The plight of SA should warn Africa not to follow suit
Without a major pivot to progrowth policies, our economy will wobble until it tumbles. An ANC-EFF coalition looks increasingly likely.
The new MK party might then support coalition efforts to cripple constitutional protections needed for legitimate elections.
If in 2029 sham elections are held amid rising misery and social decay, SA will have gifted the world proof of cultural Marxism’s dangers. Might our neighbours then see SA’s democracy experiment as a cautionary tale? A prosperous and democratic SA was to serve as this region’s role model. Would a failed SA persuade regional leaders to adopt effective pro-growth policies, or would they be impressed by how our governing elites have enriched themselves through state capture?
While it is hard to imagine other countries benefiting from SA being unable to find its stride, we should consider how the Middle East has evolved. Iraq’s Saddam Hussein and Iran’s ayatollahs contested for regional hegemony until the ayatollahs benefited from the Hussein regime’s removal.
Shia-Sunni rivalries resemble our black-white tensions. A decade after the ANC prevailed in 1994 Iran’s leaders found they had outlasted senior Iraqi rivals. Few countries with substantial but troubled economies have resisted international norms as emphatically as Iran and SA.
ANC leaders’ lust for international pageantry blurs its anti-Western style of isolationism. They rarely have anything substantive to show for attending Brics or Group of 20 (G20) summits or a court spectacle in The Hague. Falling international investor appetite for rand denominated assets reflects ANC disdain for international norms and lack of interest in building a robust economy.
As few Middle East or African companies add value in global supply chains, upward mobility and vibrant middle-class societies remain rare. Patronage and commodity exports depict the political economics of countries in both regions. If SA keeps mimicking Iran’s economic isolationism, as signalled by ANC localisation policies — and its geopolitics, as indicated by our governing party’s support for Hamas and Russia — will our neighbours follow SA’s lead or learn from ANC errors? Middle East trends suggest the latter.
Middle Eastern leaders have pivoted in favour of global integration. The United Arab Emirates’ (UAE) neighbours were inspired by its successes. That region’s history as a trading centre reflects its positioning at the intersection of Asia, Africa and Europe. The UAE is now a transport and trading hub and a tourist destination. Saudi Arabia and Qatar pursue similar transition plans.
While overreliance on resource extraction has constrained development in both regions, a key takeaway on how SA’s economy was mismanaged is summarised by the politically contrived term “beneficiation”.
Rarely is there a commercial case for locating a factory near a mineral or hydrocarbon deposit.
Political support for beneficiation typically traces to union influence or patronage. Rather than pursue ill-conceived beneficiation projects to exploit their enormous hydrocarbon deposits, the UAE, Saudi Arabia and Qatar go in the other direction and build enormous solar farms.
Today’s driver of economic and employment growth in lower-income countries value-added exporting is incompatible with the ANC’s embrace of localisation and beneficiation delusions. Leading Middle East countries rejected such unworkable paths. This leaves only Africa outside an intensely integrated global economy. Elsewhere, countries, companies and workers achieve high productivity through carving out niches in international supply chains.
SA should identify and develop paths where African countries can integrate meaningfully into the global economy, as the UAE and Israel did. Instead, the ANC wants to revive its glory days as a social justice ambassador, despite a majority of today’s 20-something black South Africans being condemned to perpetual poverty due to corruption amplifying incompetence.
While beneficiation is a politically contrived term, global integration provokes diffusion of the latest skills, technologies and concepts. The accelerating pace of disruptive innovation punishes economies indulging beneficiation and localisation delusions. Today’s global economy rewards intercontinental integration through generous knowledge transfers. Yet, not unlike Iran’s leaders, the anti-Western ANC favours localisation. This greatly constrains growth and job creation.
Our patronage-minded governing elites rely on commodity exports to fund SA’s bulging welfare state while global economic growth is ever more dominated by services increasingly being reconceived by digital and artificial intelligence possibilities. Our leaders should note how successful Middle Eastern countries are reshaping their economies. If they don’t, other African countries should learn from our leaders’ lapses.