, as you know, one of the
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  Speaker 2: abuses of Bloomberg is that we have brilliant people in
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  Speaker 2: all these places that we're reporting from. So let's actually
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  Speaker 2: go over to Johannesburg where Yvonne Mahanngo from our Bloomberg
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  Speaker 2: Economics team will join us. Yvonne, Hello, Hi, Now this
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  Speaker 2: is a watershed election for South Africa, Is that right?
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  Speaker 6: It is?
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  Speaker 1: Yes, It's the first time in three decades that the
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  Speaker 1: African National Congress may not get an outright majority, which
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  Speaker 1: implies that they may have to partner with a smaller
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  Speaker 1: political party in order to govern.
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  Speaker 2: And why, I mean, why are they losing this majority.
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  Speaker 2: I can't think of South Africa without being run by
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  Speaker 2: the ANC.
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  Speaker 1: It's a good point. I mean, there've been office for
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  Speaker 1: three decades. But if you follow the trajectory of the economy,
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  Speaker 1: particularly over the past two decades, and in particular an
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  Speaker 1: employment rate, you can understand why South Africans are frustrated.
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  Speaker 1: Unemployment has increased from around twenty three percent two decades
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  Speaker 1: ago to thirty two percent today. We have a power
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  Speaker 1: crisis that's been in place for sixteen years but in
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  Speaker 1: recent years has curiorated such that you only gets electricty
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  Speaker 1: four half of a day. South Africans are frustrated in
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  Speaker 1: terms of service delivery and are seeking alternatives from the ANC.
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  Speaker 5: If I have a question just about turnout. So in
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  Speaker 5: nineteen ninety four, when Mandela was presenting it, turnout was
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  Speaker 5: eighty five percent. In twenty nineteen the year Ramoposa was voted,
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  Speaker 5: and turnout was forty seven percent. So we've written the
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  Speaker 5: ANC has two things working in its favor. Apathy, and
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  Speaker 5: a splintered opposition. Why so much apathy apathy, I guess.
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  Speaker 1: Is the fact that there's historically been this link to
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  Speaker 1: this what we consider a liberation party, the party that
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  Speaker 1: took South Africa out of a party. So you've got
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  Speaker 1: that generation that struggles to think they could vote for
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  Speaker 1: anyone else. However, as we move away from nineteen ninety four,
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  Speaker 1: there's a young generation that doesn't have any link to
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  Speaker 1: the past, and as we side, we're actually expecting to
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  Speaker 1: see an increase in turnout at this particular election from
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  Speaker 1: reports and just hearing just listening to the radio, turnout
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  Speaker 1: seems to be pretty strong, suggesting that it's going to
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  Speaker 1: be quite different from twenty nineteen.
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  Speaker 5: Interesting, and just to follow on that, how much of
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  Speaker 5: that turnout is dictated not so much by racial lines,
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  Speaker 5: but by the haves and they have not.
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  Speaker 1: The indications just by listening to word of mouth feedback
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  Speaker 1: and those falling into radio stations is turnout has been
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  Speaker 1: pretty strong in urban areas, so I guess that would
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  Speaker 1: be where you'd see more of a mix of races.
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  Speaker 1: Apathy does still exist, particularly in the townships, which is
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  Speaker 1: a lower income area, but I'd imagine in rural areas
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  Speaker 1: where people find it important though a civic duty to vote,
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  Speaker 1: that turnout would still be pretty solid. And I highlight
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  Speaker 1: the rural areas because today that is where the ruling
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  Speaker 1: parties support is coming from. Those who are most frustrated
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  Speaker 1: are those in urban areas, and the polling that we've
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  Speaker 1: been seeing has actually been predominantly from urban areas. So
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  Speaker 1: if you do see a surprise in terms of the
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  Speaker 1: performance of the ANC, that will most likely be because
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  Speaker 1: of the turnout from the rural areas.
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  Speaker 2: And Yvonne, can you give us a sense of what
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  Speaker 2: the rival parties are.
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  Speaker 1: The second biggest party is a Democratic Alliance. They're considered
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  Speaker 1: the pro business Party. That's the party that investors would
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  Speaker 1: love the NC to form a coalition with if the
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  Speaker 1: NC lost to their majority vote. And that party is
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  Speaker 1: firm in terms of restoring fiscal health to the country.
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  Speaker 1: They look at tax reform in order to make it
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  Speaker 1: more friendly for business, and they will do away with
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  Speaker 1: affirmative action because they feel it's been taken advantage of
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  Speaker 1: if I can call it that, or corruption has gone
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  Speaker 1: into it.
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  Speaker 6: So that's a democratic alliance.
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  Speaker 1: It's also considered the White Party, so that's why in
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  Speaker 1: some cases they've struggled in order to get beyond the
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  Speaker 1: twenty percent of that they've peaked at. The other big party,
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  Speaker 1: the third biggest one is the Economic Freedom Fighters. That's
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  Speaker 1: a leftist party that that causes investors to get pretty
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  Speaker 1: nervous because of their.
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  Speaker 6: Talk of nationalization. So that's led by Julius Malemma.
