Reform or collapse: Report says South Africa may become a failed state by 2030

Abu Mubarik Sep 17, 2020 at 10:00am

September 17, 2020 at 10:00 am | Money Moves, Opinions & Features

Abu Mubarik

Abu Mubarik

September 17, 2020 at 10:00 am | Money Moves, Opinions & Features

South Africa's townships have become the most visible proofs of the wealth inequality in that country. Photo Credit: Steven Friedman via The Conversation

Not much has changed about the structures on which South Africa’s economy is built since apartheid, a report by Eunomix Business & Economics Ltd has said, and this system that was designed by the white-minority South Africans to exclude the black majority is bound to collapse South Africa into a failed state.

The nature of the country’s economy still favors the white minority and a few black people identifies as the black elite who are often disingenuously used to portray the success of black empowerment. 

When black Africans took charge of South Africa nearly three decades ago, the expectation was that the economy would be restructured to benefit the black majority. Black land ownership is still a major problem and highly skilled jobs are mostly taken up by the country’s population of European ancestry due to poor investment in the education of black South Africans.

Among the black majority, less than half are employed while many more do not have the capital to start a business.

Black unemployment in South Africa has risen to 46 percent while white unemployment is at 9.8 percent, according to Statistics South Africa. Instead of changing the apartheid era inherited economy to uplift the large majority of blacks from abject poverty, the elite blacks have continued to pay lip service to black empowerment.

Economic mismanagement, corruption and oligarchy have defined South Africa in the last decade. Promised economic reforms have yielded little or no results as there has not been a bold attempt to overhaul the economy and make it work for the masses.

In the absence of urgent economic reforms, South Africa could become a failed state. The report by Eunomix notes that South Africa faces economic and political collapse by 2030 unless it changes its economic model and implements growth-friendly policies.

According to the Johannesburg-based political and economic risk consultancy, in terms of security, South Africa risks being at the bottom with countries like Nigeria and Ukraine and have prosperity akin to Bangladesh and Ivory Coast. 

“Bar a meaningful change of trajectory, South Africa will be a failed state by 2030,” Eunomix noted. While this judgment of the economy is damning, it is an accurate depiction of the mismanagement of the political economy of South Africa supervised by the Africa National Congress (ANC).

The report further blames the South African economy inherited from white-minority reign. Apartheid created one of the world’s most unequal societies and left millions of black South Africans in poverty and in slums. The World Bank has also said South Africa is the most unequal nation in the world.

The political liberation of South Africa is yet to translate into major economic opportunities for its 55 million black people as apartheid has continued to persist in economic form. Plans of wealth distribution have not yielded expectations, with ANC governments leaving lands and other apartheid-earned assets in the hands of the whites.

A paper published by Anna Orthofer in 2016 on wealth inequality in South Africa notes that 90 percent of all wealth is controlled by whites while the majority of the blacks own next to nothing. Once in power, the ANC has shied away from implementing policies that would be deemed too radical by the West, like the redistribution of lands and enforcing equal job opportunity laws.

A lot has to change to put South Africa on the right trajectory. The ANC needs to aggressively deal with wealth inequality. Wealth inequality has the propensity to undermine the country’s democracy and create insecurity. Inequality creates an imbalance in the power structure which then undermines the proper functioning of a democratic state.

In addition, the ANC must also reform land ownership and return stolen lands to black South Africans. One of the reasons for the poverty in South Africa is the lack of land ownership among blacks, which leaves them with no collateral to source for loans to establish businesses. 

It is also incumbent on the government to increase social support to poor households and pay for it by engineering economic growth and implementing business-friendly policies.

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