- The African National Congress (ANC) faces a coalition crisis as budget clashes and deep policy divides threaten to unravel the Government of National Unity (GNU).
- Earlier in the week, the ANC convened its regular National Working Committee (NWC) meeting, which dedicated its focus on addressing tensions within the GNU, particularly in light of the Democratic Alliance (DA)’s rejection of the 2025 Fiscal Framework and Revenue Proposals that were approved by Parliament on 2 April.
- The NWC resolved that the ANC should re-engage all GNU partners, including the DA, to address growing instability within the coalition. Secretary-General Fikile Mbalula emphasised the need to consult both GNU members and opposition parties to resolve disagreements over fiscal policy and governance priorities. This reflects the ANC’s strategic intention to preserve unity within the coalition rather than risk fragmentation.
- Contrary to speculation, the ANC NWC opted not to recommended to the party’s National Executive Committee (NEC) that the DA be expelled from the GNU. Instead, the party emphasised that it was the DA’s decision whether to remain in the coalition, however, Mbalula reiterated Deputy President Paul Mashatile’s statement that he does not understand why DA Ministers would want to implement a budget they did not support.
- Amid pressure from organised business lobby groups to resolve the impasse, the GNU’s two anchor parties, held separate meetings to discuss the future of GNU and its composition.
- In a statement issued soon after the ANC briefing, the DA indicated that it is willing to meet the ANC to discuss power-sharing.
- A major fault line within the GNU lies in the ANC’s commitment to transformation policies such as the Expropriation Act, the Basic Education Laws Amendment (BELA) Bill, the National Health Insurance (NHI) Act and increased VAT, which the DA perceives as anti-growth and harmful to investor confidence. These conflicting economic visions have become a central source of friction in the coalition.
- These are key flashpoints for the DA, which has publicly condemned them as threats to property rights, educational autonomy, and healthcare stability respectively.
- Meanwhile, the ANC is pushing ahead with implementation, framing these laws as instruments of social justice and transformation.
- Adding to the already existing tension, the ANC acknowledged the possibility of a Cabinet reshuffle as part of efforts to manage internal coalition dynamics. This would allow for the reallocation of ministerial responsibilities to accommodate new coalition allies, particularly ActionSA, which voted in support of the 2025 Fiscal Framework, provided National Treasury explored other revenue alternatives besides increasing the Value-Added Tax (VAT) and defers its implementation date before 1 May.
- The political uncertainty surrounding the budget has contributed to market instability, including a notable depreciation of the rand. While global economic factors, such as U.S. imposed tariffs (that have since put on hold by the Trump Administration for 90 days), have played a role, the internal disunity within the GNU has significantly exacerbated investor anxiety and currency volatility.
- The DA has opposed a VAT increase, arguing it will disproportionately burden the poor and working-class South Africans, while the ANC maintains it may be necessary to sustain key social programmes that are essential to address poverty and inequalities.
- The DA has filed a legal challenge contesting the procedure by Standing Committee on Finance in adopting the 2025 Fiscal Framework. Nonetheless, DA leader John Steenhuisen has expressed openness to negotiations focused on economic reform. This dual strategy suggests that the DA is leveraging legal pressure while keeping the door open to renegotiation.
- These policy rifts have hardened the DA’s stance with the party making it clear that staying in the GNU without substantive policy reform is off the table. The party seeks a genuine power-sharing arrangement.
- At the same time, the Economic Freedom Fighters (EFF) has publicly signalled its readiness to join the GNU on the condition that the DA is excluded.
- This has created a pivotal decision point for the ANC. Does it accommodate the DA’s reformist demands at the risk of losing alliance support and internal cohesion, or does it shift toward a more radical left coalition with the EFF and MK party?
- Adding complexity is the uMkhonto weSizwe Party (MKP), whose negotiations with the ANC have largely stalled due to its insistence on the removal of President Cyril Ramaphosa. This makes MKP an unreliable or even untenable partner, further limiting the ANC’s coalition options.
- Each path carries weighty consequences. Prevailing business opinion is that a GNU with the DA brings policy moderation and market reassurance, but only if genuine concessions are made.
- Conversely, a pivot to the EFF would align ideologically with the ANC’s left but could trigger investor anxiety and heightened public backlash, particularly in urban and middle-class constituencies.
- If other parties, besides the DA and FF+, were to stay in the GNU and the EFF joins, that would bring the total seats in parliament to 233 (58.25%).
- Another option is a minority ANC government, but that would be a fragile experiment in legislative brinkmanship, risking policy paralysis and constant political bargaining.
- Without a parliamentary majority, every legislative decision, including critical budgets, would depend on ad-hoc agreements with opposition parties. ActionSA, has already indicated that if the ANC reneges on the agreement to retract the VAT increase that will come into effect next month, it can forget about getting the actual money bills over the line in the coming weeks.
- However, ActionSA held a meeting with the ANC NWC Delegation to resolve the national budget impasse and commit to revenue alternatives that will identify alternatives to the VAT increase.
- The GNU impasse is no longer a theoretical exercise in coalition-building. It is a governance crisis with immediate implications for South Africa’s economic outlook, social cohesion, and global reputation.
- The ANC faces a choice between consolidating power and pursuing political innovation, while the DA must determine whether to seek influence from within a governing coalition or remain on the opposition benches, all while the EFF and ActionSA may yet emerge as the unexpected kingmakers.
- While the ANC’s decision to pursue dialogue postpones an immediate crisis, unresolved ideological and fiscal disagreements particularly between the ANC and DA continue to threaten the longevity of the GNU. If left unaddressed, these tensions may eventually lead to fragmentation or an ineffective government.
- Persistent disputes within the GNU risk slowing decision-making and undermining service delivery. Legal challenges and political standoffs could delay the implementation of the national budget and other critical policy measures.
- Political instability is likely to further undermine market confidence and dampen investment prospects. A lack of clarity on fiscal direction especially regarding tax policy and land reform could have long-term consequences for economic recovery and growth.
- Ongoing political disputes risk eroding public confidence in the GNU’s ability to deliver stable governance. The ANC and its coalition partners will need to prioritise transparency, communication, and performance to regain public trust.
- Failure to resolve these issues could lead to sustained political uncertainty, weakened governance, and adverse economic outcomes.
- This is a test of political maturity and national vision. South Africans are watching not just for a government to be formed, but for leadership that puts the country ahead of party interests.
