Investors now demand only about 4 percentage points more to lend to South Africa than to America, close to the lows of the Mbeki years. The Common Sense’s economics editor Bheki Mahlobo explains to Gabriel Makin how markets price South Africa’s risk, how that price swung from the Asian crisis through Polokwane, Nenegate and Covid, and why the GNU pushed it back down.
Then the part the market hasn’t priced: why November’s local government elections are not 2024. About 100 hung councils, an overhang that can hand a party on 20% of the vote 40% of the seats, results that can be overturned in court, a GNU both sides are ready to leave, and a weakened Ramaphosa.
Bond yield data: OECD long-term interest rates via FRED (South Africa and United States 10-year government bonds, monthly).
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Watch or listen on Spotify:
Chapters:
0:00 How markets price South Africa’s risk: the yield gap
1:31 From 14% to 2%: the spread since the Asian crisis
3:11 Polokwane, Nenegate and Covid: when the risk came back
4:50 The GNU and the pricing-out of risk
5:50 What the market is betting on this election
6:43 Hung councils: about 100 municipalities in deadlock
8:05 The overhang: 20% of the vote, 40% of the seats
10:42 When the courts can overturn a council
11:50 Will the GNU hold? Both sides are ready to walk
14:39 Ipsos vs the SRF: two different polls
16:32 All the known unknowns
17:04 Ramaphosa’s squeeze and the ANC’s succession
18:51 What would change the market’s mind
19:33 How to read Bheki’s work
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‘Historically, those ward seats were retained, meaning the council could temporarily become larger than the predetermined number of seats.
However, the law was changed in 2021. The current procedure keeps the party’s ward seats but recalculates the PR allocation among the other parties, so the council does not simply expand because of the overhang. Party A has an overhang of 5 seats because it won 60 wards despite only being entitled to 55 seats proportionally.Under the current rules, A keeps its 60 ward councillors, but A is excluded from the subsequent PR calculation and the remaining PR seats are redistributed among B, C, etc. The 2021 amendment was explicitly intended to resolve these “excessive seats” situations.’ this is what chat gpt says about overhang risk is this not true?
This channel is a DA mouthpiece
Do we make it to 2029 without civil unrest? I don’t see it.
Next ANC leader Fakile Mbalula…ask me why
We need to be careful. 2026 is not the goal, 2029 is. The 2026 ANC election decline will be blamed on Cyril and Mbalula, which gives the “Mashatile” faction in the ANC a runway to go after 2029 which is the actual strategic goal. The ANC will never allow themselves to be a junior partner in a National Coalition with the DA, but will consider being a senior partner in a coalition with the EFF and MK.
Brilliant analysis!
As much as common sense south Africans see the bad things in SA, it’s moving at lighting speed, and moving in the right direction.
This guy is delulu. Even the average middle class DA voter moved the maximum amount of money off shore out of the country with the help of Magnus Heysteck.