Speaking after the results announcement, President Cyril Ramaphosa said the people are the true custodians of democracy.
After the official declaration of the results in Pretoria, President Cyril Ramaphosa said: "Our people have spoken – and they have done so clearly and emphatically.
"They voted for a united South Africa, they voted for a more equal society, free from hunger and want. We can declare with certainty that democracy has emerged victorious."
It was an improvement on its 2016 local government elections performance "when we were really facing a disaster", he said. "We are picking up from that disaster."
Minister in the presidency Nkosazana Dlamini-Zuma acknowledged the decline in support, but said: "We are happy with the mandate the people have given us and we will work hard to improve."
"The ANC is being given a chance," said political analyst Lumkile Mondi. "This is an opportunity for them to reincarnate themselves."
Analyst Susan Booysen of the Wits School of Governance said the tally was "way higher for the ANC than it would have been had Zuma been still in power".
Support for the party has fallen in every election since its 2004, when it got nearly 70 percent. By 2016, it had fallen to 54 percent in municipal polls in which it lost control of key city governments.
A record 48 parties contested Wednesday's elections.
A reduced majority nevertheless weakens Ramaphosa's bargaining power, making him more vulnerable to the pro-Zuma faction in the governing party, analysts warn.
It remains in charge eight of the nine provinces.
Some 65 percent of the 26.8 million people registered to vote turned out Wednesday.