How stable is South Africa?

Lawrence Schlemmer on the short and medium term prospects for the country

How confident can we be about South Africa's future stability?

While the longer run implications of the "Arab Spring" are far from clear, it has certainly been a wake-up call for sanguine forecasters, demonstrating once again that pendulums of stability can swing very rapidly and surprisingly. Although the contexts are very different, the Arab uprisings have lent resonance to mass upheavals all over the world including the recent rash of urban protest in South Africa. Is South Africa in for surprises?

Short-term stability?

Early speculation in the recent local government elections was that the ANC would pay a significant price for decaying local administration, pervasive corruption and poor service delivery. In the end the overall results showed that the support base of the ruling party is still largely secure. The most significant change that these results reflected was that the electorate is now clearly more comprehensively racially polarised than before, with the white and brown racial minorities very substantially in opposition and the vast bulk of Africans still loyal in support of the ANC.

In general at most around 5-7% of African voters voted for the official opposition, the DA. This is part of a very slow accretion of African support for opposition parties and will continue as Africans relocate away from the pressure for solidarity in black townships. There are unlikely to be abrupt shifts until a tipping point is reached, which, all else being equal, is some time away.

Although depicted in headlines as mass disaffection, the cores of open protest among African voters were largely limited to the 17-20% of people living in typically badly neglected temporary shack, backyard or inner city housing. The anger and grievances are genuine, but my own research shows that these people still pin their underlying hopes on the ANC. In the established formal townships very roughly 60% of urban Africans are broadly satisfied with conditions.

The government's provision of heavily subsidised housing, generous concessions for indigent residents and the issuing of up to 15 million state pensions and grants - an overall average of more than one grant per household -- still ensure massive captive political loyalty. Any swings of African support away from the ANC occurs mainly in that section of the emerging middle class that lives in mixed suburbs and is not dependent on government employment, preferential policies or other forms of government-linked largesse or business opportunity.

Thinking of the Arab Spring and its striking evidence of police brutality, it is also significant that only some 25% to 32% of South Africans have serious grievances about the police and the way they act, notwithstanding reports of increasing delinquency in police ranks. Although about half of poor people feel that the police discriminate against them, there is still no parallel with the picture of generalised police oppression in the Middle East.

The numerical strength and leverage of the ruling party still binds the somewhat crude ideological factions in the ANC ruling Alliance together, lending it underlying if fissiparous and noisy coherence. Risk analysts should conclude that relative to the Middle East and now even parts of Europe, the short-run political future of South Africa, although not pretty, is almost reassuringly predictable.

The medium term onwards?

This is where predictability runs into a wall. With time, ferment and the pressures of popular expectations will build up a powerful head of steam. The most serious single source of uncertainty about the future of our democracy is how the ANC will react to a possible rapid slide in its support.

The current responses of the ruling party to urban protests has been to attempt corrective action against mismanagement, corruption and patronage, the results of which have yet to be seen. But it has made more and more promises of improvements in service delivery that probably overreach its well-recognised capacity constraints, and such promises will reach a crescendo before the next general elections.

Here we must bear in mind that the entire process of political transition from 1994 onwards has been so comprehensively suffused with floods of captivating rhetoric about "transformation" and social justice that the electorate is trapped in a form of "cargo cult" - with the ruling party as the latter day equivalent of colonial ships bringing great stores of goods and (useless) trinkets to remote Far-Eastern shores. Notwithstanding growing cynicism about the quality of political leadership, politics as an institution is seen as a delivery machine. Few attempts have been made to moderate expectations - why spoil the party?

The key challenges in governing South Africa from now on are indeed dramatic. At the apex of the challenge are livelihoods. The effective unemployment rate is a startling 33% (including discouraged people who no longer seek work), rising to a rate of 38% among Africans and to no less than three quarters of under 25 year old African youths who are no longer studying.

Two-thirds of this world record-breaking unemployment is well over one year in duration and most of the affected youth will never find sustainable economic activity. It follows, then, that they will never acquire the everyday orientations to enable them to become self-reliant and productive citizens. They are condemned to live off handouts from older relatives, the sparse returns of state grants and the promises of politicians.

We face the near certainty of tragically "redundant" generations, with all the associated problems of demoralisation, boredom and lack of any status in the community. These young people are vulnerable to self-destructive behaviour, sexual profligacy, HIV-Aids, petty crime, prostitution or near pathological motherhood in the expectation of meagre child grants. This is a national disaster far more destructive than any other problem in our society.

At this stage the political consequences are not yet fully evident. My own and other research shows that at present the majority of these youths are not (yet) highly politicised or angry - theirs is usually a state of demoralisation and apathy. Psychologically, however, it means that the youth generation is chronically vulnerable to recruitment into gang-based crime or into the activism of slick political entrepreneurs.

Hence the majority of African youths are potentially the foot soldiers of radical, reactionary or populist dissent. The political ferment in the Middle East is an example of this consequence, but there the brutal excesses of the regimes have at least dignified it. In South Africa, the inflammatory rhetoric of the current Malema-ANC Youth League activism is a very serious portent of things to come. How long, then, can South Africa retain its basic political stability?

It all depends on the likelihood of our politicians setting aside their heroic pre-written speeches and reflecting modestly and honestly about corrective strategies and realistic policies. Hitherto, signs have not been reassuring.

