South Africa goes from hero to zero in less than two decades

South Africa’s economic performance has declined steadily over the past decade, with the country falling further behind its emerging market peers, experiencing an average annual growth rate of 0.8%. 

This has been coupled with a stagnant quality of life for South Africans, with basic service delivery failures and a lack of social mobility. 

Economist and partner at Frans Cronje Private Clients, Bheki Mahlobo, said that this does not have to be the case and can be quickly turned around if South Africa makes the right policy choices. 

South Africa’s economy has not always been stagnant, with the country enjoying an average growth rate of 4% plus in the mid-to-late 2000s. 

This period was characterised by a dominant ANC, which voters rewarded for improving their quality of life, Mahlobo told Biznews. 

Mahlobo explained that it is a common misconception to think that the ANC has consistently failed to implement the correct policies and facilitate economic growth. 

Throughout its first fifteen years in power, the party managed to stabilise the country’s economy, which was in free fall, and eventually get it to grow at a similar rate to its emerging market peers. 

At the same time, the government managed to rapidly increase access to basic services, such as electricity and water, significantly improving the lives of millions of South Africans. 

Mahlobo said that he has engaged heavily with South Africans as part of election polling efforts, with many of them saying that life was better for them in the first decade of the country’s democracy. 

“They can remember that their lives were better in terms of the electrification of the country, job creation, and wealth,” Mahlobo said. 

The percentage of South Africans without electricity declined from 49% in 1994 to below 20% a decade later, with over eight million jobs created between 1994 and 2007.  

“The rollout of service delivery was a clear success in South Africa and, crucially, many people felt the impact of the improvement.” 

This was coupled with significantly faster economic growth, with South Africa’s GDP growth averaging over 4% in the 2000s. This greatly improved the living standards of citizens. 

As a result, the ANC enjoyed immense political power, as South Africans rewarded them for improving their quality of life. 

The downfall 

The picture today, particularly of the ANC, is almost the complete opposite. It has become associated with poor service delivery, widespread corruption, and a stagnant economy. 

As it could no longer continue to improve the quality of life for South Africans, its electoral fortunes have changed, with the party no longer enjoying a clear majority. 

The everyday life of South Africans has worsened for many, with regular disruptions to electricity supplies, water shortages, and rising unemployment. 

“You look particularly at the youth in South Africa nowadays, who have left rural areas to move to the urban fringes, and they are faced with a dire situation where it is rough to go about their day,” Mahlobo said. 

“You start your day, and you have no power. You try to go towards a taxi, but there are protests due to the power shortage. You then get to work, if you have a job, and some of your colleagues are being let go.”

There is very little optimism among this cohort of South Africans about the future, because they have not experienced any significant improvement in their quality of life over the past decade. 

“These are the day-to-day issues that South Africans face, and the consequences of that are an ANC that was performing well electorally and is now at risk of losing any access to power,” Mahlobo said. 

The ANC has gone from winning close to 70% of all votes in general elections to polling at 40%, according to the Social Research Foundation. 

“South African voters are very sensible and care about basic issues. It is quite remarkable that this country has not seen high levels of violence because of its economic stagnation,” Mahlobo said. 

The decline of the country’s economic fortunes has resulted in South Africans becoming steadily poorer over the past decade as population growth outstrips economic growth. 

This has also been coupled with elevated government spending, saddling South Africa with a significant debt burden, which crowds out spending in key areas and further hampers economic growth. 

Mahlobo said it is worrying that the government continues to double down on policies that led South Africa to its current position, rather than examining what has worked for other countries and the country’s own economy in the past.