This is the third of a five-part series setting out why South Africa blew up a week ago, arguing that the blow-up was not due to a planned insurrection, that the experience will not see the government change tack and reform, and that the country will destabilize further, and suggesting what you should consider doing to survive the consequences. The analysis is based on our initial thoughts, read against our long-standing advice. We will add to it, and so improve it, over time, but are confident that the bones of it are right and will hold up to future critical scrutiny.
We don’t think it is going to happen, and our already prominent scepticism of Mr Ramaphosa has deepened since his defeat of Jacob Zuma at Nasrec, but it is important – even just to demonstrate how far off the mark the government’s reform efforts are – to set out what they would need to be for South Africa to expand its economy sufficiently to head off the risk of accelerated destabilisation and even, as I explain later in this series, an actual insurrection, and possible fragmentation of the Union.
In the Daily Friend on Sunday and on News24 the week before, I explained that to avoid a series of riots sweeping the country at regular intervals the government needed to replicate the socio-economic circumstances of the period between 1994 and 2007. That era remains poorly understood in part because much of left-leaning civil society and media intentionally denigrated it in order to shape a climate of opinion conducive to the defeat of the policy conservatism they read into the ANC’s initial policy blueprints.
But that era was much more successful than remains understood. I wrote as follows:
‘The ANC in government had a good run from 1994 to December of 2007. The party inherited the economic wreckage of the latter two decades of apartheid after the high growth rates of the 1950s and 1960s had stumbled into the political instability of the 1970s and 1980s before that system collapsed under the weight of its primary contradiction; a once expanding economy that sought to deny its people full participation therein. The events of 1976 culminated in the 1985 decision of American bank Chase Manhattan to call in South Africa’s loans, whereafter, formally bankrupt and politically adrift, the country waited for an external inflection point – which came with the collapse of the Berlin Wall – to sling it into a new political order.
‘The ANC…never received due credit for what happened next. At odds with the mainstream narrative of failed service delivery and jobless growth, conditions within the country improved markedly between 1994 and 2007.
‘We have often cited the fact that through those years the proportion of households with access to water, electricity, and other services rose sharply, progress borne out best in the fact that through much of that era ten formal houses were being built in South Africa for every newly erected shack. Jobless growth was a myth – the number of people with jobs roughly doubled between 1994 and 2007. All of that was made possible as the rate of economic growth rose to average 5% between 2004 and 2007, which was the first time that number had been sustained for four consecutive years since the 1960s.
‘Perhaps most impressive of all is that it took just thirteen years for the ANC to cut apartheid-era debt levels in half and turn the deep budget deficits of the 1990s into a budget surplus, whilst at the same time, and what is most extraordinary, rolling out what would become the most substantive welfare programme of any emerging market.
‘The political and social consequences were greatly interesting to us and saw popular confidence in the future of the country rising whilst levels of protest action abated. Most striking is that in the election of 2004, as the recovery was really picking up speed, the ANC recorded a result of seven percentage points stronger than when Mr Mandela had led it to victory in 1994.’
We went on to explain:
‘Mr Mbeki’s departure as ANC leader in 2007 saw the party jettison its relative economic policy pragmatism whilst, separately, democratic institutions were being eroded. When both phenomena later collided with the global financial crisis of 2008, South Africa’s post-1994 recovery was over.
‘In the aftermath of the financial crisis we saw a spectrum of living-standard markers plateau whilst some even began to deteriorate (such as that for the proportion of people living in a shack). Job growth stagnated to such an extent that by the middle of last year there were fewer people employed in South Africa than when Mr Mbeki left office, a predicament exacerbated by a slowing social grants roll-out and that the value of those grants had increased at levels below the rate of inflation as experienced in poor communities.
‘Stagnating living standards delivered the inverse of the political and social patterns we had seen in the first democratic decade. Polls suggest that confidence in the future of the country collapsed under Mr Zuma, rallied around the victory of Mr Ramaphosa, and slumped again as reform efforts spluttered. Protest levels increased sharply to reach their present immeasurable extent. By 2019, when the spluttering reform efforts were already apparent, the ANC saw its electoral support level come in twelve percentage points below the zenith to which Mr Mbeki had led it. Since then, we read polls to show that support for the ANC has fallen to below 50% amongst people aged 15-50, who will be the bulk of the voting bloc of the next decade, and on demographic trends alone, therefore, the political endgame writes itself.’
As I have sought to explain in the first two parts of this series, it was the ensuing socio-economic consequences, and not the thesis of insurrection, that caused the South African detonation of a week or so ago.
In a client note this week, we explained that replicating the circumstances of 1994 to 2007 would require of the government to implement a list of reforms that, ‘(in) no particular order…would include: a complete deregulation of the labour market, scrapping minimum wage laws, abandoning the compulsory horizontal application of bargaining council agreements, scrapping EWC in all its forms, scrapping the NHI policy, introducing a system of low-fee medical aid coverage, scrapping threats to IP rights, breaking up Eskom and selling its components to private providers while opening the market to competition and floating the price of electricity, selling/scrapping the bulk of South Africa’s nearly 700 SOEs, abandoning all race-based empowerment costs/taxes on investment, introducing a system of voucher/contract schooling, maintaining current welfare nets, a move to federalism to raise competition between regions, and using existing housing spend to finance poor households to build their own homes. Short of that, and all of it, not just some parts, South Arica will not stage an investment and growth recovery and the destabilisation of the country will persist and you should expect many more blow-ups over the next decade’.
Regrettably, we went on to advise that reform would not occur as ‘the risk, and reality, is that the bulk of items on this list are completely unacceptable to government and mostly unacceptable to organized business’.
I have spoken to a broad enough cross-section of journalists, policy-makers, business leaders, and politicians this week to be convinced that despite the effects of the blow-up, plain political correctness and a fear of courting racial controversies is still sufficiently intact to assure that no serious effort will be made to advance or promote such reforms.
It is quite something to witness the impact that such fear and correctness has on otherwise influential people, and it would be no exaggeration to say that many of South Africa’s most influential and wealthy people would rather put up with the country being burned to the ground than risk the accusation that they were critical of Mr Ramaphosa or his government’s racial and ideological agendas.
That this state affairs is now infused with the insidious advance of Critical Race Theory across the country means that the necessary reforms are even less likely to be adopted into the medium term. And for that reason, to borrow from Mao again – as we did heavily in the first part of this series – ‘the high tide of revolution against the imperialists, the warlords and the landlords is inevitable’ and it ‘will come very soon’.
- Read the next part of the series on what will happen next in the Daily Friend tomorrow.
[Image: Suhas Rawool, Chickenonline from Pixabay]
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