As President Jacob Zuma narrowly survived a vote of no confidence, the rand tanked and riot police gathered outside Parliament.
Altogether 177 MPs voted in favour of the motion with 198 against. There were nine abstentions of the total number of 384 votes cast.
As Speaker Baleka Mbete made the announcement, Plein Street – which was black, green and yellow – erupted as hundreds of Zuma supporters celebrated his eighth escape in a no-confidence motion.
The local unit immediately weakened to R13.39 to the US dollar from an intraday low of R13.11/$, reported Fin24.
Although a number of analysts didn’t foresee that the motion would succeed, markets reacted positively on Monday on the back of Mbete’s announcement yesterday that the no confidence vote would be held by secret ballot.
The announcement resulted in an immediate strengthening of the rand at the time, with the local currency rallying to under R13.20.
The firmer rand also resulted in a late rally in financial stocks and retailers.
Stanlib chief economist Kevin Lings told Fin24 the failure of the no confidence vote to pass means Monday’s rally was not warranted, as nothing fundamentally changed.
The rand and markets will therefore “drift back weaker” as markets will try to assess what will happen next.
“There would however be a sense that South Africa is moving towards some sort of change in leadership and markets will anticipate some change in December at the ANC’s elective conference and markets may focus on that,” he said.
All eyes will now be on the ANC’s elective conference in December this year to see whether Nkosazana Dlamini-Zuma, former Cabinet minister and African Union chairperson, or deputy president Cyril Ramaphosa would emerge victorious as the next ANC president.
GRAPH: Intraday rand movements against the dollar
The African National Congress's parliamentary caucus welcomed the outcome of the vote.
“While we respect the right of any party to table a motion of no confidence in terms of section 102 (2) of the Constitution, we reiterate that we will never endorse or vote in favour of any motion that seeks to cripple our country,” it said in a statement following the vote.
“The ANC does not take lightly the public grievances around corruption and state capture as these are genuine and legitimate concerns,” it said.
“We reiterate that further investigation from all arms of the state including the judiciary must be conducted to unearth wrong doing and the people responsible.”
“Parliament, for its part, must ensure that thorough investigations through various committee processes of oversight are conducted into matters of public discomfort. Those found guilty of wrong doing must face consequences including prosecution.”
DA leader Mmusi Maimane said the result was closer than anyone expected.
“The result reveals an ANC that is totally divided against itself. Jacob Zuma has survived, but he has nothing to celebrate tonight. He is mortally wounded, and his party is in tatters. Tonight’s result, despite the slender victory, signals the death of the ANC.”
Maimane urged the members who voted “to defend our democracy today” should realise that their home no longer resides in the ANC but in becoming part of the movement for the new beginning.
“The outcome illustrates what South Africans already know; the ANC cannot self-correct. The ANC still supports Zuma, because he is not an anomaly within the ANC, he is the norm. Jacob Zuma is the manifestation of what the ANC has become – a toxic mix of corruption, cronyism and nepotism.” – Additional reporting by Fin24