A document prepared by the biggest Party in the GNU, the African National Congress, “Wider Horizons ׀ New Frontiers: Integrated Industrial Policy & Economic Growth Path”, says:
“South Africa’s economic growth has been sluggish for the last 2 decades, with potential growth levels remaining low. This has led to premature de-industrialisation…As a result, South Africa finds itself trapped in a middle-income scenario, where planned investments are path-dependent on legacy industries, barriers to entry and exit are significant, and market concentration and power remain high.
“Adding to this economic vulnerability is the lack of diversity within the economy. Policy efforts to confront the triple challenges of unemployment, poverty, and inequality are structurally inadequate without an accelerating and diversifying economy to support them.”
WHAT STORIES DO THE FIGURES TELL? – They tell the story that the levels of unemployment are intolerably high!
(i) The official unemployment rate was 32,9% in the first quarter of 2025.
(ii) The number of unemployed persons was 8,2 million.
(iii) The number of employed persons was 16,8 million.
(iv) The youth unemployment rate was 46,1%.
(v) The number of employed youth was 5,7 million.
(vi) The number of unemployed youth was 4,8 million.
(vii) The employed in December 2019 were 16.4 million, with only 11.3
million being in the formal sector, and 5.1 million in the informal sector.
(viii) In December 2019, the potential working population, aged 15 to 64, was
about 40.7 million people.
(ix) Those who could not work because they were at school, ill, or for other
reasons were 13.2 million.
(x) Of the 27.5 million available to work, only 16.4 million were working.
WHAT STORIES DO THE FIGURES TELL? – They tell the story that the poverty levels are intolerably high!
(i) Nearly 55% of the population was living in poverty in 2023.
(ii) In 2025, South Africa’s poverty rate is projected to remain around 63.5%.
(iii) It is expected that the poverty rate will remain at 63.5% between 2025 and 2027, with the poverty headcount increasing to 41.8 million in 2027.
(iv) During 2024, around 13.2 million people in South Africa were living in extreme poverty. With the poverty threshold at US $2.15 daily.
(v) It is estimated that by 2030, over 13.4 million South Africans will be living on a maximum of US $2.15 per day.
(vi) At least 15 million South Africans suffer from food insecurity.
WHAT STORIES DO THE FIGURES TELL? – They tell the story that the levels of inequality are intolerably high.
(i) South Africa has the highest income inequality in the world, with a Gini coefficient of around 0.67.
(ii) The Gini coefficients for some other countries are:
– Namibia’s is 0.59, Zambia’s 0.57, Mozambique’s 0.54, Brazil’s 0.53, US’s
0.41;
– China’s is 0.38, India’s 0.35, Russia’s 0.37, Scandinavian countries between
0.24 and 0.27.
(iii) The top 0.01% of people, just 3,500 individuals, own about 15% of the country’s wealth.
(iv) 0.1% of the population owns 25% of the wealth.
(v) The richest 10% control 85% of the country’s total wealth.
(vi) The wealthiest 10% of households are responsible for 52% of all expenditures.
(vii) The poorest 10% of households contribute only 0.8% of all expenses.
(viii) The average CEO in the retail and wholesale sector, the country’s
second-largest employer, earns 597 times more than their lowest-earning
employee.
These hard facts convey one message. That message is that South Africa urgently needs a strongly transformative and sustained socio-economic policy and programme!
So far, the GNU has adopted two Socio-Economic Policy documents. There are:
(a) the Medium Term Development Plan: 2024-29; and,
(b) Operation Vulindlela Phase II.
It is possible that the GNU will accept a third Socio-Economic Policy document,
currently named Wider Horizons ׀ New Frontiers: Integrated Industrial Policy & Economic Growth Path.
Naturally, the question arises as to whether the programmes contained in these documents are fit for purpose – the purpose being to set our country firmly on course to eradicate the socio-economic ills detailed earlier!
SOUTH AFRICA – THE TWO AGES
In July 2023, Dr John Endres, CEO of the South African Institute of Race Relations (SAIRR), delivered an Address in Washington D.C. in the US, entitled “The Weakening of the Detrimental State: South Africa’s Third Age: What lies ahead”.
Dr Endres argued that to understand South Africa in the period since the democratic transition in 1994, one should study what he called its ‘Three Ages’.
He wrote:
The period since the 1994 transition can be divided into two ages. The first lasted from about 1994 to 2007. The second age started around 2008 and we are now at the tail end of it. The two ages reveal themselves clearly in South Africa’s development indicators…
“South Africa’s first age, from 1994 to 2007, was marked by considerable progress across a range of indicators. GDP grew at an average rate of 3.6%. The number of people with jobs increased from 8 million to 14 million, and the average GDP per capita increased by almost 40%, from R55 000 per year to R76 000 per year in real terms, after adjusting for inflation.
“By contrast, for the period 2008 to 2022 the average GDP growth rate was a lacklustre 1.2%. The number of people with jobs increased by barely a million over a period of 14 years, while the population grew by 10 million over the same period. GDP per capita declined by R1 600, as people became poorer in real terms. The unemployment rate has crept up over the years and now sits at an astonishing 32.9%…Investment trends are downwards, with gross fixed capital formation as share of GDP climbing during the first age, reaching a level of 21.6% in 2008, before declining in the second age, dropping to as low as 13.1% in 2022.”
What Dr Endres said is factually correct.
It is graphically represented by Figure 1 below, which is extracted from an article on the South African economy in the public domain.
