ANC policies have failed South Africa’s economy

South Africa’s economy is on the edge of collapse after the past 15 years of mismanagement, with the government having no idea of what makes an economy conducive to investment and industrialisation. 

Rather than address the root causes of the problem, such as poor service delivery, unreliable and expensive electricity supply, and overregulation, the state has focused on reacting to the collapse after the fact. 

The government’s reaction also makes it clear that it thinks the challenges are short-term and immediate, rather than a 15-year-long steady decline due to repeated policy missteps. 

This is feedback from Pan-African Investment and Research Services CEO Dr Iraj Abedian, who outlined the steady implosion of South Africa’s economy. 

Abedian, Standard Bank’s former chief economist, explained that it is not enough for ministers and the Cabinet to declare their grave concern at the loss of jobs without doing anything about it. 

“All of us, including my granny, can express concern and feel sorry for those who are losing jobs. But ministers and the Cabinet are responsible for doing things as opposed to sitting and kicking the can down the road,” Abedian told Newzroom Afrika. 

“This is not a recent issue. It is a 15-year consistent lack of attention to what makes an economy favourable for and conducive to industrialisation and the creation of high-value jobs.”

This is most emblematic in the collapse of the country’s infrastructure over the past 15 years, with the government failing to adequately invest in maintenance. 

“Industrialisation and the creation of jobs require a set of integrated infrastructure, which has not been the case for South Africa,” Abedian said. 

“This includes the reliable availability of cheap electricity, access to quality infrastructure, and efficient service delivery from municipalities. These issues are at the heart of our economic struggles.” 

“The decline has occurred over the past twenty years. We have had discussions around these things, but nobody ever does anything – that is the problem.”

The end result of this decline is the loss of thousands of jobs at companies that can no longer survive in a stagnant economy. 

There is no silver bullet

South Africa’s economic decline is due to a myriad of factors and cannot be solved by one quick decision. Instead, a consistent implementation of sound policy is needed. 

For an economy to stagnate for over a decade, several things have gone wrong simultaneously, and the only way to fix it is by making hard choices. 

“There is no silver bullet that will solve everything. We need to sit down and recognise that it is a combination, a package of interventions that we have to do – not talk about – do,” Abedian said. 

Abedian suggested that the Cabinet meet regularly with business leaders and international stakeholders to find out what is going wrong and how it can be fixed. 

Ultimately, the government should focus on providing what businesses need to grow and expand, which will translate into improved employment opportunities. 

“It is quite clear that our approach belongs to the 20th century, possibly the 19th century, not the 21st century. We have got to let go of these poorly conceived and failed ideologies,” Abedian said. 

“It is not one policy or one piece of the puzzle that needs to be found. If you want to have a growing economy and heavy industry, things need to work at a fundamental level.” 

Abedian explained that you cannot industrialise a country that is poorly run and lacks basic service delivery that is needed for businesses to operate. 

“How do you industrialise an economy where its cities are badly run? Its mayor and city managers are hopelessly out of their depth. All they do is destroy more of the infrastructure,” he said.

“They do nothing to make the economy more conducive to industrialisation and the 21st century. The game has changed, while the culture of government and policymaking belongs to the last century.” 

“This is the problem that needs really urgent attention in South Africa.”