Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Welcome to voter Noomics, where politics and markets collide. The
Speaker 2: polls have opened in South Africa's general election, which could
Speaker 2: be the most consequential since the end of apartheid thirty
Speaker 2: years ago.
Speaker 3: The ANC has been at the forefront of South African
Speaker 3: politics since Nelson Mandela's release from prison. He was elected
Speaker 3: president his party has been in power ever since, but
Speaker 3: the current President, Sarah Ramaposa, faces levels of discontent not
Speaker 3: seen by any of his predecessors.
Speaker 4: The ANC Mandela's party potentially could risk losing their parliamentary majority.
Speaker 4: There are lots of other opposition parties fifty one buying
Speaker 4: for people's votes, and the people who've spoken to today
Speaker 4: are very aware of the power of their vote. They've
Speaker 4: seen the change it's brought in the past, and they're
Speaker 4: hoping it can help with soaring unemployment, high inequality, and
Speaker 4: the crime that has ridden their neighborhood and the country.
Speaker 2: This year. Voters around the world have the ability to
Speaker 2: affect markets, countries and economies like never before, and we've
Speaker 2: created this series to help you make sense of it all.
Speaker 2: I'm Adream Woodbridge. My regular co hosts alegra Stratton and
Speaker 2: Severy Flanders are out this week, leaving me carrying the can.
Speaker 2: So we're going to do something a little different. We're
Speaker 2: going to focus this episode on the very significant, incredibly
Speaker 2: significant election taking place in South Africa. As you've heard
Speaker 2: at the top of the show on Wednesday, votes were cast.
Speaker 2: Over the weekend, we will get the results and then
Speaker 2: on Monday we'll have a full voter nomics with the
Speaker 2: whole crew examining election results and also featuring an interview
Speaker 2: with Dhalip Singh, former at Federal Reserve Economists now Deputy
Speaker 2: Nationals Curate Advisor at the White House, who, among other things,
Speaker 2: masterminded sanctions against Russia. But for this episode, I've invited
Speaker 2: Jacqueline Simmons, who is our regional editorial lead, to join
Speaker 2: me in the London studio.
Speaker 5: Welcome Jackie, Hi, Adrian.
Speaker 2: Jackie, give us a sense of what you're you're you're
Speaker 2: you're thinking about, Johanna, what's happening in Johannesburg at the moment.
Speaker 5: I recently was in South Africa, first in Johannesburg and
Speaker 5: then Cape Town. But one of the things that stood
Speaker 5: as we convened a dinner with business leaders of various
Speaker 5: stripes in Johannesburg, and I was really struck by how
Speaker 5: sanguine most of them were about the election outcome and
Speaker 5: the idea of a left leaning eff party somehow coming
Speaker 5: into government with the an C if it drops below
Speaker 5: its majority, you know, a party that wants to nationalize
Speaker 5: assets like lands and mines. It didn't really fase them.
Speaker 5: They didn't seem to think it would become a reality, which,
Speaker 5: by the way, very much tracks with what we're seeing
Speaker 5: in the markets and some of the pulling leading into
Speaker 5: the vote. But at the same time, they expressed utter
Speaker 5: frustration with the status quo, so you know, frustration with
Speaker 5: blackouts or load shedding as they call it, their shoddy infrastructure,
Speaker 5: bad roads, crime, I mean, it's a really long list.
Speaker 5: So you have this dual sentiment with on the one hand,
Speaker 5: it's going to be okay, but on the other one,
Speaker 5: we're really fed up. So this kind of duality stood
Speaker 5: out to me most.
Speaker 2: So is that basically is the basic sentiment there that
Speaker 2: things can't get any worse and they might get a
Speaker 2: bit better.
Speaker 5: I think it depends on who you ask. I have
Speaker 5: a very good contact in Cape Town, someone who works
Speaker 5: in architectural modeling. White votes DA will vote DA, and
Speaker 5: he says he's going to do that because the DA
Speaker 5: has a proven track record running a province efficiently. But
Speaker 5: at the same time, you talk to his black staff,
Speaker 5: both at his house and in his business. Now they're
Speaker 5: not going to vote. And I did speak to one
Speaker 5: of them, and he was clear to me that he
Speaker 5: has zero interest in politics. He does not think that
Speaker 5: life is going to change marketly whether he votes or not.
Speaker 5: And furthermore, I think some of the staff, and I
Speaker 5: think this is reflective of our reporting, they don't feel that, yeah,
Speaker 5: anything is going to get better for them, that the
Speaker 5: conditions have just if anything worsened. They don't see the point.
