South Africa

ANC had a massive opportunity in 1994 – and wasted it

In 1994, the ANC had a massive opportunity to build a dynamic, strong, and inclusive economy when it inherited a country with industrial capacity, a robust financial sector, and strong state-owned enterprises (SOEs). 

However, it failed to capitalise on this opportunity, with the decade of state capture effectively hobbling the economy. 

This is feedback from Dr Harlan Cloete, who told Newzroom Afrika that while 30 years is not enough time for the ANC to rectify a century of economic mismanagement, it has failed to adequately improve the fortunes of South Africans. 

Cloete explained that the ANC faced an uphill battle when coming to power in 1994, considering the state of the economy and social instability. 

While it was able to stabilise the economy and prevent widespread unrest, it failed to kick on from there and build a stronger, more inclusive economy. 

The South African economy was relatively fragile in 1994, but there were some strong pockets which could have been used to drive economic development. 

In particular, the ANC inherited an economy with a relatively large industrial base, a strong mining sector, and a highly sophisticated financial sector. 

Coupled with functioning, profitable, and efficient SOEs, the ANC government had a platform from which it could build a robust modern economy. 

Instead of building from the great good parts they inherited, SOEs became plagued by governance and leadership problems. 

“Evidence shows that there were deliberate attempts to destabilise SOEs, and their money siphoned off to the elite,” he said. 

Dysfunctional SOEs are largely why South Africa’s economy has stagnated over the past decade and prevented South Africans from becoming more prosperous. 

The poor performance of South Africa’s economy under the ANC is shown in the graph below.

Source: Goolam Ballim

Cloete’s comments stand in stark contrast to those of President Cyril Ramaphosa, who has recently blamed Apartheid for the current state of South Africa’s economy. 

Ramaphosa told delegates at the Worker Share Ownership Conference that pre-1994, Black South Africans were deliberately excluded from meaningfully participating in the economy.

“We enabled this economy to operate not on all cylinders. If a car has six cylinders, it was only operating on two,” he said.

Had South Africa’s economy operated on all cylinders, it would have been far bigger, it would have grown faster, and it would have created more jobs, he said.

“Through that, we would have fostered competition, and competition is good. It creates companies which can innovate and create more jobs,” he said.

“Our economy was deliberately crippled and kept stagnant by the exclusion of the majority of our people,” he said.

“That is why our economy is where it is today. Many people don’t reflect on how our economy was crippled by not enabling it to operate on all cylinders.”

“The South African economy is hamstrung by the concentration of ownership and, in part, opportunity,” he said.

He said a good measure of the success of economic transformation is the ratio of ownership among black and female South Africans.

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