The Economic Freedom Fighters (EFF) says that the recent Fitch Ratings’ suggestion of their preferred coalition outcomes, is an example of how the Western-based rating agencies have been meddling in South African politics in favour of capitalists.
The party said these agencies used their influential position in global financial markets to sway political outcomes favouring the capital and financial markets.
The Fighters said this in a statement welcoming the African Union’s Peer Review Mechanism’s (APRM) remarks on Fitch’s comments.
Fitch Ratings made the comments following the results of the South Africa’s elections on May 29, where the ANC received 40.18% votes and lost its parliamentary majority.
The DA, which is the main opposition party, received 21.81%, followed by the uMkhonto weSizwe (MK) Party at 14.58% and the EFF with 9.52%.
The results mean the ANC needs coalition partners to surpass the 50% votes in parliament to form a government.
On Friday, it was reported that the ANC reached an agreement on forming a government of national unity (GNU) with the DA, a key party in coalition talks. The agreement also include the Inkatha Freedom Party and Patriotic Alliance.
Fitch said support from the DA would probably enable President Cyril Ramaphosa to continue implementing his main priorities, including tackling infrastructure issues. The agency said this would likely result in the least significant changes to key credit metrics, such as South Africa’s debt trajectory, over the medium term, although fiscal tightening might be enhanced.
“For instance, we think the DA would likely try to lengthen the phase-in period of the National Health Insurance bill that was signed by President (Cyril) Ramaphosa shortly before the elections – a bill whose effects are not yet incorporated in Fitch’s forecasts,” read the statement.
The agency added that the MK and EFF campaigned on radical agendas, with many shared elements. These included land expropriation without compensation, nationalisation of key parts of the economy including mines, central bank and large banks, halting fiscal consolidation and aggressively increasing social grants.
Fitch said reaching an agreement with MK or EFF would require significant concessions by at least one of the parties involved, as the ANC’s stance differed sharply on these policies.
“We believe an agenda advanced by a government backed by the MK or EFF would be less radical than their campaign platforms might suggest. Moreover, a number of policies proposed by the two parties would require constitutional changes that would be unlikely to pass parliament, in our view, given the outcome of the election.”
However, the APRM said this was political manipulation, adding that it viewed the comments as premature and unsubstantiated.
The APRM added that Fitch should have waited for the outcomes of ongoing negotiations by political parties and the resulting policy choices, to reach conclusions that were based on facts and informed analysis.
Welcoming the statement, the EFF said the APRM’s criticism of Fitch Ratings was a commendable step towards asserting Africa’s autonomy in global politics and economic matters. The party added that it also highlighted the importance of African unity and self-determination, principles that the EFF advocated.
“By standing against Fitch Ratings’ politically motivated commentary, the African Union is championing the cause of an independent and non-political assessment from global financial institutions, which is crucial for the integrity of our political processes,” said the EFF.
The sentiments were echoed by Sankarist, activist and legal academic, David Letsoalo, who said it was expected that the APRM should raise these concerns, as they correctly did via their statement. This was because Fitch Ratings in this instance seemed to have attempted to influence the direction that the political ramifications should take South Africans to, and thus, subtly, undermined the sovereignty or self-determination of the South African population.
Letsoalo said there was no doubt that Fitch Ratings’ commentary was an attempt and ploy to influence the socio-economic and overall future of South Africa.
He said: “This is part of the role of many such structures within the neo-colonial and imperialist network meant to safeguard the global capitalist agenda and interests of the West.
“The tentacular power of the global capitalist network should not be underestimated. Many liberation movements in Africa and their leaders, post-independence were devoured by such networks.”
He added this was not a new or novel development.
Letsoalo said what was clear from the Fitch Ratings’ commentary was to suggestively advocate for the DA to assume a supervisory role to the ANC in a coalition framework. He added that this was problematic for various reasons, including assuming that having the DA and ANC in a coalition was the only permutation or configuration available and sustainable.
Governance expert and political analyst Sandile Swana said Ramaphosa needed the DA to protect him from a vote of no confidence against his opponents in MK and EFF. He said Ramaphosa would want the DA to be prominent in parliament through a speaker and presence in the parliamentary oversight committees.
Swana added that the African Union had demonstrated maturity and assertiveness in warning Fitch to refrain from directing or guiding the formation of the Government of the National Unity (GNU) or a coalition.
“The DA has its policy on foreign affairs which is entirely incompatible with ANC Foreign policy and probably knows it would be a waste of time to change the ANC stance on Palestine and Russia. The DA has a strong but spurious and unscientific stance on BEE and Employment Equity, again it is unlikely to change the ANC position on those matters.
“But the current ANC and DA need to find a way back to former President Thabo Mbeki’s way of running the economy, they can find common ground if they do that. The ANC is far too weak to be an equal partner with the DA, and any partnership will in effect be a takeover by the DA,” Swana said.
But market analyst George Glynos said if the ANC did not form a coalition with the DA and followed responsible policies, then it was logical to expect that SA markets would respond negatively.
Glynos said investors did not care about political power, they cared about stability, sustainability and returns.
“That's all. They have to look after people's retirement. And they try to do so in the most responsible way they can. Sometimes that means trying to figure out what politicians are going to do and they will plan accordingly.”
Sunday Independent
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