Imagine a South Africa in 2030 where “only” 10% of the eligible job-seeking population is unemployed; where the number of people living in poverty is measured in hundreds of thousands, and not tens of millions; where economic growth has hovered around a sustainable and inclusive 5% level for a few years; where the lights are always on; where most people live in harmony with one another regardless of colour, race, creed, or gender; where an entrepreneurial spirit is palpable and vibrant; where more and more people are empowered to embrace the 4th industrial Revolution; where most incidents of crime are of a petty nature; and where appropriate education and decent health care are available and accessible to all.
Now imagine a South Africa in 2030 where the unemployment rate is firmly entrenched at 25% (and much higher for younger people); where almost half of all children are living in poverty; where the economy frequently dips into recession, and when it does expand modestly only a few benefit; where a generator becomes the default option for gaining access to electricity; where people resent each other; where violent crime and unrest go uncurbed; and where access to appropriate education and health is confined to a privileged few.
It is rather unlikely that either of these extreme outcomes will transpire in exactly the way described above. The real, current question, therefore, is whether the future of South Africa will tilt towards the first, sanguine set of outcomes; or will we experience the tragic denouement portrayed in the second narrative.
Right now, many South Africans – their thoughts and perceptions swayed by a decade of adverse and gloom-ridden social, political, and economic developments – are possibly pre-disposed towards an expected set of outcomes that is more akin to the bleak description of South Africa in 2030.
The trajectory of South Africa in general, and the economy in particular, will be determined by at least seven tilting points, or key questions:
1. How will we deal with the democratic surplus? The hard reality is that for many South Africans the level and rate of democratization have not been matched by the level and rate of economic emancipation.
2. Will the country’s stock of social capital depreciate or appreciate? A society cannot develop socio-economically over the long term if it is found lacking in its search for ethical behavior, mutual trust, and goodwill.
3. Will we manage to generate sufficient appropriate skills to match the demands of employers? The OECD stated recently that the biggest challenge in South Africa is the unequal quality of school education, its low average level and the high drop-out rates.
4. Will we be able to generate sufficient national savings? In order to reach a 6% growth rate, the ratio of gross domestic savings to GDP needs to virtually double from current levels.
5. Will we be able to restore and preserve the autonomy of our democratic institutions? Institutions establish constraints – both legal and informal (norms of behavior) – thereby determining the context in which individuals organise themselves and their economic activity. Moreover, institutions influence productivity, mainly through providing incentives and reducing uncertainties
6. Will we be able to exploit the potential benefits of demographic dividend? The latter occurs when a country is able to achieve accelerated economic growth because it has a low dependency ratio (i.e., the proportion of its population that is of working age is greater than the proportion of its population that does not work, e.g., children and the elderly. This population structure frees up household and state resources that would otherwise be used to support dependent groups. These resources can then be invested to improve productivity and generate economic growth
7. Will we be able to become a competitive force in the global economy? According to the World Economic Forum’s annual Global Competitiveness Report, South Africa’s competitiveness ranking has plummeted from 47th position in 2016/17 to 67th in 2018/19.
All of these tilting points are inter- and co-dependent; the two that stand out, however, by virtue of having the strongest effect on the other factors, are the generation of sufficient and appropriate skills; and the restoration of the capacity and integrity of our democratic institutions.
This is why the 2019 General Election takes on a pivotal role in crafting the future of South Africa. Institutions matter a lot – generally, the prosperity of a country is closely correlated with its institutional quality. When institutions fail, trust is eroded and the stock of social capital depreciates, thereby compromising economic growth and development. Moreover, collaboration between the public and private sectors is a crucial co-creator of productivity growth; in the absence of strong institutions, however, the collaboration between the public and private sectors may become dysfunctional, with both sectors colluding in the pursuit of personal gain at the expense of consumers and taxpayers.
Unfortunately, there is large body of both anecdotal and documented evidence that some of South Africa’s once-proud institutions and institutional values were dealt a cataclysmic blow during the almost decade-long leadership of former President Jacob Zuma. This was also accompanied by a warped allocation of financial and human resources. This is the legacy that President Ramaphosa has to contend with and repair. Moreover, he has to restore the credibility the ANC as a viable and effective ruling party, while recognising possibly deep divisions within the party.
The 2019 general elections will probably yield one of three fundamental outcomes:
1. The ANC fails to record an outright majority, and therefore has to enter into a coalition with possibly the EFF. In this scenario, Mr Ramaphosa’s manoeuvrability to introduce sweeping structural changes, and to purge institutions of the weak and corrupt links, is constrained: constitutionalism, fiscal rectitude, and good governance are sacrificed on the altar of populism. This would take us closer to the bleak picture painted earlier.
2. The ANC attracts close to 60% of the vote. This would provide a clear mandate to President Ramaphosa to “do the right things” over, feasibly, the next 10 years. These should include a revamping of labour market arrangements, and the education system, both of which are displaying signs of partial dysfunctionality. Above all, he would have a window of opportunity to restore the aesthetic and moral fibre of society, so that normlessness, entitlement, and selfishness give way to ethical behaviour. The eradication of elitism, autocracy, and illegitimacy; and the establishment and entrenchment of a shared image of a desired future, with government playing a key visionary role, moulded by foresight and long-term planning, would tilt the country towards the far more desirable future sketched earlier. This could include a sustainable and inclusive (i.e., poverty reducing, job creating) economic growth trajectory of at least 5%.
3. Should the ANC register a slim majority (less than 55% of the vote), the implications for the country and the economy would be more ambiguous. The leadership of the ANC would probably feel rather vulnerable, and may be reluctant to introduce significant changes, for fear of alienating an increasingly critical and restless population. The major focus of the ANC leadership would then be to at least maintain, but preferably to improve their position in the next (2024) election. By not wishing “to rock the boat” they might end up simply entrenching mediocrity.
At this crucial juncture of South Africa’s post-apartheid era, the 2019 general election should serve to remind us that we simply cannot and may not lose our hard-fought for freedoms to the scourge of corruption, and the erosion of constitutional principles and the rule of law – which are non-negotiable foundations of a working democracy. If the picture of the future sketched in the first paragraph, smacks of wishful thinking, it might be worthwhile contemplating the fact that the fatalistically arranged words “Why we can’t” (aspire towards a much-improved socio-economic condition), can be rearranged in a more positive, “can-do” fashion to read “Why can’t we (aspire towards a much-improved socio-economic condition).
Professor Andre Roux is an economist and senior lecturer at the University of Stellenbosch Business School (USB).