The decline of the ANC is so central to the evolution of SA’s political economy that we need to freshly assess what has changed and what has become possible.
Ongoing budget process difficulties show that ANC leaders underestimated the political risks arising from the party’s support declining to 40% in last year’s election. Conversely, the guilt-by-association risks for the DA having joined the ANC-led coalition national government became more manageable. The DA emphasises service delivery alongside fiscal prudence and the need to create many more jobs, whereas ordinary South Africans can now plainly see that the ANC wants to increase taxes to fund more patronage. The ANC brand has taken a hard knock.
Despite such shifts, it remains difficult to argue that SA’s base case trajectory has meaningfully improved, as numerous plausible negative scenarios persist. Nonetheless, the identification of a realistic path toward broad prosperity encourages optimism. It therefore seems odd that the defining characteristic of that path – prioritising job creation − is so underappreciated.
The DA has become increasingly vocal about the need to prioritise both economic growth and jobs. This is clever politically as surveys identify jobs as voters’ top concern. As the ANC has entrenched the world’s most severe youth unemployment crisis, there is a compelling case to prioritise job creation ahead of economic growth.
While the ANC has long been electorally vulnerable to parties that can credibly campaign on a job-creation platform, our largest party is much more vulnerable now. Its capacity to fund patronage has been clipped by both coalition dynamics and an economy which has been crippled by ANC policies favouring patronage at growth’s expense.
As our politics become more competitive, accountability is likely to intensify. This should provoke an upgrading of our national dialogue. A likely consequence is interrogation of big business having aligned with the ANC to pursue investment-led growth. While such efforts are commendable, they have not reduced anti-growth policies, and their benefits are largely limited to expanding commodity exports.
Modest potential
Boosting such exports is important but has modest potential, directly or indirectly, to create commercially viable jobs. Instead, expanding commodity exports reinforces the status quo as it enhances the ANC’s capacity to fund patronage.
There are no plausible paths whereby expanding commodity exports will lead to an adequate level of workforce participation. If volumes and prices of our commodity exports were to rise, we would likely see an expansion of an already bloated civil service and grants.
There are only two reasons to mobilise capital in SA: to expand commodity exports or to cater for domestic consumption. Investment-led growth which increases commodity exports should benefit all South Africans. Instead, the ANC benefits disproportionately through an increased capacity to fund the patronage-heavy status quo which retards SA’s growth prospects.
Meanwhile, ANC pro-patronage policies have devastated SA’s prospects as a production centre for value-added exporting. Yet there are no workable paths toward achieving far higher workforce participation without surging value-added exports.
Only a small fraction of young adults contribute to value-added exports, primarily in the auto manufacturing sector. This sector is heavily distorted by pro-patronage policies that create well-paid union jobs by forcing SA consumers to pay inflated prices. Our national dialogue rarely confronts how ANC policies have systematically abused SA consumers to advance patronage.
Media outlets are far more likely to focus on corruption than patronage. But a core difference between the two is that patronage must be approved by parliament whether it is achieved through budgeting for civil servants or through anti-competitive policies such as BEE or localisation. As the ongoing budget process demonstrates, a coalition government cannot be expected to approve patronage designed to benefit ANC supporters.
Insufficient
There are no paths which would meaningfully create commercially viable jobs that don’t entail pivoting away from patronage. Nonetheless, ANC leaders had stared into the abyss and decided to stick with their embrace of rampant patronage. Even last year’s election results were insufficient to spur fresh thinking within the party.
Our youth unemployment crisis is the result of the ANC’s choosing patronage over growth and the consequences are far more severe than we appreciate. By way of comparison, the Great Financial Crisis that was spurred by imprudent lending practices in the US wreaked havoc on that country’s economy and across much of the world. But the US economy had fully recovered in less than a decade.
It is hard to imagine a realistic scenario where, within a decade, our economy creates a volume of jobs each year consistent with the number of school leavers seeking employment. But even if that was achieved, it would take at least another two generations to overcome the drag on the economy from having created millions of perpetually unemployed young adults. Unlike a debt crisis or high inflation, there are no known solutions for such a fundamental failure of economic stewardship.
The ANC is also vulnerable in the sense that their support is becoming ever more rural. If, in next year’s elections, other parties displace them to control SA’s metros, this will provide platforms to demonstrate creative ways to spur high volume job creation.
It is entirely possible that the ANC will soon align with the MK, the EFF or both. Such, so called, “doomsday” scenarios are also possible in 2029.
The ANC’s electoral reliance on widespread patronage ensures that the party won’t provide ‘a better life for all.’ This should encourage other parties to prioritise the expanding of commercially viable jobs.
[Image: https://www.anc1912.org.za/resources/]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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