JOHAN FOURIE AND CLAIRE BISSEKER | Learning from birds and gnus

There is consensus in South Africa that the fastest way to raise the economic growth rate is to accelerate the pace of economic reform. But to do this, the government of national unity (GNU) needs to really work.

This is one of the core messages from the Pick-A-Bird scenarios developed by the Bureau for Economic Research (BER). The bureau has modelled three scenarios: the Hadeda, where South Africa continues to muddle through; the Marabou Stork, where South Africa descends into a failed state; and the Fish Eagle, where growth soars to 3% and 2.4-million jobs are created by 2030.

In the Hadeda scenario, the GNU holds, but coalition complexity and state incapacity limit its ability to deliver reforms. In the Fish Eagle, South Africa uses the current political window to deliver rapidly on its reform agenda. But in the Marabou scenario, the trigger for the country’s descent is a political realignment that results in a more populist GNU that fails to back the existing reform agenda.

In a paper commissioned by the BER, “The Political Economy of Growth Coalitions: Lessons from Five Countries for South Africa”, we find it is not enough for the GNU to just hold together. It must generate sufficient policy coherence to reduce uncertainty, thereby catalysing a sustained private fixed-investment upswing that leads to higher growth and employment.

Three chief risks could derail South Africa’s positive trajectory:

• Coalition fracture: if the ANC and DA cannot resolve disagreements on specific policies, the GNU could collapse.
• Reform fatigue: if delivery is too slow, public patience may dwindle, allowing populist alternatives to gain ground.
• External shocks: the oil price rise could overwhelm the coalition before reforms produce results.

The paper examines the experiences of Chile (1986), Poland (1992), India (2002), Germany (2005) and Argentina (2003) to determine what political conditions enable sustained economic growth.

All five countries experienced high political contestation at the start of their reform journeys. Of these, Chile, Poland, India and Germany represent Path A — countries in which contesting factions forged durable political settlements.

When Poland embarked on its post-transition reforms in 1992, its GDP per capita was similar to South Africa’s today. Polish living standards had doubled 20 years later. South Africa has averaged barely 0.5% per capita growth over the past decade, a trajectory that, if sustained, would leave living standards essentially unchanged a generation from now.

Path A countries show that merely opening a reform window is insufficient; what matters is whether the political settlement is credible enough to generate the policy coherence and demonstrable results necessary to reduce uncertainty and unlock private investment.

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Argentina represents Path B. After a default in 2001-02, the country’s economy accelerated, but market-orientated reforms were subsequently abandoned because Peronism’s factional structure prevented a durable political settlement from being reached.

In short, without credible commitment, the bargain unravels: subsequent governments reverse reforms, uncertainty returns and growth collapses.

Germany under then-chancellor Gerhard Schröder offers an alternative case study. The Hartz reforms (2003-05) almost halved unemployment, but the political cost was devastating — the Social Democratic Party split and Schröder lost the 2005 election, a fate not dissimilar to that of former ANC president Thabo Mbeki.

Jacob Zuma’s presidency eroded many of Mbeki’s gains but, unlike in South Africa, Germany’s institutional structure made the Hartz reforms difficult to reverse. When Angela Merkel’s Christian Democratic Union (CDU) succeeded Schröder, she preserved and extended the reforms because reversal would have required a very broad consensus.

The distinction between Path A and Path B is not whether growth accelerates but whether it is sustained. It is the difference between doubling living standards in a generation or going nowhere, like the noisy, panicky Hadeda.

Three chief lessons can be distilled from the paper:

• Deep crises open reform windows by lowering the political cost of policy reform. But only credible political settlements — those that reduce policy uncertainty — can translate those windows into sustained private investment and growth.
• Successful reformers start with high-visibility, broadly beneficial reforms (such as building infrastructure). They defer the most divisive changes (such as labour market reform) until a growth dividend materialises but do not defer the hard choices indefinitely.
• Reforms survive only when institutional anchoring makes reversal costly and the coalition maintains operational coherence around a focal programme.

South Africa’s crisis is slow-burning. This makes reform harder. It means the GNU must construct urgency by being honest about the cost of inaction; build credibility by achieving visible delivery milestones (such as stabilising Joburg’s water crisis); protect existing institutions; and build coalition coherence around a shared policy programme and reform scorecard.

Based on these lessons, we should be constantly asking: are high-impact reforms being achieved? Is there a shared reform programme with clear deliverables or are coalition members pursuing parallel agendas or being drawn into politically divisive battles?

Positive answers would place South Africa on Path A. Negative answers would suggest we are drifting towards Path B, as marked by the slow accumulation of policy incoherence that prevents a sustained acceleration from taking hold.

The central message of the BER’s scenarios is that South Africa has only a short window to accelerate the pace of reform and make the GNU work better.

What’s missing in South Africa now is a credible, shared GNU policy agenda aligned to the national budget and tied to a detailed GNU scorecard (as opposed to only an Operation Vulindlela scorecard).

The coalition is holding, for now, but the risks are growing, and South Africa shares far too many features with Path B countries for comfort.

• Fourie is the chair of economics, history & policy at Stellenbosch University. Bisseker is an economics writer and researcher at the BER.