Lavish funding of civil service jobs and grants was expected to secure a large ANC electoral base. Instead, the party’s support is suffering as funding sources dry up due to its antigrowth policies. ANC challenges are further increased by coalition dynamics and abrupt geopolitical shifts.
Unlike corruption, most patronage is approved through formal budgeting. In a coalition-style government this could favour the ruthless, yet the ANC can ill afford to further hobble the economy. A recent poll by the Institute of Race Relations indicates ANC support has declined to, and the DA’s has risen to, about 30%.
As declines in its electoral popularity and the party’s capacity to direct patronage are mutually reinforcing, ANC leaders would rather raise taxes than reduce civil service wages. Yet other coalition parties don’t favour sacrificing growth to support ANC patronage.
The Mandela and Mbeki presidencies sought to balance growth and redistribution, but this was followed by the Zuma era’s nine years of rampant corruption. While President Cyril Ramaphosa has tamped the worst abuses of state capture, he hasn’t meaningfully reduced patronage.
Patronage is effective when political support can be bought. That is, raging poverty increases the electoral value of meagre grants and civil service jobs are particularly prized amid ultra-elevated unemployment. However, high unemployment and an oversized civil service results in a low-productivity workforce.
A stagnant economy needs competitiveness and market access, to increase exports. Instead, the ANC has blatantly ignored both factors while exploiting historical inequities to justify patronage. While the corruption at Eskom and Transnet that undermined SA’s commodity exporting has been mitigated, most commodity-exporting nations are poor, whereas most high-growth nations add value to exports. This requires not just competence but competitiveness.
We sell commodities to our top trading partner, China, which sells us finished goods. That the ANC has chosen to closely align with Iran, Hamas and Russia further undermines our growth prospects given geopolitical tensions.
The ANC’s misguided economic and foreign policies have made it particularly vulnerable to coalition dynamics and US tariffs, which are largely intended to increase US leverage against China. Democrats, Republicans and many diverse governments oppose China’s use of unfair trade practices to weaponise its formidable manufacturing competitiveness.
Since Trump was elected there has also been a recoil in America from diversity, equity & inclusion policies. Given our apartheid-to-Mandela journey, SA symbolised such sentiments — and the resulting policies have entrenched the world’s most severe youth unemployment crisis.
SA is particularly vulnerable to US President Donald Trump’s tariffs since after a decade of anaemic economic growth it is becoming difficult for the government to fund its fiscal deficit. But Trump isn’t prioritising poor countries that rely on exporting commodities to China. Rather, he needs to sway countries such as Germany and Japan to take a harder line with Chinese imports in sectors in which it seeks to dominate globally, such as cars, solar panels and computer chips.
China’s economy generates tremendous export revenues, which its government has mostly directed towards building infrastructure, industrial capacity and housing. Its subsidies for strategic industries, and related unfair trade practices, have now initiated a global trade war. But because China’s communists favour production over household wealth accumulation, China’s domestic purchasing power, like SA’s, is insufficient to achieve full employment. This makes China vulnerable to wealthy nations aligning to increase tariffs on strategic exports.
As global trade norms that have evolved over many decades are being fundamentally altered, and as our budget process grapples with a dreary economic trajectory, SA’s ANC-dominated coalition government must urgently recalibrate its growth-impeding economic and foreign policies.
• Hagedorn is an independent strategy adviser.
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