Why is SA’s economy growing far more slowly than similar economies? Why is exclusion so high, even after decades of socioeconomic transformation policies? Why are more appropriate steps not being taken to include more of its people, capabilities, assets and ideas in the economy?
These are not just academic questions. They are reflected in the anxious, tired, sadly angry faces of the small business owners I meet in the course of my job. These heroes are wonderfully resilient, but at all economic levels they are struggling. And their ranks are far thinner than an economy of this sophistication should contain — contributing to the huge unemployment rate.
These are the questions addressed by Ricardo Hausmann and his colleagues from the Growth Lab in the Kennedy School of Government at Harvard, in a report released last week based on two years of research and 10 working papers. It blames collapsing state capacity and spatial exclusion.
“It is painfully clear that SA is performing poorly, worsening problems such as inequality and exclusion. The economy’s ability to create jobs is slowing, worsening SA’s extreme levels of unemployment and inequality ... Despite its enviable productive capabilities, the national economy is losing international competitiveness ... Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice.”
I suppose the report illustrates both the strengths and the weaknesses of this puzzling country. The researchers appreciated the involvement of academics, NGOs, companies and several central and local government departments. The country has no shortage of committed experts, and many people in the government know exactly what the problems are — they told the Harvard researchers. South Africans know what to do. We just don’t do it.
Each major study of this kind comes up with interesting variations on the diagnosis of the country’s malaise. In this case, the lack of spatial inclusion recognises the historical damage to entrepreneurial capacity caused by apartheid’s geographic isolation of many people from sources of economic activity. Recent policies have not reversed this adequately. But the consistent theme in all such analyses is government failure.
Ann Bernstein of the Centre for Development & Enterprise interviewed Hausmann and reported his summary of the four interacting causes of collapsing state capacity as “gridlock on key decisions, ideologies that limit the full use of society’s capabilities, overburdening of state organisations with goals beyond their core missions, and systems of political patronage”.
My response, offered presumptuously without 10 working papers, is that their last cause - corruption - is the chief culprit. Researchers are remarkably polite in how they describe this. “Systems of political patronage” sounds so much more respectable than thieving. Corruption creates many of the other problems and undermines most of the solutions. Having begun well, the current government has steadily lost the plot, including failing to manage state-owned enterprises and infrastructure, which the private sector needs for its contribution.
The capacity was there, and some fine people remain buried in the public service, but competent people at senior levels were moved out as obstacles in the way of greed, while those remaining focused on capturing value for themselves rather than adding value for the country.
The solution is clear. The report finds that “for the economy to function and leverage all the human capabilities, productive knowledge, physical assets and natural endowments that SA has, the government needs to work”.
After many years of false dawns I have to conclude that the people of SA must get rid of the thieves in 2024’s election, and somehow avoid replacing them with worse. The selection of party representatives is a good place to begin before we vote.
• Cook chairs the African Management Institute.
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