South Africa: From Model Nation to Captured State?

South Africa – the country which has often been described as model for a good, functioning democracy and prospering example in Africa, is nowadays making headlines of a rather different nature: growing dissatisfaction with the national government, President Zuma’s announcement to withdraw the country from the International Criminal Court (ICC), a stagnating economy and ongoing protest are elements of how South Africa currently jeopardizes its model perception. What way forward can there be? Lindiwe Mazibuko, former Parliamentary Leader of the official opposition in South Africa, the Democratic Alliance (DA), joined us for a chat and gave us her perspectives.

The social realities: student protests & the ICC

The South African nation is currently experiencing violent protests at universities throughout the country. Since announcement of steep raises of tuition fees in 2015, there have been ongoing protests against further raises and a growing frustration about a lack of access to funding. Even though President Zuma has frozen the fees for the time being, new raises have already been announced, fueling again the anger of the students. But it is many different inequalities which have merged under the demand “#FeesMustFall”, according to Lindiwe Mazibuko. As she argues, these protests are indicators of something greater – a sign of lack of economic growth and high unemployment rates, especially among the (black) youth: “The dissatisfaction has been underestimated. We have to come to terms with these realities. We cannot ignore them. These are issues which have to be addressed at the leadership level.”

Moreover, President Zuma recently announced the country’s withdrawal from the International Criminal Court (ICC). Mazibuko condemns the President’s action: “It’s a dodgy, shady move.” Other African countries might jump on the bandwagon and follow the nation’s negative example.

Capturing the State?

But the leadership, namely South African President Zuma, has to face a number of further criticisms. The South African Public Protector’s Office recently published its state capture report, which points out several hundred allegations, potentially against the President. Some of them reach back to the time even before he entered office. Many of them evolve around the speculations of the President outsourcing governmental duties to external businessmen, specifically the Gupta family. Since he is transferring governance matters to them, he is breaking his sworn presidential oath, argues the former Parliamentary Leader of the Democratic Alliance. Their influence supposedly even reaches into appointments within his Cabinet. “This should have been the thing that toppled him out of office”, so Mazibuko. Despite all of this his party, the African National Congress (ANC), is still doing its best to protect President Zuma. According to Mazibuko, it is a “poor decision” to support him no matter what. Thus, the prospect of change in South Africa political leadership will depend on whether the ANC’s support of President Zuma will hold on in the years leading up the to the next General Elections in 2019 or if they would be willing to come forth and support a different candidate, she concludes.


Will the state capture report make President Zuma fall?

However, bearing the recent state capture report in mind, the question has to be raised whether President Zuma will still be in office at that point. Will President Zuma resign as a result of the report? According to Mazibuko, no: “He would like to profit as Head of State as much as possible, and then resign. He will sit our legal proceedings”. Mazibuko, currently author-in-residence at the Stellenbosch Institute for Advanced Study in South Africa (STIAS), names the government’s planned nuclear deal, which would cost the African nation a large chunk of its annual budget, as an example. While it would put the country into long-term debt, President Zuma is still determined to push it through. There are a number of renewable energy options in South Africa, so it’s not like there is no alternative to nuclear energy, argues Mazibuko: “When we think of President Zuma’s personal plans for being in office, this is the deal he wants to push through”. For the time being though, the Treasury still constitutes a threshold against the President’s plans.


The Democratic Alliance – is it able to spearhead change?

During the local elections in August of this year, the ANC unexpectedly lost a number of important municipalities to the Democratic Alliance, the official opposition – a sign of the ANC’s declining electoral support. On a national level “it was always the plan of the DA to draw the ANC under 50% and then form a coalition government”, explains Mazibuko. What she regards the biggest task ahead of the opposition party now to ignite change: “Gather enough votes so that it can push through its ideas. It’s not enough for ANC to decline, but to make sure that the DA can bring through democracy”.

Anna Reineke

South Africa – a failed state?

In the last few years, South Africa has been making international headlines for all the wrong reasons. In 2012, the world was presented with harrowing footage of South African police as they gunned down miners during a protest in Marikana, resulting in the death of 44 people.