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  Speaker 1: That's a party that could be considered for a coalition,
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  Speaker 1: particularly if the NC does really badly, like less than.
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  Speaker 6: Forty percent of the vote. Those are the two main parties,
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  Speaker 6: those are the ones to watch for.
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  Speaker 2: So that points to two very very different futures. One
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  Speaker 2: of the business oriented future and another is a populist
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  Speaker 2: sort of future.
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  Speaker 1: See but let me also point out that if the
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  Speaker 1: ANC's less than majority vote is around forty five percent,
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  Speaker 1: they simply have to partner with a smaller party. In
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  Speaker 1: this case, then Cutter Freedom Party is considered to be
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  Speaker 1: the natural fit. It's a party that's dominant in Hota,
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  Speaker 1: which is Jacobsumer's.
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  Speaker 6: Province, and if they partnered with the IFP, then.
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  Speaker 1: You'd see policy continuity because of very similar in terms
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  Speaker 1: of policy trajectory.
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  Speaker 5: So financial markets have been optimistic. We did a survey
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  Speaker 5: of twenty six emerging market investors, where most were overweight
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  Speaker 5: or neutral in South Africa, preferring it as an investment
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  Speaker 5: to Egypt or Nigeria. When investors are watching the projections
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  Speaker 5: that we'll get, at what point do you think they'll
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  Speaker 5: start to get either very nervous or very excited.
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  Speaker 6: So the first thing.
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  Speaker 1: Is whatever I wants to see is whether the answer
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  Speaker 1: will get an outdright majority or not.
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  Speaker 6: So that's the first big question.
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  Speaker 1: If they don't get the majority, I think you've got
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  Speaker 1: to see, well, the rand will show that displeasure or
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  Speaker 1: the uncertainty. Secondly, so I do you expect it to
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  Speaker 1: come off? If we see the ANCER get less than
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  Speaker 1: fifty percent, then everyone will be in a weight and
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  Speaker 1: see mode of regards to what sort.
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  Speaker 6: Of coalition will be formed.
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  Speaker 1: The authorities have two weeks fourteen days and which to
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  Speaker 1: form a government, so that period to be watched very
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  Speaker 1: closely to see what sort of horse trade is going on,
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  Speaker 1: which parties are most likely to partner the ANC, and
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  Speaker 1: the outcome of that, of course would also have its
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  Speaker 1: own impact on the market. But the first big question
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  Speaker 1: is will the ANC get an outright majority.
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  Speaker 5: The two issues that investors are most concerned about. Again,
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  Speaker 5: according to our survey, it was curbing crime and easing debt.
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  Speaker 5: Which scenario or outcome do you think might best address
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  Speaker 5: those two pressing issues that investors are most concerned about.
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  Speaker 1: So on the dead front, the Democratic Alliance are the
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  Speaker 1: party that seems to be more focused in terms of
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  Speaker 1: trying to ensure that phiscal consolidation is pursued and that
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  Speaker 1: debt is stabilized sooner rather than later. With regards to crime,
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  Speaker 1: I can't say there's a party out there that that
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  Speaker 1: comes to mind in terms of being more effectable to
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  Speaker 1: have a more effective approach. All parties and their manifestos
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  Speaker 1: have pointed out crime as a concern and something that
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  Speaker 1: they want to stamp out.
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  Speaker 6: But other than that, I.
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  Speaker 1: Think they all be relatively equal in terms of how
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  Speaker 1: they approach the issue of crime in the country.
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  Speaker 5: Yeah, and one thing that confuses me a little bit
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  Speaker 5: is that the rand and bonds rebounded and the leader
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  Speaker 5: to the election on expectation that there won't be major
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  Speaker 5: changes to economic policy. So that kind of makes me
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  Speaker 5: wonder what does this realistically mean for reform?
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  Speaker 1: The think too highlight is amongst the main political parties,
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  Speaker 1: the big parties, particularly ones ends you could pick us
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  Speaker 1: coalition partners. Their policies are broadly similar and that's why
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  Speaker 1: you're seeing investors be relatively comfortable with the South Africa
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  Speaker 1: story with regard to reforms.
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  Speaker 6: If anything, what we're hoping.
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  Speaker 1: Is that, and I'm speaking as a citizen, is that
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  Speaker 1: you get a coalition partner that will help expedite existing reforms.
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  Speaker 1: So the current policy and reform path I think generally
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  Speaker 1: South Africans are happy with, but the concern is that
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  Speaker 1: it's been slow and the economy are stagnated, and we
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  Speaker 1: want to see greater impetus going forward with regards to reforms.
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  Speaker 2: How do you manage elections in such a big, diverse country,
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  Speaker 2: with a large number of people who are not particularly literate,
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  Speaker 2: and also with the threat of interference from disruptive forces
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  Speaker 2: in the election, or from deception or from false information.
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  Speaker 2: Is it a sort of a huge organizational challenge.
