The triple evils pushing us towards an explosive tipping point
Public servants — who, thanks to the close ties between their major unions and the ruling ANC, enjoy jobs for life, guaranteed wage increases and generous benefits — should be more proactive in fighting the triple evils of corruption, incompetence and policy populism that threaten to plunge South Africa’s economy into free fall.
If the government continues on a path embodying these three evils over the next five years, the party will soon be over for public servants. It is their jobs, wages and benefits that will be the first to be cut in the austerity programmes that will be enforced to combat state failure, fend off economic implosion and deal with public revenue shortages.
Social grants, pensions and social welfare recipients also face cuts in an economic crisis driven by the three evils. Similarly, higher education subsidies, for institutions and students, will have to be scrapped.
The triple evils lead to higher debts, higher inflation, sharp currency fluctuations, low growth and a dramatic decline in industrial production. Argentina is a recent example — inflation has ballooned to 138% and interest rates had to be hiked to 133%. This is the scenario that awaits
South Africa, which means among other things that wages — including those of public servants — will lose their buying power.
Unless the country changes course after next year’s national and provincial elections, the damage wrought by the three evils will rapidly reach an explosive tipping point. This will lead to further state failure, the breakdown of the rule of law and the erosion of the value of assets such as property, savings and pensions. This may unleash an exodus of investment, skills and capital.
For example, the National Health Insurance policy — in its current form as a populist initiative led by a state that cannot even fix potholes, rather than being a pragmatic public-private partnership
— may spark a major emigration wave of skilled South Africans over the next few years.
South Africa is in danger of falling off an economic cliff because poor governance, corruption and populist economic policies are fuelling inflation, getting us deeper into debt, causing sharp currency fluctuations, curbing growth and hobbling industrial output.
An economy on life support will make South Africa vulnerable to global and regional crises, such as the Russia-Ukraine war, the conflict in Gaza and the likely coming chaos in Mozambique and Zimbabwe caused by misgovernance.
South Africa is particularly vulnerable because a small tax base of the middle class and business provide the bulk of public revenue. And the country has a big social welfare bill.
Almost all African countries in the postcolonial era, after long runs of corruption, incompetence and policy populism that ravaged their economies, have had to be bailed out by the International Monetary Fund (IMF) and the World Bank or by Western governments. More recently China has also stepped in.
In a worst-case scenario, South Africa might also need an IMF/World bank bailout. Conditions imposed by these lenders would include austerity measures, the sale of state assets, the pruning of the public sector and cuts in social services.
Ghana this year received its 17th IMF loan since independence. The austerity measures demanded by the IMF included public service cuts, lower subsidies for the poor and higher taxes.
Egypt had to take similar medicine when the IMF provided a loan last year. It also had to move towards a flexible exchange rate, which has led to a 50% depreciation in the Egyptian pound and soaring food price increases.
South Africa’s public servants must understand their “iron rice bowl” paradise will collapse unless the country puts an end to corruption, incompetence and policy populism. Along with all South Africans, they must vote out those associated with the triple evils — the alternative is unemployment or wages that are worth nothing.
The party will soon be over for public servants. Their jobs, wages and benefits will be first to be cut