The ANC's hybrid regime, civil rights and risks to business

The ANC has proceeded with several regulations, policy initiatives, bills and laws regarding mining and energy, the security industry, affirmative action and empowerment issues, land, patents, and foreign investors in general. The common underlying policy in all of these is the same: they increase the ANC government's interventionist powers in the economy.

The planned and actual measures weaken property rights and reduce private-sector autonomy, which would strengthen the position of crony capitalists with links to ANC factions compared to other businesses.

High levels of state debt and the needs of the ANC's patronage networks will drive efforts to look for new sources of income, both domestically and internationally. This search will coincide with an increased effort at economic diplomacy, both formal and informal. Positive results would at least partially strengthen the presidential and partisan ANC networks in the hybrid regime, rather than the South African state, communities and citizens as a whole.

There are different business and legal codes of conduct in different jurisdictions. International business is advised to heed best practices regarding integrity risk and reputational risk.

The factional search for more resources in the hybrid regime could result in an increased dependency on foreign patrons like Russia, China or other political and business actors. The field of competitors and the importance of specific competitive advantages of business may change suddenly.

The levels of visible state mismanagement and operational risk are likely to remain high or sometimes even rise, having an effect in many areas of service delivery such as the security of citizens and farmers, electricity, water management, waste management, road maintenance, education and postal services. The impact will differ per province and locality, with pockets of adequate or good service delivery in provinces and local areas.

Based on the internal and external dynamics of the ANC government, if government interventions do not have the required effect, there is a risk that such a result would not trigger a reassessment of the intervention, but rather a stronger form of intervention.

Factions within trade unions and trade unions will compete intensely with each other for members, networks, power, status and resources. Therefore industrial unrest will be a major risk, with the potential politicization of disputes that could be fast and assume militant forms.

Business will be exposed to diverse forms of political risk in the next five years. Political risk will be high: unexpected major shifts and unforeseen high-impact events are possible.

Businesses with a high risk appetite will remain involved or become active in South Africa. However, due to the increased political risk of the hybrid regime, some will also consider the opportunity cost when comparing South Africa to other markets.