The electoral outcome of the national general elections in 2024 created a necessity for political parties to join hands and formulate a concrete development strategy to address longstanding challenges of slow economic growth, unemployment, poverty, inequality and rampant crime which adversely impact peoples’ quality of life.

Economic development is essential to grow the economy and resolve challenges of unemployment, poverty and inequality (National Treasury, 2022: 64). Coalition governments are said to be vehicles for economic development, given that coalition governance generally spark innovation through policy reforms adopted by various coalition partners. This is borne from having more than one political party in government, allowing for greater strategic capacity in the executive. Different ministries are occupied by different political party representatives, allowing for greater focus to be placed in their specific portfolios. Innovation in this regard has the potential to resolve bottlenecks that hinder sound governance, improve goods and services, and promote economic development.

The purpose of this article is to discuss how governance and reforms of the 2024 GNU facilitated economic development at the national level. It is argued that, despite marks of instability, the 2024 GNU has demonstrated a nexus between multi-party governance and economic development. Against this background, the 2024 GNU offers useful lessons to coalition-led municipalities to promote local economic development.

What is economic development?

Economic development aims to create a long-term approach for achieving sustainable economic growth. Executing this strategy requires collective action from all three spheres of government. It focuses on enhancing a government’s capacity to innovate and place the economy on a higher growth trajectory. It involves devising policies, programmes and budgets that are innovative, and which contributes to the creation, retention and expansion of employment opportunities and poverty reduction. To eradicate inequalities, economic development must be inclusive, catering to the needs of diverse groups, particularly women, disabled and youth in society (National Treasury, 2025: 42).

The role of the 2024 GNU in promoting economic development in South Africa

Before the formation of the 2024 GNU, the national government struggled to build the economy. Population growth exceeded the rate of economic growth, creating an environment in which many individuals, particularly the youth, cannot be absorbed into the labour force. Inadequate infrastructure development, heightened debt, administrative malfeasance and corruption within ESKOM further contributed to the country-wide collapse of the national energy grid, resulting in communities having to go without electricity for hours. The Department of Human Settlements have not been successful in keeping up with the housing demand, leading to the proliferation of informal human settlements that force people to live in sub-par socio-economic conditions. Poor financial management at the national level contributed to debt growing faster than the economy, resulting in  less revenue being allocated to critical departments such as the Department of Basic Education, Health and Social Development. These are some of the challenges that were inherited by the 2024 GNU.

The 2024 GNU has made steady progress in resolving the above challenges. Loadshedding has been suspended, while the unbundling of ESKOM is underway. The unemployment crisis has showed signs of moderate improvement, moving from a record high of 34.5 per cent in the first quarter of 2022 to 31.4 per cent in the fourth quarter of 2025 – a development which materialised after the formation of the 2024 GNU. Operation Vulindlela was launched to address structural constraints within, inter alia, the Department of Housing to improve access to affordable housing. Reforms implemented in the Department of Home Affairs (i.e., Trusted Tour Operator Scheme, e-visa system, etc) contributed to a boost in the tourism sector – a major driver for economic growth. In 2025, South Africa was removed from the Financial Action Task Force (FATF) grey list, the first credit rating upgrade in 16 years. Regarding the national fiscus, the 2026 budget showed improvements in the financial health of the national government, suggesting that the fiscal strategy of the 2024 GNU is working. For example, a planned R20 billion tax increase previously announced for the 2026 budget was withdrawn due to better than expected revenue. The economy is estimated to have grown by 1.4 per cent in 2025, characterised by four consecutive quarters of positive economic growth, while debt appears to be stabilising. Thus, 2024 GNU’s appears to have made significant inroads towards achieving economic gains in the next decade.

Essential conditions for promoting local economic development in municipalities

At the outset, the 2024 GNU demonstrates that innovative and growth-friendly reforms, which include the private sector, are required to facilitate economic development. Beyond this, there are several conditions that municipalities can consider to formulate a responsive local economic development strategy. The following are but a few factors that can be useful in developing a sustainable local economic development strategy.

• Political stability

Political stability is essential to establish a conducive environment for local economic development to thrive. In a study conducted by Ogujiuba and Olamide, it was found that political and financial stability were ‘boosters of economic growth’, improving ‘efficiency in South Africa’s financial industry’ (Ogujiuba K & Olamide E, 2024: 184). Municipalities characterised by frequent coalition instability may struggle to undertake local economic development (LED), given that such instability may constrain the executive from effectively carrying out long-term LED interventions. To mitigate against instances of uncertainty, parties and interests in councils without outright majorities should undertake collective planning and priority setting. In this context, even if coalition alliances shift, the expectations, priorities, and service delivery outputs are unlikely to change.

