The electoral consequences of disillusionment with the ANC, Johannesburg’s municipal woes, and the impact of the off-on Middle East war on South Africa’s fuel supply feature in this latest edition of monthly highlights from research by the Centre for Risk Analysis (CRA) on political, economic and geopolitical events affecting South African businesses.
CRA clients receive a range of weekly and monthly reports, including Client Notes. Published on an ad hoc basis, Client Notes provide real-time analysis of a topical feature of current events.
Johannesburg’s fiscal crisis: What happens if the city runs out of money
CRA executive director Chris Hattingh writes that the National Treasury’s 7 July decision to withhold equitable share payments from 69 municipalities marks a significant escalation in response to persisting municipal financial mismanagement.
Johannesburg’s position is especially serious. Reporting indicated that by March the city had cash for only five days of costs, and faced a R2.1 billion funding gap.
Treasury has made the release of funds conditional on signed creditor repayment agreements, and a 25% reduction in unauthorised, irregular, fruitless and wasteful expenditure by the end of September. Mayor Dada Morero has said the city will pay R2.4 billion to creditors to unlock R3.6 billion in withheld funds. But the underlying pressure is compounded by an unaffordable wage agreement and growing fixed costs.
Hattingh writes that for businesses and households, the central risk is continued service deterioration rather than a sudden, orderly resolution.
In the short term, municipal contractors should expect payment delays, billing errors being likely to worsen, and sporadic interruptions in water and power supply and waste collection, and delays in road maintenance, traffic enforcement and licensing functions.
Hattingh writes that over the medium and long term, private substitution costs such as generators, boreholes, security and road maintenance are likely to become permanent operating expenses. Property values, insurance pricing and financing conditions may be affected by Johannesburg’s worsening credit and service-delivery trajectory.
He warns: “Clients with exposure to Johannesburg operations, property or municipal service delivery contracts should expect continued deterioration through the election period at minimum. The end-of-September deadline for spending reductions is the next concrete test of the city’s trajectory.”
Fuel supply outlook: the ceasefire has failed, and the Strait of Hormuz remains contested
In this Client Note, Chris Hattingh writes about the collapse of the June 2026 US-Iran memorandum of understanding, returning the Strait of Hormuz to a state of intermittent conflict rather than stable reopening. After further US strikes, Iran declared the strait closed on 12 July. The US insists the Omani transit corridor remains open; in practice, tanker operators are avoiding the route, with no large vessel recorded using the seaway.
Brent crude oil rose from $72 to above $86 in less than a week, reflecting renewed risk. Markets have not fully repriced the March-April shock because Gulf producers have expanded partial bypass capacity and Iran appears to be seeking leverage and toll revenue from shipping rather than enforcing a total blockade. Even so, pipeline alternatives cover only a fraction of normal volumes through the strait, and remain vulnerable to attack.
“The CRA’s base case is continued intermittent disruption through the third quarter of 2026: periodic strikes and counterstrikes, a persistent risk premium in Brent of $10 to $20 a barrel above the pre-war baseline of roughly $65, and tanker traffic remaining below pre-war volumes without formal strait closure.” A complete Iranian re-closure remains a moderate downside risk, especially if further US strikes target economic assets such as oil terminals, which could push Brent above $100 within days.
Hattingh writes that the CRA “expects the August adjustment to erase most or all of July’s relief, with the direction beyond August being dependent on whether the current strikes de-escalate or harden into a sustained pattern”.
The ANC’s decline is not just a turnout story
CRA research associate Ofentse Davhie writes that the ANC’s decline is no longer simply a turnout problem: it has become a defection problem, as credible breakaway alternatives convert disillusionment into votes for rivals.
For years, falling ANC support and falling turnout moved together, suggesting that disappointed ANC voters were staying home rather than crossing to opposition parties.
When the ANC’s vote share is measured against all registered voters, its real national mandate has collapsed from 52.8% in 2004 to 23.6% in 2024, and to barely one in six eligible adults. Locally, the shift came earlier: in 2016 the ANC lost support while turnout held steady, showing voters were defecting to alternatives such as the EFF rather than merely abstaining, contributing to the loss of Johannesburg, Tshwane and Nelson Mandela Bay.
The 2024 national election confirmed that the ANC’s abstention cushion has been stripped away, with MK turning dormant loyalty into direct defection on a far larger scale. The party now faces both pressures ahead of the 4 November 2026 local elections: low turnout among disappointed supporters and a wider field of credible “home-like” alternatives.
Davhie writes: “The local tier now faces both pressures at once. The ANC’s 2016 result showed defection with turnout steady, and 2021 showed abstention as turnout collapsed toward 46% and support fell to 45.6%. In 2026 the ANC meets a field of credible alternatives wider than in either year, with MK now a national force, the EFF entrenched, and a swarm of smaller parties and independents contesting wards.”
Davhie cautions: “Firms that depend on functioning municipalities should plan for a more fragmented and less predictable local-government landscape from late 2026 onward.”
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