Mandela Passes Away; ANC Faces A Challenge

Nelson Mandela's importance in South African history cannot be overstated, and his passing away on December 5 at the age of 95 has prompted mourning worldwide. He led black South Africans' struggle against apartheid and subsequently united the country in peace and reconciliation. As South Africa's president (between 1994 and 1999), he restored confidence in the nation and ushered in a period of macroeconomic stability and rising foreign investment. His African National Congress (ANC) party has sought to redress race-based inequality through a number of measures including the Black Economic Empowerment policy, which aims to increase the employment of 'all people of colour'.

Although South Africans are currently united in celebrating Mandela's achievements and the progress the 'rainbow nation' has made since the apartheid era, we expect that this will only be a temporary phenomenon. Although there have been vast improvements in terms of race-based inequality since 1994, there is still a lot of work to be done. According to census data, white South Africans, who account for 8.7% of the population of 53mn, earn six times more than their black counterparts, on average. It is widely acknowledged that white people still dominate the economy and control the majority of land. Furthermore, white people have access to better education, medical care and housing.

We believe that the passing away of Mandela will soon throw the spotlight on the ANC's progress, or lack thereof, in recent years. This will come at a critical time, because the April 2014 legislative elections are fast approaching. As we have highlighted previously, the ANC's dominant position is coming under threat ahead of the polls as dissatisfaction rises among poor black South Africans who form the majority of the population. Opposition parties are growing in popularity and number: both the Democratic Alliance and newly-formed Agang party have been gaining traction in recent months. We expect opposition parties to gain an increased share of the vote at the polls, although the ANC will easily win the election (it garnered 65.9% of the vote in 2009, versus 16.7% for the Democratic Alliance).

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This article is tagged to:
Sector: Country Risk
Geography: South Africa