Earlier this year, the South African government blatantly ignored an ICC court order to prevent Sudanese President Omar al-Bashir from leaving South Africa. Where is the country headed? Is South Africa likely to go the way of its neighbouring state, Zimbabwe, or can the ship be turned around?

Frans Cronje from the South African Institute of Race Relations shares his views on the current situation:

IMG_7451The title that I was asked to speak to, South Africa – a failed state, is a timely warning to the South African government of just how opinion has swung against the country. It is a question that should never have been allowed to arise – but it has and must be answered.

For the last 40 years analysts working at the IRR have been able to speak optimistically about South Africa’s prospects confident in the knowledge that their analysis would prove to be accurate. Matching optimism with accurate analysis has become a lot more difficult.  

South Africa’s socio-economic predicament is well understood. Our economic growth rate is well below that of comparable emerging markets – particularly those in Africa.

Electricity supply shortages are a crippling constraint on future growth and make it impossible, in the short term, for the country to notch up growth rates much above 2% of GDP. But economic growth at twice that rate is necessary to make inroads into our unemployment crisis. Half of the country’s young people do not have jobs.

Only half of South Africa’s children are likely to complete their schooling, while less than 1 in 10 will pass mathematics with 50% in their last year of high school.

Yet our economic evolution has been towards an increasingly high-skilled services orientated economy – in which the role of primary and secondary sectors has fallen away.

Weak economic performance is hurting the country

Weak economic performance is putting pressure on government revenues, which means that policies based on state-driven socio-economic advancement are ever less likely to succeed as the fiscal deficit becomes one of the most powerful forces acting on the government. Debt levels (that have doubled in a decade) exclude the possibility of aggressive borrowing.

The current account deficit has the distinction of being the widest of any country tracked weekly in The Economist. The current commodities blow-off has left South Africa’s export economy even more exposed – and we do not anticipate a commodities recovery for quite a number of years.

Yet the manufacturing economy has been decimated over the past 20 years by rising costs and unwise labour policies. The domestic consumer confidence index – which drives household spending equivalent to 60% of GDP ­- is plumbing decade deep lows. Household debt levels have escalated by 30 percentage points over a decade while in recent years secured lending has flattened as unsecured lending levels trebled.

We see increasing evidence of investors getting out of South Africa. Rising and unmet expectations are now driving violent protest levels that have grown by more than 100% over the past decade as government popularity turned downwards.

Threats against civil society are mounting

Voter turnout has fallen sharply and more people now choose not to vote than those who support the ruling party. To complicate matters the South African government has adopted a peculiarly virulent anti-Western – and anti-European – foreign policy. Threats against the free media, the judiciary, and civil society are all escalating as the political temperature increases.

We are, of course, not a failed state – I can say that with complete confidence at the start. But if state failure starts somewhere then the combination of forces I have described above would be as good a point as any. As a colleague suggested to me yesterday if you want to make a failed state then we now have many of the ingredients. Arguably, then, at worst, we are in the embryonic stages of state failure. The question is where do we go from here?

The answer will depend on the extent to which our current socio-economic predicament is exploited by a clique of powerful politicians who have effectively hijacked the policy formulation process in our country in order to place South Africa firmly on the route, first to socialism, and then, to quote from the South African Communist Party, which now commands 4/10 Cabinet seats, eventually, “a fully-fledged communist society”.

How did this unfortunate state of affairs come to pass?

In 1991 Nelson Mandela returned from Davos convinced that the world had changed and that the Afro-Socialism – once espoused by his party – needed to be rejected in favor of a new, better, economic policy direction.

That thinking led to the drafting, first of the Reconstruction and Development Programme (RDP) policy blueprint in 1994, and then the Growth, Employment, and Redistribution or GEAR policy in 1996 which became the mainstay of much South African economic policy thinking for the next decade.

Both policies, GEAR especially, were conservative policies that emphasized the importance of economic growth and fiscal consolidation – as well as sound relations with Western powers.

These policies saw interest rates more than halve between 1994 and 2007, the debt to GDP ratio was brought down from 48% to the 20 percentiles, economic growth steadily escalated to average over 5% of GDP between 2004 and 2007, and six million net new jobs were created. In two years the South African government was even able to show budget surpluses. 

