With about 80 percent of the vote counted, the ANC was ahead nationwide but it recorded its worst electoral performance since white-minority rule fell 22 years ago.
The main opposition Democratic Alliance (DA) was on course to hold Cape Town and was just ahead in the coastal city of Port Elizabeth.
The capital Pretoria and the economic hub Johannesburg were a close fight between the DA and the ANC.
The results, which were expected to be concluded on Friday, open up a new era of local coalition politics in South Africa.
Today evening it was on 54 percent -- down from 62 percent in the last municipal elections in 2011.
The DA was on 27 percent with the radical leftist Economic Freedom Fighters (EFF) on seven percent, according to official results.
"The ANC is really losing ground, but it can join other political parties to form coalitions," Shadrack Gutto, director the Centre for African Renaissance Studies at the University of South Africa, told AFP.
Yesterday's vote was also a judgement on President Jacob Zuma, who has been plagued by a series of scandals since taking office in 2009.
An unemployment rate of 27 percent and GDP growth at zero percent this year have also eaten into his popularity.
"We have grown incredibly in several places, I'm quite happy," Mmusi Maimane, the DA's first black leader, told reporters.
He ruled out any local coalition deals with ANC, saying: "We can't campaign for change, and then team up with them."
A final Ipsos survey had placed the ANC and DA neck and neck in key cities after some undecided voters drifted back to the ruling party.
"Democracy is maturing so you will find... A dilution where you might not have very strong support for one party," ANC treasurer Zweli Mkhize said as results were still being announced.
You’ve reached your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Smart Quarterly
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
