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Ramaphosa expected to ‘just miss’ mandate threshold

President expected to stay, but market doubtful reforms will push growth to 3% by 2024.

The latest election poll by research and consulting firm Intellidex shows the market is convinced President Cyril Ramaphosa will survive office until the 2022 African National Congress (ANC) elective conference.

Overall the market sees a 75.7% probability that he will serve a full five-year term as ANC president. However, the offset is a lack of reform in the absence of a proper mandate.

Intellidex Market Research polled asset managers (onshore and offshore buyside/asset managers) and financial market researchers (sell-side) as well as non-financial players consisting of policymakers, lawyers, diplomats, academics and journalists.

The research firm’s Peter Attard Montalto and Heidi Dietzsch, head of capital markets research and market research manager respectively, say one of the key questions in the poll related to the probability of “growth-boosting reforms” pushing growth higher by the end of the parliamentary term.

Reform was defined as that which would allow growth to reach 3% by 2024. The market believes there is only a 33.9% chance of this happening.

Read: Victory margin key as stock traders ready for SA vote

Does a mandate threshold exist?

Intellidex asked a number of questions related to a reform mandate for Ramaphosa arising from the election results but is “deeply sceptical” and does not believe that a “mandate threshold” exists beyond which it becomes easier for Ramaphosa to institute reforms.

The market however does seem to think it exists, but with some scepticism. It sees the threshold at around 57.5% of the vote. In terms of Wednesday’s general elections, all market segments “roughly agree” on a result of around 57-58% of the national votes for the ANC.

In the 2014 general and provincial election the ANC garnered 62.15% of the votes, the Democratic Alliance (DA) 22.23% and the Economic Freedom Fighters(EFF) 6.35%. Voter turnout was just over 73%.

Overall, the market expects the ANC’s result to just miss the level required for the mandate threshold, and to be below what is needed for a meaningful market rally.

There are some prospects of a rally if the vote is above 57.5% and Gauteng is kept as an ANC-run province. However, the start of the fightback – load shedding, the global environment and weak economic data – will keep the rally short, Intellidex researchers found.

In a previous note (April 18) Attard Montalto expressed his confidence in good polls, but warned that even the best public opinion poll is only a snapshot of public views at a particular moment in time.

At the end of last year 60% of the respondents in a poll by global market research firm Ipsos said they would vote for the ANC, 14% for the DA and 9% for the EFF. A recent poll by the Institute of Race Relations (IRR) shows the ANC at 55% of the vote, the DA at 22% and the EFF on 12%.

In the Intellidex poll, offshore asset managers seem the most pessimistic, expecting 57.1% vote for the ANC, while financial researchers and market forecasters (sell-side) are the most optimistic at 58.1%.

The overall market puts the national vote for the ANC at 57.4%, with 20.7% for the DA and 11.5% for the EFF.

Academics and policy makers (non-financial respondents) give the ANC 56.4%, the DA 21.4% and the EFF 14.1%.

All eyes on Gauteng and Western Cape 

Looking at the two most highly contested provinces, Gauteng and the Western Cape, 52% of respondents don’t believe the ANC will keep outright control of the Gauteng provincial legislature. In the case of the Western Cape, 79% believe the DA will keep outright control of the provincial legislature. 

In the IRR poll, the ANC is well below the 50% mark in Gauteng (closer to 40%), with the DA at 32% and the EFF at 18%.

Attard Montalto wrote in the April note that it seems quite possible, based on the IRR poll, that the ANC could lose Gauteng, which could have complex and important ramifications for the party.

Who will stay, and who will go?

The Intellidex poll also asked about the post-election period and the future of two heavyweights in the cabinet – finance minister Tito Mboweni and public enterprises minister Pravin Gordhan.

“Nearly all market participants expect Mboweni still to be finance minister at year-end with others barely getting a look-in.”

Names such as Reserve Bank governor Lesetja Kganyago and deputy finance minister Mondli Gungubele do not elicit a lot of confidence. However, the non-financial sector gives both these men a 22% chance of being in the hot seat by Christmas.

“Markets strongly expect Gordhan still to be public enterprises minister at year-end, though the view is slightly more split than the finance minister question,” says Attard Montalto.

He adds that six months ago it was almost baseline for both Intellidex and the market that both Mboweni and Gordhan would not continue, but circumstances have changed.

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The “mandate threshold” is a media hypothesis for which no evidence exists.

There is no mandate for Cyril Ramaphosa, New Dawn, Reform or removing Corruptheid because one cannot vote for him, but only for the party despite SA having a “Big Man” tradition.

The only mandate for him and his programmes (assuming that the spin of JZ783’s former deputy and a longtime NEC member is true) comes from ANC congresses, and his Nasrec mandate was less than 5%. And that courtesy of David Mabuza doing a last minute flip, obviously with an eye on the long game. While Ramaphoney and other ANC heavies are intent on having EFF “come home” — further weakening any chances of a reform mandate — they have not seemed so keen on other ANC breakaways – Agang, Cope, UDM; perhaps THAT indicates something.