Such liberal conservatism came under considerable pressure from remnants of the leftist and communist factions of the African National Congress. But Mandela was resolute on the importance of South Africa adopting a pragmatic economic policy framework. He personally drove considerable efforts to isolate communist influences within his party – a role later played by his eventual successor Thabo Mbeki.

In addition higher growth rates, significant early job creation, an expanding tax base, and declining debt levels allowed the government to implement one of the most expansive social welfare systems of any developing economy.

While we were critical from the start of the dependency this bred we have none the less repeatedly acknowledged the significant improvements that accrued to the living standards of poor people

On balance during its first 15 or so years as a democracy South Africa was showing many of the signs that its political transition of the 1990s would, despite stumbling blocks, see the country emerge as a leading emerging market.

Times have changed 7 years ago

However, over the past seven years things have gone very badly wrong. At a policy conference in 2007 leftist factions within the ruling alliance staged a fight back and deposed President Thabo Mbeki.

That policy conference was the beginning of a purge, and later isolation, of the ANC’s pragmatic generation of post-apartheid leaders.  Their places have been filled by hardline communists who now exercise a considerable degree of influence over economic thinking.

This new leadership has wasted no time in seeking to change South Africa’s policy trajectory. It has sought to undermine the private sector, isolate the country from Western interests, and erode its democratic institutions.

Indeed earlier this year a senior communist leader suggested that South Africa should uncouple itself from the global economy. Just last month the ruling party issued a scathing, even hateful, denouncement of Western democracies – something that should be of great concern here in Brussels as the implications for your long term interests in Africa are likely to be so significant.

One prominent example of the new policy trajectory is the Private Security Industry Regulation Amendment Bill of 2013 which will require all foreign-owned security companies to have 51% South African ownership. This may herald the beginning of broader indigenisation requirements, as in Zimbabwe.

The Economist saw the risk early on when in quoted us faithfully that South Africa had “moved quickly to adopt laws and policies that weakened property rights, reduced private sector autonomy, threatened business with draconian penalties, and undermined investor confidence”.

Though such statist intervention is clearly proving harmful in practice – just look at our economic indicators – it still enjoys considerable support among key opinion makers.

In our engagements with civil society organisations and journalists, we regularly confront influential people who spend a lot of their time advocating for ways in which the state can exercise greater control over the lives and futures of individuals, businesses, and other organisations. Perversely such policy may become even more entrenched as the economy weakens.

Our democracy is in trouble

The danger is not just in the economic sphere. Rather the consequences of declining economic freedom have already been exploited to drive a resurgent racial nationalism that argues for rights and freedoms in the Constitution to be eroded in order to liberate the poor from oppression. As a result our democracy is in trouble.

We have warned at length about growing political manipulation of agencies and institutions ranging from the police, to the revenue service, the national broadcaster, the public protector’s office, and the human rights commission. The judiciary regularly faces unfortunate political criticism. In fact every democratic institution is being eroded where it demands political accountability or investigates official malfeasance.

The free media faces hostile regulation and many newspapers are heavily dependent on government advertising, which could now be withdrawn from those identified by the government as too critical and “negative” in their reporting. Some have already published sycophantic pieces of appeasement designed to win favor with South Africa’s political elite. 

Also worrying is the growing brutality of the State. We have warned against the high number of torture cases being brought against the police. In time, we said, such methods might be used not only against criminals but also against the Government’s political opponents.

Popular demonstrations are regularly suppressed and activist leaders intimidated by the security forces. Many civil society groups and think-tanks (although not ourselves as we are almost exclusively domestically resourced) rely on foreign funding which if restricted will greatly undermine civil society activism.

This analysis might seem too strong to some. However, not even the sanctity of Parliament was respected when riot police entered that house to eject an opposition member who had described the President as “a thief”.

Weeks later a police contingent disguised as parliamentary stewards would evict an entire opposition party from South Africa’s state of the nation address after party members engaged in aggressive heckling that forced the President to interrupt his speech. We now have a government whose security forces shot and killed over 30 protesting mine-workers but three years later has as yet to hold any official to account.

