South Africa: When strong institutions and huge inequalities collide (2023)


South Africa was one of the iconic cases of democratization in the 1990s. But from the mid-2000s, the country experienced a devastating collision between its strong political institutions and huge economic inequality. The collision deepened in the 2010s, leading to economic stagnation and increasing threats to institutional integrity. Understanding why this collision occurred and worsened over time is relevant not only for other middle-income countries, but also for many higher-income democracies that face similar tensions between a decreasing tolerance for the top and rising inequality and institutions. that seemed strong in the past. past, but find their legitimacy increasingly questioned.

Ideally, ideas, institutions and growth reinforce each other in a virtuous spiral of development. Ideas offer hope by encouraging collaboration and looking for win-win opportunities. The institutions ensure the monitoring and application of cooperation agreements. Together, ideas and institutions ensure a credible engagement that drives economic growth. Such a benign scenario, however, fails to take into account how persistently high inequality, accompanied by unresolved tensions between the distribution of economic and political power, can put pressure on institutions and quickly turn hope into anger. The result can be a cascading set of pressures and an accelerated downward spiral.

In the first fifteen years of democracy, South Africa enjoyed the advantages of effective institutions and a shared disposition among interest groups that believed in the power of cooperation. This has enabled the country to overcome counterproductive conflicts and strive for win-win outcomes. Growth began to accelerate, creating new opportunities to expand the middle class. Greater fiscal space allowed greater access to public services and social benefits, thus reducing absolute poverty.

However, there were some severe limitations on what was achieved. The gains of the poorest did little to alter their difficult economic and social reality. Less than a quarter of the total population, including essentiallynowhite South Africans, enjoyed a middle-class or better standard of living. For most South Africans, there was every reason to believe that, despite promises of mutual benefit, the cards were still stacked against them. This increased the vulnerability of South Africa's political arrangement.

South Africa's political agreement was based on four different auxiliary agreements:

  1. A compromise between the predominantly white business elite and the country's new political leadership. This has included commitments to the rule of law (including protection of private property) and economic transformation, including through the Black Economic Empowerment (BEE) program.
  2. An agreement between the new political elites within the majority political party, the African National Congress (ANC). The ANC is a broad tent that encompasses many ideological trends; degree of public spirit; and regional, ethnic, and economic interests. Its implicit promise was that its formal structures, as well as the structures of government, would channel this diversity towards a common national purpose.
  3. A promise of advancement. One aspect was the obligation to protect the interests of the new members of the (predominantly black) middle class. Another aspect was the promise that a combination of education, job creation, and an end to racial discrimination would open up easily accessible opportunities for those on the cusp of middle-class status.
  4. A promise to reduce extreme poverty through a reorientation of public resources and services after minority rule.

All of these side businesses, with the exception of the last one, which lasted at least until the 2010s, had shaky foundations. Pressure on institutions has increased. Many BEE transactions straddled the line between rules-based trading and more personalized trading; who was supposed to participate in BEE initiatives became part of the ANC's inter-elite conflict. Adapting to a changed political order has placed new pressure on the public sector. If South Africa had enjoyed a combination of visionary leadership and East Asian rates of rapid economic growth over an extended period, expanding opportunity across society might have pushed the boundaries of the desired compromise. Indeed, from 2005 to 2008, the country only briefly reached an annual rate of 5%. In 2009, Jacob Zuma became president after winning a bitter battle for leadership of the ANC. Over the next eight years, a downward spiral of decline seemed to unfold.

The upper echelons of the ANC competed for control of resources and positions of influence, further increasing pressure on the institutions. After 2009, SOEs became a particularly lucrative area for individuals and powerful, well-connected factions to engage in systematic looting.

In Zuma's second term, per capita income growth turned negative. The zero-sum dispute over positions and resources at the national, provincial and local levels has become acute. A growing wave of disillusionment across much of society further undermined the political agreement. The losers of elite conflicts within the ANC took offense. Those about to enter the formal economy have not managed to consolidate their middle-class status; Job creation in the formal sector has been anemic. Unemployment rose steadily.

Disillusionment led to an idealistic turn to anger, fueled as much by genuine grievance as by political opportunism. Faced with thwarted opportunities, more and more South Africans recognized the privilege enjoyed by the predominantly white business elite – and the wave of blatant corruption that seemed the only way the new elites could partake of that privilege, a provocation. Opportunistic ethnopopulist political entrepreneurs, in turn, tried to use disillusionment to strengthen their position in political struggles among elites.

All the elements appeared to be in place for a rapidly accelerating cumulative slump, with weakened economic performance, institutional decay, and anger and ethnopopulism feeding off each other. While the election of Cyril Ramaphosa as ANC president in December 2017 and his subsequent assumption of the presidency of the country signaled a break in that slump, three years later the country is still far from over the hill. Ramaphosa was unable to go much further than a promise to stop the rot and also offer a renewed positive outlook. The country's fundamental and profound challenges remain, exacerbated by the economic fallout from the coronavirus pandemic.

South Africa's experience suggests four potentially useful lessons for the many countries struggling to maintain positive social, political and economic trajectories in the face of high or rising inequality.

  1. The path of change is the razor's edge. There is an opportunity to create virtuous cycles of positive interactions between ideas, institutions and economic growth. However, there is also a significant risk that unresolved distributional imbalances could trigger a cumulative downward spiral of decline.
  2. Ideas are important - a hopeful vision of change combined with a "good enough" ability to respond to distributional problems can be enough to initiate positive development.
  3. Both ideas and institutions can be shields against adversity—but only up to a point. Hopeful ideas can inspire positive action and help mobilize people for collective action. Institutions can act as buffers. However, both ideas and institutions need to be strengthened, including by addressing latent imbalances in economic and political power.
  4. Starting a new cycle of renewal requires a set of ideas and actions that 'sufficiently' address the imbalances resulting from the derailment.

What matters most is a credible promise of upward mobility that would offer quick wins to those on the cusp of the middle class and renew a vision of hope and possibility in society at large. South Africa's leaders need to mobilize new coalitions capable of overcoming the vested interests that stand in the way of inclusive change. Can South Africa's leadership - and the leadership of other countries where a similar disenchantment has taken hold - have the courage to rise to this challenge?


For advocates of democratic governance, the 1990s was a time of great optimism. A third wave of democracy swept in; between 1988 and 1996, the number of electoral democracies worldwide increased from 67 to 118 countries.1However, three decades later, the world has fallen into a democratic recession. Between 2006 and 2017, the proportion of countries classified as democracies fell from 58% to 51%.2Even in long-established democracies, the tenor of political discourse is becoming increasingly polarized. Many democracies find it difficult to correct themselves - that is, to use their experiences to reaffirm democratic norms and practices in the face of challenges to their systems of government.

A key part of the optimistic outlook of the 1990s was the assumption that democratization and development would naturally go hand in hand in a mutually reinforcing virtuous circle. But the experiences of the past two decades have called this assumption into question: many democracies in developing countries are struggling with economic hardship and growing challenges to their political health.

This report uses the case of South Africa to examine the proposition that a critical weakness for many democracies is the complexity of meeting the challenges of inequality and exclusion. These challenges have become pervasive in democracies around the world. Many upper- and middle-income democracies struggle with a volatile combination of decreasing tolerance for high or rising inequality and institutions that may have seemed strong in the past, but whose legitimacy is now increasingly being questioned. Economic and social imbalances can no longer be swept under the rug; However, countries are finding it difficult to address these concerns.

Brian Levy

Brian Levy teaches at the School of Advanced International Studies at Johns Hopkins University. He was the founding director of the Nelson Mandela School of Public Governance at the University of Cape Town.

Over the last quarter century, the collision between institutions and inequality has been particularly violent in South Africa. In the 1990s, South Africa was one of the most emblematic cases of democratization in the world. For more than three centuries, the country has been torn apart by conquests, wars, the devastation of indigenous social and economic structures by colonial powers and settlers from a distant continent, and by oppressive minority rule. But out of this catastrophic history was born almost miraculously a "rainbow nation" with equal citizenship for South Africans of all races and colors - not just the long-ruling white minority.3His date of birth was April 27, 1994, the day South Africa's voters went to the polls in the country's first democratic elections.

The 1994 election was a triumph for the African National Congress (ANC), a staunch opponent of apartheid whose leadership had returned after three decades in exile. Two weeks later, Nelson Mandela – apparently rising from the dead after being released in 1990 after twenty-seven years in prison for his anti-apartheid activities with the ANC – was sworn in as South Africa's first democratically elected president. A global icon and recipient of the 1993 Nobel Peace Prize, Mandela was committed to building a foundation for peace and stability. Racial reconciliation was a key part of his mandate. But like many countries, a fairytale climax was not the end of the story.

South Africa is a middle-income country (MIC) with a per capita income similar to Brazil and Thailand and slightly lower than Mexico and Turkey (see Table 3 later in this document for comparative data). Among MICs, it is an outlier in at least three respects that warrant closer examination:

  • Its democracy is underpinned by a well-crafted constitution and an exceptionally strong set of formal checks and balances on its institutions. In the dawn of its democracy, both the government's effectiveness and the quality of its judicial institutions were rated far above those of its MIC peers.
  • Of countries with high-quality data, South Africa is perhaps the most unequal country in the world, both in terms of the overall distribution of wealth and income and in terms of the ethnic composition of that distribution.
  • Its transition to democracy brought to power a political party (the ANC) with a radically different and much more inclusive political base than its white-minority predecessor – and with a long-standing commitment to building a more just society.

These characteristics make the South African argument relevant not only to MICs but also to higher-income countries where strong, or at least relatively strong, institutions are threatened by inequality, social discontent and political polarization.

The country's political success in the mid-1990s seems to have changed both the relations between the elites and the way in which the non-elite were incorporated. The agreement included implicit promises

  • rebalancing political power and economic advantage between established and emerging elites;
  • manage potential rivalries between emerging elites (particularly those within the broad tent of the ANC) in order to maintain a platform of economic and political stability;
  • create advancement opportunities for non-elite, as well as a privileged few; and
  • addressing the country's massive legacy of extreme poverty with the promise (to match the 1994 ANC election slogan) of "a better life for all".

This agreement was underpinned by a combination of ideas and institutions. The core idea was a shared willingness among stakeholders to believe in the power of working together, which would allow South Africa to overcome counterproductive conflicts and pursue win-win outcomes. Effective institutions, both formal and informal, provided commitment mechanisms that helped make promises of cooperation credible. However, the daunting challenge of transforming and resolving the country's difficult political and economic legacy has prevented South African leaders from sustaining a virtuous cycle of sustained hope, growing confidence, accelerated growth and continued inclusion. Instead, the failure to deliver on the promise of shared gains contributed to a downward spiral of institutional pressures, a deterioration in economic performance, and an ideological abandonment of cooperation.

For all of South Africa's difficulties, there are positive lessons to be learned from its example. In the early 1990s, South Africans demonstrated their ability to overcome enormous odds and reverse a seemingly inexorable downward spiral. The election of Cyril Ramaphosa, first as ANC President in December 2017 and then as President of South Africa in February 2018 following Zuma's resignation, signaled that much of society (including within the ANC) remained committed to building a prosperous and inclusive society. 🇧🇷 While the first three years of Ramaphosa's presidency have been difficult, perhaps South Africa can surprise the world again - and others can learn from the experience.

To better understand how South Africa's experience of inequality and exclusion affected its transition and democratic development, this article will provide an analytical framework and link it to the South African experience. Then, in three parts, the development of governance and institutions in the post-apartheid era is examined. The first part looks at the period from 1994 to 2010, when the cooperative vision was largely intact. The second part concerns the acceleration of a downward spiral under the administration of President Jacob Zuma. The final part looks at how South Africa broke the downward spiral with Ramaphosa's victory in December 2017 to succeed Jacob Zuma as ANC leader and what it takes to start a new virtuous circle of hope, inclusion and opportunity.

set the stage

This section presents the analytical framework of the study, provides some necessary background detail for South Africa, and highlights the links between the framework and the South African case.

The Hirschman Cycle

Albert Hirschman's reflections on the interactions between development and inequality in Latin America provide a useful analytical starting point. As Figure 1 shows, Hirschman describes the relationship as a cycle with three phases: growth, anger, and reform. (As can be seen from the bottom row of Table 1, the development of South African democracy follows these phases closely.)

South Africa: When strong institutions and huge inequalities collide (1)

Reflecting on his experiences as an academic and practitioner in Latin America in the mid-1970s, Hirschman summarized the previous quarter-century as marked by a "changing tolerance for inequality." The first part of the period was one of optimism; Hirschman's classic 1963 book was titledTravel to Progress, and his 1971 collection of essays was titledA penchant for hope🇧🇷 But over time, increasing polarization, civil conflict and military rule spread across the continent. Growth fueled by hope turned to anger. What was responsible for the change?

Hirschman characterized the growth phase – a time when “society's tolerance for disparities is substantial” – likening it to being stuck in temporarily flowing traffic:

Suppose I'm pulling into a heavy traffic jam in a two-lane tunnel. After a while, cars start moving in the other lane. Of course, my mood improves significantly... Although I'm still sitting down, I feel much better than before because I hope to move soon....

While the tunnel effect lasts, everyone will feel better, both those who got richer and those who didn't... The tunnel effect works because the progress of others provides information about a friendlier external environment; Receiving this information generates satisfaction; and this satisfaction overcomes envy, or at least annuls it.4

However, acceptance of imbalances cannot last forever. In Hirschman's framework, development is inevitably accompanied by increasing imbalances. In South Africa, the apartheid system made inequality already extremely high at the beginning of democracy; The source of hope was the promise of a more inclusive economy and society. In any case, as Hirschman said, tolerance of inequality

it's like a loan that matures at a certain time. It is extended in the expectation that disparities will eventually narrow again. But if the expectation . . . does not come true, there will be trouble and perhaps calamity. . that is, in my transformation into an enemy of the established order... No particular external event triggers this dramatic turn.5

However, the cycle can move from anger to a new phase over time. As can be seen in Figure 1, the furious tunneling phase can be followed by a reform phase that includes “recovering efforts from sectors and regions lagging behind in social reforms to improve the well-being and position of neglected groups and in the redistribution of wealth and income in general”.6

Table 1 separates Hirschman's explanation of the overall pattern with respect to three variables (ideas, institutions, and inequality) and differences in the pro-growth orientation of economic policies over the cycle.

South Africa: When strong institutions and huge inequalities collide (2)


In emphasizing ideas - particularly the role of future expectations - Hirschman followed the earlier example of John Maynard Keynes:

Normally, we have only a vague notion of anything beyond the more immediate consequences of our actions... By "uncertain" knowledge I don't just mean distinguishing what is known with certainty from what is only probable. The sense in which I am using the term is that... we just don't know. Still, the need for action and decision as practitioners compels us to do our best to ignore this uncomfortable fact.7

Thus, according to Keynes, uncertainty is the source of the Hirschman cycle's volatility:

Our theory of the future, on such a fragile foundation, is subject to sudden and violent changes. The practice of stillness and stillness, certainty and security suddenly breaks down. New fears and hopes will dominate human behavior without warning.8

Recent analyzes of political economy have examined the role of ideas in promoting change - ideas that protagonists have about themselves, others and how the world works, as well as ideas and expectations about the future.9As Dani Rodrik said:

Any model of political economy in which organized interests do not play a prominent role is likely to remain empty and incomplete...Ideasby political agents.10

Democratic South Africa offers a convincing example of the existence, alongside a political discourse concerned with interests and politics, of a tacit assumption about an underlying central idea: that a prosperous future could be built on cooperation and, therefore, on the possibility of wins. get results with shared benefits. The ANC's 1994 election slogan – “A better life for all” – and its detailed economic electoral program, the Reconstruction and Development Program (RDP), were evidence of this mindset. The starting point of the RDP was the vision that recovery and development will be achieved through "the leadership and supportive role of the state, a thriving private sector and the active participation of all sectors of civil society, which combined will lead to growth sustainable".11

Alan Hirsch

Alan Hirsch is a professor at the Nelson Mandela School of Public Governance at the University of Cape Town (UCT) and was the founding director of the school from 2011 to 2019.

The notion of gains through cooperation is radically different from a worldview shaped by domination and oppression. What made South Africa's 'rainbow' miracle so remarkable was the speed with which a range of national ideas gave way to seemingly diametric opposites. From a race-based essentialist society shaped by internalized patterns of domination and oppression – which articulated its core conflict as a struggle between competing nationalities – developed an inclusive and cooperative social order that aspired to embrace the principles of equal dignity and shared citizenship. It was a shift from a zero-sum to a positive-sum understanding of the world.

An ambitious collaborative program faces the challenge of time inconsistency. Success requires ongoing collaboration, but not all parties share the costs or reap the benefits of that collaboration at the same time. Successful implementation of RDP is required

  • anticipated tax revenues to expand the provision of public goods,
  • hitherto repressed majority to exercise political restraint in order to create an attractive business environment,
  • a willingness of private companies to commit and invest in the future, and
  • both political clemency and private investment continue in the long run.

Ideally, all these conditions would lead to mutual benefits for all South Africans. However, one or more interested parties may choose to withdraw their participation at any time. They may have received numerous benefits, but they are now facing a time when their burdens may be front and center. Alternatively, they may have lost patience with the delay in receiving the benefits they believe they should. Regardless of the situation, those who have withdrawn from the social contract can easily undermine the entire process.


Institutions, according to Douglass North's classic definition, comprise the "rules of the game . . . man-made constraints that govern human interactions."12Institutions can be formal or informal; Formalization is often needed to handle complex interactions. A paradoxical source of the strength of South Africa's constitutional democracy has been the strong formal institutions of checks and balances that the newly democratic country inherited from the apartheid era. For the country's white minority, these institutions have long provided a robust structure of economic, social, and political governance; the transition to democracy has extended its protective shield to the population as a whole.

The country's new constitutional order was built around the protection of political, civil, social and economic rights. The political order was based on the principle of equal citizenship for all. The civic order provided constitutional protection for the rights of all citizens as individuals – the latter consistent with the non-racial ethos of the ANC. Rights enshrined in the new social order included the right to education, health, environmental protection, and sexual preferences. Likewise, the economic order protected property rights: South Africa would continue to embrace market principles.

Table 2 uses four sets of measures from the V-Dem and World Governance Indicators (WGI) datasets to provide a comparative perspective on the quality of governance in South Africa in 1996 (two years after political transition) compared to other MICs. The country emerges as a strong positive outlier on three of the metrics, although its score is more mixed on a fourth – albeit for understandable reasons.

