May 10 (Bloomberg) -- South Africa’s ruling African National Congress will probably stick to its policies to boost employment and economic growth after a decisive election win, investors and analysts said.
The 102-year-old party extended its two-decade rule with 62.2 percent of the vote after all ballots were counted, according to figures from the Independent Electoral Commission. Its support fell 3.7 percentage points from five years ago.
The main opposition Democratic Alliance made the biggest gains, advancing to 22.2 percent from 16.7 percent in 2009. The Economic Freedom Fighters, which was formed by expelled ANC youth leader Julius Malema last year, won 6.4 percent.
“From a policy perspective it means that they can carry on charting the same course,” Mokgatla Madisha, who helps manage the equivalent of $1.7 billion including South African bonds at Argon Asset Management, said by phone from Cape Town yesterday. “Investors would like to see that as well.”
The election results were mainly in line with an Ipsos opinion poll published on May 2.
The ANC is hoping to invigorate the economy by putting into action its 20-year National Development Plan to tackle a 25 percent jobless rate, chronic mining strikes and electricity shortages. It must also improve its record in supplying housing, sanitation and other services in poor townships to answer the hundreds of protests across the country.
“We will use this victory to continue to deliver electricity, water, roads, schools in all urban and rural areas,” President Jacob Zuma said in Pretoria after the IEC officially declared the ANC the winner of 249 of the 400 seats in Parliament. “This mandate gives us the green light to implement the National Development Plan and to promote inclusive economic growth and job creation.”
While the government focuses on keeping inflation and debt under control, it plans to spend more than 1 trillion rand ($96 billion) on improving roads, railways and ports.
The rand, which had weakened 13 percent against the dollar in the past year, gained 1.1 percent on May 8 as early results showed the ANC would retain a majority of more than 60 percent.
While the ANC’s support fell from five years ago and it suffered losses in the richest province Gauteng, the margin of victory strengthens Zuma’s position in the party as he fights allegations by the nation’s graft ombudsman of unduly benefiting from a state-funded upgrade of his private residence. It also gives the ruling party the leeway to ignore calls by the EFF for more radical change, including the nationalization of mines.
“The market breathes a small sigh of relief that the ANC managed to hang on to the province of Gauteng,” Phoenix Kalen, a London-based strategist at Societe Generale SA, said in an e-mailed response to questions yesterday. “The risk of coalition governments which would have included the EFF would likely have undermined the ANC’s commitment to ongoing reforms as outlined by the National Development Plan.”
The ANC had about 54 percent support in the nation’s richest province.
The black majority still overwhelmingly supports the party of Nelson Mandela, which rid the country of white-minority rule. The DA said it made advances on shedding its image of being a white party after about a fifth of its support, or 760,000 votes, came from blacks. The EFF still garnered more black votes, it said.
While the ANC’s margin of victory falls short of the two-thirds needed to change the constitution, the EFF would back amendments allowing for the seizure of land without compensation, Malema told reporters in Pretoria today.
“The ANC should know that with us they have got a two-thirds majority,” he said. The EFF will work with the ruling party “only if they want to change policy and bring an alternative radical policy. If they want to amend the constitution and put a clear clause that says expropriate without compensation, they must not worry, here is the two-thirds majority,” Malema said.
The ANC has pledged to create 6 million “job opportunities,” build 1 million homes for the poor, improve education and health care and give black citizens a bigger stake in the economy over the next five years.
While the ANC’s election head Malusi Gigaba indicated the government would focus on its action plan, he also said two days ago that the party wants “radical economic transformation” in the next 20 years to give black South Africans a bigger stake in the economy.
Government policy will focus on building infrastructure, developing industries and buying more goods and services locally to help build a class of black industrialists, he said.
The ANC remained in charge of eight of nine provincial governments, while the DA strengthened its control of the Western Cape, which includes Cape Town, the second-largest city.
After weathering attacks for government spending on his private residence, Zuma will probably reward loyalty when he appoints his cabinet, Susan Booysen, a political analyst at the Johannesburg-based University of the Witwatersrand, said yesterday.
“It’s reward time now,” she said. “There is very likely to be a reshuffle to keep those happy who really helped and protected him through his campaigns.”