Which road will SA take?

2014-04-13 15:00

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SA is at a tipping point, and small shifts in political and economic conditions can cause dramatic changes. Frans Cronje identifies the key driving forces in our society and uses them to develop four scenarios for 2024. Will we follow the Narrow Road, the Wide Road, the Toll Road or the Rocky Road? This extract describes what awaits on either the Rocky or the Wide roads

Rocky Road scenario

It is May 2024. A corrupt and radical black nationalist regime just won a violent and disputed election, and rules South Africa with an iron fist. Civil liberties have been eroded.

Damaged by misguided state interventions, the economy is in recession, and living standards have suffered a precipitous decline. Industries have been nationalised and private property confiscated.

Those who can are leaving the country. The world weeps for South Africa, but most South Africans are powerless to escape from their plight.

Riled by electoral setbacks, the ANC has fallen in with the radical left and wrecked democratic institutions as part of a drive to rule by decree. Constitutional principles have been eroded or ignored. Judges have been bent to the will of the state. Newspapers have been closed down, and prominent journalists jailed.

Human rights activists have been harassed and terrorised by agents of the state. The opposition is fighting a futile rearguard action to reinstate a proper democracy.

In line with political oppression, the economy has suffered irreparable harm as policy makers sought to implement reckless populist ideas. Property rights have been eroded, and much private land, as well as many businesses, have been expropriated.

Price controls have triggered rampant inflation, and the rand has lost much of its value. The economy has been in recession for several years.

The economic decline has triggered a social crisis. Living standards have fallen for the first time since 1994. Unemployment has worsened almost every year during the past decade.

Inflation has undermined the value of social welfare. Food production has fallen significantly after the expropriation of commercial farms. Hospitals are starved for funds and lack basic equipment and medication. Schools are in a state of disrepair and most government services are worsening.

South Africa now represents the archetypal African worst-case scenario of a ruthless and incompetent nationalist regime undermining democracy to cement its grip on power, dictating to a cowed population and destroying the economy in the process.

There seems to be no hope of recovery, and South Africans are shocked by the speed with which this political and economic catastrophe has overtaken them.

Tick box for the Rocky Road

If we are headed for the Rocky Road scenario, you will notice some of the following road signs over the next decade:

»?The ANC refuses to reform the economy, which remains in the doldrums, eventually moving into recession.

»?The SA Communist Party and some Cosatu leaders gain a greater foothold in the ANC, and begin to dominate its policy-making mechanisms.

»?The ANC develops a nasty brand of racial nationalism and routinely describes its critics as enemies of the state and counter-revolutionaries.

»?The government proposes measures for curbing the freedom of the media and civil society, as well as the independence of the judiciary.

»?The state proposes laws that will allow it to seize private property.

»?The state begins to use “dirty tricks” to undermine opposition parties and manipulate the outcomes of elections.

»?The budget deficit rate remains significantly higher than the rate of economic growth.

»?The trade deficit far outstrips those of comparable emerging markets.

»?Certain high-profile companies withdraw from South Africa.

»?The proportion of people on welfare compared with people working continues to increase.

»?Water and electricity services are regularly disrupted.

»?The government blames investors, businesspeople and entrepreneurs for the problems confronting the country, and many members of the public begin to support this view.

»?Stricter BEE and employment equity policies as well as labour regulations are proposed.

»?A number of new state-owned businesses emerge and try to compete with the private sector.

»?Organised business does little to defend private enterprise.

Wide Road scenario

It is May 2024. The ANC has just won another national election with a comfortable majority, and its current leader has been sworn in as president.

South Africa is a free and open society. The economy is growing rapidly, and citizens are more prosperous and more content.

This is a dramatic turnaround from the state of affairs 10 years ago, when governance was deteriorating, the economy was lagging, new radical political movements were threatening to destabilise the country, and analysts and observers were sounding dire warnings about its future.

The sense that the ANC was losing its grip on the country gathered momentum in the 2014 elections, when the party’s share of votes cast dropped for the third straight election.

This disappointing election result galvanised a group of reformist ANC leaders into arresting the party’s decline, and turning its fortunes around.

In 2024, the party is more united and forward-looking, and has formed a more effective government. It has also abandoned its socialist and redistributionist leanings, which once threatened to strangle the economy. The judiciary, the media and civil society are strong and independent.

The economy is growing at more than 5% a year, creating enough jobs to absorb new jobseekers and reduce the unemployment backlog.

Economic reforms, ranging from the deregulation of labour markets to scaling down employment equity and BEE, have stimulated domestic and foreign investment.

The savings rate has increased significantly, and foreign and domestic fixed investment rates now match those of leading emerging markets.

The labour force participation rate has improved significantly, and income levels have increased.

This has improved the living standards of the vast majority of South Africans.

Most importantly, these improvements have been brought about by economic growth, job creation, education and entrepreneurship as much as by welfare and redistribution.

Popular protests have died out and opinion polls reveal that most South Africans are optimistic about the future.

Tick box for the Wide Road

If we are headed for the Wide Road scenario, you will notice some of the following road signs over the next 10 years:

»?Shortly after the 2014 elections, a reform movement emerges within the ANC that challenges the dominant consensus on redistribution both within the party and in the court of public opinion.

»?This movement isolates the trade unions, which gives it more space for making new economic policy.

»?A left-wing “workers’ movement” gathers steam to oppose the ANC.

»?The ANC stops threatening the media, civil society and the judiciary.

»?People with criminal records, or facing criminal charges, are removed from leadership positions in the ANC and government.

»?Property rights are entrenched and safeguarded.

»?The economy grows at 5% of gross domestic product a year or more.

»?Investment inflows rise to levels in Brazil, Russia, India and China.

»?Entrepreneurship levels increase dramatically.

»?The tax base expands significantly.

»?The unemployment rate starts to drop and is on its way to reaching 15% by 2024 from its current 25%.

»?The number of children who pass mathematics in school with 50% is set to double by 2024.

»?A new wave of skilled technical graduates in fields ranging from IT to welding are entering the labour market.

»?The inflation rate remains within the 3% to 6% target zone.

»?Soon after 2014, steps are taken to deregulate the labour market.

»?BEE and employment equity policies are diluted and some provisions are abandoned.

»?There is no further talk of nationalisation of land or the seizure of private assets, including farmland.

»?State corporations such as Eskom and SAA are auctioned off.

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