South African's Major Political Party ANC Suffers Major Election Setback
According to BBC, with 99% of the votes counted after Wednesday's municipal elections, the party has lost the key battleground of Nelson Mandela Bay to the opposition Democratic Alliance (DA).
The two parties are in a close fight for Johannesburg and Pretoria.
But the ANC is still in the lead nationally, with 54% of the vote.
The ANC has had the main share of the vote in South Africa since the end of apartheid more than two decades ago.
The DA, which took 46.5% compared to the ANC's 41% in Nelson Mandela Bay, says it is in talks with other parties to form a coalition in the municipality on South Africa's southern coast.
Its leader Mmusi Maimane said Nelson Mandela Bay had voted for change.