  • Government effectiveness:The WGI composite measure of government effectiveness captures "perceptions of the quality of public services, the quality of the public service and its degree of independence from political pressure, the quality of policy formulation and implementation, and the credibility of the government's commitment to policies ". South Africa is ranked at the 83rd percentile, well above the MIC benchmarks on the graph and on par with countries such as Italy and France.13
  • Rule of law:The V-Dem Rule of Law Composite Measure measures “the extent to which laws are applied in a transparent, independent, predictable, impartial and equitable manner, and the extent to which the actions of government officials comply with the law”. Here, too, South Africa performs significantly better than its MIC comparison countries.
  • Corruption control:The WGI Corruption Control Score is designed to "capture perceptions of the extent to which public power is exercised for private gain, including both petty and grand corruption and the 'takeover' of the state by elites and private interests."14Corruption is a result of how institutions work; The level of corruption control is a useful indicator of the overall quality of a country's institutional system. South Africa's 1996 percentile ranking was similar to that of southern European countries and was well above its MIC benchmarks.
  • Institutionalization of political parties:According to V-Dem, the indicator "captures the level and depth of party political organization, links with civil society, party activist cadres, party supporters in the electorate, coherence of party programs and ideologies, intra-party voting between representatives within the legislature party."fifteenHere, South Africa's 1996 score was higher than Thailand's and slightly above Brazil's, but well below Mexico's and Turkey's. Given that democracy was new in South Africa and the ANC was forced to operate as an exile/underground movement from the 1960s to the 1990s, it is not surprising that the ANC's domestic organizing networks were only moderately well developed by the mid-1990s.

South Africa: When strong institutions and huge inequalities collide (3)

Although imperfect, South Africa's strong formal institutions appeared to provide an extraordinarily strong foundation for dealing with the country's daunting political, economic and social challenges. In a benevolent world, positive interactions between the idea of ​​mutual gain through cooperation, strong institutions, sensible policies and a generally favorable global environment can be enough to start a virtuous circle, increase mutual trust and for the country to become a to develop. a prosperous, inclusive and wealthy society. However, this benevolent scenario does not anticipate inequality and its consequences.


A useful starting point for understanding how inequality affects cooperation is the notion of “political regulation”, an area of ​​increasing focus in development research. Summarizing a decade's worth of contributions, Tim Kelsall and his colleagues define a political settlement as "an ongoing agreement (or agreement) between the most powerful groups in a society about a set of political and economic institutions accepted to represent a minimum acceptable level of benefit , thereby ending or preventing general civil war and/or political and economic unrest."16A paradoxical implication of this definition is that high inequality need not undermine the stability of a political arrangement. What counts for stability is not inequality per se, but the alignment between the distribution of power in society and the distribution of economic benefits resulting from regulation. A settlement can be stable when both political power and economic advantage are concentrated and reproduced within a narrow, ruling elite. This is a reasonable approximation of South Africa during the heyday of apartheid.

South Africa's 1994 democratic political settlement faced the challenge of rebalancing economic and political power. The challenge had two distinct aspects: new agreements between elites and new ways of including non-elite groups. To address the former, the agreement provided a platform for collaboration between established and emerging elites. To address the latter, the settlement appears committed to massively expanding inclusion, thereby increasing non-elite access to resources and opportunities. Indeed, one of the pleas of apartheid-era elites was that the ANC's guaranteed rise to power through democratic elections would lend legitimacy throughout society to a negotiated constitutional order that promised equal rights for all. Going forward, of course, the challenge has been to balance aspirations for collaboration and inclusiveness with measures to address inherited distributional imbalances in a coherent and mutually beneficial (non-zero sum) way. The challenge was considerable.

Table 3 compares inequality in South Africa in the early 2000s with that of four other PRMs. As the table shows, inequality in South Africa was much higher than in the comparison countries (including Brazil, which was seen as a prime example of inequality among MICs in the early 2000s). A larger proportion of purchasing power is concentrated in the top 10 to 15% of the distribution, with a correspondingly smaller proportion in all others, and in the bottom 40%, where economic exclusion is particularly severe.

South Africa: When strong institutions and huge inequalities collide (4)

The data in Table 3 does not capture the total level of challenge at the top of the distribution. For one thing, wealth is generally more unevenly distributed than income, particularly in South Africa. In 2015, the richest 10% of South Africans owned 92% of all wealth in the country.17At least as challenging to the stability of the 1994 regime was the ethnic makeup of the business elite: the legacy of apartheid in South Africa meant that the high commands of economic power were entirely dominated by the white minority. In 1994, only half of 1 percent of shares on the Johannesburg Stock Exchange (JSE) were owned by black investors.18

As Table 4 shows, between 1995 and 2010 there were some changes in the ethnic composition of the richest 10% of South Africa's population. Despite this, white South Africans (who made up just 9% of the population, down from 13% in 1995) represented 56% of the richest 10% in 2010. Six out of ten white South Africans were among the richest 10%. , and all but a handful were in the top quartile. Given South Africa's history, these standards are ethically intolerable, politically unsustainable and (as discussed below) corrosive to institutions.

South Africa: When strong institutions and huge inequalities collide (5)

Now look at the middle of the distribution. As the data in Table 3 suggest, South Africa faced a steep cliff - a missed opportunity ladder in the middle of the distribution. South Africans were (and still are) rich or poor, with few intermediaries. In Brazil, Mexico, Thailand and Turkey, income at the top of the distribution is falling relatively slowly – in the early 2000s, those in the 35th percentile earned about half as much as those in the 15th percentile. In contrast, in South Africa, the incomes of people in the 35th percentile of the distribution were less than 30 percent of people in the 15th percentile.19

A comprehensive assessment of the reasons for the emergence and persistence of this income gap is beyond the scope of this paper.20However, South Africa's problems have much to do with the structural legacies of the apartheid era. The country inherited the rigidity of a political system that supported an economy focused on generating high incomes for the white minority, using legally repressed unskilled labor in mining and agriculture, while restricting social ascension. of black South Africans. Corporate insiders, whose investments and skills were concentrated in capital-intensive industries – and formal employees (predominantly black since the mid-1990s) who, like the insider “labor aristocracy”, enjoyed relatively high wages – reproduced the inequalities of the past , with little economic incentive to switch. Furthermore, the inner workings of the ANC alliance resulted in a pattern of decision-making that disproportionately empowered union workers and white-collar workers at the expense of their supporters who were outside the formal economy.

Vinothan Naidoo

Vinothan Naidoo teaches Public Policy and Public Administration at the University of Cape Town.

Whatever the origin of the cliff, its continued persistence made it difficult for the ANC government to fulfill its promise of upward mobility. It faced a particularly difficult tension between creating new opportunities for those outside the formal economy and satisfying the concerns of vulnerable members of the black middle class who made up an influential bloc within the ANC. A notable institutional consequence of the pressure to expand South Africa's black middle class was that, in the absence of a thriving ladder of market-driven upward mobility, public sector employment became an important avenue for upward mobility. As this shift has been accompanied by a growing trend of paternalism and clientelism, the public sector has had to deal with increasing pressures on taxation and service quality (see “Transforming the Public Sector” later in this document).

Virtuous and malicious spirals

Table 5 lists some of the ways in which persistent imbalances between economic and political power can undermine the stability of the broader political arrangement. One mechanism highlighted by Hirschman's “tunnel” is idealistic – a shift from hope to anger induced by a combination of disillusionment and ethnopopulist political entrepreneurship.21A second group of mechanisms works through eroded institutions. Pressures on institutions can come from the lack of robustness in elite agreements and therefore from ongoing disputes between elites; it can also result from ongoing challenges in incorporating non-lites.

South Africa: When strong institutions and huge inequalities collide (6)

Figure 2 illustrates how the interactions between ideas, institutions, inequality and growth can influence each other positively or negatively. In the favorable scenario on the left of the figure, ideas, institutions and growth reinforce a virtuous circle. Ideas offer hope and encourage collaboration. Institutions provide credibility so that the agreements that underpin cooperation are monitored and enforced. Together, ideas and institutions ensure credible engagement and drive economic growth. However, as the right panel points out, this favorable scenario does not anticipate how the continuing unresolved tensions between the distribution of economic and political power may threaten both elite agreements and the credibility of promises to include non-elites. As indicated by the solid arrows in the figure, persistent inequality can put pressure on institutions and, in line with the Hirschman tunnel effect, catalyze an ideal turn from hope to anger. The cumulative consequence, as shown by the dotted lines in the figure, can be a cascading set of consequential stresses, a slowdown in growth, and an accelerated downward spiral.

South Africa: When strong institutions and huge inequalities collide (7)

1994-2007: Season of Hope - A Better Life for All

The first decade of South African democracy was a time of hope (according to the title of Alan Hirsch's book on economic reforms under the country's first two presidents).22In this hopeful phase of the Hirschman Cycle, the country has embraced the ANC campaign slogan “A Better Life for All” and its vision of working together to achieve shared benefits. Realizing this vision was not an easy task. As Hirsch (then Chief Director of Economic Policy for South Africa in the Office of the Presidency) summarized in his book, the key challenge was to combine a commitment to growth with a commitment to sharing the benefits of that growth:

Did it make sense to redistribute a dwindling inheritance while everyone got poorer? And yet, wouldn't stimulating economic growth simply put more wealth in the hands of those who already had it? The big economic question facing the ANC was: what would be the ideal balance between growth and redistribution in South Africa? Or, more specifically, how could it put South Africa on the path of economic growth while at the same time ensuring fair, just and politically necessary redistributive outcomes? In other words: did growth and redistribution somehow complement each other in South Africa?23

Efforts to combine growth and redistribution required a collective commitment from across society - one that was deeply at odds with South Africa's historic heritage. Centuries of exploitation and oppression have left great residues of suspicion and distrust, along with ingrained dysfunctional habits of unequal communication across racial lines. The change process was inevitably difficult, with many compromises and not a few conflicts. Gradually, gains began to become apparent; economic growth accelerated and extreme poverty declined. However, it turned out that achieving growth gains and poverty reduction were the relatively easy parts of the agenda for building a prosperous inclusive society. Dealing with other dimensions of exclusion and inequality proved more difficult – and the lack of solutions in these other dimensions has put institutions under new pressure.

Institutional pressures have been particularly intense on two aspects of the ANC's agenda: initiatives to transform the elite through proactive efforts such as the Black Economic Empowerment (BEE) program, and initiatives to leverage the public sector as part of a broader transformational agenda. wide. As will become clear, despite some successes, these initiatives were accompanied by internal complications that set the stage for mounting difficulties in the 2010s. Before delving into the complications, it is worth taking a look at South Africa's achievements in reducing poverty in the post-apartheid era.

Pro-poverty growth – some achievements

Table 6 summarizes South Africa's actual economic growth rates since the beginning of democracy. By the end of the apartheid era, the economy had stopped growing. In the first twelve years of democracy, as confidence in the new system took hold, growth began to accelerate. Indeed, private investment as a share of GDP has gradually increased from an average of around 14% in the 1990s to 17% in 2007, signaling growing confidence in the private sector. The growing economy also offered new opportunities for middle class expansion and advancement through the private sector. Without growth, however, everything else would be more difficult - as South Africa would discover in time.

South Africa: When strong institutions and huge inequalities collide (8)

Table 7 summarizes the absolute poverty reduction gains in South Africa. In the early years of democracy, the focus was on expanding services. Between 1994 and 2003, over 1.5 million homes for the poor were built as a key part of implementing the RDP. Access to clean water increased from 60% to 80% of households between 1998 and 2003, and access to electricity increased from 50% to 70% of households between 1994 and 2000. The vaccination rate also increased.

From the late 1990s onwards, when public finances recovered, South Africa considerably expanded its social benefits. Pension payments (which had been generous to white South Africans during the apartheid years) were universalized and equalized. The Child Support Grant, the main form of support for needy families, was introduced in 1998 and in 2003 had already reached 3 million children. In 2010, after the maximum age of eligibility was raised several times, more than 10 million of the poorest children in a country with a total population of less than 50 million at the time were receiving child benefits. Social security transfers increased to 3.5% of GDP in 2009 in a concerted effort to alleviate extreme poverty.

South Africa: When strong institutions and huge inequalities collide (9)

Despite all of the above gains, there were some severe limitations to the progress experienced by those at the bottom of South Africa's distribution pyramid. The four poorest deciles are largely unemployed or underemployed and are located primarily in rural areas (referred to as “reserves” or “homelands” in the apartheid era) and informal settlements close to cities and towns. Many of these informal settlements are poorly integrated into the social life of cities. Social benefits are the main source of livelihood. Gains for the poorest 40% were achieved without much change in their underlying difficult reality.

Elite Transformation During Black Economic Empowerment

South Africa's transition to democracy saw a far-reaching shift in political power from a white minority to a majority of its citizens. However, the economy continued to be structured according to apartheid principles: white business elites dominated private sector ownership and control. Newly empowered political elites were unlikely to settle for a change in formal political authority when there was little or no change in economic power. For moral and pragmatic reasons, the status quo of South Africa's economic power was unsustainable.

BEE's efforts to increase the proportion of black South Africans in the country's business elite have been part of South Africa's political agenda since the end of apartheid. Initial efforts were cautious and cautious, but momentum soon built. A strong platform of formal institutions capable of overseeing and enforcing carefully negotiated (and codified) agreements offered what appeared to be a simple way: to codify a carefully constructed set of rules to guide the change process. In fact, the ANC was mostly rules-based in the beginning. But this approach, in turn, presented another dilemma: the rules-agreement conundrum.

Do not leave

Musa Nxele teaches Political Economics of Development at the Nelson Mandela School of Public Governance at the University of Cape Town.

(Video) South Africa: When Inequality and Institutions Collide

As mentioned above, the combination of a well-constructed set of formal rules and credible enforcement mechanisms was an important foundation for cooperation in South Africa. However, formalism alone cannot be a sufficient condition for success: rules cannot be written to cover all eventualities.24Both the private and public spheres require tacit agreements or norms that facilitate collaboration.25A 10-year retrospective issued by the South African presidency in 2003 pointed to the problem:

One of the characteristics of South the fact that political leadership in government differs markedly from economic leadership in terms of race, culture, origin and lifestyle. This had the advantage that the political leadership is not committed to an established "Old Boys Club". The downside is that post-1994 South Africa's economic and political “elites” lacked the confidence necessary for high levels of investment.26

As Alan Hirsch and Brian Levy analyzed in detail, South Africa's so-called trade between established business elites and new political elites lacked this tacit understanding.27In addition to agreement on formal rules, any cooperation was associated with high transaction costs.

Operating within a narrow set of formal constraints is particularly unnatural in the political realm, where doing business and building alliances is central to all activities. In a rapidly changing politics like that of South Africa, where elite transformation (including infighting among emerging elites over who the new "insiders" would be) was central to the agenda, tensions soon became apparent. As a recent wave of research has highlighted, business and decision-making on personalized networks are not necessarily at odds with development. Informal engagement mechanisms can provide solid credibility. Loyalty is the key to building political machines of all kinds.28However, there is a gray area between development and predator. There is also an associated risk that negotiation processes can undermine the common good of a country and undermine the formal norms and institutions that support development frameworks. Initially, South Africa tried to avoid this slippery slope, but as the process progressed, the dangers only increased. Several distinct BEE waves were evident.

A first wave was characterized by a combination of proactivity from established business elites and caution from newly elected politicians and policymakers. In a common scenario, established elites would transfer (usually minority) stakes in large corporations to a consortium of black investors, who would be paid back with debts paid off with dividends received. (The voting rights of these shares were often impaired.) An early example of these proactive initiatives was the privatization of the state-owned sorghum beer industry in 1990 and its transfer to black entrepreneurs that became National Sorghum Breweries Ltd.29Soon after, in 1993, the African-dominated conglomerate SANLAM sold 16% of the insurance company Metropolitan Life to a black empowerment consortium, New African Investments Limited (NAIL). NAIL's founder, Nthato Motlana, was a Soweto doctor who turned his practice into a hospital and was a courageous political leader in the 1970s. NAIL then acquired the Johnnic industrial conglomerate from Anglo American Corporation at a discount. In 1998, before things went wrong, NAIL had a market capitalization on the Johannesburg Stock Exchange of over $1 billion.30Some initiatives have included the creation of entirely new companies, as in the case of the mobile phone company MTN, founded in 1993 by private Afrikaans and Anglophone business interests, the British company C&W, the outgoing nationalist government and the new ANC. By the early 2000s, MTN's ownership structure had stabilized; became the most visible BEE-controlled company in South Africa. Cyril Ramaphosa would be the Chairman of the Board of Directors of MTN.31Box 1 presents a detailed case study: The rise of Patrice Motsepe, Cyril Ramaphosa's brother-in-law, as a mining tycoon.

Box 1: The Rise of Patrice Motsepe

Patrice Motsepe, whose net worth is currently approximately $2.1 billion, is a successful BEE businessman who, contrary to the politician-to-businessman stereotype, built his background in the private sector. After earning a law degree from the University of the Witwatersrand in 1988, he began his career as a lawyer at Bowman Gilfillan and in 1994 became the first black South African partner. After specializing in mining and business law, he took advantage of the changing political and business climate in 1994 to found Future Mining, which provides services to mining companies.32When gold prices plummeted in 1997, Motsepe secured its first gold mining opportunity by buying marginal, underperforming mines that were sold by AngloGold.33Unable to obtain a bank loan of around $8 million to cover his purchases, he struck a deal with AngloGold to repay the premium out of the company's profits - which he did in three years through restructuring and skillful management of the company. mine.34

In 2001, Motsepe ventured into platinum mining when it won a 50:50 bid as an Anglo Platinum partner to develop the Modikwa Platinum Project, a deal valued at US$164 million.35These early successes put Motsepe on a solid footing to go public and list its consolidated assets as ARMGold on the JSE in 2002, with a market capitalization of $492 million.36That same year, the mining company Avmin, belonging to the Menell family, which owned platinum, nickel and gold assets, experienced financial difficulties. Through a complex BEE transaction, Motsepe sold ARMGold and incorporated Avmin into a new company, African Rainbow Minerals (ARM), formed in 2004.37ARM became Motsepe's vehicle for increasing his mining fortunes through a series of deals with BEE, reaching a market value of US$8 billion in 2008.38In 2011, iron ore, manganese and platinum accounted for nearly 80% of ARM's sales.39In 2014, Motsepe used proceeds from another long-term BEE deal to create African Rainbow Capital (ARC), listed on the JSE in 2017 with a diversified portfolio of $350 million. Through ARC, Motsepe intends to build black capital along the lines of SANLAM, historically the capital vehicle of the African business class.40

For newly empowered politicians and policymakers, the challenges posed by the elite's need for transformation have been daunting. They had to face an established (white) business class that recognized the need to diversify the ethnic composition of ownership and control in the South African economy, but tried to do so on its own terms. Equally challenging was the task of navigating between different ideological factions within the ANC. As is often the case with power transfers, the rising waves of South African political leaders had strong incentives (similar to those of an earlier generation of white African politicians) to use their newfound political power and control over state resources to create business opportunities for its allies.

The first reaction of policymakers and political leaders was to try to channel the struggle over property into a broader discourse about economic transformation. They sought ways to address the seemingly conflicting interests of the various actors without undermining the momentum of efforts to reintegrate South Africa into the world economy and, more generally, promote inclusive economic growth and development. Efforts generally focused on new business development, affirmative action in the workplace, and action to support improved education for black South Africans who had the potential to become professionals, managers, and business leaders.41In the ANC's economic policy documents ahead of the 50th National Conference in Mafikeng in December 1997, the ANC called for the following:

National Empowerment Policy: The ANC must clearly articulate a national empowerment policy that focuses on those who have historically been disadvantaged, and particularly blacks, women, youth and the disabled, and rural communities. The empowerment process must be part of a more radical and profound change in social relations. Changing ownership and relationships in the workplace are part of this broader process of empowerment.

