Let’s not be coy about it. South Africa is not a “developing” country. It is an under-developed country. By choice.
The word “developing” is a verb. It is an action. And the -ing suffix indicates the continuous present tense. That means it’s supposed to be an ongoing action.
“Developing” is not a word one can apply to South Africa. It is politically-correct nonsense. It is a euphemism, just like “emerging”. This country is not developing (or emerging), by any definition of the term.
Real GDP has stagnated since 2018, and was hardly outpacing population growth even before that. The unemployment rate has been rising since at least 2008. Electricity production, which is closely tied to economic activity, has been declining since 2007 (and that’s not a good thing).
Capacity utilisation, which measures the productive output of the country as a percentage of its potential output, has been languished around 78% for four years running, since the end of the pandemic. It has never before remained below 80% for more than two years.
Business confidence has been below par since 2008, and in the last quarter of 2024 was way below the post-liberation peak recorded in the third quarter of 2006. A different measure of business confidence has also plummeted like a stone since the mid-2000s, despite a minor uptick in 2024 thanks to wishful thinking about the government of national unity.
New car registrations have been trending downwards for over a decade.
After climbing sharply between 1992 and 2007, manufacturing output is now 11% below its peak, and 8% below levels seen in the late 2010s.
According to the Minerals Council, gold production is down almost 40% in the decade between 2013 and 2023. Coal production is down 10%. Platinum-group metals production is down 4%. Iron ore is down 12%. Diamonds, down 28%. Chrome and manganese are the only minerals that have seen an increase in production since 2013. Other industrial minerals are marginally down, too.
Gross fixed capital formation has fallen off a cliff, rising to 22% of GDP in the post-apartheid years, but dropping back down to 15% and below since 2008.
Despite the economic stagnation, and producing less now than 15 years ago, labour costs never stopped rising. The household savings rate has cratered to zero, while consumers spend as if there’s no tomorrow.
Withering
South Africa is not developing, by any measure. It is doing whatever the opposite of developing is. It is declining. Shrinking. Withering.
It is not emerging. It is sinking out of sight.
South Africa – and it is not alone in this – is not developing, but under-developed. Past tense. Static. It is under-developed, and doing nothing to change that fact.
When countries are in this position, they will always cast about for things or people to blame. The world market is against them. Colonialism oppressed them. War damaged them. Immigrants stole their jobs. Criminals destroyed their society. Foreign countries had an unfair advantage. The global institutions of capitalism exploited them.
Some of that might be true, but none of it is relevant. A lot of countries have had rough times in their past. Without wishing to minimise the naked evil of apartheid, some had it even rougher than South Africa.
If the global institutions of capitalism wanted to exploit South Africa, they’d actually be here, investing and employing people, and profiting from doing so. They’re not. They’re staying away in their droves.
The truth is, the global institutions of capitalism couldn’t give a flying fig about South Africa, because South Africa doesn’t appear to care much about itself.
The past is the past. Nobody can control or change the past. What matters is what a country chooses to do about the future.
Unless an under-developed country pulls up its socks and starts to grow, nobody is interested in what happens to it. Nobody cares. Nobody is coming to save us.
Vacuous grin
We can send Cyril’s vacuous grin to global jamborees to go a-begging from rich countries all we like. Maybe we’ll get thrown a few dollars. But that will just disappear into the black hole that is South Africa’s under-developed, wealth-destroying economy. It’ll be like pissing on a veldfire. It won’t make any difference.
Because we choose to be an under-developed country. South Africa is not struggling because of the awfulness of its past. Sure, the past doesn’t help, and has created gross injustices that persist today, but the past is not responsible for the fact that the country isn’t growing today, more than 30 years later.
Neither is racism responsible for under-development. In fact, the less South Africa develops, the worse racism is likely to get. If South Africa were getting more prosperous, fast, people would be far too busy hustling, doing business, employing people and making money to waste time with racist bickering about whether white monopoly capital or black nationalism ruined the country.
As long as South Africa refuses to grow, nobody will invest in it, because there are better gains to be made in other countries. Nobody wants to invest when the first thing the government does is eye exactly how much of a cut they can confiscate for them and their cronies. Nobody wants to trade with a country whose prices are too high.
Nobody wants to create employment when labour is expensive and it is much harder to fire people than hire them. Local capital will be looking for ways to earn returns in dollars or pounds or euros. Foreign capital will simply go somewhere they don’t have to jump through hoops and take a haircut every time they turn around.
Look online
I say that it’s a choice not to grow, because it isn’t as if nobody knows how countries grow. It isn’t out of our hands. We’re not mere victims of circumstance, doomed by our unfortunate past to wallow in misery forever.
Sure, we can do that, but that would be a choice, just like we can choose to look to the future and create conditions for the economy to thrive and prosperity to be built.
