Tuesday, February 18, 2014

Africa: South Africans must decide what kind of country they want

Source: ISS

South Africans must decide what kind of country they want

South Africans go to the polls on 7 May against a backdrop of political turbulence and economic uncertainty. The country appears to be in crisis. But while South Africa faces leadership challenges and urgently needs changes to key social, economic and political systems, the perennial sense of doom is not supported by deeper analysis. South Africa’s structural growth prospects are actually quite healthy.

If the electorate and its leaders make the right decisions, the South African economy could be 23% bigger by 2030 than it would be on our current path. If we take the wrong turns and the African National Congress (ANC) adopts populist policies to ensure it retains power ahead of the 2019 elections, it could be 18% smaller. Under a final scenario, we keep missing opportunities and proceed along a path of modest growth as a perennial underachiever with greater potential than performance.

These scenarios are based on research in a new paper called South African Futures 2030. Each is rooted in South Africa’s current reality and provides plausible combinations of events. They are not predictions, but plausible storylines that set out the most likely implications of decisions and actions by South Africans and their leaders. The ANC leadership is central to all three, but our political future will also be affected by the future of organised labour and the extent to which opposition parties can mobilise young voters.

This article doesn’t focus on the worst-case scenario, which sees a divided nation. But South Africa’s leaders and decision-makers should nevertheless read this scenario, if only to see the impact of poor leadership and inappropriate policies.

Two options can lead to the ‘Mandela Magic’ scenario, South Africa’s high road, in which government implements a clear economic and developmental vision. It may come from either a reinvigorated ANC (the future is ANC), or a weakened ANC with strong opposition parties (the rise of multiparty democracy). Accompanied by appropriate policy and implementation, both options could yield higher economic growth and well-being for most South Africans.

Central to the first Mandela Magic scenario is an internal ANC process of introspection and reform following the death of Nelson Mandela. The party resets its moral compass and asserts its leadership within the Alliance. It endsslate voting and cadre deployment, and appoints people on merit and not allegiance. Under this option, a strong executive deputy president is able to oversee the implementation of the National Development Plan and there is clear direction and leadership.

The ANC leadership renews its commitment to the rule of law. Independence of the judiciary is ensured. Transparency, fairness and integrity underpin appointments to key criminal-justice institutions. A smaller Congress of South African Trade Unions (Cosatu) remains united behind the ANC, with pragmatic policies that allow for greater labour-market flexibility.

Government stabilises and transforms the civil service in cooperation with public-sector unions, leading to a turnaround in the delivery of key services such as education. Governance is faster and better, creating a sense of stability that impacts positively on local and international perceptions. This revitalisation of the ruling party enables the ANC to retain close to 60% of the popular vote and to govern without needing alliances beyond the 2024 elections.

An alternative option to achieving Mandela Magic prosperity sees the ANC do worse than expected in the 2014 elections, and we see the rise of a genuine multi-party democracy as the ANC loses its majority in an additional two provinces, although able to govern in both as part of a coalition. Shaken by its losses, the ANC reaches out to other stakeholders to build a social compact and implement the National Development Plan (NDP) with a focus on growth, jobs and effective services.

The private sector is recognised as the engine of growth with government in the role of regulator and facilitator, encouraging entrepreneurship and innovation through investment in research and development, and rolling out cheap broadband and IT services nationwide.

The Democratic Alliance (DA), which governs three of the nine provinces after 2019, competes with the ANC over service delivery, clean government and positioning South Africa as a winning nation.

Both trajectories of the Mandela Magic scenario would deliver, by 2030, an economy worth more than $161 billion (R1 549 billion), with gross capital formation reaching 27% of GDP and foreign direct investment increasing to more than 2% of GDP. Technocratic, consultative management – rather than ideological grandstanding – is the order of the day as government retreats from a lexicon of racism, imperialism and anti-colonialism to focus on improvements in terms of trade-and-investment guarantees.

Through concerted policy implementation, the growth of the manufacturing sector is assured. Commercial agriculture, manufacturing and the service sector all expand. Efforts to reduce unemployment through public-works programmes bear fruit, reducing social tension and service-delivery strikes. GDP growth stabilises above of 5% per year from 2024 and averages 5.1% annually over the 17-year period from 2014 to 2030.

In contrast to the desired future of Mandela Magic, the scenario closest to our current pathway is named ‘Bafana Bafana,’after our national soccer team. It is essentially a forecast of more of the same. South Africa is not doing badly, but like our footballers we remain a perennial underachiever. There is no game plan. Bafana Bafana is a story in which South Africa never quite breaks free from a cycle of inequality and unrest. Things get better, but the structural limitations remain the same.

In the years after the 2014 elections, government has no clear leadership, growth plan or policy direction. The ANC remains nominally committed to the NDP but does not coordinate its implementation. After 2024 the ANC has to govern in coalition, having dipped below 50% during the elections. In time, government succumbs to pressure from its own ranks and its partners to abandon or roll back its limited efforts towards greater labour-market flexibility and skilled migration reform.

The heavy hand of state regulation becomes ever more present. Voter apathy increases alongside a sense of drift and lack of direction. Government’s initiatives to convey a more positive message are drowned out by a cacophony of reporting on graft, corruption and poor service delivery; much of it centred on top leadership. Wasteful government expenditure – almost R31 billion in 2013 – continues largely unabated. Senior appointments continue to be made on the basis of personal and party loyalty, and not merit.

Without a clear support plan for industry, exports to the rest of Africa steadily lose ground to China and India. Foreign investors remain hesitant. South Africa attracts only modest levels of foreign direct investment (FDI) at below $2 billion annually. The rest of the continent consistently grows much faster than South Africa.

South Africa still does relatively well, however, growing at around 3,8% per annum on average up to 2030. Modest growth has limited impact on unemployment and inequality, though life for the middle and higher income groups remains good. But the country gains a reputation as a chronic underachiever – it should be dominating the region but it isn’t. Policy-making is episodic, last minute and piecemeal. South Africa muddles along.

But all is not doom and gloom. In the Bafana Bafana scenario, investments in education start to pay off, schooling improves and social-grant programmes continue to alleviate the worst effects of dire poverty. Around upper-class dinner tables, the doomsday clock remains firmly stuck at one minute before midnight. Meanwhile, the real South Africa actually does relatively well.

Jakkie Cilliers, Executive Director, Institute for Security Studies

This article first appeared in the Cape Times. To read the full SA Futures 2030 paper, click here