Trends, change and recovery: SA beyond Covid-19 is an attempt at sourcing a range of theories.
Showers early. Decreasing cloudiness. Mild.
Notes for a briefing to the Atlantic Council in Washington DC on 1 September 2016.
Read part one HERE and part two HERE.
PART THREE OF THREE
Why does a country with such obvious potential continue to promote policies that are so harmful to its economy and the prosperity of its people?
Much of the answer emerges in appreciating the factionalised structure or nature of the ruling party. Reality is never so neat and tidy but an analysis of South Africa today is greatly aided by conceiving of its ruling political class (whether in party politics or the government itself) as being split into three groups.
The first group are the communists and the left. They emerged out of the trade union movement, the communist party, and various bits of academia and civil society; their star rose in the aftermath of the political changes that took place at the ruling party conference in December of 2007. They have sought to force a dated, and long discredited, form of ideological policy dogma onto the country.
This is one that resents private enterprise, regards western countries as outposts of colonial aggression, denounces ‘CIA inspired’ plots to stir revolution, and prioritises state-led wealth redistribution over investment-led economic growth. It is their pursuit of ideology that created the economic circumstances that in turn set in motion the now growing political opposition to the ANC.
The second group are the traditionalists. They come out of the more rural and ethnically homogenous strongholds of the ruling party. Strong believers in the importance of traditional leadership structures, they regard western forms of liberal democracy as an unnecessary and colonial extravagance. They are largely out of touch with the aspirations of younger South Africans. When an artist painted a portrait, later displayed in a prominent gallery, of the president in a strident Lenin pose but with his private parts exposed, this group were apoplectic in their rage at the disrespect displayed to the country’s leader. This group is quite authoritarian, often frighteningly corrupt, and has little understanding of economics. In many respects they represent the bombastic ‘big-man’ style politics that so many African countries have suffered through.
For the past six or seven years these two camps have got on fairly well.
On a number of areas of policy, the communists have found it easy to take advantage of the policy and economic naiveté, as well as the greed, of the traditionalists and have essentially duped (deceived would be just as good a word) them into endorsing policies that have done much harm to South Africa’s economy. It is difficult, I am sure, to grasp just what a hold the traditionalist camp has over South Africa’s politics.
One window into that world is that, ahead of the recent local government polls, the president, on a number of occasions, warned voters that their ancestors would disapprove of their voting for opposition parties and they would suffer years of bad luck if they did not vote for the ruling party.
This is no joke in many communities and would have a chilling effect on support for opposition candidates in South Africa’s poorest rural backwaters. However, it also reveals how out of touch the traditionalist leadership is with the aspirations of modern young South Africans who, while carrying a measure of respect for old traditions, are most unlikely to base their electoral decisions on such ‘sorcery’.
Together the leftist and traditionalist camps have held the balance of power in the government for the past six or seven years.
However, as growth has reduced and deficits have increased, together with rising popular dissatisfaction with the ruling party, the traditionalists seem to be losing confidence in the advice they have been receiving from their leftist comrades. The traditionalists do not hold firm ideological views. Their politics is about power and patronage. Protests and anti-government activism frighten them – and increasingly they blame the leftists for the economic crisis that now threatens their political mandate and therefore the fiefdoms of patronage they worked so hard to craft. This is a most important development.
The leftists, worried at losing their political influence, do not have much room to manoeuvre. They have overplayed the political hand they were dealt in 2007 and, in creating the circumstances that have brought about a decline in support for the ANC, are now in a very vulnerable political position.
This presents an opportunity for the third faction of the ANC – the modernists. The comfortable relations between the leftists and the traditionalists have been exasperating for the modernists or reformists in the ruling party. This modernist camp is made up of a new class of successful black entrepreneurs, the emerging urban black middle class, and a cross-section of older party stalwarts who, despite being raised and schooled in Marxism, are beginning to understand that policy reform will be necessary to secure the future of what they see as Africa’s grandest liberation movement.
This faction is often overlooked in analyses of South Africa. Some argue that no such group exists, or that it has been swallowed up by the arrogance and corruption of the party. We believe that this is selling the ANC short.
If the modernist factions of the ruling party can eject the leftists and form a new balance of power with the traditionalists, then a new range of reformist scenarios are open to South Africa. This new camp will be neither democrats nor leftist ideologues. Coinciding with a commodity comeback and stable global economic conditions, this camp could conceivably secure the economic turnaround that the ruling party would need in order to head off what will otherwise be a future electoral defeat.
Bear in mind the two opening points on which this analysis rests. First, that the ANC is not a fundamentally democratic movement and retains a capacity for extreme ruthlessness. Second, that it once showed a propensity for sound economics. If those two points remain correct, this opens the way to an alliance between the traditionalists and the modernists and it is this that we term the ‘rise of the new right’ in South Africa’s politics.