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  Speaker 1: I must say the Independent Electoral Commission which runs the election,
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  Speaker 1: has been pretty efficient in terms of civic education, ensuring
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  Speaker 1: that the people that are running the voting stations are
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  Speaker 1: when informed, are able to explain what needs to be
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  Speaker 1: done to those that need assistant providing special votes to
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  Speaker 1: the elderly or those who are disabled. So we have
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  Speaker 1: a very strong machine in terms of the Independent Electoral
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  Speaker 1: Commission that's able to ensure that elections are well managed
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  Speaker 1: even in the deepest of rural areas.
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  Speaker 6: Of the country.
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  Speaker 2: Thank you so much. That's fascinating.
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  Speaker 6: Thank you.
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  Speaker 2: We're in the West. We're very myopic about these things.
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  Speaker 2: I mean, we're in Britain. We have an election, so
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  Speaker 2: we're focused on that. Everybody's always thinking about what's going
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  Speaker 2: on in the United States and the craziness is going
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  Speaker 2: on there. But I think it's fascinating to listen what's
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  Speaker 2: happening in South Africa, a huge and important emerging market.
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  Speaker 2: But it's fascinating but also a bit depressing, I think
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  Speaker 2: because I think in the nineteen nineties, this was the
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  Speaker 2: great hope of the world, this peaceful transition. The NC
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  Speaker 2: was this new party that wanted to take the country forward,
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  Speaker 2: and a lot of what you heard is quite depressing.
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  Speaker 2: It's about crime, it's about energy failures, it's about an
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  Speaker 2: uncertain it's about huge frustration in the population. This is
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  Speaker 2: not the happy future that we were hoping for.
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  Speaker 5: I agree with that. I also though, see a little
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  Speaker 5: bit from the perspective of glass half full. I mean,
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  Speaker 5: this is a continent that is the fastest growing continent
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  Speaker 5: in the world, and I do think having been on
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  Speaker 5: the ground there, you know, several times, now, you do
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  Speaker 5: see of this drive for change, this hunger for change,
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  Speaker 5: this entrepreneurial spirit that very much exists there, not just
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  Speaker 5: in South Africa, but across the continent. I think that
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  Speaker 5: you're looking at a new air of sorts. You saw
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  Speaker 5: what happened last year with the enlarged bricks that place
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  Speaker 5: in South Africa. You also will see the G twenty
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  Speaker 5: be hosted for the first time in Africa. In South
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  Speaker 5: Africa specifically, you see what's happening, you know, with respect
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  Speaker 5: to sort of capital flows. You talked about everything being
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  Speaker 5: sort of myopically concentrated on the West and then global North.
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  Speaker 5: But I do think that the story is increasingly shifting
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  Speaker 5: toward the so called global South, and South Africa is
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  Speaker 5: very much part of that story. So I do think
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  Speaker 5: it's sort of in the interest of how we and
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  Speaker 5: investors and citizens you know, think about, you know, the
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  Speaker 5: change that could come. So yes, it's depressing, but on
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  Speaker 5: the other hand, I do think there is a great opportunity,
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  Speaker 5: and I think we have to look at it a
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  Speaker 5: little bit about, you know, what we can do baby
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  Speaker 5: steps wise, and what this election represents in that optic.
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  Speaker 2: And of course we're seeing the ANC possibly losing its
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  Speaker 2: monopoly of power and that could go. I would have
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  Speaker 2: thought in two ways. It could be a good thing
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  Speaker 2: in which you get real competition for power. No particular
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  Speaker 2: party can take it for granted, and that's in some
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  Speaker 2: ways a good thing. But it could remove some of
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  Speaker 2: the guarantees of stability and you could get you knowarticularly
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  Speaker 2: if you get the far left party coming into some
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  Speaker 2: sort of power sharing arrangement, it could exacerbate some of
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  Speaker 2: South Africa's problems.
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  Speaker 5: Yeah, and the interesting thing is you don't see a
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  Speaker 5: lot with respect to election interferre to at least you're
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  Speaker 5: not reading about that.
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  Speaker 2: That was one of the things she said.
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  Speaker 5: So this idea of a democratic process that still is
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  Speaker 5: an undercurrent of that structure, I think that's quite important.
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  Speaker 5: It's quite powerful.
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  Speaker 2: I mean, I thought it was an incredibly optimistic thing
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  Speaker 2: that she said that she said that basically this massive
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  Speaker 2: democratic process in the country that's got a lot of
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  Speaker 2: unhappiness huge amount of inequality is going very well. It's
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  Speaker 2: well monitored, it's it's well administered, and everybody agrees that
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  Speaker 2: we have to have a democratic transition. That's incredibly important.
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  Speaker 2: I wish it was. It's true of the United States,
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  Speaker 2: is of South Africa. Thanks for listening to this week's
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  Speaker 2: voter Nomics from Bloomberg. This episode was hosted by me
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  Speaker 2: Adrian Woodridge, with lots of help from Jackie Simmons. It
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  Speaker 2: was produced by Samasadi, editorial direction from Victoria Wakely. Sound
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  Speaker 2: designed by Mosses and am Brendan Francis Newman is our
• 18:14
  Speaker 2: executive producer. Sage Borman is Head of Podcasts. Special Thanks
• 18:18
  Speaker 2: to Yvonne Mahango and please subscribe, rate, and review wherever
• 18:23
  Speaker 2: you listen to podcasts.