As Parliament prepares for its first sitting on June 14, the South African economy faces uncertainty after the proposal from the African National Congress (ANC) for a government of national unity (GNU), according to Sebastien Alexanderson, head of National Debt Advisors.
Alexanderson said that the GNU announcement has sent mixed signals through the SA economy, having an impact on both the stock market and investor confidence.
The rand saw a modest gain against the dollar, trading at R18.48, while the Top-40 index closed 0.6% lower, indicating the cautious stance of the markets.
The implications for policy and economic stability will affect consumer pockets directly.
Alexanderson said: “While the idea of a government of national unity brings hope for broader consensus, it also introduces significant policy uncertainty. Investors are wary of how diverse economic ideologies will coalesce, especially when it comes to critical issues like fiscal policy and economic reforms.”
For the everyday South African, the impact of a government of national unity could be serious as economic policies have a direct impact on employment rates, inflation, and access to essential services.
“Uncertainty in economic policy can lead to delayed business investments, which in turn affects job creation and economic growth. Citizens might face higher costs of living and reduced access to services if the government struggles to implement cohesive economic strategies,” Alexanderson said.
With each political party in the GNU holding differing policy views, any deadlock on important issues could impede economic growth further, according to Alexanderson.
Talks have started between the different SA parties.
The Economic Freedom Fighters (EFF) have stated their refusal to participate in a government involving the DA while the Inkatha Freedom Party (IFP) has taken a more cautious stance.
The uMkhonto we Sizwe Party (MK) has engaged in discussions with the ANC but has raised objections regarding the election results, citing alleged voting irregularities.
“The lack of a clear and unified policy direction can dampen investor confidence, as businesses and financial markets thrive on predictability and stability,” said Alexanderson.
According to Alexanderson, the direct market reaction to the proposal highlights the delicate balance investors are maintaining with domestic and foreign investors which are both in a ‘wait and see’ mode.
Alexanderson shares tips to help consumers prepare for potential economic instability:
Prepare for potential unemployment
With an unstable economy there is always the possibility of job losses.
Alexanderson advises consumers to build an emergency fund that can cover at least three to six months of living expenses.
People should also consider upskilling or reskilling themselves to increase job market competitiveness.
Explore alternative income sources
Consumers should try looking into freelancing, part-time work, or starting a small business to diversify their income streams and reduce dependency on one job.
Plan for load shedding
If load shedding makes a comeback, you should at least be prepared for it.
Alexanderson suggests investing in energy-saving appliances and backup power sources like generators or solar panels to lessen the impact of potential power outages on your life and work.
Manage inflation impact
Alexanderson said that people should track their spending and budget to combat rising prices. Consumers should prioritise essential expenses and look for cost-effective alternatives.
Saving and investing
Consumers should continue saving regularly and explore low-risk investment options to protect and grow their money during uncertain times.
Seek professional debt help
Speak with a financial adviser or debt counsellor to create a debt management plan that suits your needs and navigate financial challenges effectively.
IOL Business