The Government of National Unity (GNU) in South Africa faces a critical juncture as the two principal coalition partners—the African National Congress (ANC) and the Democratic Alliance (DA)—enter urgent negotiations to prevent a complete collapse of the fragile governing arrangement. Pressure from the private sector and international developments has prompted both parties to consider a reconciliatory approach after weeks of deteriorating trust.
On 4 April 2025, prominent South African business leaders, representing several major corporations, submitted a joint appeal to ANC President Cyril Ramaphosa and DA leader John Steenhuisen. In the letter, the business community implored both leaders to resolve their differences and preserve the GNU framework in the interest of national stability and economic continuity.
Following this intervention, internal party communications resumed, with reports from City Press and the Sunday Times indicating that senior officials have reopened discussions. However, the atmosphere remains tense. Sources describe the mood as one coloured by “bruised egos” and mutual recrimination. The ANC is reportedly advocating for disciplinary action against the DA, which could involve expulsion from the GNU or the loss of ministerial portfolios.
Tensions escalated after the DA opposed the ANC-led 2025 national budget, which proposed a 1% increase in Value-Added Tax (VAT) and offered no inflationary adjustments to income tax brackets. Despite DA resistance, the budget narrowly passed in the National Assembly, thanks to support from ActionSA and Build One South Africa (BOSA)—parties founded by former DA members and not officially affiliated with the GNU.
The ANC interpreted the DA’s vote as a fundamental betrayal of coalition solidarity. President Ramaphosa suggested that the vote effectively placed the DA outside the governing arrangement. Conversely, the DA condemned the ANC’s strategy of seeking votes beyond the GNU as a breach of trust. Steenhuisen’s party characterised the ANC as acting in “bad faith” and likened its actions to those of a political “hydra” with conflicting agendas.
Compounding these domestic tensions are deeper ideological divides—particularly in the sphere of foreign policy. The DA’s international posture has often diverged sharply from that of the ANC, further complicating coalition dynamics. Analysts note that the DA’s tendency to align with or echo positions held by AfriForum, a lobby group frequently accused of advancing minority nationalist rhetoric, has become a source of friction. For instance, the DA’s public support of the International Criminal Court’s warrant against Vladimir Putin, in contrast to the ANC’s non-aligned approach, was seen as undermining Pretoria’s foreign policy consistency. Additionally, the DA’s engagement with Western diplomats critical of ANC policy on Israel-Palestine and BRICS alignment has fuelled accusations of parallel diplomacy.
The budget dispute and policy discord have had a marked impact on financial markets. Investor confidence wavered in anticipation of the vote, not due to the fiscal content itself but because of growing uncertainty surrounding the GNU’s future. Following the budget’s approval, the South African rand slipped toward R19 to the US dollar, reflecting market anxiety over the possibility of political instability.
External developments have further complicated the domestic situation. The announcement of punitive tariffs against South Africa by former US President Donald Trump, alongside proposed sanctions against ANC officials, exerted additional pressure on the coalition. These geopolitical shifts appear to have prompted a slight change in posture from both parties, as they now reckon with the broader economic and diplomatic implications of continued discord.
Donors backing both the ANC and DA have joined the business community in urging a stabilisation of the coalition. These stakeholders recognise the importance of a functioning GNU not only for investor confidence but also for South Africa’s role within platforms such as the G20 and in global capital markets. The failure of the GNU could precipitate cascading effects across key economic indicators.
The coming weeks will be critical. The next significant budget vote is scheduled for 6 May, with a final vote anticipated in mid-June. Each stage must pass through the Standing Committee on Finance and the National Assembly, presenting opportunities for either further conflict or reconciliation. Success will depend on whether the ANC and DA can formulate a compromise economic policy that accommodates both parties’ ideological positions.
Nonetheless, the balance of power has subtly shifted. The ANC’s ability to pass the budget without DA support has weakened the latter’s leverage. This reality may embolden the ANC to pursue a reconfiguration of the GNU, either by aligning with ActionSA, BOSA and other centrist micro-parties, or—more controversially—by opening the door to leftist and populist actors such as the Economic Freedom Fighters (EFF) or the uMkhonto weSizwe Party (MKP). Either outcome would dramatically alter the coalition’s pro-reform and pro-business orientation.
The most likely interim scenario is a GNU that functions as a minority coalition, requiring ad hoc support from outside parties to pass legislation. However, this setup introduces significant legislative unpredictability, as the interests of multiple smaller parties must be accommodated on a case-by-case basis. Both ActionSA and BOSA have publicly stated that their support for the ANC remains conditional and issue-specific.
In the worst-case scenario, the entry of ideologically rigid or anti-business factions into the GNU could severely undermine investor confidence and derail efforts to modernise public administration and enhance fiscal sustainability. Such a shift would be detrimental not only to the domestic economy but also to South Africa’s international standing.
The coming weeks will reveal whether the ANC and DA can place national interest above partisanship, or if the centrifugal forces within the GNU prove too strong to contain. For now, the unity government hangs by a thread—its survival dependent on high-stakes negotiations and the collective will to preserve stability.
