South Africa Coalition Government Collapses as ANC Expels DA From Cabinet Over Budget Dispute

South Africa's Coalition Government Falls Apart Over Budget as ANC Fires DA From Cabinet

The Government of National Unity — the grand coalition that South Africa assembled after last May's historic election in which the ANC lost its outright parliamentary majority for the first time in 30 years — is over. African National Congress President and State President Cyril Ramaphosa announced Wednesday that he has terminated the participation of the Democratic Alliance in the national cabinet, effective immediately, following what he described as an irreconcilable breakdown in budget negotiations that threatened to paralyze government.

The DA's six cabinet ministers — including the Minister of Agriculture, the Minister of Public Works, and the Minister of Home Affairs — were formally dismissed by presidential decree Wednesday morning. DA leader John Steenhuisen immediately called the move unconstitutional and announced the party would challenge the dismissals in the Constitutional Court.

What Broke the Coalition and Why the Budget Was the Breaking Point

The immediate trigger was South Africa's 2026 national budget, tabled by Finance Minister Enoch Godongwana last week. The DA rejected two key provisions: a proposed 2 percentage point increase in value-added tax, which the DA argued would devastate low-income households already struggling with 33 percent unemployment, and a R120 billion supplemental allocation to state-owned enterprises including Eskom and Transnet — companies the DA has argued should be privatized rather than recapitalized with public funds.

The ANC countered that the VAT increase was fiscally unavoidable given South Africa's debt trajectory — government debt now stands at 75 percent of GDP — and that abandoning SOE recapitalization would accelerate infrastructure collapse. Both positions reflect genuine policy differences that months of negotiation failed to bridge.

According to Professor Ivor Sarakinsky, political scientist at the University of the Witwatersrand, the GNU was always a marriage of necessity rather than conviction. The ANC needed partners to govern; the DA needed to be inside the tent to have influence. When the fundamental economic philosophy diverged on the budget, the glue dissolved. What we are seeing now was probably inevitable from the beginning.

What Happens Now: Parliament, Markets, and the Path Forward

Ramaphosa has indicated he will invite the Inkatha Freedom Party, the Patriotic Alliance, and the Pan Africanist Congress to join an expanded ANC-led coalition sufficient to maintain a parliamentary majority. Preliminary contacts with those parties began Wednesday afternoon. Together, they hold enough seats to give Ramaphosa a working majority without the DA.

Financial markets reacted badly. The rand fell 3.1 percent against the dollar within hours of the announcement, its steepest single-day decline since the 2023 Phala Phala scandal. The Johannesburg Stock Exchange's All Share Index dropped 2.4 percent. South Africa's sovereign credit default swap spreads widened — a signal that bond markets are pricing in increased political risk.

The DA has not ruled out a motion of no confidence in Ramaphosa's government, though it currently lacks the parliamentary numbers to pass such a motion without support from the Economic Freedom Fighters and other opposition parties — a coalition that would require compromises that many political observers consider unlikely.

South Africa's next scheduled general election is not until 2029. How Ramaphosa navigates the next three years without a stable coalition majority — and whether the constitutional crisis triggered by the DA's legal challenge reshapes the country's political landscape — will define one of the most consequential chapters in post-apartheid South African history.