By Frans Cronje
Events such as the 9/11 attacks, 2009 global financial crisis, Arab Spring, Brexit and election of Donald Trump continue to prove that traditional forecasting methods leave decision makers dangerously exposed to unexpected events. In 2017, The New York Times reported that the Global Economic Policy Uncertainty Index had reached a record high. Factor in SA’s volatile economic and political climate and the degree of uncertainty confronting South African decision makers is unparalleled.
Into this cauldron, we have just released a new set of scenarios for SA in the form of a book titled A Time Traveller’s Guide to South Africa in 2030 (Tafelberg). The book is the second in a planned trilogy that began with A Time Traveller’s Guide to Our Next Ten Years, which was published in 2014. The third book in the trilogy is planned for 2020 – a year after the 2019 election.
The books contain scenarios that explain what is happening in the country, why it is happening and what is going to happen next. The purpose is to map the route to SA’s next political and economic transition, well before it occurs, to give advance warning of how the country will change between now and 2030.
Relying on detailed economic and social analysis and first-hand political information, the scenarios provide precise assessments of how major trends will evolve. From economic growth, policy, currency strength, inflation, interest rates, debt levels and the budget deficit to wealth management, property rights, crime, jobs, education and political stability, the scenarios cut through the uncertainties to deliver clear answers about what will change in SA, how it will change and what that change will mean for large businesses and ordinary people alike.
The first book set out four scenarios for SA’s next decade. The first of these, the Wide Road, suggested the ANC would stage an internal reformation and, amid massive popular support, introduce reforms to turn the economy around. Economic growth rates would exceed 5% by 2019 and SA would emerge as one of the world’s most exciting emerging markets.
In the second scenario, the Narrow Road, a desperate government would follow the example of the Asian Tiger economies to suppress civil rights to force a series of pro-investment reforms against the wishes of a rebellious and hostile public. Economic growth rates would again exceed levels of 5% and SA would play a prominent role in shaping the evolution of increasingly authoritarian high-growth economies across Africa.
In the third scenario, the Rocky Road, the government would reject the need for economic reform, become incredibly corrupt and turn to destroying SA’s democracy in a bid to cling to power. The country would sink into recession amid staggering corruption and terrible civil rights abuses.
The fourth scenario, the Toll Road, suggested that infighting would result in the government failing to introduce economic reforms, but also failing in destroying SA’s democracy. Support for the once dominant ANC would sink rapidly in major urban areas as the economy was brought to its knees. Massive protests would sweep the country and SA would enter a new and ultra-volatile era of coalition politics.
I am very grateful to Clem Sunter, who was generous in his advice on the scenarios for the book and the doctoral thesis upon which the book is based. During a long walk on one of Cape Town’s beaches, I asked him what scenario it would be and he answered: "One of them will happen a lot sooner than you expect."
Sunter was right — less than two years after the book was published, the governing party was at war with itself. In the 2016 local government elections, its support level slipped to a record low of 54% as it lost political control of Johannesburg, Pretoria and Port Elizabeth.
Party leaders warned it may lose the 2019 national election. Massive protests swept the country. Parliament was regularly thrown into pandemonium and economic growth rates hit their lowest point since the 2009 global financial crisis. In what almost no analysts had on their radars, the EFF and DA were effectively coalition partners. SA was well on the way to the Toll Road, with the risk it may slip into the Rocky Road.
Taking cognisance of the changes that have taken place in the country since 2014, the second book, A Time Traveller’s Guide to South Africa in 2030, introduces four new scenarios for SA one year after the 2029 election. The first of these, The Rise of the Right, suggests the state will grow more powerful and authoritarian and use that authority to force pragmatic economic policies along the lines of the model followed by Lee Kuan Yew in Singapore and Paul Kagame in Rwanda.
Coinciding with a global economic recovery and commodity price bounce-back, those reforms would take economic growth rate to record highs and trigger massive new job creation and entrepreneurial activity. By the early 2030s, SA emerges as a stable and increasingly prosperous society – a remarkable turnaround that shapes the evolution of high-growth economies across the continent.
The second scenario is titled The Tyranny of the Left. In this scenario, the state also becomes extremely authoritarian but uses that power not for reform, but to extort wealth out of the tax base and the private sector, while suppressing political dissent and civil rights. Land and businesses are nationalised and property rights destroyed. In this future, the economy will stumble along, foreign and domestic investment will dry up and living standards will fall. SA collapses into the grip of a cruel dictatorship and all hope for a better future is lost.
The third scenario is titled The Break-up. In this scenario, the state weakens as the economy stalls and, amid rising levels of internal conflict, South Africans drift apart into enclaves. Behind their high walls, the more prosperous enclaves become de facto private countries with high standards of living. But outside the walls, the rural poor fall under the control of tribal leaders, while an emerging gang culture becomes the de facto government in urban slums. As South Africans turn away from one another, the country splinters irreparably along lines of race and class.
The fourth scenario is titled The Rise of the Rainbow. In this future, a broad new political coalition allows the private sector to take the lead in returning economic growth rates to levels upwards of 5% as the unemployment rate falls, living standards increase and SA emerges, against all the odds, as a free, open, stable and prosperous society.
The forefather of modern scenario planning was Frenchman Pierre Wack, who worked for Shell and was instrumental in positioning the Shell board to respond effectively to the 1973 oil price shock (Wack has a tie to SA in that he trained the scenario-planning team at Anglo American that produced the High-Road, Low Road scenarios under Clem Sunter in the 1980s).
Following his success at Shell, Wack wrote in the Harvard Business Review that the trouble with traditional forecasts is that they are often right. However, they are right only because the world they were based on has not yet changed. When the environment in which a company operates changes fundamentally, the forecast they have relied on is useless and they have to go back to the strategy drawing board.
Scenarios that sketch a series of plausible futures, as opposed to the one official future implicit in a forecast, allow companies to avoid being trapped, without a plan, in the midst of profound political and economic change.
Wack’s warning could have been custom-written for SA. The country is simply too volatile to forecast to any single point in future space and time; scenarios, therefore, have to play a prominent role in the strategic planning efforts of groups invested in the country. Used effectively, they will allow companies to develop a detailed three-, 12-, 36-and 120-month understanding of how SA’s economic, social, policy and political trends will change. That, in turn, will allow them to develop sufficiently robust risk management strategies to identify and counter any possible political or economic eventuality.
*Cronje is a scenario planner and CEO of the South African Institute of Race Relations. A Time Traveller’s Guide to SA in 2030 is published this week. Briefings on the latest scenarios are available from The South African Institute of Race Relations
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