South Africa had world-topping HIV prevalence when then-president Mbeki, ignoring overwhelming scientific evidence, attributed AIDS to poverty and malnutrition. More recently, his party has entrenched the world's worst unemployment crisis and no one seems to be fully contemplating the consequences or developing viable solutions. The most vulnerable are again victims of science denialism but today’s version has gone mainstream.
The old regime's farmer-will-make-a-plan vibe morphed into a national dialogue where pleas for greater productivity and efficiency are countered by politically barbed social justice rejoinders. Yet, lest we delude ourselves, there has never been an active plan to make South Africa broadly prosperous.
Might this finally change now that we have a coalition-styled government where the self-interests of the two largest parties significantly overlap? Perhaps, but for this to happen we must confront much denialism.
There has been no post-election outpouring of realistic solution proposals. Nor have centres of influence acknowledged the enormity of our unemployment challenges - or the risks they pose. Instead, themes related to investment-led growth have proliferated. As with beetroot and garlic, investment flows are beneficial but they aren’t solutions.
Prior to our recent elections, pursuing investment-led growth had been a mutually beneficial accommodation between South Africa’s twin power blocks, the ANC and big business. It was not part of a well structured plan that could deliver something approaching normal employment and broad prosperity within the next thirty years. Developing such a plan requires the objective diligence common among solution-focused scientists. The evidence that needs to be interrogated is displayed daily by high growth economies. Our ignoring such insights resembles Mbeki’s dismissing the science that tamed the horrors of AIDS.
While South Africa has never genuinely pursued broad prosperity, it is also true that, until now, we have never had a fully enfranchised population demanding accountability. Big business and investors benefit from a solid GDP trajectory but, given today’s increasingly demanding political landscape, the ANC and the DA need policies to encourage millions of new jobs.
However, the ANC shows no real interest in addressing how its core policies entrench our ultra-elevated level of unemployment. The party transformed itself from being a liberation movement into being a ruling party that expected to retain its grip on power through ubiquitous patronage ‘until Jesus returns’. The party’s prior leader overindulged patronage to an extraordinary extent and its current leadership is too splintered and compromised to purge the ANC’s now entrenched patronage instincts.
The ANC’s governance shortcomings are so glaring that we presume fixing them will put SA on a solid track. Performance improvements at the likes of Eskom and Transnet point toward three percent growth. Nor is it unreasonable to think the DA could become the lead party of a governing coalition in 2029 - probably with the ANC - and this could trigger the dismantling of major growth disenablers, such as BEE and localisation policies.
Such a best-case scenario is, however, a perilous path. Achieving three percent annual growth for five years while maintaining today's broad policy framework will lead to something like 200,000 twentysomethings each year joining millions of their older siblings who are permanently marginalised. Many other hardships will continue to compound as high volume poverty eradication will remain a distant hope. This traces to how the ANC’s liberation movement militancy evolved into a post-1994 patronage-centric culture that suffocates the party’s ability to prioritise economic development basics like productivity and employment.
Chief among the reasons we aren’t exploring credible high growth strategies is that we haven’t yet acknowledged, let alone confronted, the profound incompatibility of the ANC’s patronage politics with this era’s prevailing upliftment path, integrating into global supply chains. The ANC’s patronage-supporting policies are far more compatible with an economy whose domestic consumption can sustain adequate growth. We ignore that this path is only available to wealthy countries. Consumption-led growth still eludes China despite its having averaged nearly 10% annual growth for four decades.
As ANC mismanagement became increasingly routine, we comforted ourselves by believing that correcting its missteps would produce a stable outcome. Such thinking is as scientifically robust as following sex with a shower to ward off AIDS.
Export-led growth
Our politics have failed a majority of South Africans. Reinvigorating the economy is necessary but insufficient. We are many millions of jobs shy of being a politically stable nation.
Prioritising localisation alongside redistribution-focused anti-business policies has caused the world's worst youth unemployment crisis. The World Bank and others now urge South Africa to develop an export-led growth plan.
Export-led growth has vast potential to spur employment, but only if the emphasis is on growing value-added exports. Most South African households are poor with modest assets. Many of those who are moderately better off are heavily indebted. If the prices of our commodity exports surged, the way our political economy is structured, there would be remarkably modest follow-on employment gains. Instead, grants would increase thus further entrenching widespread dependencies while failing to spur noticeable upliftment.
As half of our young adults are permanently marginalised, we are generations away from being able to sustain growth fueled by domestic consumption. Other countries, whether authoritarian or democratic, communist or capitalist, go to extreme lengths to avoid entrenching unemployment at even half our level because it is so deeply debilitating and destabilising. Our July 2021 riots drew meagerly from a large reservoir of discontent.
Distant
The Covid pandemic demonstrated that all countries struggle to balance scientific challenges with cultural influences. Yet few of today’s societies experienced transitions as uniquely dramatic as our apartheid-to-Mandela transformation. Might that have induced a form of post traumatic stress disorder which resists global integration in the society most geographically distant from the world’s top economies and trend-setting nations?
We are less isolated than we were in the heavily sanctioned pre-1994 period but in the meantime the world economy has become extraordinarily integrated. We exited apartheid only to resist global integration thus condemning a majority of born-free South Africans to life-long poverty. And now we want to think that if we can just increase GDP growth by two or three percent, that everything should be ok.
Our current trajectory risks harsh outcomes. A majority of our twentysomethings will go through life being poor or very poor. Many, if not most, of our current teenagers are on the same path.
We don’t have the luxury of waiting until 2029 to begin integrating our school leavers into the global economy. The ANC can be persuaded to support special dispensations from anti-business regulations for exporters. From there, entrepreneurs can do what they do in high growth countries, carve out niches in global supply chains. Digital services jobs should be prioritised.
If we had continued to reject medical advances, AIDS would have truly devastated our current crop of twentysomethings. Instead, as we continue to reject economic development basics, most of our young adults are condemned to life-long poverty.
The science of economic development places much reliance on comparative analysis tools. We must objectively compare our policies and outcomes to those of high growth countries.
@shawnhagedorn shawn-hagedorn.com
