The African National Congress (ANC) and its largest rival, the white-led, pro-business Democratic Alliance (DA), agreed on Friday to work together in South Africa's new government of national unity, a step change after 30 years of ANC rule.

Once unthinkable, the accord allowed President Cyril Ramaphosa to win a second term in office. He was re-elected by lawmakers with 283 votes.

The deal between two sharply antagonistic parties is the most momentous political shift in South Africa since Nelson Mandela led the ANC to victory in the 1994 election that marked the end of apartheid.

"It will once again be a privilege and pleasure to serve this great nation ... (as) president," the 71-year-old leader said in a speech to parliament, describing the coming government as an era of hope and inclusivity.

"That a number of parties that had opposed each other... have decided to work together to deliver this result has given a new birth, a new era to our country," he said.

The ANC lost its majority for the first time in an election on May 29 and spent two weeks in talks with other parties that went down to the wire on Friday morning as the new parliament was convening in Cape Town.

"Today is a historic day for our country," DA leader John Steenhuisen said.

"And I think it is the start of a new chapter ... of us putting our country, ... its interests and its future first."

The National Assembly had earlier elected a DA lawmaker as deputy speaker, after choosing an ANC politician as speaker - the first concrete instance of power sharing between the two parties.

Long seen as unbeatable in national elections, the ANC lost support in recent years as voters wearied of persistently high levels of poverty, inequality and crime, rolling power cuts and corruption in party ranks.

WATERSHED MOMENT

The DA's entry into national government is a watershed moment for a country still processing the legacy of the racist colonial and apartheid regimes.

The party wants to scrap some of the ANC's Black empowerment programmes, saying they have not worked and have mostly benefited a politically-connected elite. It says good governance and a strong economy would benefit all South Africans.

For that reason, some ANC politicians have expressed hostility to the presence of the DA in the government. The hard-left Economic Freedom Fighters, which captured nearly 10% of the vote, meanwhile accused it of representing the interests of the privileged white minority - a charge the DA strongly disputes.

"We do not agree to this marriage of convenience to consolidate the white monopoly power over the economy and the means of production," EFF leader Julius Malema said in a speech in parliament after Ramaphosa's election.

"We refuse to sell out."

Others took a less dismal view of the new racial dynamics.

"The ANC was also failing. They need a partner so they can rise again. DA is mostly white people so if they came together we can have more power and maybe a lot can change, even jobs could be created," Bongani Msibi, 38, a street vendor in Soweto, told Reuters TV earlier in the day.

Helen Zille, a senior DA figure for former leader of the party herself, said Steenhuisen's skin colour was irrelevant.

"The melanin-quotient of the DA leader is the least significant aspect of this historic agreement," she said in a post on X critical of some media headlines.

INVESTORS WELCOME DEAL

Two smaller parties, the socially conservative Inkatha Freedom Party (IFP) and the right-wing Patriotic Alliance, will also take part in the unity government.

The ANC won 159 of 400 seats in the National Assembly, while the DA got 87. The populist uMkhonto we Sizwe (MK) party led by former President Jacob Zuma has 58, the hard-left Economic Freedom Fighters 39 and the Inkatha Freedom Party 17.

The inclusion of the IFP, with its ethnic Zulu base, may help sweeten the DA pill for ANC voters. The Patriotic Alliance draws its support from the coloured (mixed-race) community.

A statement of intent of the government of national unity was circulated to party negotiators by the ANC's Fikile Mbalula.

Among the "basic minimum programme of priorities" outlined in the document, seen by Reuters, were rapid, inclusive and sustainable economic growth, the promotion of fixed capital investment, job creation, land reform, infrastructure development, structural reforms and fiscal sustainability.

London-based research firm Capital Economics said investors favoured a coalition involving the ANC and DA because there was expected to be policy continuity or an acceleration of reforms - and because the EFF and MK - both of which want to nationalise banks and privately-owned land - are excluded from policymaking.

Zuma's MK came third in the election but alleged it was robbed of victory by vote-rigging, and is boycotting the new parliament. On Friday, an IFP official was elected as premier of the KwaZulu-Natal province, Zuma's stronghold, with the support of the DA, ANC and one other party, beating the MK candidate.

Shutting the MK out of the province's government, even though it had won the larger number of votes with 45%, could cause serious trouble in KwaZulu-Natal, where hundreds were killed in violence in 2021.