South Africa must find a political path that guarantees economic growth

With a failing economy and a leadership divided, could a new era of coalition politics set the country on a more positive course?

Pretoria, South Africa – A single-minded commitment to revitalising the economy is key if South Africa hopes to reduce inequality and stem the increase in violence. As the African National Congress (ANC) battles a crisis of credibility, how likely are we to see the political changes needed to enable this kind of economic growth?

Not likely, says the Institute for Security Studies (ISS) in its latest analysis of economics, politics and instability in South Africa. Until national elections in 2019, things will probably get worse before they get better.

In the ISS’ three forecasts of South African futures up to 2024, the most likely scenario is a country struggling along under the weight of a failing economy and a divided leadership. The deciding factor will be the outcome of the ANC’s 2017 elective conference, which could revitalise the party or pave the way for South Africa to enter an unprecedented era of coalition politics after the 2019 election.

Economic crisis

South Africa is generally considered to be the most unequal country in the world, where extreme consumerism and wealth exist alongside grinding poverty and unemployment.

‘This is enough of a challenge for any government’, says Dr Jakkie Cilliers, Head of African Futures and Innovation at the ISS and co-author of the new research papers. ‘Corruption and patronage at the top have made tackling inequality almost impossible. And that’s before we factor in the policy incoherence and lack of leadership from the ruling party’.

Key state institutions have been unable to deliver, and international and domestic confidence in the country’s potential is low. With continued weak economic growth, a downgrade to sub-investment status in 2017 is likely.

Economic reform has not kept pace with South Africa’s political revolution. The economy remains capital intensive with high levels of structural unemployment, low growth, poor savings and low productivity.

More public protest and violence

Economic pressure and poor service delivery have set South Africa on a path of growing levels of public protest and violence.

‘Protests have become a part of daily life, increasing markedly since 2010’, says Ciara Aucoin, ISS researcher and co-author of the scenarios papers. ‘What’s worrying is the growing number of them that are turning violent.’

Whether violence will find expression in the upcoming local elections remains to be seen. ‘Election violence does not have deep roots in South Africa,’ says Aucoin. Analysts have however voiced concern that the August local government elections could be different. South Africa is a violent country burdened by structural inequality and a growing frustration with its ruling party.

Survey results from Afrobarometer 2015 indicate a steady decline in trust of public institutions over time, with the top level of government showing the biggest drop. Only a third of South Africans now say they trust President Jacob Zuma; down from nearly two-thirds in 2011.

‘South Africans clearly want change,’ says Aucoin. ‘Elections have up to now been the main avenue for bringing about change in South Africa. The test is whether the ANC can provide the leadership to ensure this remains the case’.

ANC under pressure

South Africa may soon be at a political turning point, depending on the outcome of the power struggle between the ‘traditionalists’ and ‘reformers’ in the ANC.

‘These internal dynamics are arguably more important to watch than the dynamics between the ANC and opposition parties’, says Cilliers.

In two new papers, Cilliers and Aucoin describe and forecast three pathways to South Africa’s future – a desirable Mandela Magic high road, an uninspiring but most probable Bafana Bafana scenario, and an alarming downward spiral called Nation Divided.

The decline in public confidence in the ANC is likely to continue – under all three scenarios – first during the local government elections in August this year, and then in the 2019 and 2024 national elections.

‘The upcoming local elections in August will tell us what to expect when the ANC elects its new president in 2017,’ says Cilliers. ‘Our most likely Bafana Bafana outcome sees the ANC lose its majority in Gauteng in 2019, with a probable loss of the province to the Democratic Alliance in 2024, the year that sees ANC votes dip below a national majority.

‘December 2017 could be a game-changer. If the traditionalist camp in the ANC continues to dominate, growth prospects will be poor and a weaker economy is likely to drive up violence levels and widen the gap between the haves and have-nots.

‘If the reformist group prevails, the ANC could be rescued from its current crisis and take the country forward’, said Cilliers.

If tensions between the two factions are not resolved by 2017 and Zuma’s successor is another traditionalist, the party could see a split not dissimilar to the one that led to the creation of opposition parties COPE and the EFF. At this point, South Africa would enter an unprecedented era of coalition politics at national and provincial levels.

Economic growth and a knowledge economy

Political change that enables a labour-intensive, low-wage and a less-regulated growth path could, in time, reduce much of the country’s economic and social malaise, but achieving this will not be easy.

‘South Africa has no choice but to build an inclusive economy that deals with our historical legacy issues’, says Cilliers. ‘This should be the primary focus of government. But at the same time, we need to invest in a knowledge economy to spur much more rapid rates of growth – something that the current model of a developmental state cannot deliver since it requires a close partnership with the private sector.’

Progress will come from increased investment in the country’s technological innovation capacity and a reformed set of Broad-Based Black Economic Empowerment (BBBEE) policies that allow for more targeted approaches to structural disadvantage.

To access the three new ISS publications, click the links below:

For media queries or to arrange an interview, contact:

Jakkie Cilliers, ISS: +27 83 644 6883, [email protected]

Ciara Aucoin, ISS: +27 72 021 7587, [email protected]