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South Africa’s coalition is teetering on the brink of collapse after disagreements led the second-largest party to oppose the government’s budget. A leaked recording has also highlighted the depth of divisions.
Lawmakers on Wednesday passed a contentious first phase of the budget after weeks of stalemate in which the two largest parties in the coalition — the African National Congress and Democratic Alliance — were at loggerheads over a range of issues, including a VAT hike. The fiscal framework passed in a tight 194-182 vote after the ANC overcame the DA’s opposition by securing support from smaller parties in the 10-party coalition.
The DA immediately said it was mounting a legal challenge to the budget. DA Chair Helen Zille told Newzroom Afrika that the party would hold talks on Thursday to decide on its future in the coalition. “The ANC does not want to share power,” she said. The ANC entered a coalition with the DA and eight other parties last year after losing its parliamentary majority for the first time since the end of the apartheid in 1994. Zille, in the interview, said the ANC wants to “dictate the terms as if it won the election and it wants its coalition partners to prop it up.”
Her comments follow the circulation of a purportedly leaked recording of an ANC meeting ahead of the budget vote in which President Cyril Ramaphosa said the DA had “locked itself into an unenviable position” by opposing the spending plan.
In the recording, Ramaphosa said DA leader John Steenhuisen had contacted him on Tuesday, a day before the budget vote, and warned that ANC alliances with parties outside the coalition would mean the end of the GNU. The president is heard saying that he told the DA leader that “you want to be the opposition in government.”
A senior ANC official, speaking anonymously because they were not authorized to address the media, told Semafor they were in the meeting and the recording was authentic.
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Semafor previously reported that a power struggle within the coalition over the control of key parts of Africa’s most industrialized economy was behind the budget deadlock. Negotiations over port and rail infrastructure have been a major sticking point, three people familiar with the matter told Semafor.
The impasse over the budget, which was first due to be presented in February, has become the sternest test faced by the national unity government since it was formed nine months ago.
Sam’s view
The DA’s hard stance in the negotiations seems to have backfired, as the ANC seems to be happy for it to walk away from the coalition. It would also be a pyrrhic victory for the ANC if the DA walked away, as the Government of National Unity enjoyed the support of big business and the financial markets. It would, therefore, lose the veneer of market favorability at a bad time for an economy reeling from US protectionism and slow growth. The DA would have to eat humble pie if it opted to stay. Ultimately, it is an unworkable coalition — more like an unhappy marriage.
It would not be South Africa if the GNU ran smoothly, as it is a country that perpetually stays on the brink. A DA walkout won’t be easy, as some of its leaders appear to be enjoying their newly-found government power, and being chauffeured around in state sedans with blue lights. The party is in charge of ministries which it can use to demonstrate, if successful, a delivery track record it can use to grow in future elections. It is damned if it goes, it is damned if it stays.
The View From Financial Markets
South Africa’s rand hovered near a three-month low on Thursday amid uncertainty around the government’s future and US President Donald Trump’s announcement of new and higher tariffs.
On Wednesday, Trump announced a 10% baseline tariff on all imports to the US and hit South Africa with a 30% rate.
Notable
- Will there be a coalition government reshuffle? The Daily Maverick considers the options.
- The delay in South Africa’s budget due to a VAT dispute highlights the challenges faced by the coalition government and the impact on citizens amidst a cost of living crisis, writes Foreign Policy.