The same or similar information is communicated by Figure 2 below, which is extracted from another article in the public domain – ‘South Africa’s Future: Opportunities, Risks, and the Path Ahead’, produced for AfriSam February 2025 by Dr Frans Cronje.
Figure 2
What Dr Endres said about the Two Ages, so clearly illustrated by Figures 1 and 2,
communicates the strong message that the Government documents mentioned above must explain what accounted for the differences between Age One and Age Two.
This is particularly important given that during both Ages, the African National Congress was South Africa’s governing party.
It is obvious that an important contributor to the decline in growth rates from 2008 was the global economic crisis which was caused by the 2007-08 US Bank Crisis which caused the global financial crisis.
Figures 1 and 2 show that in South Africa, the decline which started in 2008 continued for more than a decade, until at least 2019.
THE EXPERIENCE OF SOME DEVELOPING COUNTRIES
In this context, it is useful that we take a brief look at the comparable experience of some other developing countries of the South, to understand whether the post-2008 economic crisis affected them in the same way as South Africa.. We refer here to the randomly chosen countries of Malaysia, India and Chile.
The GDP growth rate in South Africa in 2008 was 3.19% and dropped to (minus) 1.54% in 2009. It stood at 1.56% in 2018, having never again reached 3% in the intervening years. In addition, GDP grew by 28.16% in the period 2008 to 2018.
The equivalent figures for Malaysia are 4.83%, (minus) 1.51% and 4.84%, having recovered to a level above 4% in the intervening years. In addition, GDP grew by 55.41% in the period 2008 to 2018.
The equivalent figures for India are 3.09%, 7.86% and 6.45%, having reached 7.86% even in 2009. In addition, GDP grew by 125% in the period 2008 to 2018.
The equivalent figures for Chile are 3.79%, (minus) 1.12% and 3.99%, having recovered to a level above 3% in the intervening years. In addition, the GDP grew by 64.44% in the period 2008 to 2018.
It is therefore very clear that whereas it has taken South Africa more than 15 years to recover, if at all, from the 2008 global economic crisis, the other developing countries recovered from this crisis within two years!
It would appear that the ‘new normal’ for the developing countries post-2008 was even faster economic growth than pre-2008. Accordingly, the South African experience was either ‘sub-normal or abnormal’.
All this emphasises the imperative for South Africans, and the Government in its relevant documents, to conduct a thorough forensic analysis of the factors which caused the radical difference between South Africa and the other developing countries of the South in the context of the post-2008 global economic crisis, as well as between Endres’ Ages One and Two.
SOME IMPORTANT ANALYTICAL MOMENTS – The facts serve to chain the canard
As our country marked 30 years of democracy, many claimed that this had been a period of ‘sustained disaster’.
The facts presented by Dr Endres about his Age One prove that this assertion was entirely false as this period, as Dr Endres said, was “marked by considerable progress across a range of indicators.”
Let us cite some facts not mentioned by Dr Endres in his 2003 US Address.
During this period, the public debt was reduced from just below 45% of GDP to a low of nearer 23% by 2007. Among others, this made it possible to reallocate resources to improve service delivery as well as expand the very necessary social protection system.
Both the ‘SA Twenty Year Review’ and the World Bank said that although South Africa has made progress in reducing poverty since 1994, (during Age One), the trajectory of poverty reduction was reversed between 2011 and 2015.
As has been said correctly, the national data in the period up to 2007 collectively marked progress in advancing living standards that would rival any other post-colonial emerging market.
As the GDP growth rate rose to over 5% between 2004 and 2007, this was the first time this sustained growth was achieved since the first half of the 1960s.
It was also during Dr Endres’ Age One that for the very first time, our country achieved sustained budget surpluses since the formation of the Union in 1910.
Dr Endres did not discuss the strategically important advances our country made during Age One relating to its definition and formation as a constitutional democracy.
It was during Age One that our ‘final’ Constitution was adopted in 1996. The process started after the adoption of the ‘Interim’ Constitution in 1993, of creating the institutions, adopting the legislation and instituting the practices demanded by the democratic Constitution, continued after the adoption of the 1996 Constitution.
In practice, it was during Age One that various institutions which have come to define our democracy were established. We refer here to such bodies as the Constitutional Court and the Chapter Nine institutions.
Contrary to the entirely false assertion that everything has been a disaster since 1994, the incontrovertible reality is that the Democratic Revolution proved during Dr Endres’ Age One that it was uniquely positioned to help our country eradicate the centuries-long legacy of colonialism and apartheid, and help realise the goal of a better life for all the people of South Africa!
Any effort to help our country project into a successful future after 30 years of democracy will never succeed if it fails to take into account the very rich experience accumulated by all our people during our country’s Age One!
However, we cannot and dare not ignore the negative reality detailed by Dr Endres as he described Age Two.
The first question to ask is – what happened so that overnight, as it were, an Age Two emerged as a direct contradiction of Age One?
What is particularly puzzling in this regard is that the ANC was the governing party during both Ages!
Further, in the light of information provided earlier, it is very clear that it was not the 2008 global economic crisis which caused the change between the two Ages.
To unravel this puzzle, we should, perhaps, proceed from the simple to the complex.
It is almost inevitable that given our history, the simple would revolve around the issue of race and race relations.
An outstanding feature of Age Two is the virtual stagnation of our economy for at least 15 years, with the attendant consequences of increasing unemployment and higher levels of impoverishment.
As we have seen, this was contrary to what had happened during Age One.
Could it be that the issue of race intervened, resulting in the economic stagnation during Age Two?
END OF PART 1
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