The ANC can still make a better SA – City Press, 3 April 2016

It is becoming popular to write the ANC off and say that it cannot reform to save itself. Examples of corruption and “state capture” dominate the headlines.

By Frans Cronje 

It is becoming popular to write the ANC off and say that it cannot reform to save itself. Examples of corruption and “state capture” dominate the headlines.

The ANC is accused of having failed in its mandate to improve the living standards of South Africans. Many of its former allies in civil society and the media have turned to lead the charge against the governing party.

Despite all this, at the Institute of Race Relations, we maintain confidence in a scenario in which the ANC does reform internally by capitalising on the four areas of strength it still possesses.

The first such area is that, contrary to much analysis in the media, the ANC’s years in government have coincided with considerable improvements in the living conditions of South Africans. Between 1994 and 2015, the number of families in a formal house increased from 5.8 million to 12.3 million.

On average, almost 1 000 families a day moved into a formal house since the ANC came to power. For every new shack erected after 1994, almost 10 formal houses were built.

The number of households with access to electricity increased from 5.2 million to 14.1 million. Households with clean water increased in number from 7.2 million to 14 million.

The second point is that the ANC was initially on track to stage a remarkable economic recovery from the wreckage it inherited from the last white government. Under ANC leadership, the prime lending rate fell from a peak of 21.8% in 1998 to 8.8% in 2012. The budget deficit, which averaged more than 5% of gross domestic product (GDP) between 1992 and 1994, was reduced to an average of below 2% between 1998 and 2008.

For two years, budget surpluses were recorded. Perhaps the party’s most remarkable achievement was reducing total government debt from 48.3% of GDP in 1994 to a low of 26% in 2008, which freed up the money to fund South Africa’s social development programmes.

GDP growth recovered from negative levels between 1989 and 1993 to average more than 3% for much of the past 20 years, and more than 5% between 2004 and 2007.

The third point is that much was achieved to improve a range of socioeconomic benchmarks beyond simple living conditions or “service delivery” measures. For example, the number of people with jobs almost doubled, from 7.9 million in 1994 to 15.7 million in 2015. Data from Stats SA put the proportion of “managers” in the economy in 2015 who happened to be black at 56.2%.

The number of black students at university increased from 333 905 in 1995 to 804 324 in 2014, or 141%. The proportion of children under the age of five who were severely malnourished fell from 13.1% in 2000 to 4.5% in 2014. The murder rate fell from 67 murders per 100 000 people in 1994 to 33 per 100 000 in 2015.

Their critics won’t admit it, but the ANC achieved some considerable successes. If it had “failed” to the extent critics suggest, there would be nothing on which to build a reform movement.

The fourth point in favour of an ANC reform movement is that opposition parties have not captured the confidence of disaffected voters by presenting a fundamentally different and compelling policy offering. For the time being, the ANC remains in the privileged position that its considerable mandate means it cannot be stopped from reforming itself by forces outside the party.

In our view, the trouble the ANC is in does not relate in the main to President Jacob Zuma, or crises such as those around the Gupta family and Nkandla. In the relative scheme of things, these are sideshows.

The core problem faced by the governing party is that, since 2007, the economic model upon which the ANC built its successes has been compromised. Debt levels have almost doubled as growth levels have more than halved and job creation has stalled.

The fiscal deficit has precluded any chance of the government meeting popular expectations. Households are therefore under severe economic strain and angry people are latching on to examples such as Nkandla and the Gupta family to express their frustration with the ANC.

We are often asked: Can the ANC get out of this mess? Our answer is “quite easily” – if it builds on the foundation already laid by using its remaining mandate to adopt a series of labour, property rights and empowerment-policy reforms.

If these reforms go far enough, they will secure sufficient investor confidence to attract the capital investment to initially raise GDP growth rates to 3% of GDP (and then to 5% by the end of the decade).

Our scenarios show that this would break the structural unemployment crisis, setting off a chain reaction that boosts revenue, curbs debt levels and energises consumer activity, thereby returning the country to the overall positive trajectory it was on between 1994 and 2007.

Improved household circumstances would also guarantee improved popular confidence in the party. On short-term trends, this looks unlikely, but we like to remind observers that short-term trends are never a good basis for long-term predictions.

Cronje is CEO of the Institute of Race Relations, a think-tank that promotes political and economic freedom.

Read the article on City Press here

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