Multi-Party Charter winning election a long shot, could lead to unrest

Although it is a long shot that the Multi-Party Charter will win the election and become the government of the day, if it does happen market and economy-wide policy risks will be the lowest but the risk of protest and unrest will be severely elevated.

Seven parties formed the Multi-Party Charter for South Africa in August last year and their number later grew to 11, although only four are currently represented in Parliament. The five most important are the DA, Inkatha Freedom Party , Freedom Front Plus , ActionSA and African Christian Democratic Party .

“This market fundamentalism puts the DA at odds with the ANC and its competitors to the left but does not present an ideological schism with its MPC partners.” The MPC unveiled a joint economic recovery plan in late January which focused on stabilising the macro-economic environment and attracting investment “by eliminating overly prohibitive limitations.”

When it comes to economic policy, the MPC is committed to smaller government, greater private sector participation and strong protection of ownership rights. While a MPC win will be good for the economy of South Africa, the political-economic risk will worsen in this scenario, Nel says, although these risks should dissipate over time and are far lower than under the ANC-EFF worst-case scenario.

Source: Financial Digest (financialdigest.net)

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