The political model that such a traditionalist/reformist alliance might follow would approach that of Lee Kuan Yew in Singapore, Park Chung-hee in South Korea, and Deng Xiaoping in China, while closely resembling that of Hailemariam Desalegn in Ethiopia and now Paul Kagame in Rwanda – with many important differences. The model would see a distinct turn in the ideological outlook of the government, while still offering the ruling party the political control it craves over the country.
However, it could also secure the economic performance, and critically the jobs, necessary to restore popular confidence in a future government. South Africa will thus have a more authoritarian party-driven government that makes reasonably good economic decisions.
It is premature, therefore, to write off South Africa’s current ruling party and to say it is beyond help and that true economic reform is simply an ideological bridge too far for the party. Late in the day as it is, it still has time to save itself. However, short of the rise of such a ‘new right’ the clock will keep ticking on the ANC’s time in office.
South Africa’s next decade is therefore headed towards one of two broad sets of outcomes.
The first is this:
The reformists gain a balance of power in the ruling party over the next eighteen months. They seize control of the party at its internal leadership elections in December 2017 and lead the party to contest the 2019 national elections and choose a reformist cabinet – possibly with support from the centre-right of the opposition spectrum (we do not write off a future DA/ANC alliance from around 2019 – do not be misled by the emerging DA/EFF alliance, this is but a temporary strategic position as both parties have their focus on the real prize; an alliance with what remains of the ANC by 2019).
The cabinet moves quickly and firmly to secure property rights, deregulate the labour market, professionalise the sluggish civil service, and employ the private sector as partners on the road to rebuilding the South African economy. Where opposition to the government’s reformist agenda is encountered, we expect it to act decisively and harshly to ensure that its reformist agenda is not derailed – as harshly, possibly, as the ANC dealt with its political opponents 30 years ago.
Such firm action may extend to the point of undermining civil rights, free speech, the sanctity of the courts, rights to free political association, and the standing of trade unions and other civil society groups. If such a reformist agenda were to be pursued with vigour, we anticipate South Africa’s debt and interest rates peaking in the period around 2020, before declining back to levels last seen around 2006. Growth levels will have averaged below 2% of GDP into 2020, but will then commence a gradual rise, to average in excess of 5% of GDP by 2024-2026.
The currency will strengthen back to purchasing power parity levels by the mid-2020s, while the current account and budget deficits will narrow. Rising employment and living standards will stabilise the politics of the country – as they did for much of the period from 1994 to 2007. Factor in a global economic recovery and commodity comeback, and South Africa’s economy may perform very strongly. As confidence in the government returns, restrictions on civil rights and free expression may concomitantly be lessened.
Our second case is as follows:
South Africa’s ruling class is unable to unite around a reformist economic policy agenda. Policy confusion and uncertainty continue, exacerbated by weak commodity prices and global economic underperformance. Growth levels slip further as investment dries up and South Africa experiences a decade of volatile stagnation – a term we use to describe a society that is making no economic progress as its politics becomes more volatile. Quite possibly, this is a future of deep recession and declining living standards. Deficit and debt levels will escalate sharply and economic and industrial output will fall, even as the currency weakens.
Anti-government protest actions will escalate sharply and will be met, when not with rubber bullets and arrests, with wild populist promises. Property rights are then likely to be eroded as well as civil liberties, as a rapacious and ideologically stubborn state refuses to turn on policy. This outcome may also see the EFF party triumphantly return to its ANC mother body and may, for a time, offer the ANC some valuable percentage points of political support.
The effective reincorporation of the EFF into the ANC may, however, also put paid to any chance that the ANC could meet the aspirations of younger voters through staging an economic turnaround.
The ANC/EFF collective will then find itself facing electoral defeat – just on a slightly extended timeline. A minority view in my organisation is that if it assumes the leadership of the ANC, the existing EFF leadership, which has some high calibre thinkers, may turn sharply right on the economy. A third view is that the great unknown factor in South African politics, the unregistered youth voter, may turn out in sufficient numbers to give the DA a clear national majority.
What becomes apparent is that despite populist attempts at clinging to power, this future will culminate in 2024 (if not in 2019) in the political defeat of the ruling party. This will, in turn, usher in a new era of politics - and most probably coalition politics. South Africa would remain an unstable society that undershoots its economic potential.
If South Africa follows the first trajectory described above, the model may well become influential in further shaping the evolution of high growth economies across the African continent. South Africans would cede some of their political freedoms in exchange for growing prosperity and the promise of stability. Where growing prosperity is achieved, it will resemble the development model that was followed by many of the Asian Tiger economies – albeit with very important differences.
It is also the model that is being pursued with some economic success in Rwanda and Ethiopia. However, where prosperity is not forthcoming, it is also a model that invites a system of rule with impunity, from which South Africa may not escape for some considerable time.
- Frans Cronje is a scenario planner and CEO of the IRR, a think-tank that promotes political and economic freedom.
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