‘Market-friendly’ government of national unity will alleviate SA’s cost-of-living crisis

South Africa has dodged many bullets during our young democracy, and this is a testament to the proven resilience of the South African people. The greatest test for us has been to rise from the ruins of State Capture.

Over the last few years, we were again tested during the Covid pandemic, the civil unrest of July 2021, unprecedented levels of load shedding, a cost-of-living crisis, and through all of these challenges South Africa’s people still stand tall.

This election has yet again tested the resolve of our people, and the next few hours and days will enlighten us on the quality of our political leadership. In contrast, the next few weeks, months and years will enlighten us on the seriousness with which they take the will of the people. Preliminary evidence suggests that, as before, South Africa is likely to rise to the challenge.

Our ancestors have an interesting way of communicating. It wasn’t long ago that South Africans experienced nail-biting finishes to the Rugby World Cup, the Africa Cup of Nations and the Netball World Cup, among others, which could have been some indication of how our resolve can be tested to the core.

Our sports teams epitomise the resilient spirit of South Africans, and it is perhaps most opportune now for our country to dig deep into that state of mind as we pray for a better future. 

All seems lost when the chips are down, but time and again, we rise to the occasion.

A few days ago I wrote in Business Day about what I believed would be the implications of a government formation which seeks to abandon or undermine our constitutional democracy, the rule of law, and so on. I highlighted that such a formation could bring economic instability, and derail the overall democratic project that commenced unofficially in 1990 and officially in 1994.

My father, Thami Mazwai, wrote this week on the vision of the 1994 government and their pragmatic approach to forming a government of national unity (GNU), which included the National Party. He reminded us it was then that the wounds of apartheid were most freshly and harshly felt, yet the leaders of the day had the wisdom and courage to take the road less travelled.

His point was in contesting social media misinformation which implies that a formalised relationship between the ANC and the DA would be an abandonment of the National Democratic Revolution – in essence, it wouldn’t be, because such a relationship has happened before.

Since the election, we have read many pieces about the Doomsday Coalition, and perhaps it would be in our interest to change the narrative from what happens when, in our view, the wrong decisions are made, to what happens when the right decisions are made. 

Downside risks are as important a consideration as the upside potential, which is incumbent upon politicians rising to the occasion and citizens understanding the difference.

There is substantial news flow that the idea of a GNU formation is broadly intact with the ANC-DA-IFP and other parties poised to again take the road less travelled.

The first implication, and probably most immediate, of a “market-friendly” government formation, is its solving the cost-of-living crisis. 

The rand should almost instantaneously appreciate towards R17/$. By my estimate, assuming the price of Brent crude remains stable at $80/bbl, petrol prices will drop significantly over the coming months, putting downward pressure on producer and consumer prices in general.

The purchasing power of the rand will go up, and people will be able to afford more goods. As inflation is further contained, the South African Reserve Bank (Sarb) will have space to cut interest rates. Solving the cost-of-living crisis is good for the general populace, particularly for low and middle-income consumers.

As the threat of expropriation without compensation recedes and property rights look protected, the risk premium attached to SA assets will similarly recede. Our borrowing costs will fall, and the state will have a more disposable budget to spend on the delivery of services and funding of social support (including grants).

Business confidence will ramp up as economic policy certainty comes to the fore. Businesses will invest in the country, which will be further catalysed by lower borrowing costs driven by the Sarb cutting interest rates and lower SA risk-premia.

It doesn’t end there

• Trim Cabinet to be fit for purpose;


• Cabinet must be competent and beyond reproach;


• Expeditiously release 2-5 million hectares of land to communities and facilitate collaboration between the private sector and beneficiary communities;


• Make education a priority to put SA on a long-term, sustainable and improved economic path;


• Place even more effort into the economic reform programme;


• Reduce the red tape for businesses to operate in a conducive environment; and


• Implement growth-enhancing policies.