Certified free and fair, South Africa’s 2026 municipal elections have set the price of the next phase of local economic policy: two weeks of coalition horse-trading that will decide whether functional local government can unlock growth beyond the current 1% to 2% band. Economists read the polls as a signal to investors, with the credibility of the electoral process itself carrying market value.
IEC chairperson Mosotho Moepya declared the elections free and fair, saying the commission was satisfied with their conduct. “It is our assessment that the elections were largely conducted in a peaceful environment,” he said, drawing on the Elections Satisfaction Survey 2026, which measured voters’ views on the process, its integrity and its operational efficiency. For business observers, that predictability mattered as much as the outcome. Professor Raymond Parsons of the North West University Business School called the elections good for the economy, arguing that a predictable political process across levels of government is a major pillar of business confidence.
The seat arithmetic shows the scale of the coalition task. The ANC leads with 30.89% of the national vote and 3 164 council seats, followed by the Democratic Alliance on 24.60% and 1 527 seats. The uMkhonto weSizwe Party took 9.61% and 701 seats, the EFF 6.25% and 505 seats, and ActionSA 5.68% and 219 seats. Other parties and independents collectively drew 22.97%. With so many councils hung, Parsons described the results as a definitive further shift toward multiparty coalitions at municipal level, warning that the horse-trading over the next two weeks must deliver political stability if local economic development is to be maximised.
Municipalities, in Parsons’s framing, are the engine rooms of the economy. Breaking out of narrow growth depends on functional local governments maintaining a positive environment for business activity. “Business cannot operate without dependable water, electricity, roads and logistics,” he said, noting that all parties had committed to urgently fixing municipal governance and service delivery as their overriding priority and must now be held accountable. He urged business to remain a constructive partner through public-private sector partnerships, and said new municipal governments and business should mimic the advantages already apparent in cooperation between the government of national unity and the private sector.
A harder fiscal reading came from Patrick Bond, distinguished professor of sociology and political economist at the University of Johannesburg. He pointed out that the ANC and the DA, the likeliest coalition partners, both enjoy recognition from the Bretton Woods institutions, the International Monetary Fund and the World Bank, and both comply with IMF fiscal consolidation commands dating from the $4.3 billion Covid-19 loan granted in 2020. Since then, National Treasury has cut annual per-resident national-to-local operating subsidies by 11% and municipal capital grants by 1.5%. Bond maintained that in 2023, marching orders from Washington confirmed that Treasury officials that year agreed grants to local governments were contained. He added that Finance Minister Enoch Godongwana regularly fibs about this austerity regime, claiming last month that subsidies for free basic services such as electricity and water reach 11 million households, when in reality fewer than three million qualify given the state’s means-testing barriers.
Meanwhile, the mechanics of coalition formation now carry direct economic weight. Dr Thina Nzo, a local government expert at the Public Affairs Research Institute, said the ideal first option would have been for parties to consult their constituencies on which partners to choose, but under two-week deadlines and with many hung councils dispersed across provinces, that may not be possible. The more workable option is transparency: parties should tell voters which parties they are negotiating with, outline one to five key negotiation principles, and report back on outcomes so the electorate gains insight into decision-making.
Nzo also warned that larger parties should avoid being held ransom by smaller parties using mayoral seats as a bargaining chip, which distorts representation and produces poorly considered principles. Parties must set criteria for electing speakers and mayors aligned with competence to execute legislative duties. That will be easier in metros, where mayoral candidates were announced before the elections, but newly hung councils in secondary cities, peri-urban and rural municipalities need stringent leadership criteria acceptable to all parties. With the Municipal Systems Amendment Bill, which introduced the coalition framework, not yet passed in Parliament, the process will depend on party maturity and past lessons in avoiding sporadic motions of no confidence against mayors and council speakers. Whether that maturity materialises within the fortnight will shape the investment climate for years to come.