Continued decline is very likely

Don’t be fooled by the South African government’s protestations or purported renewed commitment to the National Development Plan (NDP) – its latest policy blueprint. In the hands of the current Cabinet this plan may turn out to be little more than a smokescreen for another agenda.

Our sense, based on 80 years of experience in South Africa, is that a single overt move to drive the country into socialism overnight, seize all private assets, and destroy all democratic institutions remains less likely than a continued white-anting of constitutional protections for property and other rights as the economy stagnates.

This continued decline is our most likely scenario. If the electoral system remains intact it may culminate in a defeat for the ruling party, triggering a new era of coalition politics. The likelihood, however, is that the political leadership will seek to destroy democratic institutions to cling to power by any means.  

If we are to turn the tide we must exploit the window of opportunity that exists in South Africa’s current economic crisis and dedicate ourselves to shifting public opinion away from dirigisme and towards the economic freedom vital to investment, growth, and jobs. We must also keep showing that economic and political freedoms are two sides of the same coin. Given the essential link between the two, the diminution of economic freedom now well in train will in time also reduce the political freedom secured in 1994.

If we can be successful in advocating for reform then there is a second scenario in which a future South African government, under incredible political and economic pressure, adopts market driven policy shifts and a multi-polar foreign policy in a bid to secure the investment to drive the growth levels to create the jobs to meet popular expectations while reducing the triple (household, current account, and fiscal) deficits.

While we assign a degree of plausibility to this, better, scenario the latest policy documents published by the ruling party still remain hostile to property rights and private investment. Equally much of civil society and the media remain ideologically hostile to market reforms while business leaders are seeking to diversify out of South Africa and Western diplomats seem unsure about how to respond to the rapidly changing climate.

Certainly they are doing very little to advance reforms. For our part we are not going to die wondering what might have been. We are working very hard to build a groundswell of public, official, and political support for policy reform in order to safeguard property rights and the rule of law, adopt market driven reforms, and thereby position our country as a leading emerging market on the continent.

Africa Rising: Free Trade on the fastest growing continent in the world

IMG_4161Will Africa become a new global economic player and make use of its abundant natural resources? 18 monts ago and way before the outbreak of the Ebola-crisis, the “Economist” called Africa he “hopeful continent”, arguing that African lives had greatly improved over the past decade and the prospect for the next 10 years was even beter. Continue reading

Upcoming event: Africa Rising: Free Trade on the fastest growing continent in the world

World Bank,Namibia 2007.Tuesday, 14 October 2014
12.00 – 14.00
Venue:Friedrich Naumann Foundation for Freedom, Avenue de Cortenbergh 71, 1000 Brussels

Africa is the world’s fastest growing and most natural-resource rich continent in the world, with the real potential to become the world’s next economic powerhouse. There are, however, still many opportunities that must be seized in order to transform this potential into reality.

With this in mind, the panelists examine the current state of trade in and with Africa – what African states are getting right, what challenges must still be overcome, how African countries can make themselves more competitive and how the Africa Liberal Network plans on spearheading the drive to increase levels of free trade on the continent. Continue reading

Video Interview with J. Endres and F. Cronje: Trade trumps development aid in Africa

Mandela Cronje (Kopie)In many African countries improvements in good governance are accompanied by economic growth. However, increases in growth and trade are not equal to “development”, thus more efforts have to be directed to improve good governance and the efficiency of governments in Africa. Asked about policy recommendations on how the EU could support democracy in (South) Africa, there’s a clear message: The EU must step up its game and understand that facilitating trade trumps development aid.

Susan Schneider

An eye for an eye – the evolution of Human Rights regimes

webseite1“An eye for an eye” proclaims the Old Testament, which serves as the argument to shut down all discussions on the abolition of the death penalty in contemporary Catholic-dominated southern African states. However, EU officials proclaiming that the death penalty is not in accordance with “western values” and must be abolished as part of conditionality agreements is an imposition, not a strategy either. Europeans tend to forget what the representatives of the Southern African Legal Assistance Network (SALAN) were relieved to learn: that the death penalty was once admissible under the European Convention on Human Rights and that it took decades and public education to change European norms and values and for it to be legally abolished throughout Europe.

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