Speaker 2: Now, of course, Jackie, as you know, one of the
Speaker 2: abuses of Bloomberg is that we have brilliant people in
Speaker 2: all these places that we're reporting from. So let's actually
Speaker 2: go over to Johannesburg where Yvonne Mahanngo from our Bloomberg
Speaker 2: Economics team will join us. Yvonne, Hello, Hi, Now this
Speaker 2: is a watershed election for South Africa, Is that right?
Speaker 6: It is?
Speaker 1: Yes, It's the first time in three decades that the
Speaker 1: African National Congress may not get an outright majority, which
Speaker 1: implies that they may have to partner with a smaller
Speaker 1: political party in order to govern.
Speaker 2: And why, I mean, why are they losing this majority.
Speaker 2: I can't think of South Africa without being run by
Speaker 2: the ANC.
Speaker 1: It's a good point. I mean, there've been office for
Speaker 1: three decades. But if you follow the trajectory of the economy,
Speaker 1: particularly over the past two decades, and in particular an
Speaker 1: employment rate, you can understand why South Africans are frustrated.
Speaker 1: Unemployment has increased from around twenty three percent two decades
Speaker 1: ago to thirty two percent today. We have a power
Speaker 1: crisis that's been in place for sixteen years but in
Speaker 1: recent years has curiorated such that you only gets electricty
Speaker 1: four half of a day. South Africans are frustrated in
Speaker 1: terms of service delivery and are seeking alternatives from the ANC.
Speaker 5: If I have a question just about turnout. So in
Speaker 5: nineteen ninety four, when Mandela was presenting it, turnout was
Speaker 5: eighty five percent. In twenty nineteen the year Ramoposa was voted,
Speaker 5: and turnout was forty seven percent. So we've written the
Speaker 5: ANC has two things working in its favor. Apathy, and
Speaker 5: a splintered opposition. Why so much apathy apathy, I guess.
Speaker 1: Is the fact that there's historically been this link to
Speaker 1: this what we consider a liberation party, the party that
Speaker 1: took South Africa out of a party. So you've got
Speaker 1: that generation that struggles to think they could vote for
Speaker 1: anyone else. However, as we move away from nineteen ninety four,
Speaker 1: there's a young generation that doesn't have any link to
Speaker 1: the past, and as we side, we're actually expecting to
Speaker 1: see an increase in turnout at this particular election from
Speaker 1: reports and just hearing just listening to the radio, turnout
Speaker 1: seems to be pretty strong, suggesting that it's going to
Speaker 1: be quite different from twenty nineteen.
Speaker 5: Interesting, and just to follow on that, how much of
Speaker 5: that turnout is dictated not so much by racial lines,
Speaker 5: but by the haves and they have not.
Speaker 1: The indications just by listening to word of mouth feedback
Speaker 1: and those falling into radio stations is turnout has been
Speaker 1: pretty strong in urban areas, so I guess that would
Speaker 1: be where you'd see more of a mix of races.
Speaker 1: Apathy does still exist, particularly in the townships, which is
Speaker 1: a lower income area, but I'd imagine in rural areas
Speaker 1: where people find it important though a civic duty to vote,
Speaker 1: that turnout would still be pretty solid. And I highlight
Speaker 1: the rural areas because today that is where the ruling
Speaker 1: parties support is coming from. Those who are most frustrated
Speaker 1: are those in urban areas, and the polling that we've
Speaker 1: been seeing has actually been predominantly from urban areas. So
Speaker 1: if you do see a surprise in terms of the
Speaker 1: performance of the ANC, that will most likely be because
Speaker 1: of the turnout from the rural areas.
Speaker 2: And Yvonne, can you give us a sense of what
Speaker 2: the rival parties are.
Speaker 1: The second biggest party is a Democratic Alliance. They're considered
Speaker 1: the pro business Party. That's the party that investors would
Speaker 1: love the NC to form a coalition with if the
Speaker 1: NC lost to their majority vote. And that party is
Speaker 1: firm in terms of restoring fiscal health to the country.
Speaker 1: They look at tax reform in order to make it
Speaker 1: more friendly for business, and they will do away with
Speaker 1: affirmative action because they feel it's been taken advantage of
Speaker 1: if I can call it that, or corruption has gone
Speaker 1: into it.
Speaker 6: So that's a democratic alliance.
Speaker 1: It's also considered the White Party, so that's why in
Speaker 1: some cases they've struggled in order to get beyond the
Speaker 1: twenty percent of that they've peaked at. The other big party,
Speaker 1: the third biggest one is the Economic Freedom Fighters. That's
Speaker 1: a leftist party that that causes investors to get pretty
Speaker 1: nervous because of their.
Speaker 6: Talk of nationalization. So that's led by Julius Malemma.
Speaker 1: That's a party that could be considered for a coalition,
Speaker 1: particularly if the NC does really badly, like less than.
