THE PRESIDENT of South Africa, Jacob Zuma, is a folksy sort of politician and seems not to relish stuffily formal occasions. The master of ceremonies at an event on April 27th to mark the 20th anniversary of South Africa’s first multiracial elections tacitly admitted as much. The fun would soon start but formalities must first be observed, he told the audience in front of the Union Buildings in Pretoria, as Mr Zuma approached the podium. It did not help matters that the praise-singer that often acts as a warm-up act ahead of the president seemed to have been cancelled.
So Mr Zuma had to sing his own praises and those of his country. Head down over a prepared text, brow furrowed in concentration, he ploughed through a 40-minute screed in the flat tone he reserves for such occasions. The first fully democratic elections 20 years ago marked the end of more than 300 years of colonial and white-majority rule, he said. South Africans came out in their millions to join long queues to vote for the first time. A constitution was agreed. It was an era of hope that lives would improve. The gains made since then should not be denied. “We all have a good story to tell,” he declared.
With elections due on May 7th, the ruling African National Congress (ANC), with Mr Zuma at its head, is campaigning on the gains made since 1994 rather than on its record since the last national elections, in 2009. The party is sure to win, and may well keep its share of the vote above 60%.
But Mr Zuma’s first term has not been one to boast of. His presidency has been nagged by charges of corruption. In February the public protector, a watchdog, said Mr Zuma had unduly benefited from a $25m facelift for his private home, paid for by taxpayers. Violent protests over shoddy public services and corrupt local officials occur almost every day. The police response to unrest in August 2012 at Marikana, in the platinum belt, left 34 miners dead. A new strike is in its fourth month.
The economy has stalled. Unemployment has risen to 25% of the workforce, or 36% including those who have given up looking for work. A growing sense of disquiet about South Africa’s present—and anxiety about its future under a fractious ruling party—makes it hard for many South Africans to accept that anything has changed for the better since 1994.
The jollier narrative
The facts suggest otherwise. South Africa is a much more stable and peaceable country than might have seemed possible during the turmoil of the early 1990s. Rates of violent crime are high by the standards of other countries, but they have nevertheless fallen. Politics is dominated by the ANC but the Democratic Alliance (DA), the main opposition party, has steadily increased its support since 1999 and now governs the Western Cape, the second-richest of South Africa’s nine provinces. Parliament is a lapdog to the ANC, in part because of a system that allocates seats to political parties based on their share of the vote. But other bodies created by the constitution to keep the executive in check enjoy public support. The ANC has been on the wrong end of many court judgments, to its chagrin. But it accepts them.
Despite early fears, the ANC has not proved reckless with the levers of macroeconomic policy. Prudent management of public finances in the early years of its rule created the room to run large budget deficits when the global recession struck. The South African Revenue Service (SARS) is the envy of other African countries for its ability to harvest tax. The Reserve Bank has stuck to an inflation target. It has ANC members at its head, but has nevertheless acted independently of government. It recently raised interest rates, even though elections were on the horizon.
South Africans have on average grown richer and their living standards are generally higher than in 1994 (see table). A black middle class has emerged. For every black engineering student in 1994, there were 44 white students. Now their numbers are broadly equal. More than half of all blacks have bank accounts, compared with less than a fifth 20 years ago. Black professionals are a still a minority, but a much larger one. Around 40% of senior managers are black compared with just 4% in 1994. Races mix easily in the shopping malls in the wealthier parts of Johannesburg, the commercial capital. Most South Africans, especially the young, think of pervasive racism as a thing of the past.
Poverty is still widespread but is falling. Far more households have access to basic amenities, such as electricity, drinkable water and flush toilets. A broader welfare safety-net has softened the misery of poverty. The number in receipt of welfare grants has risen from 2.6m to almost 16m. Millions of country folk have moved to cities in search of work, the sort of migration that was forbidden under apartheid. The urban population increased from 52% to 62% between 1990 and 2010. Still, the proportion living in shack settlements has fallen. More than 2.5m homes have been built by the state since 1994. The biggest blot is the fall in life expectancy, the result of the disastrous policy on HIV/AIDS under Thabo Mbeki, Mr Zuma’s predecessor.
