Why does South Africa keep falling short of its potential?

By Celeste Hamman

Since 1994 the average South African growth rate has been about 3,2% per annum. While South Africa has in recent years been dominant in almost everything in Africa, it has lately been slipping down the economic league tables. South Africa’s economy grew just 1.3% in the second quarter from the first three months of the year, a slower-than-expected pace out of step with the country’s ambition to be seen as a powerful emerging market. The slow growth is also unlikely to chip away at the crippling unemployment rate, now comprising about 25% of the country’s working-age population. Youth unemployment has become a volatile political issue in South Africa with an increasing widening gap between the rich and poor.

Most analysts believe South Africa’s growth performance will not exceed 4% even under the present constraints, and based their assumptions on various studies regarding the South African economy. It has infused everything from protests over lack of public services to a debate over whether or not to nationalize the country’s mines and banks.

This raises the question, why does South Africa keep falling short of its potential? One reason might be the continued inability of the ruling party to create a coherent macro-economic framework. This means the majority of South Africans remain politically and economically disenfranchised, often without access to proper healthcare and education. The ruling party has struggled for too long to consolidate its strategy for South Africa’s political economy, with the demands of its warring factions undermining the needs of those South Africans whom these issues affect the most. The status quo in South African political economy is the result of the ANC being, or allowing itself to be, held hostage to the demands of speculative capital when it came to power. In trying to be everything to everybody, the ANC’s future direction is ultimately uncertain. The ANC has once again failed to join the dots between SA’s various economic plans and planners, leaving analysts disillusioned and businesses and activists alike furious. In a turbulent time for global politics and economics, the ANC must articulate its own coherence as a post-struggle organisation, and turnaround an internal culture tainted by poor service delivery, corruption, increasing authoritarianism, policy incoherence and factionalism.

Looking at the facts it is still not clear if South Africa’s government will continue on their destructive decision making path which they have been on for the past decade. They need to realize that policy decisions have to be based on how things are, not on how we fondly imagine them to be. The question confronting us as a society, and the ANC, is therefore what sort of state we want, and how we might go about constructing it. To promote a developmentalist ideology without addressing these questions will simply create more opportunities for distortions that have little bearing on what actually happens inside the state and even less impact on the needs of the people. All these considerations point to a need for a higher employment-rich growth path, a faster pace of development and a society growing wealthier in the broadest sense rather than in the narrow one.

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