Halftime in the Year of Elections: Reasons for Optimism from the Global South

It was hard to pick up a newspaper at the end of 2023 without being hit by a wave of commentary about 2024 as the great year of elections, during which more voters would head to the polls than ever before. Much of this commentary had a foreboding tone, with fears of a new wave of populist, polarizing and post-truth politics, hot on the heels of the shock election of Javier Milei as President of Argentina.

Whether these concerns were justified will largely be determined by what happens in the second half of the year, most notably France’s surprise general election, and the U.S. presidential vote in November. However, as we reach the mid-point of the year, it is worth reflecting on reasons for optimism across the Global South and BRICS, which bode well not only for democracy, but also global trade and investment.

First, let us reflect on what did not happen. Taiwan went to the polls in January and re-elected a pro-independence government. The Chinese government voiced dissatisfaction but did very little. Now let us reflect on what happened during the last few weeks in the big three elections of the Global South: India, South Africa and Mexico.

India

The return to office of Prime Minister Modi for a historic third term masks the real story, i.e., a shock loss of support across the heartlands of India, which leaves Modi and his BJP reliant on coalition partners. The loss of support is widely attributed to dissatisfaction on issues relating to the economy, employment, the cost of living and quality of life for the middle- and lower-classes.

As a result, the BJP finds itself in coalition with two strange bedfellows, one of socialist heritage and the other a pro-market, reformist party. The likely consequence is a Modi 3.0 administration with its autocratic tendencies held in check, less focus on religious and cultural policy, and more focus on business-friendly economic reform and growth.

South Africa

The drop in vote share for the ANC in South Africa was much less of a shock but was nevertheless of real historic significance. This is the first time since apartheid that the party failed to win a plurality of votes.

In the immediate post-election period, President Ramaphosa faced a range of choices, including coalition with the radical, statist EFF party or the equally radical EZ, established recently by former President Zuma. Instead, Ramaphosa and the ANC decided to enter coalition with the DA, a party strongly in favor of economic liberalization, trade and investment, with a strong track record of competent regional government.

Mexico

Mexico spoils our narrative a little. The populist left-wing MORENA party was re-elected in a landslide victory for its new presidential candidate, Claudia Sheinbaum. However, there are reasons for optimism:

• Institutions held; elections were peaceful and the outcome widely accepted.

• President Sheinbaum, held by some to be little more than a puppet for the outgoing president, is likely to be more open and technocratic in style of governance.

• Nearshoring, friendshoring, call it what you will, but the direction of travel is set, and it is hard to see anything getting in the way of further North American integration, trade and investment. 

There are significant challenges ahead in these three countries: not least whether the coalitions in India and South Africa can hold and whether the BJP and ANC will truly moderate their positions.

The outcome of the U.S. election in November will also of course have a huge bearing on the dynamics of trade and investment in the North America region.

Geopolitical risk now consistently ranks as a top three concern for global CEOs and boards. As CCOs, we need to play a central role in understanding and interpreting these risks; easier said than done given the huge amount of noise. For those of us advising the C-suite and board members of global companies it is important not to catastrophize, even when many news commentators are.

For those that can understand and navigate complexity, there are huge emerging opportunities out there across the Global South and BRICS and it is not all doom and gloom.