Time travelling to 2024: Finding our way into the future – Moneyweb, 5 January 2015

Jan 07, 2015
In the first edition of this column we set out four scenarios for South Africa the morning after its 2024 election. This month we reveal the key indicators to identify which of those diverse futures is coming into view.

By Frans Cronjé

In the first edition of this column we set out four scenarios for South Africa the morning after its 2024 election. This month we reveal the key indicators to identify which of those diverse futures is coming into view.

In describing a set of multiple but different futures for the same country scenarios represent a map of where the future could plausibly take you – as opposed to the single predetermined destination implied by a forecast. However, a map only sets out possible routes you could follow. You also need a guidance system that will tell you which of the varied roads to follow.

The best guidance systems will be built around a series of indicators, or what Clem Sunter popularised as ‘flags’, that would be indicative of one scenario approaching a higher degree of plausibility than another. If you can identify these turning points, and read them accurately, they will lead you into the correct future. In our work at the Centre for Risk Analysis, the consulting arm of the IRR, we use the concept of road-signs to do this.

The first scenario we identify is the Wide Road. This is a future in which the ANC realises it has to reform, a reform movement arises in the party, they win a popular mandate to reform, a series of growth friendly economic policy reforms are introduced, and by 2024 South Africa has made its way to 5% GDP growth as its unemployment rate falls from 25% to 15%.

The top three road signs we look for in this scenario are:

Firstly, that the ANC increasingly comes to identify that it is in trouble.
Secondly, a leadership shift in the party that squeezes out those individuals who are likely to resist pro-growth reform.
Thirdly, that the new leadership seeks to convince South Africans of the need to support reforms at the same time as moving on labour market deregulation.

Labour market regulation has long been a policy holy cow that if the party moves towards deregulation we will read that as a sure sign that it is serious about reform which will in turn open the way to other reforms. See these three indicators materialise and you can start to assume that an economic recovery is plausible securing South Africa’s future as a free and open society.

Our second scenario is the Narrow Road. Here the ANC again realises it is in trouble. Again a reform movement comes to the fore. This time, however, it does not seek a popular mandate for reform. It realises that the only reforms that will save the South Africa economy (and secure the future of the ANC) will so closely approximate those of Margaret Thatcher that South Africa’s trade unions and left leaning media and civil society will never accept them. Hence, if they want to reform, they have to force it against popular sentiment

Here we are looking for the following road-signs.

First we again want to see more and more ANC leaders admit they are in trouble.
Second we are looking for evidence that they want to undermine any mechanisms (trade unions, civil society activism, parliamentary opposition, a critical media) in order that they may act with impunity.
Third we want to see them move on labour market deregulation for the same reasons as set out above.
If these three road signs line up then South Africa is heading to become more prosperous and stable even as it becomes less free.

Our third scenario is the Rocky Road. Here the ruling party refuses to change. No reform movement materialises. Economic circumstances worsen as the party destroys democratic institutions in a bid for radical wealth redistribution as a desperate nationalist drive at reversing it failing political fortunes.

The top three road signs here are as follows:

First we are looking for a party leadership that is in denial about the state of the South African economy.
Second we are looking to see if a united leftist leadership centred around the South African Communist Party is able to entrench itself as the engine of ideas of the ANC and then to set about the destruction of democratic institutions.
Third we expect no moves towards securing a better investment space but rather the opposite as business regulation is tightened, racial policy is more strictly enforced, and property rights eroded.
Let these signs align and we are set to follow a road that will lead towards an increasingly poverty struck and dictatorial society from which there will be little chance of escape.

Our final scenario is the Toll Road. This is again a scenario in which the ANC remains in denial about the trouble it is in. This time, however, it remains divided against itself. No clear leadership or policy direction emerges with the one benefit that democratic institutions remain intact as the ANC’s popularity falls all the way into a 2024 electoral defeat.

The road signs here are:

First that the party remains in denial about its failing political fortunes.
Secondly it becomes increasingly internally divided as factions turn on each other.
Thirdly the broader opposition use unfettered access to democratic institutions (parliament, the courts, the media etc) to offer clear policy alternatives sufficient to capture the confidence of increasingly disappointed voters seeing the ANC majority slip to below 50% in 2024.
Whether we remain a free and open society, or move towards centralised single party control, at the same time as whether the ANC embraces, or rejects, growth-friendly economic reform will determine what South Africa looks like in 2024.

As of January 2015, this column will month-by-month track our progress against these driving forces to start developing some clarity on where South Africa is headed.

Frans Cronje is CEO of the IRR – a think-tank dedicated to developing and promoting policy solutions to South Africa’s economic and social challenges. This column is based on the book, A Time Travellers Guide to Our Next Ten Years (Tafelberg, 2014). You can follow him at @FCronje­_­IRR

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