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Although it is a long shot that the Multi-Party Charter (MPC) will win the election and become the government of the day, if it does happen market and economy-wide policy risks will be the lowest but the risk of protest and unrest will be severely elevated.
Louw Nel, senior political analyst and Jee-A van der Linde, senior economist at Oxford Economics Africa, write in their fourth research briefing for the election about the MPC (previously known as the moonshot pact) election scenario where the centre-right opposition to the ANC united in a coalition around the DA, secures enough National Assembly seats to form a majority and govern without the ANC or the leftist pan-African parties.
However, Nel and Van der Linde warns that based on past election results and recent polling, this outcome is the least likely of their four scenarios to materialise.
Seven parties formed the Multi-Party Charter for South Africa (MPC) in August last year and their number later grew to 11, although only four are currently represented in Parliament. The five most important are the DA, Inkatha Freedom Party (IFP), Freedom Front Plus (FF+), ActionSA and African Christian Democratic Party (ACDP).
The parties in the MPC collectively got a third of the vote in the 2021 municipal elections and therefore, winning a majority this year would require a major shift in voter behaviour, which is why DA leader John Steenhuisen originally referred to a ‘moonshot pact’.
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Nel points out that based on recent polling, a win for the MPC would be a moonshot indeed. The liberal Brenthurst Foundation has been conducting a survey in which it specifically highlights intentions to vote for MPC parties.
In October, 36% of respondents said they intended to vote for the coalition, but in February the figure was 33%. In the most recent poll by Ipsos in April, support for the DA, IFP, ActionSA, and FF+ added up to 31.5%.
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The DA was one of the first parties to unveil its manifesto on 17 February and made no secret of the fact that it was committed to smaller government and greater private sector participation, Nel says.
“This market fundamentalism puts the DA at odds with the ANC and its competitors to the left but does not present an ideological schism with its MPC partners.” The MPC unveiled a joint economic recovery plan in late January which focused on stabilising the macro-economic environment and attracting investment “by eliminating overly prohibitive limitations.”
The MPC also committed to “defend property rights and introduce additional legislative measures to protect land, capital and intellectual property”.
However, Nel says, agreeing on the economy might not be easy for the MPC. “Some of the commitments found in the DA manifesto will not sit quite so well with its coalition partners, such as the DA’s hostility to employment equity and using public procurement to address structural inequality is one area of potential conflict.”
Reimagining the country’s social support system is another potential banana peel, he says. “The DA wants to reduce the number of people receiving social grants to increase the quantum paid to qualifying recipients, but MPC members do not yet agree on this.”
When it comes to economic policy, the MPC is committed to smaller government, greater private sector participation and strong protection of ownership rights.
Van der Linde writes that the macro outcomes for this scenario are positive, with widespread market euphoria showing investors are glad to see the back of the ANC and local assets rallying strongly across the board.
“The 10-year bond yield would drop to single digits in the first quarter of 2025, while the rand will rally from oversold levels, which will moderate fuel prices and temper inflation. Investment will be the big driver of growth and also mean exports are higher than in our baseline. Real gross domestic product (GDP) growth will accelerate to 2.8% in 2026 and average 2.4% per year between 2026 and 2030.”
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While a MPC win will be good for the economy of South Africa, the political-economic risk will worsen in this scenario, Nel says, although these risks should dissipate over time and are far lower than under the ANC-EFF worst-case scenario.
Nel says the ANC successfully retained power for 30 years and ruling without it could prove problematic for the new government. “Capacity issues are top of mind as none of the MPC coalition partners have national governing experience. Furthermore, with the MPC coalition including at least four parties from varying sides of the political spectrum, policy formulation, ministerial appointments and governance will be arduous.”
In addition, keeping coalition partners in line and voting with proposals in a fractured parliament could be difficult. “However, governing successfully and keeping the ANC in opposition will better the health of South Africa’s democracy,” Nel says.
“Ousting the ANC from government will improve adherence to the rule of law and reduce state corruption risks. Still, with ANC appointees working at all levels of the government bureaucracy, rooting out the former ruling party’s patronage networks, restructuring the state and redirecting government finances will take time.”
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Consequently, financial capacity risks remain elevated in the short term, he says. These risks should improve as the MPC government successfully restructures state-owned enterprises, redirects the fiscus to favour longer-term development spending and accumulates less unnecessary debt.
Nel warns with the ANC successfully removed from power, the risk of protest and unrest is severely elevated. “Trade unions, tripartite alliance members and ANC loyalists are expected to take to the streets and defy the government, branding the MPC as illegitimate or counter revolutionary.
“The slow dissolution of the ANC patronage networks will reduce the financial power within the ANC, with various factions fighting for diminishing positions in government. As the ANC struggles to find its feet in opposition, the party could adopt EFF-like combative and antagonistic approaches to working with the government, increasing political violence and polarisation.”
It is unclear whether President Cyril Ramaphosa will remain the leader of the ANC, with a potential EFF cooperative agreement or the ascension of more radical factions in the party being prominent risks, Nel says.