• Adopt a strategy to promote sound coalition relations

In coalition governments, encountering conflict is inevitable, which may threaten the duration of the coalition government. Thus, coalition management, particularly between party leaders, is crucial to ensure ongoing political stability and alignment in the direction of the coalition government. The 2024 GNU’s coalition management strategy involves a combination of frequent consultations and retreats to iron out differences, take decisions and formulate strategies. In October 2025, the 2024 GNU further moved to adopt the Terms of Reference to guide decision-making in the Clearing House Mechanism, which was established to resolve  disagreements relating to bills and legislation (i.e., Basic Education Laws Amendment Act).  While the 2024 GNU has no doubt faced challenges of instability, it may be argued that having a sound dispute resolution strategy made it easier for the coalition partners to manage those conflicts, restore political stability and endure.

Creating alignment between the coalition government agenda and the strategic direction of the municipality

Under the 2024 GNU, the service delivery priorities of the 7th Administration have been aligned with the Minimum Programme of Priorities outlined in its Statement of Intent. This ensures that the Statement of Intent is not a stand-alone document but that the 2024 GNU service delivery priorities are fully embedded in strategic documents of the national government. For example, the Medium-Term Development Plan of 2024/29 (MTDP) makes express reference to the Statement of Intent, stating that the core objective of the MTDP is to ‘strategically guide the work of the 7th Administration to achieve the goals set out in the Statement of Intent of the GNU’ (Department: Planning, Monitoring and Evaluation, 2025: 2022). At the local level, such an approach is lacking – resulting in strategic documents such as the Integrated Development Plan, budget and the Service Delivery and Budget Implementation Plan being largely divorced from the priorities of the coalition government. In the absence of transparent coalition agreements, it is also difficult to establish what those priorities are and whether they have been incorporated into municipalities strategic development documents.

• Sound budgeting and financial management

Operationalising a coalition government’s service delivery priorities cannot be achieved without adequate financial capital and sound financial management. A key benefit of a coalition government is that it enhances accountability and transparency by having "more eyes on the till". Coalition partners keep a close eye on expenditure across departments.

Under the 2024 GNU, the Parliament’s Standing Committee on Public Accounts (SCoPA) is chaired by the party leader of Rize Mzansi, Songezo Zibi. A primary purpose of the SCoPA is to ensure that expenditure has been incurred in accordance with the budget and relevant legislation. Interestingly, this party does not occupy any ministries or deputy ministries in the cabinet, which strengthens oversight and accountability in financial management within the 2024 GNU.

Coalition partners at the local level can thus benefit from adopting a similar strategy, by ensuring that the partner chairing the Municipal Public Accounts Committee is also not in control of or part of the municipal executive.

• Administrative capacity

A coalition government is only as effective as its administration, which is responsible for operationalising its service delivery agenda. Challenges of corruption, maladministration and inadequate skills, knowledge and expertise within national government departments prevented the previous single-party government from delivering on its mandate. Thus, enhancing capacity within the various departmental areas became a priority for the 2024 GNU cabinet. In the Department of Home Affairs, for example, several officials have been subjected to disciplinary processes after the Special Investigating Unit uncovered "20 years of visa corruption". Thus, municipalities must prioritise clean governance within their administration to ensure that it is fit for purpose. This may necessitate reviewing the organogram, rooting out politically influenced administrators, properly investigating complaints, swiftly adopting resolutions to implement recommendations flowing from such reports. and dismissing administrators where necessary.

• Infrastructure development

Infrastructure investment is central to growing an economy. Investing in infrastructure results in job creation, particularly in the construction sector, while its outputs improve service delivery. Socio-economic disparities are addressed through undertaking socio-economic development, which cannot be achieved without investing in infrastructure.

The 2024 GNU made significant inroads in stabilising public debt, which enabled national government to move from recovery to focusing on fiscal sustainability by investing in infrastructure. This includes, inter alia, infrastructure investments to rehabilitate Transnet, unbundling of ESKOM, Passenger Rail Agency of South Africa (PRASA) commuter rail system, national roads to improve logistics, and more. Large investments in infrastructure further necessitates participation by the private sector. Thus, to enhance access to capital, the 2024 GNU also introduced reforms to unlock private investment in infrastructure.

Coalition governments at the local level will benefit from adopting a similar strategy, which seek to ensure that local budgets are balanced to enable municipalities to enter financial recovery, before moving on to investing infrastructure to achieve sustainable socio-economic development. Where such projects are funded by conditional grants, it provides an opportunity to harness the support of those funders to facilitate sound implementation and realisation of the capital infrastructure projects. Finally, public-private-partnerships (PPPs) will similarly be useful to address demand and supply issues in regard to infrastructure that deliver essential services such as access to potable water, sanitation, refuse removal and electricity.

Conclusion

The 2024 GNU shows that having two or more parties in government is better than one.  The formation of the 2024 GNU coincided with the introduction of major reforms and positive budget yields that set the country on a trajectory towards sustainable socio-economic growth. At the same time, it demonstrates that managing a coalition government is inherently more difficult than a single-party government, given that various, sometimes opposing, interests must be balanced, making such governments prone to conflict and instability. Coalition management must thus be prioritised to resolve conflicts and to ensure continuity in governance. Collective planning and inclusive budgeting are key features for building sustainable coalitions that deliver goods and services to all. The strategies identified in this article can be useful in supporting local coalition governments to undertake socio-economic development in municipalities.

By Jennica Beukes