Part 4: South Africa’s road to 2024 – Rise of the ‘new right’ - Moneyweb, 22 September 2016

This is the final article in a four-part series penned by the Institute of Race Relation’s Dr Frans Cronje. Two scenarios are sketched, one which Cronje believes will emerge within the next 12 to 24 months

 

By Frans Cronje

This is the final article in a four-part series penned by the Institute of Race Relation’s Dr Frans Cronje. Two scenarios are sketched, one which Cronje believes will emerge within the next 12 to 24 months

The political model that such a traditionalist/reformist alliance described in Part Three of this series of articles might follow would approach that of Lee Kuan Yew in Singapore, Park Chung-hee in South Korea, and Deng Xiaoping in China, while closely resembling that of Hailemariam Desalegn in Ethiopia and now Paul Kagame in Rwanda – with many important differences. The model would see a distinct turn in the ideological outlook of the government, while still offering the ruling party the political control it craves over the country. However, it could also secure the economic performance, and critically the jobs, necessary to restore popular confidence in a future government. South Africa will thus have a more authoritarian party-driven government that makes reasonably good economic decisions.   

It is premature, therefore, to write off South Africa’s current ruling party and to say it is beyond help and that true economic reform is simply an ideological bridge too far for the party. Late in the day as it is, it still has time to save itself. However, short of the rise of such a “new right” the clock will keep ticking on the ANC’s time in office.

South Africa’s next decade is therefore headed towards one of two broad sets of outcomes.

The first is this:

The reformists gain a balance of power in the ruling party over the next eighteen months. They seize control of the party at its internal leadership elections in December 2017 and lead the party to contest the 2019 national elections and choose a reformist cabinet – possibly with support from the centre-right of the opposition spectrum

(we do not write off a future DA/ANC alliance from around 2019 – do not be misled by the emerging DA/EFF alliance, this is but a temporary strategic position as both parties have their focus on the real prize; an alliance with what remains of the ANC by 2019).

The cabinet moves quickly and firmly to secure property rights, deregulate the labour market, professionalise the sluggish civil service, and employ the private sector as partners on the road to rebuilding the South African economy. Where opposition to the government’s reformist agenda is encountered, we expect it to act decisively and harshly to ensure that its reformist agenda is not derailed – as harshly, possibly, as the ANC dealt with its political opponents 30 years ago. Such firm action may extend to the point of undermining civil rights, free speech, the sanctity of the courts, rights to free political association, and the standing of trade unions and other civil society groups.

If such a reformist agenda were to be pursued with vigour, we anticipate South Africa’s debt and interest rates peaking in the period around 2020, before declining back to levels last seen around 2006. Growth levels will have averaged below 2% of GDP into 2020, but will then commence a gradual rise, to average in excess of 5% of GDP by 2024-2026. The currency will strengthen back to purchasing power parity levels by the mid-2020s, while the current account and budget deficits will narrow. Rising employment and living standards will stabilise the politics of the country – as they did for much of the period from 1994 to 2007. Factor in a global economic recovery and commodity comeback, and South Africa’s economy may perform very strongly. As confidence in the government returns, restrictions on civil rights and free expression may concomitantly be lessened.   

Our second case is as follows:

South Africa’s ruling class is unable to unite around a reformist economic policy agenda. Policy confusion and uncertainty continue, exacerbated by weak commodity prices and global economic underperformance. Growth levels slip further as investment dries up and South Africa experiences a decade of volatile stagnation – a term we use to describe a society that is making no economic progress as its politics becomes more volatile. Quite possibly, this is a future of deep recession and declining living standards. Deficit and debt levels will escalate sharply and economic and industrial output will fall, even as the currency weakens. Anti-government protest actions will escalate sharply and will be met, when not with rubber bullets and arrests, with wild populist promises.

Property rights are then likely to be eroded as well as civil liberties, as a rapacious and ideologically stubborn state refuses to turn on policy. Considerable politically inspired violence may occur. This outcome may also see the EFF party triumphantly return to its ANC mother body and may, for a time, offer the ANC some valuable percentage points of political support. The effective reincorporation of the EFF into the ANC may, however, also put paid to any chance that the ANC could meet the aspirations of younger voters through staging an economic turnaround. The ANC/EFF collective will then find itself facing electoral defeat – just on a slightly extended timeline.

A minority view in my organisation is that if it assumes the leadership of the ANC, the existing EFF leadership, which has some high calibre thinkers, may turn sharply right on the economy.

A third view is that the great unknown factor in South African politics, the unregistered youth voter, may turn out in sufficient numbers to give the DA a clear national majority. What becomes apparent is that despite populist attempts at clinging to power, this future will culminate in 2024 (if not in 2019) in the political defeat of the ruling party.  This will, in turn, usher in a new era of politics – and most probably coalition politics. South Africa would remain an unstable society that undershoots its economic potential.

If South Africa follows the first trajectory described above, the model may well become influential in further shaping the evolution of high growth economies across the African continent. South Africans would cede some of their political freedoms in exchange for growing prosperity and the promise of stability. Where growing prosperity is achieved, it will resemble the development model that was followed by many of the Asian Tiger economies – albeit with very important differences. It is also the model that is being pursued with some economic success in Rwanda and Ethiopia. However, where prosperity is not forthcoming, it is also a model that invites a system of rule with impunity, from which South Africa may not escape for some considerable time. 

This analysis is based on a briefing by Frans Cronje to the Atlantic Council in Washington DC in September 2016. It was authored with support from a number of IRR analysts and Policy Fellows. 

 *Frans Cronje is a scenario planner and CEO of the IRR, a think-tank that promotes political and economic freedom.

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