SA is in serious trouble. The country has been mired in a crisis of low investment and slow growth for more than a decade. Its growth drivers and fiscal buffers are utterly depleted just at the time when the politics is becoming complex and unpredictable.
The upshot is that SA is experiencing a confluence of economic vulnerability, fiscal fragility and political uncertainty, making it difficult to see how we could pull ourselves out of this death spiral.
President Cyril Ramaphosa and business are still beating the drum that everything will be OK as long as we work together. They met earlier in April and agreed to undertake “practical joint action” in three areas: energy, logistics, and crime and corruption. Ramaphosa says he is “confident” that if these three issues can be addressed “we will be able to turn our economy around and unleash its full potential”.
I find it hard to take much comfort from this statement. The problem is that the damage done in these three areas runs so deep and is so entwined with vested political interests that it is unrealistic to expect any big reversal.
Turning the economy around would require the ANC to end cadre deployment and political patronage; it would require the firing of incompetent and conflicted ministers; it would require allowing the private sector to run government facilities. In short, it would require a complete change of heart from the government and reform in nearly every area of the economy.
Granted, now that Transnet is on the skids it is being pummelled into allowing greater private participation; and now that Eskom is on its knees the caps have been begrudgingly lifted from private energy self-generation. But after 15 years of allowing the country’s investment case and growth potential to disintegrate; after watching its levels of productivity and industrialisation being eroded year after year; after ignoring constructive advice from the private sector on how to improve the business climate — now the government wants to work with business to fix the economy?
As the ANC realises its failure on the economy is destroying its 2024 election prospects it is trying to back-pedal, but even if it fixed Eskom and Transnet tomorrow the economy would be unlikely to sustain rapid growth. SA’s problems run far deeper than that — Eskom and Transnet’s woes are just the most obvious symptoms of a structural decline that began in 2009 and has been gathering pace ever since.
Consider the education system. In 2022 about 20% of matric candidates wrote and passed maths and physical science — no better in percentage terms than in 2009. Over the same period SA’s fixed investment ratio has declined dramatically — from 22% of GDP in 2008 to just 14% now, which is below the level required to maintain the country’s capital stock.
In other words, firms are investing just to survive, just to get off the grid — few are investing in the future. But even if they were, the education system is not producing the skills they will need to grow their operations. And so, finally, Ramaphosa has announced visa reform to make it easier for firms to import scarce skills — but from a department of home affairs so dysfunctional I will soon make my fourth visit in as many months in an attempt to get a routine passport for my daughter.
The state is retreating, reluctantly ceding a little space to a more agile (and desperate) private sector and willing civil society. Though this will have positive spin-offs, no amount of active citizenship can replace state-led systemic change in a country where millions of poor people depend on the state for services.
Unfortunately, I see little hope of the state reforming its character at this stage — or even acknowledging that SA is failing to pass even the most basic of standards. SA may not yet be a failed state but we are certainly failing and have been for some time.
• Bisseker is a Financial Mail assistant editor.
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