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Assessing and promoting civil and minority rights in South Africa.

[Source: Business Day Live by Anthony Butler.]

According to the most recent Ipsos Socio-Political Trends Survey, only 44% of South Africans now believe that the country is “moving in the right direction”, down from 76% in 1994 and 71% in 2004. Such findings may signal that citizens’ ability to conceive of a positive future for their society is eroding.

South Africans have long lived for today, digging stuff out of the ground, seeking new opportunities in towns and cities, and floating on gold revenues in times of international uncertainty. SA has an entrenched low savings culture and the top 20% of earners are among the world’s most conspicuous consumers.

The established white middle class has enjoyed a boost to its asset wealth over the past 20 years and has maintained a salary premium as a result of a continued near-monopoly over certain scarce skills that has been perpetuated by a weak public education system. Recent rapid increases in public sector and parastatal employment and remuneration have, meanwhile, created a parallel black consumer class.

The availability of public sector jobs, the politicised allocation of elite black economic empowerment opportunities, and the gains offered by access to provincial and local government revenue streams, all constitute strictly circumscribed resources in a slow growing economy.

One clear sign of the strains in the country’s patronage systems is factional politics driven by the pursuit of resources. In such circumstances, it is perhaps inevitable that political and business elites have turned their attention to economic opportunities that bring rewards today only by jeopardising the country’s future prospects.

Take the energy sector. Here, there are three indications that present-day elite gain is being privileged over society’s longer-range interests. First, there has been apparent acquiescence to the African National Congress’s (ANC’s) proposal to reach deep into the R1,2-trillion Government Employees Pension Fund to recapitalise Eskom, so potentially robbing tomorrow’s pensioners.

Second, the international shale gas industry appears to be successfully lobbying the government for a special dispensation that will enable fracking to go ahead in spite of uncertainty about its longer-term environmental and economic consequences. Third, the government plans to finance nuclear power generation by imposing debilitating electricity costs on future consumers. Such costs are not just a distant menace, of course, because anticipated price rises will quickly discourage investment and undermine confidence in SA’s future creditworthiness.

The real price of nuclear power will also depend on who absorbs the risks. An opaque procurement process run by short-termist actors will not allow the allocation of future risk to be appropriately scrutinised. The immediate beneficiaries of a nuclear deal (other than French, Chinese or Russian governments peddling mostly redundant technologies) will be South African political brokers, the owners of “offset” and “domestic content” companies and fronts, and what Sports Minister Fikile Mbalula might describe as “approved recipients” in the ANC’s internal “diaspora legacy programme”.

This is all very bad news for the poorest 40% of citizens, who will continue to languish in poverty. But it is also bad news for what Prof Brian Levy and others have described as SA’s “missing middle”. Below the top 20% of earners, there is a “distributional cliff” that leaves the next 40% of the population unusually impoverished when compared with their peers in otherwise similar developing countries. Such citizens already struggle to seize the few opportunities available to them. A thriving middle class is essential for a stable and democratic society, but the self-serving actions of today’s political elite may rob that class of even its hopes for a better future.

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Butler teaches politics at the University of Cape Town

 

South Africa at a Glance
57 700 000 (mid 2018 estimate)
4.9% y/y in September 2018 (CPI) & +6.2 y/y in September 2018 (PPI)
-0.7% q/q (2nd quarter of 2018)
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