Speaker 6: Forty percent of the vote. Those are the two main parties,
Speaker 6: those are the ones to watch for.
Speaker 2: So that points to two very very different futures. One
Speaker 2: of the business oriented future and another is a populist
Speaker 2: sort of future.
Speaker 1: See but let me also point out that if the
Speaker 1: ANC's less than majority vote is around forty five percent,
Speaker 1: they simply have to partner with a smaller party. In
Speaker 1: this case, then Cutter Freedom Party is considered to be
Speaker 1: the natural fit. It's a party that's dominant in Hota,
Speaker 1: which is Jacobsumer's.
Speaker 6: Province, and if they partnered with the IFP, then.
Speaker 1: You'd see policy continuity because of very similar in terms
Speaker 1: of policy trajectory.
Speaker 5: So financial markets have been optimistic. We did a survey
Speaker 5: of twenty six emerging market investors, where most were overweight
Speaker 5: or neutral in South Africa, preferring it as an investment
Speaker 5: to Egypt or Nigeria. When investors are watching the projections
Speaker 5: that we'll get, at what point do you think they'll
Speaker 5: start to get either very nervous or very excited.
Speaker 6: So the first thing.
Speaker 1: Is whatever I wants to see is whether the answer
Speaker 1: will get an outdright majority or not.
Speaker 6: So that's the first big question.
Speaker 1: If they don't get the majority, I think you've got
Speaker 1: to see, well, the rand will show that displeasure or
Speaker 1: the uncertainty. Secondly, so I do you expect it to
Speaker 1: come off? If we see the ANCER get less than
Speaker 1: fifty percent, then everyone will be in a weight and
Speaker 1: see mode of regards to what sort.
Speaker 6: Of coalition will be formed.
Speaker 1: The authorities have two weeks fourteen days and which to
Speaker 1: form a government, so that period to be watched very
Speaker 1: closely to see what sort of horse trade is going on,
Speaker 1: which parties are most likely to partner the ANC, and
Speaker 1: the outcome of that, of course would also have its
Speaker 1: own impact on the market. But the first big question
Speaker 1: is will the ANC get an outright majority.
Speaker 5: The two issues that investors are most concerned about. Again,
Speaker 5: according to our survey, it was curbing crime and easing debt.
Speaker 5: Which scenario or outcome do you think might best address
Speaker 5: those two pressing issues that investors are most concerned about.
Speaker 1: So on the dead front, the Democratic Alliance are the
Speaker 1: party that seems to be more focused in terms of
Speaker 1: trying to ensure that phiscal consolidation is pursued and that
Speaker 1: debt is stabilized sooner rather than later. With regards to crime,
Speaker 1: I can't say there's a party out there that that
Speaker 1: comes to mind in terms of being more effectable to
Speaker 1: have a more effective approach. All parties and their manifestos
Speaker 1: have pointed out crime as a concern and something that
Speaker 1: they want to stamp out.
Speaker 6: But other than that, I.
Speaker 1: Think they all be relatively equal in terms of how
Speaker 1: they approach the issue of crime in the country.
Speaker 5: Yeah, and one thing that confuses me a little bit
Speaker 5: is that the rand and bonds rebounded and the leader
Speaker 5: to the election on expectation that there won't be major
Speaker 5: changes to economic policy. So that kind of makes me
Speaker 5: wonder what does this realistically mean for reform?
Speaker 1: The think too highlight is amongst the main political parties,
Speaker 1: the big parties, particularly ones ends you could pick us
Speaker 1: coalition partners. Their policies are broadly similar and that's why
Speaker 1: you're seeing investors be relatively comfortable with the South Africa
Speaker 1: story with regard to reforms.
Speaker 6: If anything, what we're hoping.
Speaker 1: Is that, and I'm speaking as a citizen, is that
Speaker 1: you get a coalition partner that will help expedite existing reforms.
Speaker 1: So the current policy and reform path I think generally
Speaker 1: South Africans are happy with, but the concern is that
Speaker 1: it's been slow and the economy are stagnated, and we
Speaker 1: want to see greater impetus going forward with regards to reforms.
Speaker 2: How do you manage elections in such a big, diverse country,
Speaker 2: with a large number of people who are not particularly literate,
Speaker 2: and also with the threat of interference from disruptive forces
Speaker 2: in the election, or from deception or from false information.
Speaker 2: Is it a sort of a huge organizational challenge.
