What you need to know:
- South Africa is headed towards “collapsing state capacity”, says a leading US-based research group.
- A Harvard research team has delved deeply into South Africa’s failing infrastructure, and sees no options but for a radical shift in governance.
- Hope lies in promoting export- and job-creating “green growth industries”, as well as an overhaul of employment rules which favour politically connected persons
A hard-hitting academic study by specialists at highly-regarded Harvard University in the US has concluded a series of investigations that point clearly to “collapsing state capacity” in South Africa – and a bleak outlook for the country.
The report, the finalisation of a series of nine studies over two years, and the culmination of the renowned Harvard Growth Lab’s investigations of South Africa’s rapidly deteriorating state-provided infrastructure offers little hope on current trends – and it sharply underlines the hurdles before the ruling African National Congress (ANC), just six months ahead of a national election.
Early next year, South Africans will go to the polls for the eighth time since the dawn of democracy in this country in 1994.
But for the first time since the party of Nelson Mandela swept to power – tossing the race-based system of apartheid into history’s rubbish bin, in the process – there is a real chance that the ANC, once commanding up to 80 percent of the vote in most provinces, could lose sole control of both key provinces, including the economic heartland of Gauteng centred on Johannesburg, and of the national government.
With various forms of citizen protests over poor or non-existent ‘service delivery’ by local and national government having become a daily occurrence over the last several years, there is a strong prospect of both a protest stay-away by non-voting former ANC supporters, and of the disillusioned voting for other political groupings.
For the government of Cyril Ramaphosa, the 2024 poll will be a “make-or-break” election, as the president himself has admitted.
That admission came recently from the ANC leader while addressing the nation on several of the crises now afflicting it, from ‘rolling electricity blackouts’, which are crippling business and home life, to sewage running in the streets, lack of legal electricity access when the power is on, which is for only about half the day in some areas, and lack of freshwater access in many locations, to the potholes that riddle many roads servicing major urban centres and their suburbs.
The Harvard Kennedy School’s Growth Lab researchers diagnose South Africa’s decline as advanced and serious, and say tough choices need to be made by Ramaphosa and his team if the country is to move forward.
Concluding their two-year investigation, the researchers last week issued a final report, a stark diagnosis of the “collapsing state capacity” in South Africa, being the consequence of policy failures, mismanagement, and patronage, with painful outcomes for millions of poor, jobless people.
Of countries with formal unemployment figures, South Africa has the highest in the world at 31.9 percent, a slight decrease from 32.9 percent in the first quarter of 2023, with another 10-11 percent estimated to have dropped out of the job market altogether.
Worse than that, youth unemployment remains stubbornly and alarmingly high, say economic analysts, at 60.7 percent for those aged 15 and 24 years old, a slight improvement by 1.4 percentage points over the start of the year.
Put together with very low real growth in the economy, especially post-Covid, the picture portrayed is one of a country on a slippery slope towards complete failure of government to play its core roles.
Making the situation even more dire than in most African states, South Africa had had a well-developed infrastructure on the macro level, even though many poor black communities had been consigned between 1948 and 1994 to under-serviced and over-populated zones on the fringes of urban areas through apartheid ‘spatial planning’.
Now even previously well-serviced ‘upper income’ areas and city centres are suffering the general collapse against which citizens have been vocal in making public complaints, sometimes including violence, burning barricades, stone-throwing and general mayhem.
While the overall picture of a state in decline has been clear for some years, the Harvard research team has delved deeply into underlying causes – and sees no options for the ruling elites but radically to alter their approach to governance.
They do, however, also offer some concrete recommendations that could help the country in its required turn-around.
These include overhauling dysfunctional state-owned enterprises, especially the ailing electricity provision utility Eskom, still plagued daily with both scheduled and unscheduled blackouts affecting the entire country, plus others also in trouble, like the two state-owned rail entities for cargo and passengers.
The group’s final report urges South Africa to take steps to liberate entrepreneurs to exploit opportunities in “green growth industries” that could create jobs at home and drive clean energy exports.
It also recommends longer-term reforms to create more dense housing clusters located closer to business centres – exactly the opposite of what apartheid’s social engineers had set up as part of their stratification of South African society along race lines.
Black and poor communities remain largely stuck in desolate rural areas or increasingly in isolated suburbs, far from jobs in urbanised areas.
Said lead author of the report, Professor Ricardo Hausmann: “It is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion.”
Under Hausmann, a former Venezuelan planning minister and the Rafik Hariri Professor of the Practice of International Political Economy at Harvard, with contributions from a similar strategy lab at the London School of Economics, the research group drew on insights from nine studies published over the two-year project, culminating in the final report, “Growth Through Inclusion in South Africa”.
The Growth Lab is based at Harvard’s Kennedy School of Government and its team of more than 50 research scholars has led growth strategy projects in dozens of countries around the world.
The Harvard researchers also engaged with a network of local South African experts, including the Centre for Development and Enterprise, a leading think tank, as well as many community representatives across the country, in order to develop their analysis.
The resulting report says that despite best efforts, in the “three decades after the end of apartheid, the South African economy (has been) defined by stagnation and exclusion (of the impoverished black majority)”.
Asking why the nation’s economy is growing far slower than comparator countries, especially in Africa, the study identifies the predominant reason as: “South Africa is facing the economic consequences of collapsing state capacity.”
Government reform initiatives in recent years had encountered “systemic, deep-seated, and underlying issues of political gridlock, ideology, patronage, and an overburdening of state organizations with goals beyond their core missions and capabilities”.
Those goals include requiring state-owned businesses to employ politically connected people and to procure supplies from favoured firms, in line with the ruling party’s longstanding Black Economic Empowerment policy, meant to ‘level the playing field’ after nearly five decades of aggressive racial oppression, but only serving to effectively enrich a relative few.
“South Africa also needs to develop new and better mechanisms for driving inclusion, empowerment, and transformation that include far more of society,” the authors write.
Among impediments to growth are structural restrictions on hiring, which remain overtly race-based though now favouring black applicants almost exclusively, along with many administrative and statutory constraints on businesses.
The research group’s ‘green-growth strategy’ recommendations are grounded in some of South Africa’s traditional strengths, including manufacturing skills that create opportunities for production of fuel cells, among other identified emergent ‘green industries’.
But achieving these goals will need far-reaching reforms to remove regulatory barriers and allow more skilled immigrants into the country, the researchers say.
The hard-hitting report, elements of which have been admitted to by ANC leaders including Ramaphosa, leaves few places to hide for the ruling party ahead of its looming date with the electorate and has received substantial coverage in the local media.
Analysis of the report locally is that it is essentially accurate and is useful for having come from external sources, leaving government ‘spin doctors’ little room to blame its daunting findings on people ‘operating with agendas’, and is based on comparable experiences in other countries facing roughly similar conditions, such as Chile.
While the Harvard report itself notes that many of its recommendations are not new, what is ‘new’ is that Ramaphosa and his team are admitting to their challenges with increasing openness, while the D-Day for the ruling ANC closes in rapidly, leaving little time for Ramaphosa to make effective changes palpable to ordinary voters, before polling day comes round.