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The two biggest parties in the Government of National Unity (GNU) are making a last-ditch attempt to save the shaky coalition following an urgent request from South African business leaders to prevent its collapse.
On Friday (4 April), business leaders representing big companies in South Africa wrote to DA leader John Steenhuisen and ANC president Cyril Ramaphosa, imploring them to sort out their differences and find a path forward for the GNU as it is.
Reports by the Sunday Times and City Press say that senior party officials have again opened up communication channels to move forward together after party donors got involved.
However, the discussions are reportedly mired by bruised egos and bitterness, with both parties feeling betrayed by the other and the ANC, in particular, calling for the DA to be punished in some way.
This would either be outright expulsion from the GNU, or the potential loss of cabinet positions, if the DA remains.
The GNU is hanging by a thread after the DA voted against the AND-led budget this past week, which included a one percentage point VAT hike and no adjustments to tax brackets for 2025.
The budget passed with a narrow majority in the National Assembly, with the ANC finding support from Action SA and BOSA, non-GNU parties started by ex-DA members.
The ANC views the DA’s vote against the budget as a betrayal and crossing a line, with Ramaphosa saying the action has defined the party outside the GNU.
Meanwhile, the DA views the ANC’s shopping around for support outside the GNU amid negotiations as a betrayal and crossing a line, with party leaders describing the party as a “hydra” and acting in bad faith.
Heading into the weekend, the DA and ANC were angry and bitter, with their members pushing for a divorce. Markets were not happy.
Ahead of the budget vote, markets were on edge—not because of the budget but because the lack of consensus in the GNU put its future in doubt.
After the fallout of the vote, the rand pushed toward R19 to the dollar, confirming these fears.
The rand crumbled even further after global politics got mixed in, with US President Donald Trump announcing punitive tariffs against South Africa and his supporters in government tabling proposals to sanction SA government officials and the ANC.
This has reportedly led to a shift in views in the DA and ANC, however slight.
According to the City Press and Sunday Times, the parties are cognisant of the importance of the GNU to the economy and stability in South Africa.
Both ANC and DA donors are also now putting pressure on the parties to find each other amid the turmoil.
The economy, investment, the G20 and wider geopolitics are all pressure points that could deteriorate should the GNU fail.
What happens next?
Crucially, the budget saga is far from over.
While the fiscal framework passing in the Standing Committee on Finance and in National Assembly is the important first step, all the bills have to go through the same process.
The next big vote on the budget is scheduled for 6 May, and the final step in mid-June. Both these votes will be preceded by tablings in the standing committee.
This represents many points where things could fall apart – or be eased if ANC and DA negotiations prove successful.
If the two parties can meet each other and find an economic policy that will work and keep both happy, the GNU and the budget process can continue unabated.
However, this would be a hard-won path. The budget vote this past week showed that the ANC can proceed without the DA, decreasing its negotiating power.
The wider implications of the GNU on the economy, however, could give the parties the impetus to make it work.
However, if ideology wins out and the DA is given the boot, the GNU would have to be reconfigured.
The GNU could proceed with smaller parties like Action SA and Bosa, which supported the ANC in passing the budget, replacing the DA.
This would maintain the GNU’s perceived centrist position, but the grouping would lose its supermajority in parliament.
This could potentially lead to disruptions down the line as the interests of nine smaller parties come into play when passing legislation.
Amid wide backlash, Action SA and BOSA have insisted to their electorates that their support of the ANC is conditional.
The GNU could continue but as a minority coalition. This would introduce significantly more instability as passing legislation would require buy-in from those outside the grouping – as was the case with the budget.
In a worst-case scenario for businesses and markets, the GNU could invite leftist and populist parties like the MK Party of EFF into the coalition, which would likely spell the end of the grouping’s pro-business and pro-reform stance.
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