Yet, though most changes in society and in material conditions have been for the better, many South Africans scoff at the idea that the story of their country’s past 20 years is a good one. The gains from a growing economy have been skewed. Whites and educated blacks have done well. The rest have largely been left behind, even if state welfare has spared them from even worse poverty. Too many are excluded from paid work: the jobless rate is higher now than in 1994. Prospects for many seem to be fast diminishing.
One sign of disenchantment is the steady decline of the ANC’s share of eligible voters since the newly enfranchised queued to cast their votes 20 years ago. Only a third of those aged 18-19, the “born free” generation too young to have witnessed the end of apartheid, have registered to vote. Many increasingly opt for direct forms of protest rather than the ballot box. Angry protests about poor basic amenities, known as service-delivery protests, now occur almost every day (see chart 1).
Labour unrest is increasingly common. Disgust at the cosy relationship between union bosses and big business has spurred an increase in wildcat strikes such as the one that spawned the tragedy at Marikana. Workers in the platinum belt have since switched allegiance to an upstart union with no links to the ANC. In January it called a strike for higher pay which shows no sign of ending. Mr Zuma cancelled two scheduled stops this week in the heart of the strike zone, after a local ANC office was set on fire.
A rift with the party’s allies in the Congress of South African Trade Unions (COSATU), the biggest labour group, has been temporarily healed but is likely to reopen once the elections are over. A Labour Party to rival the ANC is mooted. The ruling party is already warding off a challenge to its left flank from the Economic Freedom Fighters (EFF), led by Julius Malema, who was head of the ANC’s youth wing before he was expelled. Mr Malema wants to nationalise mines and farms without compensation. His electoral appeal appears to have influenced the drafting of several bills that weaken property rights and will deter investment at home and broad.
Much of this growing disenchantment has its roots in rising joblessness. Only 43% of the working-age population have jobs. The economy has grown too slowly to keep pace with a burgeoning population (now 52m) and to absorb the large numbers already without work. GDP grew at an annual average rate of 3.3% in the two decades after 1994. That would be respectable for a rich country at full employment, but for an emerging-market economy with lots of idle hands it is poor. In that period the average growth rate for developing and emerging economies was 5.4%, according to the IMF; Africa’s grew by 4.8%.
Recovery from the global recession in 2009 has been sluggish. The economy grew by just 1.9% in 2013. Only six of sub-Saharan Africa’s 45 measured economies grew more slowly. ANC bigwigs point to the slump in Europe, a big export market. Failings closer to home have been largely to blame.
Three of the biggest problems are South Africa’s rigid labour laws, its unskilled workforce and a business climate that is increasingly unfriendly to much-needed foreign investment. Bargaining councils made of big established businesses and trade unions meet every so often to agree on wage levels and conditions of work. The minister of labour is then obliged to extend such agreements to all businesses in the industry. Big firms can live with the deals they cut with unions and find ways to comply with racial quotas set by affirmative-action laws. But small businesses struggle. As a result South Africa has a dismal rate of small-business creation in comparison with the BRIC countries—Brazil, Russia, India and China.
The ANC enacted labour laws to lessen inequality, but they have ended up reinforcing it. They protect insiders (big, established businesses and their employees) at the expense of outsiders (start-ups and the unemployed). The IMF notes that many South African industries are dominated by a handful of companies that make fat profits. Lack of competition hurts the jobless by denying them jobs and raising their living costs. Herman Mashaba, who started his cosmetics firm, Black Like Me, a decade before the end of apartheid, is funding a court case to stop the compulsory extension of wage deals on the ground that companies not party to a bargain should not be bound by it. “I’m glad I didn’t start my business in the new South Africa, because I would not have survived,” he says.
