SA at risk but not in crisis
ANC investments will drive growth in the long term.
South Africa does not face a crisis despite high crime, unemployment and inequality, though weak growth and poor governance have made it more likely things could go badly wrong, according to a new paper from the Institute for Security Studies (ISS).
‘The margin for error is thin, but there is still reason to be optimistic,’ says ISS executive director Jakkie Cilliers, who has revised his SA Futures scenarios to take account of electricity shortages, 2014 election results, new population figures and incoherent government policy.
‘We are experiencing turbulence, but not a storm yet. SA requires a comprehensive resetting of key social, economic and political systems, but the perennial sense of crisis in the media is not supported by deeper analysis of the structural conditions. In reality, South Africa’s growth prospects are quite healthy,’ says Cilliers.
SA in a sweet spot
The next five to ten years may be quite uncomfortable, but in longer term SA is in a ‘sweet spot’ for economic growth due to its growing population and the ANC government’s investments over the past 20 years in water, sanitation, health and education.
South Africa’s transition to greater political and economic inclusiveness is making steady progress. Government programmes to support the transfer of wealth to black South Africans and help the previously disadvantaged are arguably the largest and most comprehensive of their sort worldwide, Cilliers says.
Besides social grants, broad-based black economic empowerment and extensive employment of previously disadvantaged South Africans in the civil service had led to increases in the proportion of the black segment of the top Living Standards Measure (LSM) from 4% in 1994 to 29% by 2014.
And government has been investing in things that drive long-term growth; so in the long term SA will grow because the fundamentals are positive, despite worrying levels of wastage, corruption and patronage.
‘Uninspiring leadership and a recent loss of vision by the ruling party should not hide the remarkable progress achieved, including rolling out of essential services, alleviating deep-seated poverty and the provision of broad-based education, despite flaws in implementation.’
‘The impact of investments in education takes almost a generation to realise, but there can be little doubt that South Africa will in time reap the benefits of the investments made since 1994,’ Cilliers says.
Many more people
Demographically, the country is well positioned for the future, with a proportionately high number of working-age people and a proportionately low number of young and old.
The new ISS SA Futures paper anticipates a South African population around 67,3 million by 2035, a large increase from the 2015 estimate of 54,7 million and higher than forecast by the National Planning Commission.
This increase is despite a fertility rate that is expected to fall below replacement levels in a decade, and is the consequence of continued inward migration, declining levels of infant mortality and increases in life expectancy.
Although high unemployment will have continued negative consequences, the increase in employment levels from 15.1 million people in 2015 to a forecast of more than 25 million by 2035 will have a positive impact on tax revenues, the size of the economy and social stability.
Growth remains weak
Gross domestic product (GDP) growth dropped from 2.2% in 2013 to an ailing 1.5% in 2014, and electricity constraints will continue to restrict growth for several years, the ISS said.
And without a near revolution in policy coherence and government efficiency, there is little chance of average GDP growth levels reaching 5% over the medium to long term.
ANC majority threatened
Weak leadership, poor governance and lack of delivery may cause the ANC to lose its majority as early as 2024, says Cilliers. He is concerned about a leadership vacuum ahead of the scheduled 2019 national elections, with a new ANC leader due for election in December 2017.
Most South Africans vote for the ANC on the basis of its liberation credentials. As the number of born-free voters increases with each election, however, the memory and experience of apartheid, and the role of the ANC in South Africa’s freedom struggle, will diminish. Instead, the demand for effective implementation and policies that deliver jobs, education and services is likely to increase. Born-free voters are also expected to be more willing to switch parties than older voters, increasing volatility in voting behaviour, Cilliers said.
Education and urbanisation also have a political impact. During the 1994 elections, around 51% of South Africans were living in urban areas. This increased to 63% by the 2014 elections, and by 2035 up to 74% of South Africans are expected to live in urban areas.
‘Parties that appeal to a rural support base may struggle to remain relevant in an increasingly urban-orientated consumer culture,’ Cilliers says.
Still unemployed
Unemployment has grown every year since 2008, when the global financial recession hit South Africa - also the year that Jacob Zuma became president. Although the prognosis for improvements in South Africa’s employment rate is not good, Cilliers emphasised the positive impact of expected growth in overall employment. While the number of unemployed will remain constant, the ISS forecast is for a steady growth in employment from the current 43% to 56% of the working-age population.
Full SA Futures 2035 paper available at https://www.issafrica.org/publications/papers/south-african-futures-2035-can-bafana-bafana-still-score
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