The national disaster of one of the highest recorded rates of unemployment in the world has been evident at least since the nineties. One opinion poll after another, including its own polls, has reminded the government that this is far and away the top policy priority.

Yet protectionist pressure from the unions disguised by outmoded class warfare rhetoric, given credibility by high levels of inequality and scurrilously high executive rewards, have combined to block the use of the most obvious and effective short-term stimulus for job creation - the deregulation of the labour market. The debate over this has produced a rich source of ideological point scoring but meagre results other than rattling investor confidence and a further honing of the rhetoric of anti-business activists.

In the short run no involved politicians can claim to care about young people unless they make sure that every possible source of employment is opened up to unemployed people. This, however, is not the only serious challenge facing stability in the future. There is a malaise in the state of the nation that has been roundly confirmed by the government's own recent review, carried out by Minister Manuel.

Nothing better depicts the fault lies and massive impediments to longer-run growth and stability than the results of Competitiveness Ranking of South Africa over time. I would be the first to concede that the methodologies and precision of these rankings are problematic, but in the broadest terms they validly outline a picture of the distortions in our state of society.

South African Global Competitiveness rankings (World Economic Forum, also reported in the South African Institute of Race Relations: South African Survey)

South Africa's Country Ranking over time:

2006: 36th
2007: 44th
2008: 45th
2009: 45th
2010: 54th

(Next highest in Africa: Mauritius 55th and Namibia 74th)

(Although the numbers of countries ranked have changed, the countries ranked above South Africa are consistent and therefore the recent rankings are comparable.)

South Africa is falling in its relative competitiveness. The most disturbing picture emerges in respect of the components of the ranking, however.

South Africa's best and worst rankings out of 139 countries on selected components of competitiveness: 2010:

Best rankings include:

Auditing Standards:


Regulation of the Securities Exchange:


Efficacy of Corporate Boards:


Soundness of Banks:


Equity Market Financing:


Financial Services:


Financial Market Development:


Weakest rankings include:



Quality of Maths and Science education:


Business costs of crime:


Hiring and firing regulations:


Labour-employer cooperation:


Flexibility of wage determination:


Quality of the education system:


Life Expectancy:


Pay in relation to productivity:


These ratings give a perfect picture of a society with a split personality. The highest rankings are the legacy of a developed, first world corporate sector. The lowest rankings are evidence of the decay of crucial aspects of governance that have fallen below developing world standards. This pluralism may be substantially inherited from Apartheid but the rankings over time show that the current dispensation is actually aggravating it, not by design, but by strategically and ideologically blinded default. Will the leading economy in Africa be allowed to sink below its continental peers? In some key respects - mass education in particular - it already has.

There are many indicators that reinforce this dismal pattern. Gross fixed capital formation is on a rough plateau since an upturn in 2005-2008, as is private investment, which has been falling as a proportion of GDP. Gross domestic saving as a proportion of GDP is down to roughly half its levels in the eighties and the Minister of Finance has just warned that our gross savings rate of 16%, down from 30% in the early nineties, compares very poorly with rates in other comparable countries. We are starved of domestic growth capital.

But since 2001 the number of beneficiaries of state social grants has increased from 3,5 million to 15,1 million, an overall average of over one state welfare beneficiary per South African household. ANC MP Prof Ben Turok laments: "South Africa is becoming a charity rather than a developmental state" (HSRC Review, June 2011).

Employment is being crowded out by increasingly expensive government services. Wages in the public sector rose by 23% in real terms over the period 2006 to 2010 compared with a 19% increase in private sector wages.

One can go on and on with statistical examples but one keynote indicator of a state on the cusp of disaster will have to suffice. One major reason why we have cataclysmic levels of youth unemployment is that the vast majority of school leavers in the mass education system are unemployable. Prof Jonathan Jansen calls it "a class based calamity" pointing out that no other government in Africa spends nearly 5,4% of its GDP or 20% of its revenue on education, providing largely free education in 64% of its schools, but this avalanche of money notwithstanding, fewer than half the pupils who enter the educational system reach the final grade 12 and the educational quality, as measured, is now virtually the lowest in Africa. (Sunday Times, July 10, 2011).

Jansen has the courage to say what most business leaders and academics are too nervous to say, that the government has to exercise political leadership and take the political risk of reclaiming mass education from the ideologically sharpened protectionist claws of the SA Democratic Teachers Union

South Africa can, however, challenge the world in one form of production - the output of arcane and overly ambitious policy documents that will wondrously claim to fix all these problems. The record, however, is that they will fail the test of implementation. They tend to have one thing in common - they are pitched at maximum effects whereas all successful policy is aimed at optimal effects - first and foremost taking realistic account of impediments and counterproductive consequences.

This is not the result of mysterious "expertise" but largely of humility, common sense and judgement. South Africa has enormous but increasingly hidden potential, but if we follow our competitiveness ratings and most other current indicators downhill to a failed state, with instability to boot, it will be on the heads of our leading politicians and their judgement.

Lawrence Schlemmer is former Vice President of the HSRC and professor, now an executive director of a research company, MarkData.

This article was published with the assistance of the Friedrich-Naumann-Stiftung für die Freiheit (FNF). The views presented in the article are those of the author and do not necessarily represent the views of FNF.

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