Confronting SA’s core misconceptions

15 September 2023

Just before Clem Sunter began his recent talk at the SA Institute of International Affairs about “SA and the world beyond 2023”, a political analyst and I chatted about the ANC’s election strategy. Our concerns were then freshly illuminated as the first half of Sunter’s talk covered his forecasting methodology, particularly the importance of situational awareness.

While it is easy to attribute the ANC’s renewed efforts to blame its governance shortcomings on apartheid as exploiting voter ignorance, such messaging has a religious-like quality that unites the faithful against non-believers. Such tactics purge our national dialogue of situational awareness to the point that both risks and opportunities are under appreciated?

Much of our ruling party’s “faith based” electoral support traces to reliance on ANC-allocated patronage. Meanwhile, many opposed to the ANC place faith in the constitution's ability to, eventually, hold today’s ruling party accountable. Yet, evidence keeps accumulating suggesting that legitimate elections in 2029 are unlikely, while fiscal realities are suddenly choking patronage capacity thus clouding the party’s 2024 prospects.

V’s

Sighting a victory-enabling vision requires the vantage point which objective awareness offers. But our society’s bedrock is a stormy sea of identity politics with blacks seeking validation while whites want vindication. Such reasonable desires clash with the ANC’s patronage-plus-vilifying playbook.

To be validated requires the dignity which comes with a job. The young black South Africans whose parents are among the majority that didn’t escape poverty are extremely likely to go through life poor. White South Africans with wealth and skills resent the ANC coveting the former while seeking to sideline the latter. Greater cooperation is required to more fully vindicate those who placed faith in the 1990s transition. Rather a dysfunctional standoff has emerged which repels solution-focused thinking.

SA’s many long-term unemployed twentysomethings don’t need Sunter’s powerful forecasting methodologies to see that they have scant prospects of ever being meaningfully employed. Including discouraged jobseekers, our youth unemployment rate exceeds 70% - and none of our leaders offers a workable solution. In each of the next several years, hundreds of thousands will join the millions of young adults who are permanently marginalised. Such exceedingly rare circumstances usually follow “failed nation” status.

Misconceptions

I’ve been publicly recounting our national misconceptions for over twenty years. It has always seemed that there are so many because, given its antecedents, the 1990s political transition shaped our national consciousness around values-based expectations. Also, geological endowments serve to reinforce how our geography isolates us from accepting global trends - such as sustaining economic growth and job creation through niched integration into global supply chains.

From a political perspective, the need to sustain high growth had to be balanced against electoral demands for equitable redistribution. This seemed to provoke the overarching misconception that SA could adjust to global shifts at its own pace.

Not integrating extensively into the global economy was always going to trigger massive youth unemployment. Even after decades of rapid growth China still lacks sufficient discretionary purchasing power to fully absorb its school leavers into the economy. We have ignored such economic development basics while placing our faith in unworkable investment-led growth scenarios.

The ANC’s embrace of localisation reflects how its patronage focused electoral strategy is inherently anti-business and anti-competitive. Our debates have centred around corruption versus inequality with remarkably little focus on global integration or jobs.

Those opposed to ANC policies all too often believe that only elite workers can compete internationally and that horrific education outcomes preclude our low-skilled workers competing with Asians. This seems logical until one observes that integrating into global supply chains isn’t about achieving a broad array of sophisticated skills but rather carving out specialised niches. This observation may seem foreign to many but that is because SA is such an outlier in its dismissal of what drives high growth economies.

It is also a misconception to think that centres of influence or public intellectuals should endorse prospective niches for South Africans in global supply chains. This is the job of entrepreneurs and it invariably involves many failures. Rather than carving out niches in global supply chains to access abundant purchasing power, we encourage our entrepreneurs to develop better ways to fish in the overfished pond that is SA’s depleted economy.

A related misconception is that if all of the ANC’s errors due to incompetence, corruption or ideological indulgences were corrected, that the economy would be on a healthy path. The proposed solutions of many of our leaders goes no further than choosing to prioritise a few of the things which have gone hectically wrong. Rarely do they emphasise that SA always needed to transition away from overreliance on commodity exporting. Our unemployment is now so elevated that it would take multiple generations to normalise it in the absence of sharply increasing our value-add into global supply chains.

The even more fundamental disconnect is the belief that if we fix our politics and business prospects, then robust job creation and poverty alleviation will follow. Opposition parties aligning to displace the ANC and investment-led growth are both highly desirable. Yet high situational awareness should be spotlighting how our obscenely elevated youth unemployment can be exploited to make SA ungovernable and uninvestable.

We have been presuming that spiralling social unrest from obscenely high youth unemployment can be tamped with sub-subsistence grant payments. In July 2021 bad actors demonstrated how vulnerable we are, politically and economically, to premeditated rioting and looting. It would almost certainly take a new, vastly more competent national government many years to ensure law and order.

Expectations are routinely aroused of a commodity boom or discovery of a massive deposit. The benefits of such events would mostly accrue to elites. Meanwhile, global ecological concerns will render our coal deposits as stranded assets as our economic policies similarly sideline a majority of our most valuable assets, our school leavers.

We presume that we can prioritise the attracting and rewarding of capital ahead of focusing on rewarding captive labour. Yet ours is among the world’s worst economies at broadly dispersing benefits as depicted by our top ranking at income inequality and youth unemployment.

Economic forces

Our national discourse has curdled into a mental block about how this region’s potential to add value within the global economy is shifting from commodities to people. The most formidable of economic forces are demographics and technology. The rise of Asia followed from that region having the world’s largest supply of underutilised labour. That distinction has unequivocally shifted to Africa. SA’s policies and discourse align to impede our participation as evidenced by our having by far the world’s worst youth unemployment crisis.

Young adults in this region are integrating into the global economy despite the unhelpful thoughts and actions of our public and private sector leaders. The numbers are not huge but they are very significant from a proof of concept perspective. Unlike commodity exporting jobs, many of these jobs are not reliant upon capital being deployed in SA.

Those who seek to grow SA’s economy or deliver a new political era next year merit our support. Yet forecasts based on objective awareness will remain grim if we don’t prioritise integrating young workers into global supply chains - as is common practice in high growth countries.

@shawnhagedorn