Within the scope of the National Empowerment Framework, the Government should create a National Empowerment Fund, which should result in stimulating savings, moving people from the informal to the formal sector and from the predominantly retail sector to more manufacturing SMEs [small, medium and micro enterprises].

The ANC government must ensure that a vigorous affirmative purchasing policy is implemented, ensuring that the government and parastatals facilitate the awarding of contracts to our people through approved mechanisms.42

Subsequently, however, it became increasingly clear that cautious approaches to transformation did little to change the property's ethnic coloring. Thus, the BEE process accelerated after 1997 - fueled in part by a 1998 economic crisis and a decline in stock markets that left many black South African beneficiaries of early rounds of transactions without the cash flow needed to meet their financial commitments. related to meeting BEE. During this period, the proportion of black South Africans in the JSE dropped from 8 percent to less than 4 percent.43The BEE increasingly became the focus of the ANC's agenda, and its protagonists and beneficiaries became increasingly influential within the party.

A key pillar of this accelerated response has been an attempt to establish a framework within which to manage BEE expectations and pressures.44This effort has had a number of notable milestones. In 1998, at the behest of the Black Management Forum, the government established a BEE Commission with the task of (as then-president Thabo Mbeki put it) "to promote the formation of a black bourgeoisie that is self-engaged and contributes to economic empowerment."45The commission produced a final report in 2003 and published an official policy document that led to the enactment of the Broad-Based Black Economic Empowerment Act (BB-BEE) in 2004. Also in 2002, the government passed the Mineral Resources Development Act and Petroleum (MPRDA), which required owners of "old order" mineral rights to convert them to "new order" rights, subject to the fulfillment conditions of BEE tenders (see box 2).

Box 2: The struggle for mineral rights

In the mining sector, efforts to introduce BEE have created uncertainty. Between 2001 and 2008, the longest sustained resource boom in recent history, South Africa's mining industry shrank by 1% a year, even as its closest competitors grew by an average of 5% a year - despite a valuation of Citgroup of South's 2010 report on Africa's proven wealth of natural resources is the largest in the world at $2.5 trillion.46The MPRDA-ordered process of converting old order mineral rights into new rights proved to be fraught with ambiguity and room for ministerial discretion as to what would result in a BEE-compliant conversion, leading to numerous (legally resolved) disputes involving the holder and the BEE companies and government discretionary actions. An attempted revision of the legal framework through a 2013 Mineral and Petroleum Resources Amendment Act added to the ambiguity.

A particularly thorny issue related to one specific issue: a new round of BEEs would have been required if a mining company had met a required minimum threshold of 26 percent black-owned capital, but some of the black South African shareholders subsequently opted out. sell your shares? The ongoing disputes and revisions continued. In 2018, a compromise appeared to have been reached to increase the BEE to 30% within five years of the contract, including a controversial 10% deadweight loss for communities and employees as part of the ownership structures.47Draft changes to the regulations were published in December 2019. The miner considered the draft an improvement, but expressed reservations that some obligations were excessively onerous; At the time of this writing, the regulations have not yet been finalized.48Unless the issue of mineral lease rights is decisively resolved, South Africa could also miss out on the next mineral boom.

As its name suggests, the BB-BEE Act of 2004 went beyond a narrow concern for property. Its implementation framework established a balanced scorecard that set targets for ownership, management control, skills development and support for subcontractors and other small and medium-sized enterprises, and broader socio-economic development. The expectation was that each economic sector would detail a quasi-voluntary industry statute consistent with the framework set out in the legislation. The only enforcement mechanism was that companies had to comply with the BEE to gain access to public procurement opportunities.

The construction sector illustrates the results of these efforts. Immediately after the passage of the BB-BEE Act in 2004, the industry began negotiating its own industry-specific charter, which was finalized a few years later.49Four of the largest companies achieved exemplary compliance with some of the Charter's provisions.50In 2014, the percentage of black South African owners was over 45% at Murray & Roberts and Wilson Bayly Holmes Ovcon. (The other two, Group Five and Basil Read, were also above the 30 percent target.) All four companies met the regulation's BB-BEE targets for providing capacity building support to their subcontractors and for business development.

However, the construction industry's BB-BEE program has not been a clear success. First, in 2014 all four companies fell far short of targets (which ranged from 30 to 60 percent) for the inclusion of black South Africans in senior, middle and junior management positions. On the other hand, the big builders have positioned themselves as global companies with only a small part of their business in South Africa. There was also a domestic political scandal. The 2010 World Cup venue in South Africa was a gold mine for the contractors who built the stadiums and associated infrastructure. As a result, after a detailed investigation by the independent competition commission, all companies admitted to extensive price agreements related to the construction of the World Cup.51Eventually, partly as a result of the World Cup scandals and partly as a result of broader economic stagnation, the industry went into crisis with stock prices falling sharply.

For all its limitations, the combination of voluntarism and rules-based BEE was consistent with the continuation of strong formal institutions. But there was also a downside to the new government's use of economic power. Top political leadership wanted trusted allies to be the beneficiaries of ongoing efforts to change the racial coloring of business. The ANC also needed support to finance its activities. Inevitably, some influential insiders went further and saw an opportunity to use their political influence as a platform for private economic enrichment and empire building.

The problems began almost immediately after the new government took office. When the ANC came to power, it discovered that the South African armed forces had entered into an arms purchase agreement with identified suppliers. This initiative was quickly torpedoed. Following completion of a defense review, calls for tender were launched for a range of conventional naval and air force equipment. The exercise was marred by several kickbacks and side deals under the guise of aiding the ANC and supporting empowerment, including one involving then-Vice President Jacob Zuma.52This was the first major series of transactions tainted by corruption.

South Africa's state-owned enterprises (SOEs) also provided opaque business opportunities. In the early 2000s, the newly formed SOE PetroSA and a little-known consulting firm BEE were involved in a shady deal related to the United Nations' oil-for-food program in Iraq. This deal also appeared linked to the ANC's efforts to raise funds for the 2004 election campaign.53Similarly, in 2004, a multibillion-dollar procurement contract for the boilers of the giant coal-fired power plant at Medupi was awarded through a mysterious process by the state-owned electricity company Eskom. The order was for a joint venture between Hitachi Power Systems and Chancellor House - the investment arm of the ANC.54

The telecom industry has also seen some questionable transactions. In 2004, a BEE "elephant consortium" group led by the former Director General of the Department of Telecommunications and dominated by close Mbeki allies, acquired a majority stake in South Africa's leading fixed telecom operator Telkom, with subsidized state support. . owned by the Public Investment Corporation. The capital was acquired by an international consortium that came to South Africa in 1997 as part of a partial privatization, but left just seven years later.55Between 2007 and 2009, a series of deals by Vodacom – one of the two largest mobile operators in South Africa (then a joint venture between Telkom and UK-based Vodaphone, controlled by the latter) – resulted in:

  • A great stroke of luck for the Elephant Consortium (as part of Telkom, which sold part of its equity);56
  • Formation of a new BEE consortium to partner with Vodacom – led by Bulelani Ngcuka, a close Mbeki ally and, as chief prosecutor, a key player in efforts to prosecute Zuma on corruption charges;57e
  • After Thabo Mbeki lost an ANC leadership battle to Zuma, the Ngcuka-led consortium was sidelined in favor of a more politically neutral BEE deal with Royal Bafokeng Holdings.58

In summary, the incorporation of black South Africans into the capitalist class began in the early 1990s through a series of ad hoc private initiatives and transformed into a series of rules-based programs during the Mbeki presidency in the early 2000s. Despite the ambiguous nature of the BEE and some signs of its corrosive effect on formal institutions, the balance of rules and arrangements was good enough to provide a reasonably robust platform for business. While the seeds for a more anarchic series of deals and maneuvers to enrich black South Africans (and others) could be argued to have been planted during the presidencies of Mandela and Mbeki, the legitimate order prior to Zuma's rise to power has remained dominant. Prospects for accelerated growth and sustained reduction in extreme poverty looked positive.

Public Sector Transformation

A long-held idealized Weberian view of public sector governance draws a sharp line between the recognized need for political control of the public sector apparatus, on the one hand, and a professional bureaucracy with technocratic skills to solve public problems, on the other, as suggested by prioritized political leadership. The reality almost everywhere lags behind this idealized vision. In the case of South Africa, elements of Weberianism were evident in public sector management from the beginning of the 20th century. However, the goals that this bureaucracy was tasked with pursuing were outlined by apartheid political leaders, condemned worldwide. From the mid-1920s, public sector employment was used as a policy tool to direct job creation and acted as an employer of last resort to solve the "white poor" problem.59The police arm of the public sector was the mechanism for ruthlessly enforcing apartheid controls. Quasi-independent Bantustan puppets—complete with explicitly clientelistic bureaucracies—became a key mechanism for denying black South Africans their citizenship. The politico-bureaucratic interface was regulated in practice by the influence of a parallel clandestine organization, the Broederbond - a good reputation necessary for political careers as well as careers within the public bureaucracy.

The advent of democracy presented opportunities and challenges for public administration. Challenges included asserting political control over a civil service that had been instrumental in enforcing apartheid laws; unravel the bureaucracy; Reintegration of the quasi-independent Bantustans into a new non-racial semi-federal system, with aligned responsibilities at national, provincial and local levels; and the provision of equitable public services from which white minority populations had benefited disproportionately. A representative bureaucracy was a key element in the transformation of the post-apartheid civil service. It was rooted in the ideal that a bureaucracy that represented the country's demographic diversity could help restore citizens' confidence in government. In practical terms, this meant increasing the employment of black South Africans in the hierarchy of government departments. This contributed to the broader goal of accelerating the emergence of a black South African middle class.

With these historical realities (rather than a standard of perfection) as a backdrop, this daunting transition was handled pretty well for the most part. Contrary to a well-known domestic cataclysmic narrative of bureaucratic collapse, post-apartheid South Africa maintained relatively tight control over economically sensitive households, with a continued (if certainly imperfect) focus on expanding the provision of public services to the population as a all .

Certainly, the shift in political control has brought new opportunities for the politicization of public sector employment. Over time, the impact of this situation on bureaucratic performance was a decay that accelerated during the Zuma era. Despite this, as of 2020, the South African bureaucracy remains largely functional – albeit surprisingly inefficient in terms of its performance potential and results – and sits at the more powerful end of the bureaucratic performance spectrum among MICs.

Employment and economic aggregates.A useful starting point for understanding what has happened to public sector management in South Africa's quarter-century of democracy is the big picture: the role of the public sector in expanding an emerging black South African middle class. Tables 8 and 9 provide estimates of magnitudes. Table 8 uses the 1995 average per capita income as the lower threshold for characterization as middle class.60(Per capita income was about $5,500 in 1995; 23% of the population earned above that average.61) As the table shows, approximately 3.9 million black South Africans earned above this threshold in 1995; by 2010, the number had risen to 7.5 million - an increase of 3.6 million.62

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With this in mind, consider Table 9. The table consolidates data on public sector employment trends by level of government, race, and occupational classification; The types of jobs highlighted in the table include those that can be characterized as middle-class (and elite) jobs. Between 1995 and 2005 (and continued between 2005 and 2018) there was a major shift in the racial composition of management and other qualified positions within the bureaucracy. As early as 1995, some 360,000 black South Africans were employed in the public sector at levels that supported a middle-class (or better) lifestyle and allowed for the integration of civil servants from former Bantustan bureaucracies. Between 1995 and 2005, middle-class black South African employment in national and provincial government increased by nearly 115,000 jobs. This increase allowed an additional 344,000 black South Africans (in the upper third of the distribution, assuming an average family size of three) to achieve middle-class status. These numbers are not small. Even so, the rise in public employment represented only a modest part of the overall expansion of South Africa's black middle class.

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Consistent with the data in Table 9 and the pattern seen in Figure 3 below, the control for economic aggregates related to public employment – ​​number of employees and salary levels – was largely robust. Notably, between 1995 and 2005 there was a decline in overall employment (at national and provincial levels) in the public sector, reflecting a transitional period of public sector rationalization. There was then some increase that took employment to the levels of 1995 and beyond. However, as Table 9 shows, employment in the largest middle class employment category – highly skilled manufacturing, where employment is predominantly at the provincial level and mainly in education and health – actually declined over the period 1995-2018. There is no sign of efforts to meet the aspirations of the middle class by increasing jobs in the highly skilled and job-rich frontline areas of the civil service.

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The number of middle and senior managers has grown significantly.63The National Treasury put this into perspective when reporting that, in 2006/2007, 31% of civil servants were employed in grades 1 to 4 and 10% in grades 9 to 16 (middle and senior management).64In 2017, the proportion of officers at levels 1–4 dropped to 19%, while the proportion of officers at levels 9–16 increased to 21%.65The most notable exception in managerial expansion was the number of “highly qualified supervisors” (middle management) at the provincial level. Most of the increase occurred over a three-year period between 2006 and 2009, wiping out growth in the number of skilled production workers. (In that three-year period, the number of jobs in this category almost doubled, reaching just under 131,000.66) This increase, which affected service delivery at the subnational level, may have been exacerbated by political interference in executive hiring processes.

Local governments seem to be experiencing faster growth in employment than other levels of government. Overall employment grew by about 30% between 2005 and 2018, with executives accounting for most of the growth.

Total public sector spending on wages increased. Job-specific wage agreements have enabled workers in the education and health sectors concentrated in the provinces to achieve real wage increases that, in some cases, outpaced inflation and public revenue expansion, with relative increases being larger between 2010 and 2017. result was this compensation. The share of expenditures in total provincial budgets increased to nearly 70 percent in 2017/2018. However, as of 2019, labor costs had not spiraled out of control. Between 1995 and 2019, expenditure on personnel varied between 32 and 40 percent of total government expenditure and has remained between 32 and 36 percent since 2002/2003, rising to 38 percent in 2019.67Total government consumption, including wage costs, was about the same percentage of GDP (20%) in 2006 as in 1994. It rose slightly to 21.5% of GDP in 2010 in the wake of the global financial crisis and then leveled off slightly below that level.68

In its 2020 budget, the South African government announced its intention to aggressively address public sector wage bills, moderating cost-of-living increases, wage evolution and other benefits, in order to reduce the country's tax burden and the crowding out effect of other government spending.69The upward trend in public sector revenues has become an acute political issue, as it has not been fueled by a drastic increase in total headcount (which, as Figure 3 shows, peaked in 2012 and has leveled off).70Instead, the increases appear to have benefited civil servants at the highest paid supervisory/management levels, whose numbers have grown disproportionately compared to highly skilled frontline public sector workers.

Trends in the quality of public administration.Two paths taken by the new ANC government had far-reaching consequences for public sector management. One was the government's experimentation with New Public Management, a concept popular around the world in the 1980s and 1990s. This is not the place for a comprehensive overview of the impact of New Public Management on public administration in South Africa.71What is relevant for present purposes is that its introduction weakened centralized control over government administrative processes as a result of widespread contracting out of service delivery through government procurement and supply chain agreements. The use of fixed-term contracts was extended to the hiring of top civil servants, to manipulate the entry of politically docile officials and to discourage competent, career-oriented officials from fundamentally opposing various forms of abuse of office and fear of conforming. with its policy principles.72

A second path taken by the ANC government in 1997 was the use of cadres. The party cadre image has a long history in the ANC, originally conceived as part of a strategy to develop the political, ideological and operational discipline of party members (then in exile) in preparation for political leadership. The use of party cadres as an ANC political imperative was revived after 1994 to achieve this goal and was articulated as part of the broader public service transformation agenda. Intrinsically linked to the objective of representation, it was justified by the need to reassert political control over a potentially undisciplined bureaucracy that only a few years before constituted a repressive state apparatus.

Over the past 25 years, the ANC has struggled to reconcile the conflicting pressures associated with its efforts to manage the implementation process internally. As a result, the practice has degenerated into factionalized contestation, retirement seeking and sponsored appointments in a wide range of institutional positions in the civil service and state enterprises. In that regard, the deployment of frames was perhaps less of a change than it might appear on the surface. South Africa has historically not used an examination system as a non-political means of merit-based recruitment; The good reputation within the Broederbond was the very form of implantation of cadres of the African nationalist government. After 1994, managerial positions generally had stricter competency criteria and higher-level qualifications. However, explicit support for the use of cadres made it even more difficult to establish professional norms and skills in the public service. South Africa's National Development Plan, drawn up in 2012 in the early days of Zuma's presidency, recommended reforms in the appointment of senior bureaucrats, introducing more independent controls into the selection process to reduce the room for political manipulation. These political reforms did not materialize in the years following Zuma's presidency or thereafter.

What effects did the combination of relaxed process controls and the deployment of frameworks have on the quality of public services? Table 10 shows trends in South Africa's performance for two widely used indicators: the WGI measures of governance effectiveness and control of corruption between 1996 and 2017. As the table shows, both measures declined steadily but slightly over time. over two decades. Surprisingly, there is no evidence of an accelerated decline from the Mbeki era to the Zuma era. For both measures, as of 2017, South Africa's score was at least as high as the scores of the MIC comparator countries listed in Table 2.73

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In order to better understand what is behind the WGI standards for South Africa, including why they do not match South African perceptions, the following sections (and Appendix A) report on changes in quality indicators of public management processes and the public over time delivery of services. Box 3 highlights a series of five turning points in the character of public sector management between the Mbeki and Zuma eras.

Box 3: From Mbeki to Zuma: the changing character of public administration, 2008–2018

It is common in South African discourse to catastrophize the performance of the public sector and to blame the Zuma form of government for the decline in the quality of the public sector. Indeed, Zuma's presidency has been associated with predatory actions, particularly with regard to the management of state-owned companies. However, an analysis of service quality trends during the Zuma and Mbeki eras does not show a dramatically accelerated decline. On the contrary, there appears to have been a gradual erosion of core public administration practices; five of them are highlighted here.