Sadly the ANC has spent more time thinking about how to share the spoils from sunset industries, such as mining, than encouraging new enterprise. It has failed to develop the resources that lie above ground. The Swiss-based World Economic Forum ranks South Africa 146th out of 148 countries in educational standards. The pass mark for the matric, the standard school-leavers’ exam, has been cut to as low as 30% for some subjects. The main teachers’ union (an affiliate of COSATU) has stymied attempts to link teachers’ pay to performance. It faces allegations that it has put teaching posts up for sale.
Most pupils do not make it to the exam hall. In 2010 there were more than 1m grade-ten pupils. Two years later, when this cohort reached grade 12, the graduating class, their number had fallen by half. Researchers at the South African Institute of Race Relations (SAIRR) find that this steep drop-out before the matric has been a consistent pattern in recent years (see chart 2). Only four out of every ten pupils who start school pass the matric, and only 5% pass maths with a mark above 50%. Just 12% achieve high enough marks to get into university, and even fewer earn degrees from good universities in business, law, medicine or engineering. It is hard to get a good job in a sophisticated middle-income economy without such qualifications.
South Africa also desperately needs business know-how and capital from abroad. The country’s current-account, a broad measure of the country’s savings, is in deficit to the tune of 6% of GDP. Long-term investment by foreign companies, for instance in new factories and offices, is scarce. Strikes are a factor. The local boss of BMW, a German carmaker, said last year that a stoppage of several weeks in the car industry had put paid to chances of building a new model in South Africa.
Enterprise is distrusted. Senior ANC people often trash business. Each ministry drafts its own legislation, seemingly with little thought as to how it will affect investors. A shortage of electricity-generating capacity is another deterrent. Rolling power cuts earlier this year hit the country for the first time since 2008.
For all South Africa’s troubles and the scandals that have tainted the ANC, it looks set to rule for another five-year term and probably at least another after that. The party is still seen as the body that did most to end apartheid. Many black voters are patient with it for that reason. Voters may be angry about the corruption of local ANC officials and the impact that graft has on the quality of services. But they seem to place more trust in the party’s national politicians.
Yet despite the progress made since 1994, the next decade or two seem no more certain than the future looked 20 years ago. In a new book, Frans Cronje of the SAIRR sets out four plausible roads that South Africa might take in the next ten years. In his best case, the ANC maintains an open society and upholds the constitution. It reforms labour laws, loosens regulations that deter private investment and public education. Eskom, the ailing state-owned power company, is privatised and corrupt officials are weeded out. GDP growth picks up as a result, unemployment falls and the ANC sees off the challenge from rival parties. In a related second scenario, the ANC clamps down on its political opponents and the press to make space for the same economic reforms. South Africans accept the trade-off of less freedom for more riches.
In a third scenario the ANC, complacent after winning a majority of more than 60% at the 2014 election, fails to reform the economy—indeed, it continues to intervene in ways that harm growth. It loses much of its majority at the 2019 elections, but is so riven with factions that it cannot summon a response to its failing fortunes. The DA wins the 2024 elections but faces an uphill struggle to revive the economy. In a fourth scenario the ANC persists with its damaging policies but also suppresses dissent. South Africa begins to resemble its dismal neighbour, Zimbabwe.
Which of these is likelier? The prospect of a reforming ANC should not be entirely written off. Like any other president, Mr Zuma would like a legacy, beyond keeping out of jail. He is no ideologue and may sign up to reforms if he could be convinced they would cut joblessness and poverty. He has not yet signed the business-bashing bills passed by parliament. Perhaps they will gather dust in a drawer once Mr Malema’s EFF has been seen off in the election.
But an election scare would probably be needed to push the ANC into action; a panic sale of assets by foreign investors might also do the trick. Pollsters say the party may again exceed 60% of the vote. So a long and depressing slide towards ANC defeat in 2024 seems likelier. South Africa’s good story looks set for an ending that no praise-singer could bring harmony to.