South Africa is turning into a mafia state in its failure to uphold the rule of law and allowing criminality and corruption to thrive amid rising unemployment and inequality.
Unless urgent measures are taken to accelerate economic growth, the structural problems and volatile security situation will worsen — potentially sparking social unrest and even triggering national and provincial elections on the country before 2029.
So says Colin Coleman, former CEO of Goldman Sachs Sub-Saharan Africa and a nonresident fellow with the Atlantic Council’s Africa Center, a global think tank.
The failure of the government to grow the tax base and reallocate budget spending to productive investment — along with failing to hold wrongdoers accountable — were causing a slow systemic meltdown, echoing the early warning signs seen in countries prior to the Arab Spring, Coleman said.
“I believe that the balance of risk suggests that it is unlikely — without changing trajectory — that the country will be able to hold together without calling an early national election.
“This is because society may either become too unstable — as unhappiness grows due to the lack of implementation of the rule of law, high unemployment and high inequality — or that something will give ... in the ANC or the GNU [government of national unity], resulting in a build-up of pressures.
“It’s likely that the boiling point may be reached sooner than 2029.”
Corruption is becoming systemic
Coleman, co-chair and nonexecutive director of the Youth Employment Service, warned that the spiral towards a mafia state risks becoming irreversible.
“When corruption enters society, it becomes part of the furniture and is extremely difficult to extract. So then your political/economic system becomes a mafia-like system … an extractive system.”
When corruption enters society, it becomes part of the furniture and is extremely difficult to extract ...
This everyday slide into a mafia state manifested itself in the proliferation of an underground, illegal, untaxed economy, driven by politically connected “tenderpreneurs”, the construction mafia, armed gangs and other illicit formations — all of which posed a threat to democracy.
“Some time ago, I warned that without spreading economic opportunity far and more widely, the current merging of criminal and political interests to illegally access economic opportunity would accelerate. New forms of illegal economic organisation would crowd out legal, formal and taxed economic activities.
“This growth in the informal, untaxed, illegal economy enmeshed within the politics of the ruling party and others is going to completely contaminate democracy.”
Growth stagnation worsens inequality
Coleman said South Africa experienced high population growth — including an influx of undocumented migrants — but this was not been matched by growth rates, which had hovered around 1% for 15 years. GDP had remained stagnant at around $400bn (R6.9-trillion), the same level it was in 2010.
He contrasted this with emerging market peers, including Türkiye, with a population of 80-million supported by a GDP of $1.2-trillion; and Poland, which has added $300bn more to its GDP since 2011.
He repeated previous sentiments that with higher economic growth, the government could work South Africa out of its R6-trillion debt problem.
“We have a growth problem and we have a debt problem; but we’ll only be able to deal with our debt problem by sustainably achieving high rates of growth.
“The US under [former president Bill] Clinton, for instance, worked themselves out of a debt problem by turning a massive deficit into a surplus by significantly growing the economy. No amount of austerity without growth will solve our debt problem.”
Leadership capacity is the missing link
Coleman questioned whether there was enough capacity in President Cyril Ramaphosa’s cabinet — specifically in the key economic and security departments — to drive the required reforms and restore the rule of law.
“In any system, the ability to implement and to succeed and execute is entirely based on the people you have. Unless you change the team, you won’t get a different outcome.
“So Ramaphosa needs to have — in critical portfolios — a much more capable and much more authoritative team, that can execute. He doesn’t have those people with him.”
In any system, the ability to implement and to succeed and execute is entirely based on the people you have. Unless you change the team, you won’t get a different outcome.
The former senior fellow and lecturer at Yale University’s Jackson Institute for Global Affairs believes the GNU has been ineffective in driving economic reforms and restoring the rule of law — with a few exceptions, such as fixing loadshedding and improvements at the department of home affairs.
Should a national election be called earlier than 2029, current polling suggests the ANC may slide to 30% from 41%, while the DA may increase support from 21% to 30%, which would then bring the balance of power in a GNU much closer to a genuine sharing of power between the two.
“Together, this rebalanced GNU will arguably be more capable of executing on a growth and rule of law mandate, deploying the best South Africans to lead and execute on the key portfolios. That will constitute the glue that can hold the centre.”
Coleman said time was running out for South Africa if it hoped to mend relations with the US and strike a fairer trade deal that could see import tariffs on locally made goods and products eased towards 15%, in line with emerging market peers.
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