Speaker 1: I must say the Independent Electoral Commission which runs the election,
Speaker 1: has been pretty efficient in terms of civic education, ensuring
Speaker 1: that the people that are running the voting stations are
Speaker 1: when informed, are able to explain what needs to be
Speaker 1: done to those that need assistant providing special votes to
Speaker 1: the elderly or those who are disabled. So we have
Speaker 1: a very strong machine in terms of the Independent Electoral
Speaker 1: Commission that's able to ensure that elections are well managed
Speaker 1: even in the deepest of rural areas.
Speaker 6: Of the country.
Speaker 2: Thank you so much. That's fascinating.
Speaker 6: Thank you.
Speaker 2: We're in the West. We're very myopic about these things.
Speaker 2: I mean, we're in Britain. We have an election, so
Speaker 2: we're focused on that. Everybody's always thinking about what's going
Speaker 2: on in the United States and the craziness is going
Speaker 2: on there. But I think it's fascinating to listen what's
Speaker 2: happening in South Africa, a huge and important emerging market.
Speaker 2: But it's fascinating but also a bit depressing, I think
Speaker 2: because I think in the nineteen nineties, this was the
Speaker 2: great hope of the world, this peaceful transition. The NC
Speaker 2: was this new party that wanted to take the country forward,
Speaker 2: and a lot of what you heard is quite depressing.
Speaker 2: It's about crime, it's about energy failures, it's about an
Speaker 2: uncertain it's about huge frustration in the population. This is
Speaker 2: not the happy future that we were hoping for.
Speaker 5: I agree with that. I also though, see a little
Speaker 5: bit from the perspective of glass half full. I mean,
Speaker 5: this is a continent that is the fastest growing continent
Speaker 5: in the world, and I do think having been on
Speaker 5: the ground there, you know, several times, now, you do
Speaker 5: see of this drive for change, this hunger for change,
Speaker 5: this entrepreneurial spirit that very much exists there, not just
Speaker 5: in South Africa, but across the continent. I think that
Speaker 5: you're looking at a new air of sorts. You saw
Speaker 5: what happened last year with the enlarged bricks that place
Speaker 5: in South Africa. You also will see the G twenty
Speaker 5: be hosted for the first time in Africa. In South
Speaker 5: Africa specifically, you see what's happening, you know, with respect
Speaker 5: to sort of capital flows. You talked about everything being
Speaker 5: sort of myopically concentrated on the West and then global North.
Speaker 5: But I do think that the story is increasingly shifting
Speaker 5: toward the so called global South, and South Africa is
Speaker 5: very much part of that story. So I do think
Speaker 5: it's sort of in the interest of how we and
Speaker 5: investors and citizens you know, think about, you know, the
Speaker 5: change that could come. So yes, it's depressing, but on
Speaker 5: the other hand, I do think there is a great opportunity,
Speaker 5: and I think we have to look at it a
Speaker 5: little bit about, you know, what we can do baby
Speaker 5: steps wise, and what this election represents in that optic.
Speaker 2: And of course we're seeing the ANC possibly losing its
Speaker 2: monopoly of power and that could go. I would have
Speaker 2: thought in two ways. It could be a good thing
Speaker 2: in which you get real competition for power. No particular
Speaker 2: party can take it for granted, and that's in some
Speaker 2: ways a good thing. But it could remove some of
Speaker 2: the guarantees of stability and you could get you knowarticularly
Speaker 2: if you get the far left party coming into some
Speaker 2: sort of power sharing arrangement, it could exacerbate some of
Speaker 2: South Africa's problems.
Speaker 5: Yeah, and the interesting thing is you don't see a
Speaker 5: lot with respect to election interferre to at least you're
Speaker 5: not reading about that.
Speaker 2: That was one of the things she said.
Speaker 5: So this idea of a democratic process that still is
Speaker 5: an undercurrent of that structure, I think that's quite important.
Speaker 5: It's quite powerful.
Speaker 2: I mean, I thought it was an incredibly optimistic thing
Speaker 2: that she said that she said that basically this massive
Speaker 2: democratic process in the country that's got a lot of
Speaker 2: unhappiness huge amount of inequality is going very well. It's
Speaker 2: well monitored, it's it's well administered, and everybody agrees that
Speaker 2: we have to have a democratic transition. That's incredibly important.
Speaker 2: I wish it was. It's true of the United States,
Speaker 2: is of South Africa. Thanks for listening to this week's
Speaker 2: voter Nomics from Bloomberg. This episode was hosted by me
Speaker 2: Adrian Woodridge, with lots of help from Jackie Simmons. It
Speaker 2: was produced by Samasadi, editorial direction from Victoria Wakely. Sound
Speaker 2: designed by Mosses and am Brendan Francis Newman is our
Speaker 2: executive producer. Sage Borman is Head of Podcasts. Special Thanks
Speaker 2: to Yvonne Mahango and please subscribe, rate, and review wherever
Speaker 2: you listen to podcasts.