As South Africa gets ready to announce the African National Congress (ANC) victorious by the slimmest margin in the post-apartheid era, president Cyril Ramaphosa needs to keep his eyes on the country’s financial services industry.
At time of publication, around 75% of votes had been counted placing the ANC in the lead with a 57% share. The Democratic Alliance was trailing with 21%, followed by the recently-formed, firmly left-wing Economic Freedom Fighters (EFF) with 10%.
This means, that while the remaining 25% is yet to be counted, it should not cause any major shake up to the provisional results.
International Adviser reached out to Joanne Baynham, head of investment strategy at South Africa-based investment management firm MitonOptimal, to understand what the future holds for the country’s financial services industry.
“In our opinion, in as much as this result was expected, there was always an outside chance that the ANC could have come in below 49% and be forced to form a coalition government, an outcome which looks extremely unlikely now.
“Cyril Ramphosa also has a pretty strong mandate within his own party for change, as this outcome of 57% would have been extremely unlikely under Zuma, so broadly speaking that is bullish for the South African markets and the rand.”
What does this mean for the financial services?
With Ramaphosa set to continue leading the government, the next five years are going to make or break his leadership and the expectations he needs to meet, especially following the scandal-fuelled resignation of former South African president Jacob Zuma.
Baynham added: “There was also the risk that the EFF could have garnered an even higher share of the vote, which would have scared investors as they are not business friendly, have very strong socialist leanings and believe that land and jobs should be given away for free.
“But, as leader of the ANC, Ramaphosa has to do some heavy lifting in the next few weeks, if the business community in South Africa and foreign investors are to support him on his new growth plans.
“We will know more when he announces his cabinet at the end of May and the world will be watching to see if he roots out the bad apples from his own government and downsizes ministerial posts.
“After the dismal first quarter economic numbers, Ramaphosa is running out of time, but there is always hope and after the wasted Zuma years, any good news will be very positive for South African [client-facing local businesses].”