As the bickering and dickering in the UK show, when there is a hung party, outside parties can exert influence, pressure and direction. similarly, in the US a rogue president and senate is being kept in check by an opposition Congress.

As for Ramaphosa serving out his full term: the ANC is yet to have a president serve two full terms. That, as well as the narrowness of his “victory”, should reflect the odds of CR2017 doing so.

The ONLY mandate for reform is to vote for a “reform” party: ACDP, Agang, Cope, DA, IFP, ZACP and such, PARTIES which prefer “reform” (or economic reality, if you will) preferably one that is likely to have a strong presence in Parliament thus keeping the pressure upon the ANC and its president-of-the-moment.

@V_3: I like your reference to Corruptheid. The new evil that replaced the old evil Apartheid 25 yers ago. That term describes what ails SA now, having slowly ballooned over the past two and half decades. Will that also survive for 40 years I wonder. I think the term Corruptheid is so accurate and succinct and needs to be popularised and with your permission I plan to use it wherever I can.

I agree with David Brent. This imaginary threshold was probably thought up by the Zuma faction.

After the elections there is nothing to prevent the arrests and prosecution of the State Capturers, which would strengthen the CR faction.

“…. the arrests and prosecution of the State Capturers!” Dear God! What planet are you living on?

These people will quietly slide away into the sunset in their Mercedes Benzes to sulk in their tribal villages, consuming huge quantities of beer and roasted meat, hoping for a sharp knife in Dear Cyril’s back.

You misread my comment.

Because there is no real competition for the ANC, the competition is itself: between the “good” ANC and the “evil” ANC.

The argument by various commentators, known as the strategic vote for the ANC, is that everyone must vote for the admittedly filthy mix of “good” and “evil” and assume that this will strengthen the “good guys” in its fight against the “bad guys”.

The “mandate threshold” is the mythical percentage needed by the “good” ANC to purify the “evil” ANC.

As for state capturers going to jail this is not possible with police unwilling and/or unable to investigate and prosecutors unwilling and/or unable to charge.

Do think we’ll see some momentum of arrests after the elections. Will strengthen CRs hand and he’ll do it through institutional levers, not internal party mechanisms (appointments thus far have been sold).
Some other unrelated comments to ponder on.
1) Mbeki had more than 60% vote…but was booted.
2) This thing about a liberation movements can’t lead a democracy was almost disproved by the era of Trev MAn etc, the economy was growing. But Zuma and co destroyed it.

Saying all the above..I already voted DA x 2.

David Brent – Agreed… A Greed…

leomalan – We should’ve seen some momentum of arrests BEFORE the elections. Shortly after 18 December 2017, or 15 February 2018 at the latest. HOWEVER, just like he protected JZ all those years, he’s been protecting all the cronies too.
1) Yeah, it’s electioneering nonsense. As for your point 2), I humbly disagree. Granted, the economy did grow in the 2000s, but crediting the Mbeki government for that, neglects the effects of the 2000s commodity boom.
I also debate the scapegoating of Zuma. Least we forget, it’s the people of South Africa that knowingly voted in a corrupt rapist and a corrupt party that protected him. Sure, the guy was… lacking, but to neglect the fact that he was allowed in and to carry on unchecked? He alone was never that clever.

Not worried about the Ramaphosa era post Wednesday. Will be same as now. What I am worried about though, is the era thereafter…David Mabuza. I predict he will be Jacob Zuma reloaded, perhaps even worse. Brace yourselves.

If the schedule of African National Congress (ANC) elective conferences is hurting our prospects for investment then change the schedule.

If the electoral system of voting for a party and not a person is hurting our prospects for investment then change the electoral system to allow people to vote for a person.

One prediction will be certain:

Not long after the 8 May elections has passed, Eskom will soon start to implement load-shedding again!

(Eskom has tried their best to avoid it since March to date, as it would negatively impact the ANC-vote as the ruling party. The grid is as tight as before, but strangely no hint of loadshedding…)

I just had a hefty UPS installed to cover the lights and essential plug points in my house. I wrote off the cost against “ANC incompetence tax”.

Great investment ‘MC’!

Hmmm….that ANC Incompetence Tax you mention…I must speak to my business accountant…to add it as a NEW ACCOUNTING EXPENSE ITEM in my books 😉

Seriously, it’s part of SARS section 11(a) deduction, if you run a business from home (floor area pro-rata’d of course)

What I can not understand in my stupidity is why is a big win for the ANC required by analysts and economists to say that then SA will see a better economic growth rate? We need a bigger win for the opposition parties to achieve this in order to have more power to halt the ANC corruption and to halt changing and implementation of policies that are not aligned to accelerate growth. The bigger the win for the ANC the smaller the economic growth will be be faster average South Africans would need to put plans in place to protect their wealth.

“We need a bigger win for the opposition parties” – EFF included ? If so, be careful what you wish for….

Ramaphosa is just a figure head, others beat the drum and he just do the dancing. A small ANC elite runs the country. Into the ground.

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