What is effectively happening here is a head-to-head.

The once dominant African National Congress (ANC) can no longer govern alone, having nosedived to 40.18% in the recent national election.

Siding with ANC Marxist-inspired breakaways, like the Economic Freedom Fighters (EFF) at 9.52% and uMkhonto we Sizwe (MK) at 14.58%, offers nothing less than ruin.

A confidence and supply arrangement with the pro-market Democratic Alliance (DA) at 21.82% offers numbers and credibility.

Such a move may fundamentally replumb the ANC’s longstanding structures, including its alliances with trade unions. Its far-left elements will see the move as a betrayal. Yet the chaos brought by an EFF/MK tie-up would see the party’s disappearance. The ANC should see a modest downsizing, survival or even renewal as preferable to implosion.

And what may be hidden here beyond the noise is how the country’s two largest parties could work very well together.

Part of me wonders if an ANC-DA tie up is really a pipe dream. But if the President attempts to fudge negotiations by ‘letting everyone across the spectrum have a say’, he is delaying the party’s downfall.

I agree with many commentators who have highlighted that an ANC-DA agreement should move slowly, first focusing on innocuous policy areas. 

Timing on my suggestions and ideas, I will leave to others. My purpose is to show that there is a plethora of productive solutions for the quadripartite alliance of business leaders, civil society and ANC-DA politicians to trumpet.

Walking the tightrope in matters of justice.

All areas of policy are off the table if the ANC-DA arrangement does not hold.

The DA must understand that a tie-up with the ANC will immediately see ANC infighting and defections, as the party finds its final alignment in the centre. 

This is history taking its course. The broad church of Africa’s oldest liberation movement has always had this coming. One of the many factors in South Africa’s favour was that the ANC was never a uniform, efficient, Leninist machine. 

Revelations may well be about to pour out on past wrongdoing in office. The DA may be partnering with the ANC at its weakest and most vulnerable time. Yet turmoil may be temporary.

A post-ANC amnesty of sorts led by transparency groups may be an enormous pressure valve. 

‘Come clean in return for immunity’. This may well soften the long-feared ANC break-up, if politicians losing seats refrain from inciting violence.

In my interview with OUTA CEO Wayne Duvenage, we discuss how this could work in practice. We also discuss the DA’s proposal for an elite crime-fighting unit, accountable to Parliament. This could only be disbanded with a two-thirds majority in Parliament. 

The DA can frame this as ‘corruption is being exposed and coming down under our watch’.

The fruits of labour market reform

The tie-up will not be much good by the next election if it is solely about survival, and if both parties cannot show improvements in material circumstances for voters.

There is a straight line between ANC support and job creation. Its election reckoning should have made it aware of this.

Some commentators still defend tough labour market regulation in a country with the world’s highest unemployment rate: 33%.

As barriers to entry in the labour market have risen, so too has unemployment, by around half a percentage point annually since 1994. Einstein said that insanity is doing the same thing over and over again and expecting different results.

Labour market reform is not a hard sell to the electorate, with around 80% of participants agreeing that ‘SA’s labour laws make it difficult to find jobs and should be relaxed so that more people can find work’. That is according to the Social Research Foundation (SRF).

High minimum wages turn job seekers into criminals. The biggest impediment is race-based quotas in the civil service and business (Black Economic Empowerment).

The removal of BEE would merely take away one of the most business-unfriendly policies anywhere in the world. It would also see the biggest uptick of job growth in emerging market history.

In a country with a recent history of racial segregation, certain media corners will loudly cry foul.

Big business should broker a counter argument: “We agree with the DA’s assessment on BEE. Instead, we propose the creation of a fund for black entrepreneurs – a Black Opportunities Fund (BOF) – as a prescribed asset, forcing companies to invest in it. This could range from ZAR 5000 per month loan-grants for small shop owners to large tickets on farming projects.”

Within a short time, voters would reward the ANC-DA for their newfound progress at the ballot box. Spurred economic growth would also make funds available for the continuation and expansion of social grants.

Open the economy, the ‘balance of benefits’

A benefit of this historic moment happening now is that South Africa can learn from other countries which have failed in various economic experiments.

I envisage a ‘balance of benefits’ in opening the economy, overseen by an independent Centre for Economic Performance (CEP) that reports to Parliament on various metrics. 

The ANC and the DA agree on fiscal prudence. The establishment of an Office for Budget Responsibility (OBR) seems safe, as does a Sovereign Wealth Fund (SWF) to capitalise on South Africa’s mineral birthright. 

The DA may expedite mining licenses, but companies will be given a ranking based on their contributions to jobs and training provided, and their contributions to the SWF. This is the crux of the IRR’s Economic Empowerment for the Disadvantaged (EED) proposal.

Mineral companies could be taxed on a counter-cyclical basis, Chilean style: highly when earnings are high and vice versa.

A DA-led further conversation may look like this:

“We want Expropriation Without Compensation off the table, but we will entertain some sort of land value tax (LVT) to guard against speculative bubbles”.

This is an idea being floated by centrist circles in the UK.

Similarly, “In exchange for privatisation of the railways, operators’  profits may be pegged only to performance and not merely UK-style rent extraction schemes.”

The BOF, LVT committee, OBR, SWF and EED would all livestream their records and report to the CEP.

In short, the combination of the ANC and the DA could build an economy fit for the 21st century, one that harnesses the power of the market for all, but tames its worst excesses. 

It also allows both sides not to feel as though they are sacrificing their identities. The DA counters the claim of a Thatcherite bulldozer, the ANC showcases pragmatism, social grants are maintained, and business is booming.

But the biggest winner of all is that it would show the cunning Marxist opposition that with the right safeguards in place, an open economy does not have to be predatory.

[Image: Bonginkosi Tekane]

The views of the writer are not necessarily the views of the Daily Friend or the IRR.

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contributor

Sean McLaughlin is an associate of the Free Market Foundation. He has a degree in Arabic and International Relations from the University of St Andrews, Scotland. Between 2016 and 2020, he worked in market intelligence on Latin America and Spain. During the UK-EU Brexit negotiations, he wrote extensively on the issue of Northern Ireland for think tank VoteWatch Europe. From 2021-2024, McLaughlin worked for a data provider in the energy industry, and, since 2023, he has been contributing articles on South African politics to various outlets.