I have now replayed the ANC “roll call” incident and its follow-up several times, and I still don’t understand. Does it mean the ANC’s local government election theme will be “we will do what the DA does this time, promise” or (if you then follow the backtracking) “we will do transformation but don’t worry about the audit compliance stuff, that’s less important”.

Both of these seem contra to logic, politics and common sense — and the facts. The idea that anything can be achieved in terms of transformation without an economy that functions well, without randomly leaking money, is fanciful. All the literature and experience of entities such as the World Bank point to a hugely significant correlation between how well an institution is run and its ability to bring service delivery to bear.

The politics and common sense of this also don’t compute. What is being said? That there is a better option for service delivery in another party? Or that the ANC can deliver for poorer areas without passing audits? As we’ve seen with continually failed basic services, collapsing hospitals, and sanitation in Gauteng’s metros, this is clearly not the case. There is no idealised example of highly efficient institutions in SA that ignore audit requirements and somehow deliver anyway.

The whole situation indicates that no-one in the ANC actually reads auditor-general reports, as the head audit cleanliness score is just one element of the document that covers everything, including service delivery. The focus on the audit outcome ignores the dual mandate of the auditor-general, but also the huge detail in such reports that closely links institutional quality, spending practices and service delivery.

This reveals something deep about the path ahead in the coming years. The ANC’s need to row back shows that managing the internal party dynamic remains paramount, but to what end? Ramaphosa has no succession strategy (something that is increasingly alarming even to his supporters), which makes his deputy, Paul Mashatile, the front-runner by default. If one believes the hyperbolic media coverage, that’s because the ANC might otherwise have forced Ramaphosa out early — yet the party didn’t even do that to Jacob Zuma after years of discussions and plotting.

One should be careful not to read the death of the ANC into all this. After all, considering last year’s electoral performance, it has done remarkably “OK” in recent by-elections, broadly marking to market at local level what last year’s result implied, plus a bit of a downward trend.

However, it is clear that the ANC is in the beginning of a death spiral, amid a mixture of denial and distraction. It is interesting to see a vast acceleration in the number of ANC cadres getting degrees and even PhDs (seemingly handed out like confetti by SA universities) as they prepare for life after the ANC (perhaps ignoring the fact that the jobs market would be hugely saturated with people with notionally advanced degrees but no experience in the real world).

We should be cautious of this panic. As I wrote in my previous column, it’s causing something of a doubling down on unworkable and failed industrial policies and poor policymaking, such as the new Transformation Fund. So far, it has only infringed on the Operation Vulindlela agenda around the edges (more in energy policy, with logistics reforms far more protected by a more attentive and robust minister against volatile ANC winds). But on raw capacity we saw a slowing down of the Operation Vulindlela reform agenda to a degree going into last year’s elections, and we should watch what occurs now that we are only about 14 months from local elections, especially in Johannesburg.

The recent ANC Women’s League statement on Johannesburg was a case in point, showing the level of departure from reality that can occur when people are triggered. The ANC may be tempted to turn somewhere darker next year and stir up racial and tribal/group loyalties as its only remaining card. The fiscal environment remains tight, and tightening on defunct municipalities like Johannesburg. There isn’t the option to splash the cash, either through projects or corruption of any size. Reforms focused on metros and municipalities will not have begun to yield results by the end of next year.

There is no mechanism in the government of national unity for the other parties to keep the ANC in check between now and the next general election, but we should be cognisant that the ANC generally withers when it loses power rather than going out with a bang, as we saw in the Western Cape.

It is easy to dream up all kinds of tail-risk scenarios, like a huge fiscal blowout or similar. But regardless of the need for votes in parliament, this is just not the ANC’s style, and there is no sense that this will feature in the forthcoming medium-term budget policy statement. The dynamic is remarkably calm on that front, which investors seem more willing than usual to price in.

Vigilance of the tail risk is needed from investors and businesses, but not panic. A doubling down on bad industrial policy and a slowing around the edges on some (but not all) reforms is not great, but it is a continuation of the status quo rather than anything more dramatic.

The issue for investors, and especially banks, is if one waits until after the local elections to open the taps more fully, lending and investment in the economy will be narrow and restrained. There is too much uncertainty over future coalitions to front-run the elections and make any strong calls on the deployment of capital this early. We have a long period of uncertainty ahead, until 2029, where the answer can’t be “don’t ever open the taps because something might go wrong”.

Perhaps a party slowly shrivelling in a series of cliff-related incidents — while reforms stop-start through the period and fiscal policy remains conservative with low inflation — might eventually be enough to open the taps, as drama and the smell of panic give way to a sense of robustness around SA and a belief that anything can be weathered.

• Peter Attard Montalto leads on political economy, markets and the just energy transition at Krutham, a SA research-led consulting company.

This article first appeared in Business Day.

Image Credit: ANC headquarters by Babak Fakhamzadeh licensed under CC BY-ND 2.0.