ANC on course to lose majority in South Africa's seismic election

The African National Congress looked set on Thursday to lose the parliamentary majority it has held for 30 years, as partial election results suggested it would need a partner to stay in power - a first in South Africa's post-apartheid history. If the final results confirm the loss of its majority, the ANC will be forced to make a deal with one or more other parties to govern - a situation that could lead to political volatility in the coming weeks or months.

"The ANC might have to consider forming an alliance with one of its major rivals in order to maintain its hold on power," said Andrew Bahlmann, a senior executive at M&A advisory firm Deal Leaders International.

"The key area of uncertainty is the make-up of a future coalition."

With results in from 20.4% of polling stations, the ANC's share of the vote in Wednesday's election stood at 43.4%, with the pro-business Democratic Alliance (DA) on 24.9%, data from the electoral commission showed on Thursday. The Marxist Economic Freedom Fighters (EFF) party was on 8.8%, while uMkhonto we Sizwe (MK), a new party led by former president Jacob Zuma, was snapping at its heels on 8.1%, with support concentrated in Zuma's home province of KwaZulu-Natal.

The ANC has won national elections held every five years since the landmark 1994 vote, which marked the end of white minority rule and the ascent of Nelson Mandela as president.

But since those heady days the ANC's support has declined because of discontent over high unemployment and poverty, rampant crime, frequent power blackouts and corruption.

While early results skew towards rural areas where the ANC is relatively strong, results from urban centres where it is weaker build up later. Pollsters and two of the country's three main broadcasters were predicting that the final results would confirm that the ANC - which won 57.5% of the vote in the previous election in 2019 - had lost its majority. Under South Africa's proportional voting system, parties' shares of the vote determine the number of seats they get in the National Assembly, which then elects the next president. With the ANC still on course to be the largest party, that is likely to be its leader Cyril Ramaphosa, the incumbent.

However, a poor showing could make him vulnerable to a leadership challenge from within party ranks, whether in the immediate future or at some point during his term.

RISK OF GRIDLOCK

Which of the opposition parties the ANC may seek out as a potential coalition partner was the subject of intense speculation.

"(These results) give the ANC the option of partnering with the market-friendly DA, which markets would undoubtedly prefer, or one of the two populist parties that advocate for the nationalisation of mines and banks," said Bahlmann, referring to the EFF and MK.

"The possibility of an unstable coalition is causing concern in financial markets, as such a coalition would likely demand policy changes that could discourage investment."

The rand slipped more than 1% against the U.S. dollar while the wider equity index dropped more than 2%. The country's international bonds also fell.

The ANC has some policy similarities with the EFF and MK, but both are led by former ANC figures who have fallen out with the ruling party's leadership.

The new parliament must convene within 14 days of final results being declared and its first act must be to elect the nation's president.

• World