President Cyril Ramaphosa’s reform agenda is at the risk of stalling should the country be presided over by an “unstable coalition” after May’s general elections, deputy finance minister David Masondo says.
Masondo, who doubles up as the chair of the state asset management company, the Public Investment Corporation, was addressing a group of investors in an event organised by Bank of America on Tuesday night.
While he expected the ANC to retain its outright majority, a possible coalition government might derail the reform agenda, he said.
“There is no doubt that an unstable coalition would threaten continuity and place at risk the economic reform agenda that we have begun in this administration,” Masondo said.
Many of the reforms under way needed several years to follow through to full implementation “especially where new institutions are required”.
“However, we are committed that should the ANC form a government after these elections, the reform agenda will remain a top priority,” he said, adding that the government’s primary objective remained to build an inclusive, fast-growing economy for all South Africans.
“Through Operation Vulindlela, we are working to develop the second phase of the economic reform programme that will be implemented over the next five years. This will build on the initial set of reforms while prioritising those reforms with the highest and most immediate impact on growth.”
SA’s largest asset manager Ninety One this week said a bad election outcome for the capital markets would be the ANC support falling to about 40% and the party then choosing an EFF or MK alliance to secure a majority. However, it said it considered the chances of this happening to be low.
Polls have predicted the ANC losing outright power for the first time, with coalition governments at national and provincial levels on the cards. The EFF, DA, IFP and Jacob Zuma’s MK party are likely to emerge as kingmakers, particularly if the ANC’s support plunges below 45%.
Coalition governments at municipal level in the country have already given the electorate a sour taste of chaotic governance with metro governments changing every few months in councils that did not have outright winners, like Johannesburg, Tshwane and Ekurhuleni.
Masondo told the asset allocators that the government was finally turning a corner on the energy crisis and that the severity of load-shedding in the first three months of 2024 was more than 60% lower than the same period last year.
This was a result of new capacity added to the system and improved performance of Eskom’s existing fleet, he said.
Progress was being made in stabilising and improving the logistics system through the work of the national logistics crisis committee, he said.
Masondo highlighted the Economic Regulation of Transport Bill, which has been passed by the National Council of Provinces and sent to the president for assent. The bill will establish an independent economic regulator to oversee changes in the sector. The government has released a draft network statement to enable open access to the freight rail network by private rail operators, which represents a sea-change in the rail system.
“In addition to addressing the immediate operational challenges, rapid progress is being made to reform the logistics system and introduce private sector participation in port and rail operations. Transnet is establishing a partnership with an international terminal operator for the Durban Pier 2 container terminal and is clearing the last hurdles for this model to be fully implemented,” he said.
“The importance of these reforms cannot be overstated. In the years to come, we will see new entrants emerge in the rail sector and new mechanisms for private investment in rail and port infrastructure. This will both remove the constraints on our exports and enable us to modernise our logistics system.”
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