Political overview

By Nedgroup Investments

Despite the rumours and fake news over the last few weeks, none of which is true, Cyril Ramaphosa is stronger than ever and solidified his position with the Covid-19 crisis.

Before lockdown, his popularity rating was 62%, which was 10% higher than the ANC’s popularity rating. His public approval rating, measured over a recent three-week period, was 82%, so he is not about to be toppled.

The budget took place 11 weeks ago, so what changes have happened?  Salary increases were going to be limited to 1.5%. In April, actual salary increases were zero despite unions threatening to go to court, which has yet to happen. SAA asked for more funding, which was refused. SA Express was allowed to go insolvent and private sector advisors have now been appointed for the Landbank. All this tells us that there has been a holding of the line as far as prudent fiscal policies go. This was also confirmed in the fair and appropriate fiscal and monetary response to Covid-19. There has been no political pressure on the SARB and finally a decision to go to the IMF, World Bank and the BRICS bank. These instances show a consistent line of middle of the road thinking in both fiscal and monetary policy, which is an indicator of where the political leadership of the country is and is a good indicator going forward.

I see two priorities for Cyril Ramaphosa. The first is the economy, where he will do everything he can to get economic growth back and secondly, to build a more capable state. A ‘benefit’ of this crisis is the realization that we have to up our game if we want to go anywhere.

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