  1. acceleration ofTop management growth (medium and high) of civil servants at the expense of highly skilled frontline workers, especially in provincial and local governments. This change constrained subnational service delivery, increased pressure on wage costs, and failed to instill the desired level of professionalism in the public service at the expense of political interference. In a briefing to Parliament, the Public Service Commission reported a number of problems with senior civil servants that continued to thwart efforts to professionalise the civil service. These included excessive staff turnover (also linked to interference from political figures below senior management) without proof of the necessary professional qualifications, lack of preparation of staff entering middle management, and insufficient controls and incentives to prevent manipulation of the performance management system. .74Advocacy groups have highlighted how politicization can affect public sector managers: "Regardless of the delegation system involved...the political appointment of a politically allied department head...the hierarchy."75
  2. deterioration trends in public finance management, characterized by an almost endemic continuity in procurement/supply chain violations and increased irregular spending, as reflected in this statement from the Office of the Auditor General of South Africa: "There has been a similar pattern over the last four years since 2014-15, in with more audit scores falling than improving.” Auditor General Thembekile Kimi Makwetu said his office has for years reported weaknesses in internal controls and the risks that need to be addressed by national and regional governments: even blatantly disregarding our recommendations.”76
  3. A harmful thread ofPolitical interference in municipal leadership, often linked to the challenge of service contracts, which led to a deterioration in financial management and great instability in local government: “[A]lthough political criteria are formally excluded from appointment decisions also in the local area, they actually play a role a prominent role. A vacancy as a community leader is often a pretext for some of the most vicious and debilitating factional conflicts on community councils. The political appointment and control of a community leader allows for a politicization of personnel practice down to the lowest salary level.”77
  4. a raisebloated and fragmented government machines,especially at the national level.78A steady peak of 29 ministerial departments in the Mbeki period rose to 39 under Zuma, thwarting coordination, fueling political uncertainty and making it easier to reward political allies.
  5. SignificantRotation of ministers and senior bureaucrats.79This trend has exacerbated leadership instability, straining political-administrative relations and allowing appointments suspected of encouraging corruption: “The essential 'government-making' mechanism, in which administrative decisions regarding procurement and other matters are effectively outsourced to organizations undemocratic and opaque forums is therefore coming into focus.”80

Figure 4 shows trends in a process indicator: the extent of irregular spending at the national/provincial level and at the municipal level. These metrics are collected as part of a mandatory audit process required by the South African Public Finance Management Act for all entities at all levels of government. Both sets of measures increased between 2009 and 2018, reflecting a growing propensity by the government to disregard bidding processes. However, for both groups, even at the end of the period (that is, at the height of the increases shown in Figure 4), the total amount of irregular expenditure was only about 10 percent of total expenditure excluding wages and interest.81

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From the citizens' point of view, the quality of service provision is of paramount importance in assessing the performance of the public sector. In the current and cataclysmic narrative, the perception is of a generalized and rapidly decaying quality. However, service quality data has a more complex and long-lasting history that reveals long-term demonstrable efforts to expand access to public services. However, these initiatives have been constrained by spatial/regional and sectoral inequalities and low performance. Urban-rural disparities, as well as divisions within urban areas between wealthier, historically white communities (with much broader access to private services) and formerly black communities that predominantly rely on public services, are other factors. Appendix A contains detailed industry-specific information. Here are some highlights:

  • In education, where responsibility for delivery lies at the provincial level, there is evidence that teacher recruitment and promotion began to be subject to corruption through job-buying in the mid-2010s. dates in the administration of teacher allocation, going back to the merger of new provincial governments after the end of apartheid. The response to these latest reports was a high-level ministerial inquiry which, while questioning the perceived scale of the problem, revealed widespread non-monetary irregularities and undue interference in naming practices – all of which threatened to undermine professional standards in teaching.82Despite these challenges, the aggregate pattern is not an accelerated decline in sectoral performance. The best available systematic measures of performance trends over time come from globally standardized tests. As of 2015, South Africa performed the worst among all participating countries in the Trends in Mathematics and Science Survey (TIMSS). However, between 2003 and 2015, South Africa had the fastest increases in test scores of any country, with significant increases across all provinces. In summary, overall performance improved from disastrous to just comparatively disastrous.
  • For health care (also a state responsibility), the public sector payroll has had to accommodate an increasing number of better paid civil servants. This has led to a growing shortage of nursing staff within an already overstretched public health service that serves the vast majority of citizens who cannot afford insurance and private health care. However, South Africa has also done an excellent job of mastering the biggest challenge (before the corona pandemic) to the public health system in the last decade: adequate storage across the country and supply of antiretroviral drugs to around a quarter of the country's adult population. population that is HIV positive.
  • With regard to road maintenance, a service provided by the local government and an important factor in social and economic activity, the majority of respondents to the Afrobarometer survey, both in 2004 and 2015, expressed dissatisfaction with quality (with slightly less dissatisfaction in the subsequent survey ). Trends vary by province: two provinces show a significant improvement, two show a significant decrease, and five show no trend at all.
  • When it comes to water supply and sanitation (also the responsibility of local governments), despite steady progress in expanding access to services for low-income households after the first democratic local elections in 2000, local authorities are struggling with the complex scale urban demand for these services to continue. These problems are further complicated by a formal housing crisis in formerly black metropolitan areas; and little progress in improving rural access. Overall repair and maintenance expenses are uneven, in part due to a lack of in-house technical capacity.

Overall, the quality of the public sector remained good enough at the end of the Mbeki era to sustain a season of hope – a sustained virtuous cycle of gains along the lines shown in Figure 3, while the quality of governance and public sector performance declined. in the decade following years. However, the overall picture suggests that a "good enough" characterization still applied towards the end of the Zuma era. Note, however, that the focus on quantitative performance indicators likely underestimates the damage done to the integrity and performance of the public sector during the Zuma period.

2011–2017: "Get Angry"

In May 2009, Zuma was sworn in as the fourth president of South Africa. He inherited an economy that, despite being hit by the 2007-2008 financial crisis, appears to have been fundamentally healthy. In the course of the Mandela/Mbeki era, economic growth accelerated and absolute poverty fell. Indeed, during the early years of Zuma's presidency - which included the atmosphere of great success and celebration of South Africa's hosting of the FIFA World Cup in June 2010 - it seemed likely that the country would continue on its positive trajectory and perhaps until a new phase of the FIFA World Cup renewal began.

However, a hopeful scenario has been overcome by a combination of events and deep-seated ongoing challenges caused by South Africa's persistent extreme inequality. Events included Zuma's assumption of leadership and South Africa's weak, undisciplined and uncoordinated response to the global financial crisis, which interrupted a virtuous circle of a recovering economy and society. As a result, despite resilience in the aftermath of the global crisis, South Africa failed to gain momentum and stagnated (unlike other MICs), signaling that the global shock is insufficient to explain the subsequent turnaround. This deviation is shown in Figure 5.

South Africa: When strong institutions and huge inequalities collide (15)

The continuing profound challenge has been the country's extreme inequality. As Table 11 shows, two decades after the onset of democracy, half of South Africa's population remained mired in chronic poverty, with limited advancement to the middle class. Less than a quarter of the total population, but essentiallynowhite South Africans, enjoyed a middle-class or better standard of living. And although white South Africans made up just 9% of the total population, they were two-thirds of the top earners in the country and accounted for 37% of all spending. For most South Africans, there was every reason to believe that, despite promises of mutual benefit in the early days of democracy, the cards were still stacked against them. The stage was set for a reversal of the Hirschman cycle—for "failing to live up to the expectation that my turn will soon come makes me 'enraged', i.e., an enemy of the established order".83

South Africa: When strong institutions and huge inequalities collide (16)

By the mid-2010s, South Africa's incipient positive spiral had reversed. According to the conceptual framework outlined above, the downward spiral has been characterized by an increasing reliance on personalized arrangements, increasing pressures on institutions, a shift from cooperation to conflict, an increase in ethnopopulist politics, and (according to Table 6 and Figure 5) a stagnant economy. To better understand how and why each of these trends took hold and how they mutually reinforced each other, this section examines three main aspects of the process: the leadership succession conflict that brought Zuma to power; the redirection of state-owned companies; and the momentum of ideas shifts from hope to anger.

What happened in Polokwane

South Africa's adoption of constitutional democracy resolved two main aspects of who would lead politically. Leadership would be determined by the (black) majority of the country through competitive elections. Given the ANC's political majority and its role as a liberation party, it would emerge dominant in elections and enjoy sustained loyal support from most voters. However, this left open the question of who would lead the ANC. In South Africa's constitutional system, voting is by proportional representation; The leader of the ruling party becomes the president of the country. As such, the ANC leadership struggle is having a huge impact on the wider community. ANC election conferences could be pivotal moments in shaping the country's future. The 2007 Polokwane Conference was one such moment.

The conference, at the height of South Africa's growth boom, marked the defeat of the post-1994 ANC establishment and its guiding vision. Prior to Polokwane, the center of South Africa had largely held, albeit in a confused way. The expectation was that a vision of mutual gains through collaboration would be upheld and that programmatic and general development purposes would be central to government decision-making. (The details would, of course, be disputed on technocratic and ideological grounds.) While he would not be eligible for a third term as the country's president, Mbeki suggested that a close ally succeed him as the country's president and run as such would be a candidate for a third. mandate as President of the ANC. He was decisively defeated: 1,505 delegates voted for him and 2,329 for Zuma.

There were many reasons why Mbeki lost and Zuma won. These included arrogance, unforced policy errors, ideological conflicts, and the emergence of a political culture (fueled in part by the BEE agenda) in which development-oriented decision-making began to give way to narrower personal goals. Unraveling their relative influence is beyond the scope of this discussion. Instead, Hein Marais' vivid account of what happened on the way to Polokwane suffices as an introduction:

Polokwane would set the stage for a mutiny that Mbeki could no longer avoid or survive... He and his circle were blamed, their power and authority abused, the ANC sidelined and tensions stoked within the organisation, key allies and key leaders humiliated, poor leadership and the use of state structures to pay the bills. The AIDS fiasco squandered goodwill inside and outside South Africa, as did Pretoria's indifferent response to Zimbabwe's descent into despotism and misery... [Domestic] he was found guilty of a mortal sin: forcing the Plan for Growth, Employment and Redistribution (GEAR) 1996 . in politics, he steered South Africa onto a neoliberal course and oversaw the rise of a rebellious black elite as jobs disappeared and inequality deepened...

An underlying weakness in the ANC's dominance was becoming apparent... Perhaps most irritating was the sense of rampant injustice - that the fruits of liberation were not being fairly shared. Everyday life not only repeats the scandal of inequality, but all too often legitimate access to basic sources of well-being seems to require connections, rewards or favors.

In the run-up to the conference, supporters left Mbeki in droves. Overnight, many became ardent supporters of Zuma... Crucially, the succession struggle was an undignified contest for position, leverage and influence. Individuals who were insulted, hurt or marginalized during the Mbeki years now found common ground with "comrades" who harbored old grudges, those whose corporate or political ambitions were thwarted, their ineptitude or greed had their careers turned upside down, or who were disfellowshipped because of their policies or principles.84

Jacob Zuma assumed the South African presidency in 2009 after another (decisive) election victory for the ANC.85During his nine-year term, he governed increasingly individually and resorted increasingly to polarizing rhetoric. This increasingly personalized style of governance was in part the result of deep pressures from South Africa's unequal society. But the quality of political leadership was also decisive for what happened.

When Zuma took office, many of his supporters hoped he would bring a grassroots and inclusive flavor to the leadership — a contrast to Mbeki's aloof, technocratic and somewhat domineering style. Indeed, Zuma has proven to be an astute, ruthless and charismatic strategist. Many say the Moscow-trained ANC intelligence chief in exile lives up to the meaning of his middle name, Gedleyihlekisa ('he who laughs while crushing his enemies'). If Zuma, instead of using his skills to plunder the economy on behalf of his friends and clients, had used his credibility with the poor and organized working class to rewrite the social contract, the outcome might well have been different, instead. stable stability. decline .

A Turn to Personalized Governance: South African State Enterprises

During the Zuma presidency, the focus of elite transformation efforts shifted from BEE initiatives to transforming corporate ownership and control to redirect SOEs. This change has placed renewed pressure on South African institutions of accountability.

SOEs have a long history at the heart of South Africa's political economy. State-owned railway, electric, and steel companies date back to the early 1920s. State-owned companies were an integral part of the country's import-substitution industrialization strategy in the 1940s and 1950s, and new state-owned companies were established in the 1960s and 1960s. 1970s in response to apartheid's economic boycott.86The way these companies have been run since 1994 combines the best of the early days and the worst of the later democratic era.

With the issuance of a Protocol on Corporate Governance in the Public Sector in 1997 (revised 2002), South Africa published a set of best practice regulations for institutions. These agreements are contained in a 2006 World Bank publication,Held by visible hand, which should provide a global model for the governance of SOEs. As the release details:

In South Africa, the Department of Public Enterprises has issued Public Sector Governance Protocols that apply to the six SOEs it oversees, but also to other SOEs. These protocols provide detailed guidance for the board of directors and financial oversight of SOEs, as well as their commitments to stakeholders and social goals.... A shareholders' agreement is agreed between the SOE and its shareholders.

It is the joint responsibility of the SOE Board and the Government (and other shareholders) to ensure that the Shareholders' Agreement is developed... All SOE Boards are required to issue directors' reports [which] include a review of financial performance in the past Information on internal and external factors that affect the performance of SOEs, emphasizing risks and opportunities and strategies to face them... . [F]ancery and other implications of instructions from the executive authority or other political body.87

It is easy to overestimate the practical implications of this protocol in the years immediately following its issuance: both the PetroSA and Eskom/Medupi examples mentioned occurred during this supposed heyday of good governance. However, the way SOEs were governed before the 2010s was part of the “good enough” balance between rules and agreements of the Mbeki era – a balance that allowed to stimulate confidence in the future, stimulate accelerated growth and reduce poverty.

Looking back, one can pinpoint the moment when SOE governance changed from one largely benign to another: the resignation of Secretary of Public Enterprises Barbara Hogan in November 2010 and the appointment of Malusi Gigaba. the 2016capture statusThe report by Thuli Madonsela, head of South Africa's resolutely independent Public Protector's Office, provides details.88According to the report, Hogan's resignation followed repeated efforts by Zuma and ANC Secretary General Gwede Mantashe to intervene in the appointment of board members at the two largest SOEs, Eskom and Transnet. The last straw was a dispute over whether South African Airways should cede the potentially lucrative route to Mumbai to an Indian airline backed by the Gupta family.

How and why governance of South African SOEs took a different turn is presented in 2016 in compelling detailbetrayal of promiseMessage.89This is how the authors put it:

The presidency of Jacob Zuma aimed to redirect state institutions to consolidate a Zuma-centric power elite... These [Zuma-centric] networks serve two purposes. The first is to promote a transition from the traditional BEE, which was based on the possibility of reforming the white-dominated economy, to a “radical economic transformation” driven by groups disguised as a black capitalist class independent of white monopoly capital. The second is to drive a transition from accepting constitutional regulation and the “rules of the game” to a redefinition of state institutions achieved in part by violating those rules….

The battleground for economic change shifted from business itself to the state, and specifically to state-owned enterprises outsourcing massive industrial contracts to private sector service providers... [This required] preferential procurement of black-owned businesses... [but] the constitutional and legal environment constrained this model of economic transformation by insisting that bidders for government contracts must meet more than racial conditions. Price and experience were also considered.90

Once price and quality constraints are relaxed, the line between a political agenda of radical economic transformation and a corrupt private agenda of state takeover becomes blurred. The role of the Gupta family's corporate empire during Zuma's presidency is a vivid example.91

The Guptas project in South Africa began in 1993 when Atul Gupta came to South Africa in search of opportunities after failing to find an entry point to do business in China. He was joined there in 1995 by his brother Ajay and in 1997 by another brother Rajesh. Before long, the brothers began informally associating with leading ANC figures. Apparently, they first met Zuma in 2002. In 2008, a year after Zuma was elected president of the ANC, his 26-year-old daughter Duduzile was asked to join the board of one of the Gupta family companies; his son Duduzane joined the Gupta company a little later. In 2010, the Gupta family started a media company that quickly garnered huge advertising buys from SOEs. The extended Gupta family left South Africa in April 2016. Between June 2015 and December 2017, there were "known departures from companies and individuals affiliated with Gupta to a group of Hong Kong companies totaling R4.9 billion (just under of $ 500 million). - Dollar). )"92

Tracing the governance and operations of South African state-owned enterprises from 2010 to 2017 reveals the formula that attempted to redirect them to serve the intersecting agendas of radical economic transformation and private enrichment. This formula had the following steps:

  • Install a minister of support for public companies.
  • New appointments to the EE Board of Directors.
  • Appoint a compliant/supportive Chief Executive Officer (CEO).
  • Challenge established rules of decision-making, especially procurement – ​​including through direct board intervention in operations.

Replacing the rules requires not only coverage of SOEs, but also compliant institutions beyond the SOEs themselves. Because of this, sustained and sometimes successful efforts to install loyal officials in both the court system and the treasury were part of the state's winning agenda.

Examples from South Africa's two largest SOEs, Transnet and Eskom, show how this process unfolded between 2010 and 2017.93To give a sense of scale, Transnet's acquisition was R70 billion in 2010/2011 and Eskom's was R74 billion; Together they accounted for 70 per cent of the total collection of R204 billion that year by South Africa's thirteen largest SOEs. (In the period 2009–2012, the exchange rate was approximately R8 per dollar.)

Transnet.Transnet encompasses the railway, port and oil pipeline business areas. The story of how SOE was built and the ongoing challenges arising from its cumbersome departmental structure (made up of many different units) are beyond the scope of this discussion. Instead, the focus is on some aspects of its governance and operations after 2010.94

(Video) Inequality in Southern Africa - An assessment of the Southern African Customs Union

In February 2011, three months after Gigaba became Minister for Oversight of Public Enterprises, Brian Molefe was appointed CEO of Transnet.95During Molefe's tenure as CEO and his successor, Siyabonga Gama, there were several reports of questionable contractual arrangements.96Molefe's appointment was accompanied by a significant reorganization of Transnet's board of directors. This included the resignation of Jürgen Schrempp, who had been appointed as a non-executive director just a few months earlier; and the appointment of Iqbal Sharma, a former official at the South African Department of Trade and Industry (from whose position he had come into contact with the Gupta family).

Such a reshuffle would have consequences that seemed more than random. In 2012, Sharma was appointed to chair a new Board Acquisitions and Disposals Committee to oversee the proposed pipeline of future infrastructure spending. A key part of the committee's work was overseeing a major tender (R51 billion) for over 1,000 new locomotives. China South Rail (CSR), which apparently had ties to the Guptas, had an internal line in the locomotive business and was one of four winning bidders.97Even in addition to the original bid, a separate contract for 100 locomotives was drawn up and awarded to CSR - ignoring the recommendation of the technical team in charge of the program and notwithstanding the fact that CSR's bid of R4.4 billion was R1.2 billion higher than a more technically advanced and lower cost (R3.2 billion) offering from Mitsui. Local sourcing was a key aspect of the locomotive business; Winning bidders had to source up to 60% of their components from South African contractors. Prior to contract award, all four successful bidders had visited VR Laser, a local metal body builder. A few weeks before the announcement of the winners, "a company in which Iqbal Sharma, Rajesh Gupta and Duduzane Zuma were partners acquired a stake in VR Laser Services".98

Eskom.The Eskom state is South Africa's main electricity supplier. It generates most of the electricity produced in the country, controls the transmission network and supplies electricity both to the downstream municipal distribution networks and (if there is no independent municipal supplier) to its own distribution network. In 2001, Eskom was named Energy Company of the Year at the Financial Times Global Energy Awards in New York. Then things changed.99In June 2011, six months after his appointment as minister, Gigaba dissolved Eskom's long-standing board, replacing all but two of its non-executive directors. Soon after, he imposed a stipulation that by 2018/2019 all of Eskom's coal supply contracts must come from miners with more than 50% black ownership.