These days, if you want to know how to do something, you can just look it up online. There are plenty people that will gladly share their knowledge, for free. You can find evidence of what worked, and what didn’t. It’s not complicated. It doesn’t require reading advanced books on arcane subjects.
Start with the IRR Growth Strategy, a 22-page paper written by Institute of Race Relations CEO John Endres as a submission to the 2023 Multi-Party National Convention. In it, he urges political parties to shift their mindset towards decisively defeating poverty, noting that it can only be beaten by fast economic growth, and sets out a formula for achieving this.
After this introduction, read the IRR’s Blueprint for Growth series. Each of these reports are short and to the point. It starts with Arming SA’s Pro-Growth Forces, and continues with Slash waste, cut taxes; Breaking the BEE Barrier to Growth; Reforming South Africa’s Public Administration; Reinforcing South Africa’s Growth through Infrastructure; Generating Jobs and Skills for Prosperity and Growth; South Africa’s Investment Malaise and How to Escape it; and finally, Solutions to SA’s crime crisis to boost growth.
If you don’t like or trust the IRR, that’s fine, too. There’s a dearth of trust in South Africa, so I understand. In that case, consult one or more of the many other simple online step-by-step guides to achieve growth and prosperity.
Economic Freedom
Perhaps dip into Max Rosen’s comprehensive, data-driven essay on what exactly economic growth is, and how we measure it. It will serve as an excellent backgrounder.
I can highly recommend the Fraser Institute of Canada’s Economic Freedom of the World reports. It has a handy interactive global overview map, data, and a detailed report.
This report makes it patently obvious that compared with the 25 countries with the least-free economies, the 25% most free countries enjoy 7.6 times greater GDP per person; their poorest 10 percent earn eight times as much; the average person lives 16 years longer and is 40 percent more satisfied with their life; youth literacy is nearly universal and there is no gap between boys and girls; environments are cleaner; and people are more tolerant of other genders, minorities, and immigrants.
Conversely, compared with the top 25 percent, in the 25 percent least -free countries, the infant mortality rate is nine times greater; extreme poverty is 30 times as common; two-and-a-half times as many children work; corruption is higher; and only 78 percent of girls aged 15 to 24 are literate.
This shows that trying to control economies does not work, but leaving economies free to do their own thing, does.
The criteria by which they measure economic freedom, which includes measures of the size of government, the legal system and property rights, monetary policy, the freedom to trade internationally, and regulation, forms a simple checklist of what to do and what not to do.
Does South Africa perform poorly on one of these measures? Get better at it. Does South Africa perform well? Keep it up, and improve it even more. It is a guide to becoming a prosperous, developed country.
The Heritage Foundation in the US has a similar annual report, called the Index of Economic Freedom. It’s useful that they replicate the research, because though they use slightly different criteria, they also come to the conclusion that growth follows not the central-planning state, but growth follows the economic freedom of private individuals to work and dispose of their private property as they see fit.
One of the Foundation’s policy analysts summarised it into a short article: Why Economies Grow. Once again, this should be read as an instruction manual. It shows exactly what countries that wish to be prosperous should and should not do, and why.
Competitiveness
Or visit the World Economic Forum’s website. It used to produce a World Competitiveness Report, the penultimate version of which for 2019/2020 still serves as an excellent how-to guide for improving economic performance. (The final version is less useful, since it focuses more on the mid-pandemic “build back better” idea that is more about government intervention to transform rich economies into champagne-socialist states than about creating prosperity in poor countries.)
When considering these reports, take into account that South Africa is under-developed. It is not a rich country. It is not in a position to pay for all of the luxuries that developed countries can afford. To build a generous welfare state and social safety net, for example, would be lovely, but it requires first becoming prosperous enough to support it.
In fact, no matter what the broader social priorities of the government might be, the first step, the prerequisite, is fast economic growth. Once the economy is free to expand rapidly, creating wealth and jobs, only then might a society choose to consider luxuries that cost money and constrain growth.
South Africa also cannot continue with business as usual. The dogged pursuit of the National Democratic Revolution, a piece of ideological archaeology from the mid-20th century that has failed everywhere it has been tried including in South Africa (and which the government of national unity cannot defeat), must be put aside, for the sake of the country.
Choose growth
If South Africa’s government chooses development over decline, if it chooses not to remain under-developed, and if it chooses to take responsibility for creating a prosperous future instead of dwelling on the injustices of the present and past, then the next steps are easy.
There are simple instructions online for how to create the conditions for rapid economic growth, which is the only pathway to building a developed country.
That South Africa remains under-developed, and isn’t developing, is a conscious choice of government policy. It is time to abandon that choice, and instead to choose growth.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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Image: A market in Gia Lai, Vietnam. In South Africa, this market would be torn down by police. To allow free economic activity is a choice. Photo: public domain.