Without a ‘meaningful change of trajectory’, South Africa will be a ‘failed state by 2030’, according to a new report.
Political and economic risk consultancy, Eunomix Business & Economics LTD warned: ‘The [Covid-19] pandemic is the last nail in the coffin of strategic fiasco. The economy is unsustainably narrow and shallow. It rests on a small and declining working population burdened by very high debt and taxes.’
According to a Bloomberg article, Eunomix, using a range of measures, forecasts that South Africa will rank near the bottom of a table of more than 180 countries in terms of security, similar to Nigeria and Ukraine, and have prosperity akin to Bangladesh or Ivory Coast.
‘Bar a meaningful change of trajectory, South Africa will be a failed state by 2030,’ the Eunomix report is quoted as saying.
The consultancy blames a structure created during the white-minority apartheid era that was designed to exclude the black majority, creating one of the world’s most unequal societies. Since the advent of democracy in 1994, the ruling African National Congress perpetuated that situation by rejecting job-intensive growth policies and instead raising wages and subsidising the poor through welfare.
It notes that, while less than a quarter of the population is in work, South Africa’s wage bill as a percentage of gross domestic product significantly exceeds that of countries such as India, Thailand and the Philippines.
Eunomix recommends that the South African government adopt a ‘dual-track’ strategy of developing and maintaining high levels of social support and paying for it by adopting an aggressive special economic zone policy, which boosts growth and employment, albeit at lower wages.
It said former president Jacob Zuma ushered in a decade of low growth when he focused on increasing the role of the state, instead of supporting a private sector-led recovery after the global economic crisis of 2008. Prolonged policy uncertainty in areas ranging from mining to telecommunications compounded the slowdown.