The following years were times of continued challenges for Eskom's corporate governance. Gigaba has refused to sign a R4 billion tender to replace steam generators at South Africa's only nuclear power plant, which had been awarded competitively to Westinghouse. He also stepped in to hire Eskom to work with a certain accounting firm. The board was deadlocked over controversial deals, including a deal with the Gupta media empire and a series of (technically sound) proposals to outsource management of Eskom's IT systems - proposals that would save around R1 billion. “From 2013, Eskom executives and directors began to bleed, many of whom were suspended on trumped-up charges (without evidence) and refused fair disciplinary procedures.”100

After this turnaround, 2014 was a turning point, mainly because of the start in November of a new unexpected round of large-scale 'load shedding' that affected South Africa's power system in 2007. In March, the CEO Brian Dames, unable to weather the current governance storm, has resigned. Shortly after, the nuclear steam generator contract was awarded - and not to Westinghouse - and the Guptas were given a new expanded media contract. In May, Lynne Brown was appointed Minister for Public Enterprises, and in December she "made sweeping changes to the Board, bringing in at least six Gupta-affiliated members".101

In March 2015, amidst the burden-sharpening crisis, South Africans were faced with the spectacle of a circular firing squad by the Eskom government. This included, in short order, the announcement of a so-called forensic investigation into Eskom's governance, the suspension of senior Eskom executives by express order from the highest political level, and the downgrade of Eskom's bonds. Furthermore, the CEO, who resisted political pressure, was ousted and replaced by Ben Ngubane, who claimed to be close to Zuma. In April 2015, Molefe was transferred from Transnet to CEO of Eskom. Also in August, Anoj Singh, Transnet's CFO, transferred to Eskom to take a similar senior role.

Accompanying the governance issues were a number of actions on the coal supply front.102Coal is Eskom's biggest procurement item at 120 million tonnes per annum for around R50 billion.103A Gupta-owned company, Tegeta Exploration and Resources, purchased the Brakfontein coal mine in 2011. However, coal from the mine was reported to be substandard and the purchases were not approved by Eskom's technical staff; Eskom only signed the first contract with the mine in January 2015. Meanwhile, a major supplier, Optimum Coal, owned by Glencore, had already invoked a hardship clause in July 2013; claimed that its delivery costs had risen to R300 per tonne, too high to be covered by a fixed price contract of R150 per tonne. In March 2015, Eskom's Executive Purchasing Committee approved a cost increase, but this increase was rejected by Molefe immediately after his appointment as CEO. Glencore subsequently sold Optimum Coal to Tegeta, a sale made possible by the direct intervention of South Africa's new Minister of Natural Resources, Mosebenzi Zwane, and an advance payment from Eskom to Tegeta in April 2016 to allow the company to complete the purchase transaction after unable to raise money for the transaction in the financial markets. Several coal supply agreements were restructured: in December 2015, coal from Tegeta was diverted from a power plant for which it had received R150 per tonne to another plant through which it earned R467 per tonne.104More generally, after the conclusion of the Optimum deal, "the price of coal supplied by Tegeta skyrocketed from R161 per tonne paid to Glencore to R550 per tonne".105

nuclear power.In early 2011, after meeting with then-Prime Minister Vladimir Putin, Zuma signaled his desire to finalize a nuclear deal with Russia.106In September 2014, a few weeks after another meeting between Zuma and senior Russian officials, a nuclear cooperation agreement between South Africa and Russia was signed in Vienna with the Russian company Rosatom. Details of what was and wasn't mandatory remain unclear, as is the proposed scale of the deal, which includes a series of up to eight nuclear power plants with an estimated total construction cost of $40 billion to $50 billion.107What was not disguised was that the entire process took place outside of South Africa's energy procurement and supply planning processes. The resulting turmoil consumed South African politics. He played a central role in the 2016 Public Protectorcapture statusMessage.108After Zuma left the presidency, the impetus for the nuclear deal seemed to evaporate.

While the string of businesses involving the Gupta family epitomizes the Zuma era, the Guptas weren't the only players in the private sector. The investigations, which began with the public protector and continue today, identified a range of favored intermediaries, including international companies such as KPMG, Bain and McKinsey.

Changing ideas: a turn towards ethnopopulism

In addition to increased exploitation of public goods and increased pressure on public institutions, the 2010s also saw a significant shift in the tenor of South African political discourse. As a prelude to exploring the reasons for this shift from hope to anger, it is important to reiterate that the deep underlying cause was persistent economic inequality. But the ideal drivers are not simply an intermediate step in the causal chain of inequality, institutional quality and development outcomes. Ideas can have an independent effect; they are an important currency of political persuasion. As Rodrick says:

Political arguments in the real world are rarely based on a direct appeal to narrow economic interests. In public discussions, what we might call “the politics of ideas” seems to be at least as important as interest-based politics. 🇧🇷 🇧🇷 🇧🇷 Ideas [can] shape interests [by] changing voter preferences and/or changing their worldview.109

The ideal policy occurs in many different areas. Where inequality is the area of ​​concern, the ideal challenges faced by political entrepreneurs who support the status quo and those who challenge it differ. Politicians selling "hope" need to convince citizens that inequality is irrelevant or that they will bring about more inclusion. Politicians who sell "anger" focus on the injustices of the status quo. South Africa's turn from hope to anger in the 2010s was in part a necessary effort to continue processing the country's troubled history. However, as in many countries in recent years, political entrepreneurship has also been at play, often with more than a little selfish opportunism in the background.

Reckoning with the ideal inheritance.Hirschman's analysis of the tunnel effect provides a useful starting point for understanding why focusing on the economic dimensions of inequality is insufficient to explain the shift from hope to anger. Hirschman understood that turning into a furious period of tunneling was driven by more than the backlash of the economically disadvantaged:

Climbers do not necessarily become pillars of society all at once, but, on the contrary, they can be disillusioned for a considerable period of time... They can be along one of the dimensions of social status, such as social status. they discover that a series of obstacles, rigidities and discriminatory practices still block their ascension... and, therefore, they feel that, despite all their efforts and achievements, they are not really succeeding.110

Not surprisingly, given the country's turbulent history, South Africa's furious about-face had a distinctly racist tone.

Racial tropes have long been at the center of South African political discourse. The promise (or perhaps the illusion) of the "rainbow miracle" was that the racist tropes were left behind. While the country's racist past needs to be addressed, for example by a truth and reconciliation commission, this factor need not get in the way of the cooperative effort as a whole. A very simple way to combat this – an approach taken unsurprisingly by many white South Africans – was a form of amnesia that believed that South Africa's transition to democracy had overshadowed the country's history. Another more challenging but ultimately hopeful approach to resolving the seeming contradiction between a racist past and an inclusive new beginning was captured in Stephen Biko's classic dictum from the 1970s: "White people need to be made to understand that they are only human, not higher. The same with black people. They need to realize that they too are human, not inferior.”111

In the first two decades of democracy, the amnesiac approach seemed to have become widespread, particularly among the elite. But in 2015, after two decades of quietism, a "falista" student movement ("Rhodes Must Fall"; "Fees Must Fall") erupted on South African university campuses. The movement began at the University of Cape Town (UCT), the country's leading university, whose admission seemed to offer a ticket to the elite, including black South Africans.112The movement was sparked by a controversy over the place of honor given to a statue of arch-imperialist Cecil John Rhodes on the campus. This protest led to the removal of the Rhodes statue in April of that year and quickly turned into a national student “fees must come down” movement protesting the continuing economic and social obstacles facing the supposed black elite of the next generation. This movement has also had a successful outcome, with a government agreement in 2018 to radically expand support, including the removal of all university fees (plus some living allowances) for families with household incomes below $25,000.

The fallist movement combined an attack on persistent inequalities (at least among strata of young people aspiring to post-secondary education) with an attack on the ideal structures associated with these inequalities. Student activist Rekgotsofetse Chikane, son of Frank Chikane (a prominent anti-apartheid figure and later director general of the Mbeki President's office), vividly captures the spirit of the early Falista movement:

Chumani Maxwele will be remembered by some as the man who threw shit at a statue... While there have been protests at UCT before, none have been as moving as Chumani's. Shirtless, he stood in front of the statue of Rhodes that he had desecrated with human feces... Chumani held up a sign that read "White Arrogance @UCT...".

Many within the university and across the country fell into the trap of believing that the protest was about the statue and not what it really was, which was the pervasive nature of institutionalized forms of racism on campus... We became orators of our circumstances and warriors of your change. We were students of the message of decolonization and teachers of its practice. As black children in South Africa, we learned to love ourselves.113

Ethnopopulist political entrepreneurship.Parallel to the Fallist movement, a number of South African political entrepreneurs tended increasingly to turn to a new racist discourse. Before delving into the specifics of this discourse, it is useful to step back and look more broadly at how populist discourses take root.

A useful starting point is Sharun Mukand and Dani Rodrik's distinction between two dimensions of ideal ethnopolitics. In the worldview dimension, political entrepreneurs work to "shape voters' understanding of how the world works, which in turn changes their perception of proposed policies and their outcomes."114In the “identity” dimension, advocates focus on “shaping or shaping voters' self-identity…. Individuals have a variety of identities – centered on ethnicity, race, religion or nationality”.115Identity and worldview memes are mutually reinforcing:

Voters who share an identity with the political opponent [may] want to support him because of the shared identity tug-of-war. Supporting the political opponent's policies, however, can harm the low-income voter economically... voter alone).116

The political discourse of South Africa's Economic Freedom Fighters (EFF) is a classic example of idealist politics in action. The expulsion of Julius Malema, the hot-headed leader of the Youth League, from the ANC in 2012 and the founding of a new political party, the EFF, the following year was a turning point in the emergence of contemporary ethnopolitics in South Africa - both for its direct impact and for its later influence on the type of speech used in murderous ANC conflicts. At the heart of the EFF's strategy for mobilizing political support was angry rhetoric that targeted both the country's persistent inequalities and their ethnic correlates. Malema outlined the EFF's economic vision as follows: “Soldiers and police are not our enemies; our enemy is white monopoly capital and its political cronies... The [Party's] plan includes the non-negotiable principles of land expropriation and mine nationalization, both without compensation. The EFF wants to move from a discourse of reconciliation to a discourse of justice.”117

The EFF became the third largest political party in South African politics. In 2014, she received 6.4% of all votes cast; In 2016 (in the state municipal elections), it won 8.2%; 2019 10.8%. Figures 6 and 7 show the use of two EFF memes combining worldview and identity politics in three major media outlets (none affiliated with EFF):

  • White Monopoly Capital (WMC), which combines the longstanding radical critique that the continued dominance of “monopoly capital” is at the root of South Africa’s poverty and inequality with the assertion that capital “knows” and therefore must be part of the colonial past wiped out.
  • Expropriation Without Compensation (EBR), which describes colonial land grabbing as the country's original sin and calls for Zimbabwe-style land grabbing without compensation. While this call seems narrowly focused on farmland, given that two-thirds of South Africa's population live in cities - and that the movement pushing for EWCs is urban, not rural - EWCs are widely interpreted as representing a broader challenge to constitutional protections of property rights.

South Africa: When strong institutions and huge inequalities collide (17)

South Africa: When strong institutions and huge inequalities collide (18)

While both memes were part of the EFF's economic manifesto, the manifesto did not drive their use in the period covered by the tables.

The WMC meme was powered by Bell Pottinger, a British public relations consultancy. The following summarizes some of the findings from news investigations into this "odd" partnership:

Bell Pottinger signed the Gupta family as a client in 2016 to try to improve its image, and the chosen strategy was to target white business leaders to deflect serious accusations of state capture.

One of the strategies seems to have been to promote a narrative, which circulated mainly on social media, that “white monopoly capital”, the South African Communist Party and the National Treasury prevented the transformation of the South African economy.

Bell Pottinger's plan included using Twitter bots engaged in a fake news campaign to support news that criticized white monopoly capital and to defend against the Guptas.118

After the exposure of the Bell Pottinger campaign, the spread of the WMC meme slowed down, but did not completely stop. In November 2017, ahead of the ANC election conference, Zuma said the following about the WMC:

It is a fact, not manufactured. We tell the truth. We fought, they took everything, the political power we have now. They conquered economic power and land. Take the mines, companies that dominate in mines, few benefit. You will find the same companies responsible. It means they dominate. They monopolize, they are not black... They have companies that are white. 🇧🇷 🇧🇷 🇧🇷 They are monopolies, they should be named for what they do. There is monopoly capital and in SA it is white. Because of our history, it has one color and it's white.119

2017 also sped up the EWC meme. In February, Malema proposed a constitutional amendment to allow for an EWC. In March, Zuma added his voice to the call.120In the months that followed, the EWC was hotly debated within the ANC. A request for support from the EWC was added to the list of items to be considered at the ANC election conference in December; was approved after a heated debate.121The ANC continues to struggle to come full circle on a renewed commitment to reconciliation, with some of its influential members continuing to push for an EWC.

In short, Zuma has ridden a wave of dissatisfaction with the skillful but imperious Mbeki to power. Different groups with different motives articulated their anger and frustration at the large inequalities persisting during the Zuma era with slogans such as WMC/EMC, "Rhodes Must Fall" and "Fees Must Fall". These slogans represented real grievances, but they were also used and abused by political entrepreneurs in and out of government as a populist vehicle to promote political and personal ambition. In particular, some political leaders used them as a cover for a regime no longer focused on making a growth and redistribution pact, but transformed to provide patronage to an increasingly greedy machine. The result has been a steady loss of confidence among business and political elites and a steadily deteriorating economy. The average real per capita income of South Africans has fallen every year since 2014. The current government, hobbled by indecision and the coronavirus pandemic, has yet to reverse the downward trend.

patterns and implications

In December 2017, Ramaphosa narrowly defeated Zuma's preferred candidate to succeed him as ANC president. In February 2018, Ramaphosa became President of South Africa. His victory helped press a pause button on a seemingly unstoppable and continuing downward spiral of South Africa's extravagant hopes in the first decade of democracy.

What were the forces that stopped the acceleration of the conquest of the state? What can be learned from the experience that can help chart a path to a more successful, inclusive, and hopeful path? What lessons from South Africa could be most relevant? Before delving into any of these issues, it is useful to summarize the evidence so far about what went wrong in South Africa following the high expectations of the onset of democracy in the early 1990s.

Unfulfilled aspirations and their consequences

At the root of the turning point in South Africa was the failure to adequately address the challenges of inequality and exclusion. This section provides an overview of the channels through which persistently high levels of inequality can affect development outcomes.

Certain aspects of inequality affect the shape and strength of a country's “business elite”, and others affect how non-elites are included. For South Africa to realize its quest for a cooperative path at the dawn of democracy, each of these aspects needed to be addressed in a 'good enough' way. Achieving that goal turned out to be beyond reach, even for the visionary leadership with which South Africa was endowed during the first decade or so of democracy. For South Africa's supposed elite deal to be robust, three distinct sub-agreements must operate effectively:

  • A parallel arrangement between the established (predominantly white) business elite and the country's new political leadership.This involved four types of commitments: (1) a comprehensive commitment to cooperation (with political power in the hands of the electorally dominant ANC and economic power remaining overwhelmingly in the hands of the white elite); (2) an obligation to uphold the rule of law, including the protection of private property; (3) a commitment to ongoing economic transformation (including via BEE); and (4) a commitment to support pro-poor tax restructuring, given that white elites were the dominant source of public revenue.
  • A bargain between the new political elites within the ANC.Although political power passed to the ANC, the question of how it would be exercised (and who among the new elites would benefit) remained unresolved. Not only does the ANC explicitly describe itself as an alliance that also includes the Congress of South African Trade Unions (COSATU) and the South African Communist Party, but the ANC itself is a broad tent that encompasses many ideological trends; degree of public spirit; and regional, ethnic, and economic interests. The ANC's unspoken promise was that its formal structures, as well as governing structures, would channel this diversity towards a common national goal.
  • As part of the parallel agreement within the ANC, a commitment to protect the interests of new members of the (predominantly black) middle class.This stands out as the third accessory business due to the pronounced economic and political dynamics. This privileged middle class is broadly defined. It ranges from middle managers and skilled production workers within government to unionized workers and formal sector employees earning just above a formally mandated minimum wage.

In the early years of democracy, the ANC's credibility as a broad-based liberation movement allowed it to include non-elites as well. Indeed, one of the appeals of apartheid-era elites was to negotiate with the ANC that their secure grip on power through democratic elections would give society as a whole legitimacy for a new negotiated constitutional order that promised equal rights for all. In addition to the promise of equality, two promises to the non-elite embodied in the ANC campaign slogan "A Better Life for All" were crucial:

  • A promise of advancement.For those on the cusp of middle-class status (the “vulnerable middle” and “temporary poor” according to Table 11), a combination of education, job creation, and an end to racial discrimination would provide an easily accessible path forward. to death. middle class.
  • A promise to reduce extreme poverty.A reorientation of public funds and services after minority rule would benefit the population as a whole.

With the exception of the commitment to fight extreme poverty, which was unequivocally pursued at least until the 2010s, all the agreements and side pledges mentioned above were anything but realistic. Each is best described as an ambitious compromise - enshrined in a carefully negotiated democratic constitution and strong formal institutions, but not a solid agreement. The ANC's unspoken commitment to align its conflicting interests toward a common national goal came more from belief than from the experience of governing a country. The promise of ascendancy and the obligation to protect the interests of the existing burghers were in direct conflict with each other. BEE's efforts to reshape the ethnic makeup of the business elite, both owners and managers, offered less than they initially seemed. The initiatives have not systematically addressed the extreme concentration of wealth and income in the country.

Had South Africa achieved rapid economic growth in East Asia averaging 6 to 10 percent a year for an extended period, expanding opportunity throughout society might have surpassed the limits of each of the various intended commitments. In reality, an annual rate of 5% was achieved only briefly from 2005 to 2008. However, these ambitious commitments, although vague, seemed to provide a “sufficient” platform for a promising path for the first fifteen years of democracy. The ideal dimension of the South African "rainbow miracle" was maintained. Indeed, in the late 2000s, it still seemed possible that a collective quest to build a better society through working together could endure. There was hope that Zuma's presidential candidate could help restore confidence and start a new cycle of growth. However, as the 2010s progressed, it became clear that the trend was going in the opposite direction. In the absence of rapid growth, the limitations of promises to tackle different dimensions of inequality have become clear. New tensions arose and fed. Four consecutive reversals set in motion an accelerated downward spiral of decline.

The first turn in the spiral was the increasing pressure on institutions. These pressures were fueled by the continuing ambiguities and unresolved tensions within the Elite Accord, and Zuma's personalized and sometimes predatory approach to leadership added fuel to the fire. Within the upper echelons of the ANC, various subgroups engaged in increasingly relentless and widespread conflicts over control of resources and positions of influence, as exemplified by the violent infighting at the 2007 ANC conference in Polokwane.

