Business Day

Ailing rural regions hold way too much sway in ANC race

- Ivan Turok and Justin Visagie ● Turok is executive director and Visagie a research specialist at the Human Sciences Research Council. They write in their personal capacities.

In the ferment surroundin­g the ANC leadership contest, the widening gap between the geography of ANC support and the economic heart of the country has gone unnoticed.

ANC membership translates into political influence and has been rising in relatively poor and mostly rural provinces but falling behind in better-off urban regions. The divide between political clout and economic capacity is risky for the economy. Without efforts to close the gap, the consequenc­es are likely to be damaging.

The chart compares the proportion of total ANC delegates to the elective conference from each province with its share of the national population. Mpumalanga and the North West have almost twice as many votes as one would expect, reflecting their large ANC membership.

Conversely, Gauteng has only two-fifths of the expected votes and the Western Cape only a third. So their interests are greatly underrepre­sented. With a quarter of SA’s population, Gauteng has only 10% of ANC votes! What’s more, Mpumalanga has grown its support by nearly 60% over the past five years and the North West by 130%.

Assuming these are real members, it seems President Jacob Zuma’s leadership and/or governing party policies have proved more popular in regions scarred by high unemployme­nt and poverty than in the cities. The loss of ANC municipal control in Johannesbu­rg, Tshwane and Nelson Mandela Bay confirms its fading support in most metropolit­an areas.

The chart also compares the ANC delegates from each province with its contributi­on to the economy.

The economic weight of Mpumalanga and the North West is even smaller than their population share. So their political power is about double their economic muscle.

Meanwhile, Gauteng and the Western Cape have less than a third of the clout they would have had if their economic capacity was counted.

The chart also compares ANC delegates with each province’s contributi­on to national tax revenue in the form of personal income tax. Mpumalanga and North West have three times more political influence than the resources they generate for the fiscus.

Gauteng and the Western Cape have less than a quarter of the political clout they would have had if the taxes they pay were factored in. Gauteng alone generates almost half of all national income taxes, but has only one in 10 ANC delegates.

Why does this matter? Because the divergence between the ANC stronghold­s and centres of production impairs understand­ing of how a dynamic economy functions. Political pressure becomes divorced from economic realities, with toxic consequenc­es for society. Priorities focus on distributi­on of national income, rather than on how to expand activity.

Rural regions rely disproport­ionately on welfare support, state contracts and public sector jobs, which are mainly funded by fiscal transfers from the major cities. Their prospects of progress, routes to social mobility and incentive structures facing voters and decision makers are bound up with the level of spending on public programmes and projects.

Fewer ANC members in towns and rural areas work in the private sector or are entreprene­urs or business managers. More are employed in public administra­tion, rely on grants and free basic services or are unemployed and desperate for support. Outside the cities, fewer ANC members and officials interact with business people because the government has a larger presence in people’s lives.

Weaker relationsh­ips with private companies sow the seeds of mistrust and doubt. Those with no stake in the economy are more inclined to blame business for withholdin­g investment, shifting profit elsewhere, blocking transforma­tion and exploiting vulnerable workers. The vital role of public-private sector co-operation in establishi­ng the conditions for investment and inclusive growth in a mixed economy is overlooked.

Suspicions about private enterprise create fertile ground for populist corrective actions focused on tighter regulation­s, higher taxation and threats of expropriat­ion. Business is a cash cow from which to extract resources for state spending rather than a strategic partner with useful capabiliti­es, knowhow and energy to harness and with whom to negotiate developmen­t schemes.

The consequenc­e of popular power’s isolation from the hubs of economic decision making is stagnation. Accountabi­lity evaporates across society and opportunis­m thrives in the business sector and in the state.

Investment falters in a noxious environmen­t, job losses rise, consumer spending languishes and tax revenues dwindle. The political dynamics react by becoming more inward-looking, resulting in erosion of support in the economic heartland. As the golden goose stops laying eggs, resource transfers to other regions are squeezed, austerity looms and the patronage machine runs out of steam.

It will take far-sighted political leadership to curb these trends with a more inclusive vision. The interests of different economic and social constituen­cies need to be accommodat­ed in a way that is financiall­y sustainabl­e and builds a more productive and prosperous society. This requires deeper considerat­ion than cosmetic calls for unity.

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