ANC-EFF Coalition Fears Rattle South African Markets and Investors
Africa · Southern
Key Facts
—Election shock. The ANC lost its outright majority in May 2024, falling to 39.7% of the vote and forcing the first national coalition since 1994.
—Market reaction. Coalition uncertainty weakened the rand by 1.7% and pushed South Africa’s international bonds down by up to 2 cents on the dollar.
—EFF policy threat. The Economic Freedom Fighters demand nationalisation of banks, mines, and land, alarming foreign investors and global lenders.
—Fragile GNU. A 2025 budget crisis saw the DA vote against ANC proposals and go to court, raising doubts about the current centrist coalition’s durability.
—Debt pressure. South Africa’s debt-to-GDP ratio sits at roughly 72.5%, the highest since the democratic transition, leaving no fiscal room for populist spending.
ANC-EFF coalition fears are once again rattling South African financial markets as the fragility of the current Government of National Unity forces global investors to price in a radical policy shift that could unwind years of hard-won fiscal credibility.
How South Africa arrived at coalition risk
In the 29 May 2024 general election, the African National Congress saw its national vote share collapse from 57.5% in 2019 to just 39.7%, losing the outright parliamentary majority it had held since Nelson Mandela’s victory three decades earlier. The ANC secured only 159 of the 400 seats in the National Assembly, while the pro-business Democratic Alliance took roughly 22%, Jacob Zuma’s uMkhonto weSizwe party captured about 15%, and Julius Malema’s Economic Freedom Fighters claimed around 9.5%.
For the first time in democratic South Africa, coalition or confidence-and-supply negotiations became unavoidable, a political reality that is routine in Europe but entirely new for a nation accustomed to single-party dominance. By early 2025, the ANC had assembled a Government of National Unity involving about ten parties, pointedly excluding the populist EFF and MK, a move that initially bolstered economic sentiment and was welcomed by bond markets.
Why ANC-EFF coalition fears unsettle bond and currency markets
Global investors have been unambiguous about their preferences: an ANC-DA alliance is viewed as market-friendly, promising fiscal discipline and long-awaited reforms in power and transport, while an ANC-EFF government is widely described as disastrous for the economy. As the 2024 vote count confirmed the ANC would fall far short of 50%, the rand weakened by roughly 1.7% and briefly touched a five-week low, while South Africa’s international bonds fell by up to 2 cents, with longer maturities trading around 70 cents on the dollar—a level associated with distressed debt.
Asset managers including abrdn, Amundi, and Alexforbes warned explicitly that an ANC-EFF or ANC-MK pact would trigger immediate bond outflows and sustained downward pressure on the currency. Markets are particularly sensitive to who controls the finance ministry and whether the South African Reserve Bank’s independence—long a anchor of investor confidence—might be diluted by a radical coalition partner.
What the EFF wants and why it alarms foreign capital
The Economic Freedom Fighters present themselves unabashedly as an anti-capitalist, radical left formation that identifies “white monopoly capital” as its prime enemy. Its manifesto envisages large-scale nationalisation, including the abolition of private land ownership with the state becoming custodian of all land, and the takeover of banks, mines, telecommunications firms, and parts of the construction industry.
Analytical work on a hypothetical ANC-EFF coalition argues it would target a completion of the revolution of South Africa’s property relations, re-engineering ownership in land and key industries through heavy state involvement and prescribed assets for pension funds. These positions put the EFF on a direct collision course with global investors, ratings agencies, and multilateral lenders who treat property rights, central-bank independence, and predictable taxation as non-negotiable.
The fragile GNU and the budget crisis that spooked investors
In early 2025, the Government of National Unity hit a serious impasse around the national budget, with the DA voting against ANC proposals—including a controversial two-percentage-point VAT increase from 15% to 17%—and even going to court to block them. Reuters reported in April 2025 that ANC-DA tensions over budget policy and DA demands for more control over economic legislation raised serious questions about the coalition’s durability, and the rand fell sharply on speculation of a DA withdrawal.
This fragility is precisely why ANC-EFF coalition fears remain a live and market-sensitive scenario for the next electoral cycle or in the event the current coalition collapses. South Africa enters this political uncertainty from a position of macro-vulnerability, with real GDP growth averaging near zero for more than a decade, mass unemployment driving populist support, and a debt-to-GDP ratio of roughly 72.5%—the highest since the democratic transition and more than double what it was fifteen years ago.
The great-power contest and the BRICS dimension
South Africa’s coalition debate does not occur in isolation; it is embedded in a multipolar global financial and geopolitical environment that Africa: The New Scramble tracks closely. As Africa’s most industrialised economy and a major emerging-market asset class, South Africa serves as both a go-to exposure for global funds seeking African risk and a first exit when sentiment turns, meaning political shocks quickly transmit to currency, bond yields, and equity indices.
The EFF supports closer relations with Russia, including developing nuclear power capacity with Russian assistance, and its participation in government would likely harden South Africa’s stance on the Russia-Ukraine conflict while reshaping energy procurement toward Russian technology. A centrist coalition with the DA would probably balance between Western capital markets and BRICS political solidarity, but an ANC-EFF alignment could tilt more strongly toward anti-Western narratives, amplifying geopolitical risk for Western investors and potentially increasing reliance on Chinese policy banks and Russian state-linked entities.
What markets and investors should watch next
The key indicators to track include whether the ANC retains control of the finance and public enterprises portfolios, and whether any EFF-aligned figure gains influence over land, mining, or economic policy. Any move to dilute the Reserve Bank’s mandate or change its governor’s tenure would be read as a direct threat to the rand and foreign investment.
Investors should also monitor draft laws or constitutional amendments related to land expropriation without compensation, nationalisation of banks and mines, and prescribed assets for pension funds. For global corporates and Latin American readers accustomed to navigating coalition politics in their own region, South Africa has moved from a one-party-dominant story to a coalition-risk story in which an ANC-EFF alignment is the key downside scenario—it would not necessarily mean immediate economic collapse, but it would sharply raise risk premia, regulatory uncertainty, and geopolitical complexity, requiring more cautious capital allocation and tighter political-risk management.
Connected Coverage
Frequently Asked Questions
Why does an ANC-EFF coalition frighten foreign investors?
The EFF advocates for nationalising banks, mines, and land without compensation, policies that directly threaten property rights and the predictable regulatory environment that global capital requires. Combined with the party’s anti-capitalist rhetoric and its desire to dilute South African Reserve Bank independence, an ANC-EFF government would almost certainly trigger capital flight, rand depreciation, and a sharp rise in sovereign borrowing costs.
How stable is South Africa’s current coalition government?
The Government of National Unity formed after the 2024 election is fragile. In early 2025, the Democratic Alliance voted against the ANC’s budget and pursued court action to block a VAT increase, raising serious doubts about the coalition’s durability and causing the rand to weaken on speculation of a DA withdrawal.
What does South Africa’s coalition uncertainty mean for BRICS and great-power competition?
A centrist ANC-DA coalition would likely balance between Western capital markets and BRICS political solidarity, while an ANC-EFF alignment could tilt South Africa more decisively toward anti-Western narratives and closer ties with Russia and China. This would raise compliance and sanctions-risk concerns for Western firms while potentially opening opportunities for state-linked companies from BRICS partners.
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