Decisions about who would participate in BEE initiatives became part of the ANC's inter-elite conflict. Private companies began to make decisions about who their BEE partners would be based on their political networks of influence. Around this time, SOEs emerged as a particularly lucrative area for the most powerful and well-connected individuals and factions to engage in systematic looting. Control of key political and managerial positions within provincial and local government became a means both of responding to the promise of members of the middle class and of building personalized networks (and opportunities for self-enrichment) across the country. As per capita income growth turned negative, ANC members became embroiled in zero-sum disputes over office and resources at all levels of politics and government, whether national, provincial or local. The decay of institutions and governance has undermined confidence in the cooperative vision of the future and reduced the possibility of renewed growth.

The second and third turns toward a downward spiral are those highlighted by Hirschman in his metaphor of the "tunnel effect": a rising tide of disillusionment followed by a sudden idealistic transformation into anger. Disillusionment spread across large sectors of society. The losers of elite conflicts within the ANC took offense. Those on the cusp of entering the formal economy failed to consolidate middle-class status; Job creation in the formal sector was weak, except for a few years in the mid-2000s.122Unemployment rose steadily. This economic malaise fed the dissatisfaction not only of those who, despite their efforts, felt directly contradicted, but also of the population in general. Meanwhile, income and wealth remained massively and disproportionately concentrated in the hands of the white community. The BEE did not involve systematic changes in the tax structure; In fact, South Africa's wealth taxes remained below those of the United States during the first quarter century of democracy. On its own, BEE's gains were limited: in 2018, 69.6% of senior management in the private sector were white (up from 73.7% in 2008), as were 60% of senior management (up from 67.9% white). % in 2008).123

Disillusionment led to the third turn in the spiral, an ideal turn for anger. The angry turnaround was catalyzed as much by genuine resentments as political opportunism. In the face of thwarted opportunities, a growing number of South Africa's population recognized the privilege enjoyed by the predominantly white business elite - and the wave of blatant corruption that seemed the only way the new elites could partake of that privilege was a provocation. Opportunistic ethnopopulist political entrepreneurs, in turn, tried to use disenchantment to strengthen their position in the political struggles of the elites.

As of 2017, formal institutions, while largely remaining functional, were under increasing pressure. All the elements seemed ripe for a fourth downturn in the spiral: a rapidly accelerating cumulative downturn, with weakening economic performance, institutional decay, and the idealistic shift toward anger and ethnopopulism feeding off each other in an accelerating race to the bottom. Then came the election of Cyril Ramaphosa as president.

South Africa's Surprising Strengths

At the start of the ANC election conference in December 2017, Zuma was confident that he was in control of events and that his ex-wife, Nkosazana Dlamini Zuma, would be elected to succeed him. At the event, Ramaphosa won by the smallest margin. The step-by-step details of how he achieved victory are not relevant here, although it is worth noting that his victory was secured by the defection of one of Zuma's oldest allies, David Mabuza - and that Mabuza is now Vice President of South Africa. South. Of more general interest is how the foundations of Ramaphosa's success were laid through determined opposition from a combination of civil society, including the media, and official regulators, including the judiciary, which remained largely unchanged during the Zuma era.

The basis for most of South Africa's security mechanisms, as it descended into a spiral of self-destruction, was the far-sighted constitution agreed to in the South African Parliament on 8 May 1996. Through its effective separation of powers and protection of liberties, the constitution opened space for critics and rebels to challenge the government. Although Zuma desecrated the police and prosecution system by placing his supporters in leadership positions, he failed to do any significant damage to the judiciary and some other constitutionally created and protected institutions of oversight.

When Mogoeng Mogoeng was proposed by the Judicial Service Commission, confirmed by Parliament and appointed Chief Justice by Zuma in 2011, some feared that this socially conservative and religiously professed Christian might be too timid to seek justice with his strength.124This fear was unfounded; The Constitutional Court and the other major courts largely maintained their integrity during the Zuma era and beyond. Judicial prosecutions and investigations continued, albeit within the confines of a damaged prosecution system.

Among the other formal oversight bodies, the most important was the Office of the Public Protector, established by the South African Constitution to investigate complaints against government agencies or officials and propose remedial action. The power of this office depends on the public protector's courage and perseverance. During this difficult period, South Africa was fortunate to have its toughest and most effective public protector, lawyer Thuli Madonsela. Of his many important investigations and reports, the best known is thiscapture statusReport in late 2016, towards the end of his term, that he used whistleblower testimonies and a cache of private emails to expose abuse of state institutions for personal gain. The Office of the Auditor General also played an important role in reporting on the misuse of government funds and assets.

The media's role was crucial, reinforced and supported by a variety of non-governmental activist organizations. Some of the Ombudsman's findings were anticipated by investigative media reports. According to the Reporters Without Borders Media Freedom Index, South Africa has one of the freest media environments in the world.125In Africa, it is second only to Namibia, but is ahead of "free" countries such as France, Italy, the United Kingdom and the United States. South Africa also has a tradition of bravery in journalism that dates back to apartheid times, when reporters risked their lives and personal freedom to expose stories of oppression and a few brave editors published their stories. Brave whistleblowers helped the media and other investigators with personal testimonies, documents and flashcards full of confidential emails and other data. While commercial media are in decline, investigative reporters have formed in-depth reporting groups to secure funding from foundations that support freedom of information. Many of the increasingly corrupt government's illegalities and transgressions were first exposed in print media and on the internet. Scholars delved deeper, verifying and expanding on media disclosures. Civil society organizations provided funds to mobilize against abuses of state power.

Parliament itself was an important site of protest. Opposition parties used the freedom granted by Parliament to oppose vigorously and theatrically. The populist EFF disrupted several of Zuma's State of the Union speeches, forcing the Speaker of the House to ask House security officials to throw them out. Their protests were broadcast on national television. Opposition parties could also raise provocative parliamentary issues and make speeches that exposed government abuses.

What turned out to be crucial was Zuma's progressive loss of support from some key factions within the ANC. The ANC alliance has long supported Zuma, with exceptions. Former COSATU Secretary General Zwelinzima Vavi, then a powerful ANC ally and instrumental in Zuma's rise to power, broke with Zuma early on over ethical issues. He was expelled from COSATU and formed a rival union group. A group of ANC veterans of stature, if not political power, gathered and spoke strongly. After many revelations, including thecapture statusReportedly, some leaders within the Communist Party (part of the ANC alliance), the ANC parliamentarian and even the rest of COSATU have become openly critical. As the rise of David Mabuza signals, it would be a mistake to characterize Ramaphosa's close election as ANC president in December 2017 as a clear triumph of principle over capture. Still, there is no doubt that the anti-corruption clamor of the Zuma era and the enduring reputation that Ramaphosa generally enjoyed as a staunch constitutional lawyer contributed to the outcome.

Create a way forward

Despite Ramaphosa's rise to the presidency of South Africa, the country is still not out of the woods. So far, the number of prosecutions against corrupt infiltrators has been limited, although there are signs that prosecutions are beginning to accelerate.126Ramaphosa has yet to go beyond his promise to root out the rot and offer a new, positive vision of how South Africa could move forward. The country's deep, underlying challenges remain.

In addition to the immediate tasks facing South Africa – including how to respond to the COVID-19 crisis – it is worth examining three different scenarios for the country's future. The most positive scenario would be an inclusive development option anchored in a renewed social commitment with collaboration and the search for win-win results. A second, less optimistic scenario would involve more confusion. A third scenario could be a renewed ethnopopulist impulse. The integrative scenario is designed around the guiding principle that, according to Hirschman, was fundamental for Latin America to create the turn from anger to renewal: “Efforts to recover lagging sectors and regions, to undertake social reforms to improve well-being and the position of groups that have been neglected and squeezed, and in the redistribution of wealth and income generally”.127(Appendix B includes some key elements of a purported South African agenda to promote inclusive reforms.)

Table 12 uses simple arithmetic to plot the three scenarios in terms of changes in aggregate income and the distribution of that income. The bottom row of the table shows, for each scenario, the potential magnitude of actual changes in income (from a 100-point baseline) over a period of five to ten years; the middle lines show the associated changes in the distribution of that income. In the confusing scenario, total income increases by 20%. In the ethnopopulist scenario, it drops by 20%. In the inclusive scenario, it increases by a hypothetical 40%.

South Africa: When strong institutions and huge inequalities collide (19)

Confusing scenery is the path of least resistance for established elites, and unsurprisingly, it has become the preferred option for many. They have been campaigning for the country to get back to the "basic basics" to get back on track with the Mandela and Mbeki presidencies. This back-to-the-future approach would again prioritize pro-growth economic policies and improve public sector performance in decision-making, while addressing other social and political issues on the sidelines.

However, this messy scenario is unlikely to find the broad political support needed to be sustainable in the medium term. To be successful, a pro-growth strategy needs a credible commitment to the sustainability of pro-business and pro-market policies. Credible engagement requires a critical mass of elites in the private, governmental and political spheres to voluntarily support and enforce the rules of the game, with compliance underpinned by credible enforcement mechanisms. The contested reality of the South African elite's well-worn agreements falls far short of a robust commitment to these mutually agreed rules. The confusion also fails to address the question of how non-elites can best be integrated into the economic and political order. There is no common understanding among the elites - let alone agreement or agreement among the non-elite ones - on how this incorporation should be accomplished.

In 1994, the halo effect of a negotiated constitutional democracy, the ANC's resounding electoral victory and the promise of a "better life for all" were enough to push the boundaries of the Elite Accord and promises to non-elites and a season of hope to advertise But by the mid-2010s, the limits of the ambitious pledges made in 1994 had become all too obvious. With Ramaphosa in office, aid when disaster was averted may have given way to a strictly pro-growth approach in the short term. It might have been enough to hide the growing cracks in the country's political, institutional and social foundations for a few years. But it would only be a matter of time before a downward spiral deepens again – with the COVID-19 crisis increasing the risk of decline.

The second scenario in Table 12 is ethnopopulism. In this scenario, opportunistic political entrepreneurs use the elite/non-elite relationship as a weapon in inter-elite competition. In the resulting economic collapse, the losses fall disproportionately on pre-existing, predominantly white elites. The poor and vulnerable also lose out from falling tax revenues, which have been key to sustaining incomes in the bottom half of the distribution. However - and this is the economic basis for the strategy's appeal among ethnopopulist political entrepreneurs - it is plausible in such a setting that black elites could achieve large real income gains. Depending on the details of the implementation, the impact on black middle class “insider” income could be quite modest. (This ethnopopulist scenario is a good approximation of what has happened in Zimbabwe since the early 2000s.)

The right column of Table 12 summarizes a third, more optimistic scenario - one that renews a collaborative platform with a commitment to shared benefits. Outcomes associated with this scenario include the following:

  • High growth, with real income rising 40% in the period.
  • Substantial reduction in absolute poverty, with real income nearly doubling for the poorest 50-60 percent of the population.
  • Very modest real income gains for white South Africans - slightly above zero to encourage cooperation, but proportionately lower than all other subgroups, implying a significant decline (from 37% to 28%) in their income share total.
  • Strong gains in upward mobility for about a quarter of the population who are on the verge of or struggling to stay in the middle class.

At the heart of an inclusive next generation development strategy for South Africa is a credible promise of upward mobility. Such a pledge would, of course, be crucial for those already on the vulnerable threshold of the middle class. Furthermore, a credible promise of upward mobility would offer a vision of hope and opportunity for a better life across society. In its absence, anger and despair can spread. But if the promises of ascension were seen as real (and if a minimum level of basic needs were met), then perceptions about the legitimacy of the social and economic order could be renewed.

A crippling weakness in South Africa's development path over the last quarter of a century has been the failure to address the distribution gap described earlier. During the first fifteen years of democracy, the elimination of racial barriers and the country's rapid growth masked the reality that the economy was not designed to support broad upward mobility. However, as the fruits of opportunity opened up by the end of apartheid's racial privileges faded, the limited economic prospects of those outside the elite became apparent.

Of course, it is easier to write the optimistic arithmetic of an inclusive development strategy than to define what such a strategy might entail. As described here, a strategy that would deliver on the promise of upward mobility would have four interdependent aspects:

  • Improvement of public administrationas the key to renewing citizens' perception of the legitimacy of state institutions. Without improvements in public sector governance, none of the public sector's missions would be feasible, nor the cooperation needed to meet a higher tax burden.
  • Bold initiatives to strengthen the supply side of upward mobility🇧🇷 Along with expanded investment in learning (including in early childhood and post-secondary education), such efforts could include an equity grant payable in adulthood to address the historical legacy of massively unequal wealth and reduce constraints to upward mobility that can stem from precarious financial conditions. circumstances.
  • Bold initiatives to strengthen the demand side of upward mobility, with a focus on job creation, by private and public actors and by small and large companies.
  • Legal protection compatible with growth and revenue growth, which are critical to providing the additional revenue needed to implement expanded public initiatives and strengthen the legitimacy (and equity) platform of the economic order. This approach may be a preferred replacement for BEE and its unintended corrosive consequences. Compared to comparative studies, wealth taxation in South Africa is not disproportionately high.

Appendix B provides additional detail on each of these aspects.

Some broader implications

South Africa's political settlement in the mid-1990s radically reconfigured the space occupied by political elites and the way they interacted, but the extreme inherited inequalities were only marginally addressed. The country's experiences over the next quarter century may therefore provide useful lessons for many countries struggling to maintain positive social, political and economic trajectories in the face of decreasing tolerance for high or increasing inequality. Four related lessons, applicable beyond the South African case, are of great interest.

First, the path of change is the razor's edge.After the initial settlement, the country's transformation was shaped by interactions between ideas, institutions and distributive concerns. There is potential to initiate virtuous cycles of positive interactions. At the same time, however, there is a significant risk that unresolved distributional imbalances will be reversed and initiate a cumulative downward spiral of decline.

South Africa started its democratic journey with a bold political and institutional realignment and a strong platform of formal institutions, but also with huge misalignments between the political dimension and the economic/distributive dimension. Resources remained disproportionately concentrated in established elite white communities. For a while, however, a strong ideal platform seemed to be enough to replace the ongoing disruption in distribution.

Second, ideas are important.A hopeful vision of change, combined with a “good enough” response to distributional problems, may be enough to initiate positive development.

The South African experience suggests that a positive course can continue as long as influential interests and broader citizens remain hopeful that pre-existing legacies of inequality and injustice will be resolved. In retrospect, the promise to reverse these legacies in South Africa was more ambitious than realistic. Still, for a while at least, the promise of achieving it was enough to start a season of hope. It doesn't have to be solved all at once.

However, positive narratives can also be lost. Within a decade, cracks in the foundations of South African democracy were becoming apparent. As the 2010s wore on, things seemed to be falling apart at an accelerated pace.

Third, both ideas and institutions can shield against adversity in different ways—but only up to a point.Hopeful ideas can inspire positive action and help mobilize collective action. Institutions can act as buffers. However, both need reinforcement, including constant attention to purulent imbalances.

South Africa's reversal reflects the ideal turn depicted in Hirschman's tunnel effect: an early season of hope; growing disillusionment with persistent (and in some cases growing) imbalances; and then an ideal change, an outburst of rage. In the case of South Africa, pressure on institutions came first, followed by a change of mind. It is plausible that, in other contexts, a turn to anger may precede, even catalyze, a subsequent attack on institutions.

What does it take to achieve renewal when a positive trajectory has been lost? As noted earlier, although Ramaphosa began the task of rebuilding the damaged state early in his term, he chose a gradual and legalistic path of reform. Unlike, for example, US President Theodore Roosevelt's attack on corruption and abuse of power in the United States nearly 120 years ago, Ramaphosa did not choose to ignore party bosses and rely on public support for reform.128Instead, he chose an incremental path, relying mostly on hastily-fixed prosecutors to clean up the state. The ANC remains divided, with the faction formerly led by Zuma led by Ace Magashule, who managed to control the party machine through his position as general secretary. Resistance remains strong in many regions, cities and towns, and Ramaphosa's power remains conditional. As can be seen in Figure 6, there has been no recovery in economic growth in the two years (pre-COVID-19) since Ramaphosa took office. Table 13 summarizes what has changed in South Africa's political economy in 2020, the Corona year.

South Africa: When strong institutions and huge inequalities collide (20)

Wandering through infectious imbalances without resolving them can fuel disillusionment and cannot go on indefinitely. Ramaphosa has tried to govern in an arrogant way and has tried to revive the aspirations of the 1990s, but it takes more than nostalgia for past promises that may have served as inspiration but are past their sell-by date and widely seen by citizens as inadequate, to tackle the current challenges.

Fourth, starting a new cycle of renewal requires a set of ideas that address imbalances in a “good enough” way.this has led to derailment – ​​including a willingness to challenge entrenched interests that have blocked change.

It is imperative that South Africa strengthens public sector governance and effectiveness. The country must raise revenues to fund a credible commitment to upward mobility and overcome the rigidities that block mobility. It must renew a sense of fairness and possibility. Leadership must risk mobilizing new coalitions capable of overcoming the vested interests that impede inclusive change. Can South Africa's leadership – and can the leadership of other countries where a similar disillusionment has taken hold – summon the courage to face this challenge?

Appendix A: Sector trends in public service delivery

This appendix reports some empirical patterns related to trends in the provision of four areas of public services: education, health, local road maintenance, and water and sanitation. The first two are implemented by provincial governments; the last two are attributions of the local government.

In terms of performance, the South African education system is extremely negative on measured learning outcomes compared to global expectations. However, using a globally standardized measure, the Trends in International Mathematics and Science Study (TIMSS), Table A1 shows that, since 2003, South African students have achieved large gains in performance in almost all provinces. In fact, the gains made (from an exceptionally low baseline) were unprecedentedly rapid.

(Video) Class Struggle In Africa By Kwame Nkrumah (Chapters 2&3:Class Concepts,Characteristics & Ideologies)

South Africa: When strong institutions and huge inequalities collide (21)

Incremental gains in other sectors of service delivery at the provincial level must also be seen in the broader context of long-term net underperformance resulting from a disproportionate failure to expand the highly skilled segment of the public sector workforce at the expense of a burgeoning leadership class. This is reflected in only modest growth in the caregiver-to-population ratio in South Africa between 1998 and 2018, including a steady increase between 2009 and 2017.135Furthermore, any net benefit to public sector nurses would have been dwarfed by the doubling of the number of nurses working in the private health sector between 1994 and 2014. The gains from this incremental increase in the nursing workforce are also offset by the significant South Africa's burden of disease. Despite impressive rates of uptake of antiretroviral drugs, the improvement in the nurse-to-population ratio in South Africa compared to other MICs is marginal at best when life expectancy at birth is taken into account.

Figure 8 summarizes performance trends across two groups of key municipal government functions: local road maintenance and water and sanitation services. Road maintenance data remain generally negative from a citizen's point of view and vary greatly between provinces. Nearly 57 percent of respondents to a 2004 Afrobarometer survey rated the quality of local road maintenance by municipalities as “very bad/fairly bad”.136Eleven years later, the prevailing opinion has remained negative, but has weakened somewhat to 53%. At the provincial level, it was found that local governments significantly improved road maintenance between 2008 and 2015 in two provinces, and local road maintenance declined in two provinces; No trends were evident in most (five) provinces. According to the South African National Roads Agency, the government agency that manages the country's national road network, it has taken responsibility for some provincial and municipal roads, including in the Eastern Cape, Mpumalanga, Limpopo and North West provinces.137The latter are among the provinces that showed a decrease or no trend in public perceptions of local road maintenance, underscoring the degree of degradation of municipal governance.

Data on water and sanitation services in Figure 9 show a steady increase in the number of billed households served by these services. Despite steady progress in expanding access or connectivity, other perspectives paint a less confident picture of community performance. The nationally representative Afrobarometer survey found an increase in the proportion of respondents who said the government was managing water and sanitation “very/fairly poorly” from 37 percent in 2002/2003 to 53 percent in 2018.138

South Africa: When strong institutions and huge inequalities collide (22)

South Africa: When strong institutions and huge inequalities collide (23)

One explanation for the discrepancy between the general expansion of municipal water and sanitation services and public response is that broader measures of household access include settlement patterns (as well as the interconnection of multiple housing units, a by-product of the urban system). long standing). housing crisis). They show virtually no long-term change in urban affordability, which hovers just below 90%, and only a small increase in rural affordability, which remains well below urban areas.139Furthermore, the rural subsample of Afrobarometer survey respondents were consistently more critical of water and sanitation. Finally, despite increasing (audited) expenditures on repairs and maintenance of water and sanitation infrastructure between 2008/2009 and 2016/2017 - an important indicator for measuring the qualitative impact of improved access - staff-related costs can be seen as a proportion of total municipal expenditures Infrastructure repairs and maintenance were very inconsistent between 2007/2008 and 2018/2019 and were consistently outperformed by contracted services.140These facts intersect with two problematic dynamics discussed earlier: the significant growth of the senior segment of the local government workforce at the expense of non-senior personnel (which include technical staff involved in maintaining infrastructure) and the intensifying political struggle for a contractors' budget for the provision of public services in a context of growing financial mismanagement.

Appendix B: Promoting Inclusive Development

Four elements are central to a strategy capable of credibly promoting inclusive development that focuses specifically on proactively supporting Ascension: (1) better public sector governance, (2) a strengthened supply side of Ascension, (3) upside of the demand side strengthened; and (4) repair compatible with growth.

Improved public sector governance.This is a fundamental concern; Without improved governance, the public sector would not be able to implement a proposed development strategy, nor would the public be willing to shoulder the increased tax burden needed to support these improvements. A useful innovation would be to move beyond the hierarchical (“government must deliver”) perspective of the public sector common to most South Africans and focus on “active citizenship” in governance processes. This revised approach may be the key to renewing citizens' perceptions of the legitimacy of state institutions. As the 2012 South African National Development Plan states: "To build an inclusive nation, the country must find ways to promote a virtuous cycle in which an effective state, inspiring leadership at all levels of society and active citizens are empowered and strengthen each other."141

A strong supply side for the advance.This reflection is primarily about filling important gaps in South Africa's current unequal opportunity ladder. Better education and financial support can help create an environment where opportunities for advancement are possible.

The quality of basic education is an obvious area in which South Africa remains at the core. School resources are more or less equivalent to those available at other MICs and any critique of South African student performance must bear in mind the historical legacies of apartheid. However, governance remains a crucial challenge. Careful theoretical and empirical analysis of data from countries around the world has shown that expanding investment in quality early childhood development (ECD) can have the greatest return of any investment in development. However, compared to other MICs, a much smaller proportion of South African children under the age of six participate in ECD programmes.

Post-secondary adolescents and young adults also need more investment in higher education and vocational training. The proportion of 15- to 24-year-old South Africans completing tertiary or vocational education is lower than in the reference countries. In 2017, in response to the 'messages must fall' student movement, South Africa took some steps to address these shortcomings, but there is much more to be done in terms of financial and quality improvements. Innovations are in demand.

Some countries have considered direct financial supports such as “equity endowments” and “baby bonds” (paid at age 18) as a means of simultaneously addressing the historical legacy of massively unequal wealth and alleviating constraints on upward mobility. being just one paycheck away from disaster. As Anthony Atkinson put it in his 2014 bookInequality: what can be done?, "There should be a capital endowment paid to everyone in adulthood... It could be argued that some degree of 'prudence' is prescribed in their use... Possible permissible uses could include education or training... Down payments on houses or apartments or starting a small business.”142

A strong demand side for the rise.This is an area that has long preoccupied South African policymakers and academics.143The demand side of upward mobility is primarily about job creation – by private and public actors in the informal and formal sectors. Survival jobs in the informal sector and temporary work, such as those offered by South Africa's Expanded Public Works Programme, offer few opportunities for career advancement. A major infrastructure boost can be an effective and productivity-enhancing tool for job creation and is likely to require significant additional public funding.

South Africa has also experimented with a variety of wage subsidy modalities to help transform subsistence employment into a viable path to upward mobility. This is to be expanded upon. Furthermore, in the context of a changing global economy, including in particular China's changing role in global supply chains, South Africa may have the opportunity to enter the global economy in new ways. In coastal regions with good port infrastructure and high unemployment, efforts should be made to accelerate the implementation of export zones, including tightening regulation within zones.

Legal protection compatible with growth and revenue growth.Additional resources are needed to implement the bold initiatives to accelerate upward mobility. In the South African context in particular, raising taxes is about more than just meeting fiscal needs. Given South Africa's legacy of extreme historical injustice, the country's "rainbow miracle" honeymoon and slow growth, the continued concentration of income and wealth at the top of the distribution is stirring up a sense of injustice to add. salt to an open wound. For similar historical reasons, redress is likely to include continued attention to the difficult challenges of land redistribution, an area in which the Ramaphosa government has acted with full knowledge of the facts and with due sensitivity to the dangers.

Notably, the country's tax level in 2018 was intermediate, despite nearly three decades of efforts to reverse South Africa's legacy of extreme historical injustice compared to other middle- and upper-income countries. At 38 percent, revenue collection as a percentage of GDP was above the United States (31 percent), similar to Australia (37 percent) and below Brazil (41 percent), Germany (46 percent) and Sweden (51 percent). Currently, marginal tax rates in South Africa are not disproportionately high and property taxes are relatively low. In its 2018 budget, South Africa raised its maximum inheritance tax from 20% to 25%. In contrast, the highest property tax rate in the United States consistently exceeded 50% from the mid-1930s through the early 2000s. Property taxes in South Africa are currently lower than in the United States. Clearly, South Africa has plenty of room for revenue growth – even more so given the country's history of accumulating and exploiting wealth.

While the dangers of increasing wealth taxation are obvious, there may also be a politically win-win dimension. In the first two decades of democracy, the reallocation of funds to the poor and the efforts of the BEE were the main means of dealing with the historical legacy of injustice in South Africa. The combination of increased attention to upward mobility along the lines described above, and increased taxation to fund opportunities, adds up to a large set of new, sufficient, and growth-compatible initiatives to seek redress for the country's historic legacy - perhaps as a more favorable solution a substitute for BEE and its unintentionally corrosive consequences.


ANCAfrican National Congress
THE BOOKafrican rainbow capital
ARMafrican rainbow minerals
BB-GOODBroad Black Economic Empowerment
BEEBlack Economic Empowerment (Program)
presidentManaging Director
HE WASCongress of South African Trade Unions
CSRChina Southern Railway
ECDearly childhood development
EFFFighter for economic freedom
EBRExpropriation without compensation
BIPgross domestic product
JSEJohannesburg Stock Exchange
MICmiddle income country
MPRDALaw on the Development of Mineral and Petroleum Resources
NAGELLimited new African investment
OECDOrganization for Economic Co-operation and Development
RDPReconstruction and Development Program
SOEstate company
TIMSSResearch on trends in math and science
UCUniversity of Cape Town
WGIGlobal governance indicator
WMCwhite monopoly capital


South Africa: When strong institutions and huge inequalities collide (24)

This article is the result of a research collaboration between the Carnegie Endowment for International Peace and the Nelson Mandela School of Public Governance at the University of Cape Town, focusing on the interactions between governance and development in Africa. The authors thank Carnegie for financial support; Tom Carothers, Faizel Ismail and Carlos Lopes for their valuable contributions; Kevin Foster and Thomas Van Huyssteen for research support; and Lori Merritt and Amy Mellon for their excellent editing and article design.

About the authors

Brian Levyteaches at the School of Advanced International Studies at Johns Hopkins University. He was the founding director of the Nelson Mandela School of Public Governance at the University of Cape Town. From 1989 to 2012, he worked at the World Bank, including as Head of the Secretariat responsible for implementing the World Bank Group's governance and anti-corruption strategy. He has published numerous publications on the interactions between institutions, political economy and development policy, including as the author ofworking with the grain(Oxford University Press, 2014) and as senior editor and contributing author ofThe governance and policy of basic education: a story of two South African provinces(Oxford University Press, 2018). He received his PhD in economics from Harvard University in 1983.

Alan Hirschis a professor at the Nelson Mandela School of Public Governance at the University of Cape Town (UCT) and was the founding director of the school from 2011 to 2019. Born in Cape Town and educated at UCT, the University of the Witwatersrand and Columbia, he has taught for First time at UCT and joined the South African Department of Trade and Industry in 1995. From 2002 to 2011, he led economic policy in the South African presidency, represented the president at the G20 and was co-chair of the G20 Development Working Group. Hirsch is a board member of the European Center for Development Policy Management, the International Advisory Board of the New Development Bank and the Economic Advisory Board of President Cyril Ramaphosa. He has been a visiting professor at Harvard Business School, a regular visiting professor at Maastricht University, director of research at the International Growth Center in Zambia, a member of the OECD's Inclusive Growth Advisory Panel, and a Bradlow Fellow at the South Africa Institute for International Affairs. His published works includeSeason of Hope: Economic Reform Under Mandela and Mbeki(University of KwaZulu-Natal Press, 2005) andDer Oxford Companion to the Economics of South Africa(Oxford University Press, 2015).

Vinothan Naidooteaches Public Policy and Public Administration at the University of Cape Town. He has a multidisciplinary background with degrees in history, political science and public administration and has published on a wide range of topics related to the South African public service. These issues include public sector reform, political-administrative relations, anti-corruption, policy implementation, monitoring and evaluation, and intergovernmental relations. He has contributed to many applied research projects for South African and international organizations over his twenty-year career, serving as a private sector consultant, public sector think tank and university official. He received his PhD in Public Administration from the University of Cape Town in 2008.

Do not leaveteaches Political Economics of Development at the Nelson Mandela School of Public Governance at the University of Cape Town. He is pursuing a joint PhD in economic and development policy and practice at the Université de Paris 1 Panthéon-Sorbonne and the University of Cape Town. He also holds a master's degree in economic development and globalization from both universities. His research focuses on the political economy of industrial development and investment. Before moving on to university teaching in 2017, Nxele worked in the private sector in investment banking and industrial development consultancy. He dedicates his life to transforming people and societies, fueled by hope and the incredible history of his hometown of Soweto.


1Larry Diamante,The Spirit of Democracy: The Struggle to Build Free Democracies Around the World(New York: Times Books, 2008), 372. Data refer to countries with more than 1 million inhabitants.

2Larry Diamante,Sick Winds: Saving Democracy from Russian Rage, Chinese Ambition, and American Complacency(Nova York: Penguin Press, 2019), 54.

3In this article, the lowercase letters of "white" and "black" reflect current style preferences for racial terms in South Africa.

4Albert Hirschmann and Michael Rothschild, "The Changing Tolerance of Income Inequality as Economic Development"Quarterly Journal of Economics87, FEMALE. 4 (1973): 545.

5Ibidem, 552.

6Albert Hirschman, „The Turn to Authoritarianism in Latin America and the Search for Its Economic Determinants“, em David Collier, ed.,The new authoritarianism in Latin America(Princeton, NJ: Princeton University Press, 1980), 88.

7John Maynard Keynes, "The General Theory of Employment",Quarterly Journal of Economics51, nº. 2 (1937): 209.

8Ibidem, 210.

9Veja, por exemplo, Dani Rodrik, “When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations,”Journal of Economic Perspectives28, No. 1 (2014): 189–208; Sharun Mukand and Dani Rodrik, “The Political Economy of Ideas: On Ideas versus Interests in Policy Making”,NBER working papers series,not. 24467 (2018): 1-40; north douglas,Understand the process of economic change(Princeton, NJ: Princeton University Press, 2005); and World Bank,World Development Report 2015: Mind, Society and Behavior(Washington DC: Banco Mundial, 2015).

10Rodrik, „When Ideas Outweigh Interests“, 189–190.

11African National Congress,The Reconstruction and Development Program: A Policy Framework(Joansburg: Umayamo Publishers, 1994).

12douglas north,Institutions, institutional change and economic performance(Nova York: Cambridge University Press, 1991), 5.

13Italy was at the 78th percentile and France at the 86th percentile.

14Weltbank, Global Governance Indicators,

fifteenFernando Bizzarro, Allen Hicken und Darin Self, „The V-Dem Party Institutionalization Index: A New Global Indicator (1900–2015) (1. Mai 2017)“, V-Dem Working Paper 2017, 48,

16Tim Kelsall, Nicolai Schulz, William Ferguson, Matthias vom Hau, Sam Hickey and Brian Levy,Understanding Development: The Promise of Political Regulations(Oxford: Oxford University Press, 2021, no prelo); e Tim Kelsall e Matthias vom Hau, "Beyond Institutions: Political Settlements Analysis and Development",IBEI working document56, University of Barcelona, ​​​​​​​​2020,🇧🇷 Influential contributors include Douglass North, John Wallis and Barry Weingast,violence and social order(Nova York: Cambridge University Press, 2009); Douglass North, John Wallis, Barry Weingast e Stephen Webb (eds.),In the Shadow of Violence - The Problem of Development in Restricted Access Societies(New York: Cambridge University Press, 2013); Mushtaq Khan, „Political Settlements and the Governance of Growth Enhancing Institutions“, 2010,; Daron Acemoglu e James A. Robinson,Why Nations Fail(Nova York: Crown Books, 2012); Willian Ferguson,The political economy of collective action, inequality and development(Palo Alto, California: Stanford University Press, 2020); World Bank,World Development Report 2017: Governance and Law(Washington, DC: Banco Mundial, 2017); e Brian Levy,Working with the grain: integrating governance and growth into development strategies(Nova York: Oxford University Press, 2014).

17For comparison, the corresponding figure for 2015 in the United States was 77%.

18Pádraig Carmody (2002), quoted in Martin Plaut and Paul Holden,Who governs South Africa?(Londres: Biteback Publishing, 2012), 256–257.

19Para uma análise detalhada, consulte Brian Levy, Alan Hirsch e Ingrid Woolard, "Governance and Inequality: Benchmarking and Interpreting South Africa's Evolving Political Settlement",Effective states and inclusive development, nº. 51 (2015).

20For a definitive analysis of the roots of inequality in the apartheid economy of South Africa, see Jeremy Seekings and Nicoli Nattrass,Class, race and inequality in South Africa(London: Yale University Press, 2005). Jeremy Seekings and Nicoli Nattrass examine the evolution of the balance between continuity and change in South Africa's class structure during the first two decades of democracy; see Jeremy Seekings and Nicoli Nattrass,Politics, politics and poverty in South Africa(Londres: Palgrave Macmillan, 2015).

21Note that, in Hirschman's (1973) account, the asymmetries between political and economic power are not necessarily apparent early in the cycle, but are fueled by a subsequent period of rapid and uneven growth. In contrast, strong asymmetries have existed in South Africa since the beginning of the democratic political settlement.

22Alan Hirsch,Season of Hope: Economic Reform Under Mandela and Mbeki(Pietermaritzburg: University of KwaZulu-Natal Press, 2005, 1st edition).

23Hirsch,Season of Hope: Economic Reform Under Mandela and Mbeki, 1.

24Oliver E. Williamson, "The New Institutional Economics: Taking Stock, Looking Ahead",Business Literature Magazine38,WOMAN 3 (2000): 595–613.

25Elinor Ostrom, "Collective Action and the Evolution of Social Norms",Journal of Economic Perspectives14, FEMALE. 3 (2000): 137–158.

26Policy Coordination and Advisory Services, "Towards a 10-Year Review: Synthesis Report on the Implementation of Government Programs", Präsidentschaft, Republik Südafrika, October 2003,

27Alan Hirsch e Brian Levy, “Elaborate Scaffolding, Weak Foundations: Business-Government Relations and Economic Reform in Democratic South Africa“,Effective states and inclusive development, nº. 105 (2018): 111.

28North and ai.violence and social order🇧🇷 Merilee S. Grindle, „Good Governance, R.I.P.: A Critique and an Alternative“,guide30, nº. 1 (2016),; and Lant Pritchett, Kunal Sen and Eric Werker,Business and development: the political dynamics of growth episodes(Oxford: Oxford University Press 2018).

29Paul Taylor, "A Black Success Story in Brewing in South Africa",Washington Post, July 21, 1993

30Hirsch,Season of Hope: Economic Reform Under Mandela and Mbeki.

31Ewan Sutherland, "MTN: A South African Mobile Telecommunications Group in Africa and Asia",South African journal of communication theory and research41, FEMALE. 4 (2015): 471–505.

32Securities and Exchange Commission, "Annual Report under Section 13 of the Securities Exchange Act of 1934 for the year ended June 30, 2004," Form 20-F, Commission File Number 001-31545, 2004,

33"AngloGold announcement expected on Tuesday",Courier and Responsible, November 25, 1997.

34Susan Adams, "The Prince of Mines"Forbes, March 6, 2008

35“Motsepe says he lost R500m at Modikwa platinum mine”LIO, October 10, 2004,

36"Empowerment Meets Gold"LIO, May 17, 2002,

37Adams, "The Prince of Mines".

38"Annual Report 2008", African Rainbow Minerals, 2008,

39“Sustainability Report 2011”, African Rainbow Minerals, 2011,

40Dewald Van Rensburg, "JSE list - a little steel goes a long way",city ​​press, August 27, 2017,

41Matt Andrews: “Is BEE a catalyst for South African growth? (Or it could be...)”, prepared for the South African government as part of the International Growth Panel initiative, September 2007,ÖNNTE%20IT% 20BE).pdf.

42African National Congress, „National Empowerment Policy“, 50. Nationale Konferenz des African National Congress, Mafikeng, Südafrika, 1997; and African Communist, „Inequality is no longer just a matter of race“, Politicsweb, February 16, 2017,

43Roger Tangri and Roger Southall, “The Politics of Black Economic Empowerment in South Africa“,Journal of South African Studies34, nº. 3 (2008): 699–716.

44For details see Hirsch,Season of Hope: Economic Reform Under Mandela and Mbeki🇧🇷 Tangri and Southall, "The Politics of Black Economic Empowerment in South Africa"; Jabulile Mpanza, “B-BBEE and its impact on the South African construction industry”, University of Cape Town, 2016,; Plaut from HoldenWho governs South Africa?; e Ross Harvey, „Between a Rock and a Hard Place: State-Business Relations in the Mining Sector“,New South Africa Review 5: In addition to Marikana,Capítulo 5, Witwatersrand University Press, 2015.

45Hirsch,Season of Hope: Economic Reform Under Mandela and Mbeki, 221. The chairman of the commission was Cyril Ramaphosa, a senior ANC figure and business leader who would later become president.

46For the citation, information from Citigroup, and more detail on the challenges of implementing the MPRDA, see Harvey, "Between a Rock and a Hard Place: State-Business Relations in the Mining Sector."

47“South African Supreme Court Ruling: Once Authorized, Always Authorized”, Mining Review Africa, 5 April 2018,

48Giada Masina, Allan Reid e Ben Cripps, "Minister Publishs Draft Amendments to MPRDA Regulations", Mining and Minerals Alert, Cliffe Dekker Hofmeyr, 4 de dezembro de 2019,

49Almost all negotiators who were not already senior industry executives were later appointed non-executive directors to the boards of major construction companies.

50Mpanza, "B-BBEE and its impact on the South African construction industry."

51“South African construction companies fined $140 million for price fixing,” Global Construction Review, June 26, 2013,

52Open Secrets & SWI, "Arms Deal: The BAE Corruption Bomb",daily misfit, July 29, 2020

53North Gauteng High Court, „In the High Court of South Africa/Es (North Gauteng High Court, Pretoria)“, CASE n. 2263/06, July 30, 2009,

54Public Protector South Africa, “Report on an inquiry into an allegation of misconduct by the former Chairman of the Board of Directors of Eskom Holdings Limited, Mr. V. Moosa, in connection with the award of a contract”, Report No. 30 of 2008/9, Public Protector of South Africa, 2009,

55Simpiwe Piliso, "How ANC Bigwigs Lobbyed for Telekom",sunday schedule, October 15, 2006; and Simpiwe Piliso, "ANC defends role of the State in telecommunications agreement",sunday schedule, October 15, 2006.

56"Vodacom: The ANC's Elephant Hunt",Courier and Responsible, May 25, 2009,

57Zweli Mokgata, “Vodacom moves forward with empowerment deal”, Sowetan Live, April 1, 2008,

58Hirsch und Levy, „Elaborate Scaffolding, Weak Foundations“, 26.

59Carnegie Corporation de Nova York, "Carnegie Corporation in South Africa: A Difficult Past Leads to a Commitment to Change", Carnegie Results, Winter 2004.

(Video) 26th Congress: Invited Panel: The annihilation of democracy

60Given the huge inequality in South Africa, the median per capita income is in the 20th to 25th percentile of the distribution and therefore well above the median. South Africa is also a MIC, with a per capita income about one-fifth that of high-income countries. Its average per capita income is well below what would be perceived as middle class in high-income countries.

61In constant 2010 dollars. In current 1994 US dollars (at prevailing exchange rates), 1995 per capita income was closer to $4,000.

62Measuring middle-class expansion in this way is of similar magnitude to Roger Southall's estimates; see Roger Southall, “The Black Middle Class and Democracy in South Africa,”Journal of Modern African Studies52, FEMALE. 4 (2014): 647–670.

63This was described in the National Treasury's "2019 Medium Term Budget Policy Statement" as "a consistent upward trend in the distribution of personnel by grade".

64National Treasury, „Declaration of Medium-Term Budget Policy 2019“.

65Salaries for highly skilled frontline public sector workers are generally between levels 6 and 8 – therefore, the increase in the share of jobs in levels 9-11 is generally consistent with an increase in managerial levels.

66Department of Civil Service and Administration; South African Government Employee Salary Database; and Public Service Commission, "State of the Public Service 2006: Assessment the Capacity of the State to Deliver", Pretoria, 2006 The year 2009 is also evident in the data contained in the National Treasury, "Medium Term Budget Policy Statement 2019", for be presented.

67National Treasury, Budget Review, various years; Medium-Term Fiscal Policy Statement, 2018 (salary data); and OECD, “OECD Economic Surveys: South Africa”, 2020.

68International Monetary Fund, International Financial Statistics online database, various years.

69As reported in the OECD, “OECD Economic Surveys: South Africa”, 2020.

70National Treasury, “2019 Medium Term Budget Policy Statement”, October 30, 2019. The data showed a continuation of this trend in 2017/18. The OECD also cited wage increases, rather than job growth, as the main driver of government spending; see OECD, “OECD Economic Surveys: South Africa”.

71Robert Cameron, "Recent Public Management Reforms in the South African Civil Service: 1999-2009",Journal of Public Administration44, No. 4.1 (2009): 910–942; and V. Naidoo, "Changing Conceptions of Public 'Management' and Public Sector Reform in South Africa",International Public Management Review16, FEMALE. 1 (2015): 23–42.

72Joel Pearson und Thatshisiwe Ndlovu, „‚I am not applying law anymore‘: human resource practices in state institutions: perspectives of public servants“,Working Document5, Public Affairs Research Institute, 2018; and Public Service Commission, "Recruitment, Retention, Career Path and Use of Experience and Skills of Senior Management Service Members in the Public Service", Public Service Commission, 2017.

73Between 1996 and 2017, WGI measurements for Brazil and Mexico also declined; those in Thailand and Turkey remained broadly stable.

74Parliamentary Consultative Group, “Public Service Commission: Building a Professional Public Service; administration of terminations and pension payments; Public Service Regulations 2015,” Transcript of the Meeting of Administration and Civil Service, Performance Monitoring and Evaluation Commission and National Assembly, November 9, 2016.

75Ryan Brunette, „Position Paper on Namement and Removal in the Public Service and Municipalities“, Position Papers on State Reform, Public Affairs Research Institute, abril de 2020,, 12.

76Auditor General of South Africa, “Auditor General Kimi Makwetu Announces National and Provincial Audit Results”, 21 November 2018,

77Brunette, "Position paper on appointment and dismissal in civil service and local authorities", 15.

78V. Naidoo, „Policy Transition and Mechanism of Governmental Change in South Africa“,Journal of South African Studies45, FEMALE. 3 (2019): 575–595.

79G. Van Onselen, „Political Musical Chairs: Turnover in the National Executive and Administration since 2009“, South African Institute of Race Relations, September 27, 2017.

80Brunette, "Policy Paper on Appointments and Dismissals in Civil Service and Municipalities." The phenomenon of "state capture", which refers to corrupt relationships between politicians, high-ranking officials and business leaders, emerged under Zuma's presidency and came under investigation by the South African Public Protector in 2016. of inquiry of the Presidential Committee.

81National Treasury, „2019 Medium-Term Budget Policy Statement – ​​Based on Consolidated Expenditures of National and Provincial Departments, 2018/19“; and National Treasury, „Municipal Aggregate/Consolidated Information 2018 MTREF“.

82Department of Basic Education, “Report of the Ministerial Task Force Appointed by Minister Angie Motshekga to Investigate Allegations of Sale of Tutoring Positions by Members of Teachers Unions and Department Officials in Provincial Departments of Education: 2016 Final Report.”

83Hirschman und Rothschild, "The Changing Tolerance for Income Inequality in the Course of Economic Development", 551.

84Hello Marais,South Africa pushed to the limit: the political economy of change(Londres: Zed Books, 2011), 363–64, 375, 378–79.

85Thabo Mbeki was forced by the now dominant Zuma faction of the ANC to resign as the country's president in September 2008. Kgalema Motlanthe was president from Mbeki's resignation until Zuma took office after the 2009 elections.

86Brian Levy, „Commanding Heights: The Governance of State Enterprises in South Africa“, in Haroon Bhorat, et al.,Der Oxford Companion to the Economics of South Africa(Oxford: Oxford University Press, 2014).

87Weltbank, "Second Hand Visible: The SOE Corporate Governance Challenge for Emerging Markets", Washington, DC, 1. May 2006, 9, 13–14, 16, 21.

88Republic of South Africa, Public Protector of the State of Capture, "Report No. 6 of 2016/17", 2016,, 91.

89Its ten authors represent a 'who's who' of renowned South African scholars working in the field of public policy. An edited version of the book was published in 2018, authored by Ivor Chipkin and Mark Swilling "with" the other authors. Other prominent scholars in the top ten include Haroon Bhorat, Mbongiseni Buthelezi and Mzukisi Qobo. Quotations and references in the work are by Ivor Chipkin and Mark Swilling, with H. Bhorat, M. Buthelezi, S. Duma, N. Prins, L. Mondi, P. Camaren, M. Qobo, H. Friedenstein,Shadow State: The Politics of State Conquest(Joanesburgo: Wits University Press, 2018).

90chipkin e swilling,state of the treasure, 31–32, 36–37.

91The Zupta network is the focus here because it was the most researched, received the most media attention, and is generally considered to have the strongest impact. However, the evidence also suggests that, even setting aside individual acts of corruption, other networks operated independently of the Gupta family. An important loose network that was not entirely separate from the Guptas was the "first league": the Prime Ministers of the Free State (Ace Magashule), Northwest (Supra Mahumapelo) and the Prime Minister of Mpumalanga, David Mabuza. The Mvelaphanda group of former Prime Minister of Gauteng and Cabinet Minister Tokyo Sexwale forms another network.

92chipkin e swilling,state of the treasure, 25, 92. This article reports most transaction amounts in South African Rand; between 2010 and 2017, the exchange rate ranged from R8 to R17 per dollar. In October 2016, Finance Minister Pravin Gordhan submitted an affidavit showing how R6.8 billion in "suspicious and unusual" transactions may have contributed to the [South Africa's Big Four] banks' decision to grant accounts linked to the Gupta family closed.

93Other well-documented examples include the Passenger Railway Authority of South Africa, where a R51 billion purchase contract for new passenger carriages from a consortium led by a Spanish company resulted in the delivery of thirteen carriages configured to be rendered unusable in the South African rail system. (Chipkin and Swilling,state of the treasure, 68–71); South African Airways, where a low-cost buy/lease of twenty Airbus A320s was abandoned at the last moment to proceed with an alternative deal that added R1.9 billion to the cost to South Africa (Chipkin and Swilling,state of the treasure, 67–68); and Denel, who claimed that during contentious negotiations with the Gupta-affiliated joint venture Denel Asia (Chipkin and Swilling,state of the treasure, 88–90), the Guptas attempted to sell Denel's intellectual property to India while diluting the company's share by half.

94Details of the Transnet saga come from Chipkin and Swilling'sstate of the treasure, plus additional research support conducted by Thomas Van Huyssteen under the direction of Musa Nxele.

95For the previous two years, Transnet's CEO role had been filled on an interim basis following the resignation of Mbeki loyalist Maria Ramos.

96Gama was actually Zuma's preferred choice as CEO in 2010/2011; In fact, the immediate reason for Barbara Hogan's resignation was his refusal to agree to her nomination.

97Alongside Transnet's locomotive business, the South African Passenger Railway Authority was involved in the acquisition of a R123 billion fleet of passenger trains. While the international partner in the deal was revealed to be a Spanish company, the CEO, Lucky Montana, sent a letter to its board in 2012, reporting that "in numerous meetings, the Guptas, Duduzane Zuma and their associates allegedly pressured the exercise of the then Minister of Ben Martins and Montana Transport in favor of [CSR]”; see chipkin and swilling,state of the treasure, 68. The overall contract for the remaining locomotives was divided between four companies: CSR, Bombardier, General Electric and China North Rail.

98chipkin e swilling,state of the treasure, 74. In 2016, VR Laser played a key role as a joint venture partner in a later aborted initiative (after critical media coverage) by South African defense company SOE, Denel, to restructure its operations in Asia. The deal between VR Laser and Denel gained momentum shortly after then Public Enterprises Secretary Lynne Brown radically restructured Denel's board and the new board quickly replaced Denel's respected CEO, CFO and company secretary (Chipkin and swellstate of the treasure, 89).

99This material is derived primarily from Catrina Goudinho and Lauren Hermanus, "(Re)conceptualizing State Capture—With a Case Study of South African Power Company Eskom," prepared for the Public Affairs Research Institute research conference on State Capture and Its Aftermath: Building Responsiveness Through State Reform, Johannesburg, 22-24. October 2018; and Anton Eberhard and Catrina Goudinho, "Eskom Research Reference Book: A Research Resource for Public Enterprises of Parliament, Civil Society, Journalists and Engaged Citizens", State Capacity Research Project, Graduate School of Business, University of Cape Town and Public Affairs Research Institute, August 2017. The material also draws on the analysis of the political economy of decision-making in the electricity sector in Nchimunya Hamukoma and Brian Levy, "When the Quest for Electricity Reform and the Need for Investment Collide: South Africa , 1998–2004", in Nuno Gil, Anne Stafford and Innocent Musonda (eds.),Duality by Design: The Global Race to Build Africa's Infrastructure(Cambridge: Cambridge University Press, 2019), 69–96.

100Goudinho und Hermanus, „(Re)conceptualizing State Capture“, 16.

101Eberhard and Goudinho, "Eskom Inquiry Reference Book", 12.

102Details are from Chipkin and Swilling,state of the treasure, 84–87; also Eberhard and Goudinho, "Eskom Inquiry Reference Book", 14-19.

103Eberhard and Goudinho, "Eskom Inquiry Reference Book", 16.

104Goudinho und Hermanus, „(Re)conceptualizing State Capture“, 22.

105chipkin e swilling,state of the treasure, 86.

106Perhaps not by chance, one of the first major investments made by the Gupta family alongside Duduzane Zuma in 2010 was the purchase of the then-Canadian mine Uranium One.

107Andrew Weiss and Eugene Rumer, "Nuclear enrichment: Russia's ill-fated influence campaign in South Africa",” Carnegie Endowment for International Peace, December 16, 2019,, 11.

108Republic of South Africa, Public Protector of the State of Capture, “Report No. 6 of 2016/17”.

109Sharon Mukand and Dani Rodrik, „The Divided Public Heart“, Aeon, June 6, 2018,

110Hirschman und Rothschild, "The Changing Tolerance for Income Inequality in the Course of Economic Development", 557.

111Thabo Mbeki's 'I am an African' speech to Parliament in May 1996 on the approval of a new constitution in South Africa is another strong statement in the same vein.

112As reported in the 2016 Teaching and Learning Report of the University of Cape Town, the ethnic composition of UCT's undergraduate student body in 2015 was 27 per cent SA (South Africans) black, 14.4 per cent SA (South African) SA, 7.4 percent. SA Indian, 29% SA White, 14.5% International and 7.6% Unknown.

113Rekgotsoftesses Harassment,Breaking a Rainbow, Building a Nation: The Politics Behind #MustFall Movements(Johannesburg: Picador Africa, 2019), 99, 105, 110.

114Mukand and Rodrik, "The Political Economy of Ideas", 2.


116Mukand and Rodrik, "The Shared Public Heart". According to Mukand and Rodrik, “A meme is a combination of cues, narratives, symbols, or indeed any type of communication, disseminated by the political entrepreneur in such a way that exposure to it changes views about how the world works or emphasizes a identity. Memes are the concrete vehicle that channels the ideas developed by the politician into the political marketplace.”

117“Economic Freedom Fighters Founding Manifesto”, Politicsweb, 25 de julho de 2013.🇧🇷 and "Malema: It's an EFF Revolution", News24, July 11, 2013,

118"Full report alleged on Bell Pottinger's Gupta PR scheme," The Citizen, April 4, 2017,

119Bernice Maune e Batandwa Malingo, "Zuma Tells Us Why 'White Monopoly Capital Is a Fact, Not an Offense'", The Citizen, 13 de novembro de 2017,

120"Agrarian Reform: Zuma's Steps to Expropriation Without Compensation",city ​​press, March 31, 2017,

121Marianne Merten, "#ANCdecide2017: Land expropriation without compensation makes a big entrance",daily misfit, December 21, 2017,

122One of several reasons for slow job creation was the way politically influential union workers protected their positions through restrictive labor market policies.

123Labor Justice Commission, several years.

124Ricardo Calland,The Zuma Years: The Changing Face of Power in South Africa(Cape Town: Random House Struik, 2013), Chapter 11. "The Judges" (Loc. 5903-6401) describes the fears of many at the time of Chief Justice Mogoeng's appointment.

125Reporters Without Borders, World Press Freedom Index 2020, accessed July 9, 2020.

126Alexander Winning and Emma Rumney, "South African Police Issue Arrest Warrant Against Senior ANC Official Magashule",world news Reuters, November 10, 2020,🇧🇷 and Pieter du Toit, "Leading UN Advocate, Former Scorpio Among High-Level NPA Appointments Announced by Ramaphosa"news 24, January 14, 2021,

127Hirschman, “The turn to authoritarianism in Latin America and the search for its economic determinants”, 88.

128Doris Kearns Goodwin,Leadership: In turbulent times(Nova York: Simon & Schuster, 2018).

129Our World in Data, "South Africa: Coronavirus Country Profile", accessed 21 February 2021.

130Siphelele Dludla, “National Debt Rises to R3.7 Trillion, Says Reserve Bank,” IOL, 16 Dec 2020,


132Bureau for Economic Research, "Beeld Consensus: Monthly Survey of Leading South African Economists Who Forecast Key Macroeconomic Variables", Faculty of Economic and Management Sciences, University of Stellenbosch, South Africa, December 2020, https://www.ber. B.C. za/BER%20Documents/Beeld-Consensus/?doctypeid=1044.


134Republik Südafrika, „Election Commission on the Results of By-elections held on December 9, 2020“, December 10, 2020,

135From forty-one to forty-nine nurses per 10,000 inhabitants. See Salimah Valiani, "Public Health Care Spending in South Africa and the Impact on Nurses: 25 Years of Democracy?"Agenda33, nº. 4 (2019): 67–78.

136This contrasted with the “fairly well/very well” response.

137SANRAL, "Frequently Asked Questions about SANRAL", October 15, 2019,

138South Africa Survey Round 2 2002/2003 and Round 7 2016/2018,

139South Africa Statistics, General Household Survey, 2002-2017 data.

140National Treasury expenditure tables for local governments, various years. Spending on water peaked in 2014/2015, showing a more modest pattern of increases for sanitation. The difference was particularly large between 2010/2011 and 2013/2014 before reversing in favor of a small increase in employee-related costs compared to contract benefits.

141Brian Levy, Robert Cameron, Ursula Hoadley e Vinothan Naidoo (Hrsg.),Basic education policy and governance: a story from two South African provinces(Oxford: Oxford University Press, 2018), 281. For details, see National Planning Commission, “National Development Plan, 2030: Our Future — Making It Work”, Republic of South Africa, Presidency, 2012.

142Anthony Atkinson,Inequality: what can be done?(Cambridge: Harvard University Press, 2015), 170–172.

(Video) "African Urban Fantasies: Dreams or Nightmares?" | Vanessa Watson | Clarkson Chair in Planning

143For some recent contributions, see Anthony Black (ed.), Towards job-intensive growth in South Africa(Cape Town: University of Cape Town Press, 2016); and Nicoli Nattrass and Jeremy Seekings,Inclusive Dualism: Labour-Intensive Development, Decent Work and Surplus Labor in South Africa(Oxford: Oxford University Press, 2019).

Carnegie does not take institutional positions on public policy issues; The views expressed herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its employees or its trustees.


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What is the impact of inequality in South Africa? ›

High levels of inequality and low intergenerational mobility act as a brake on poverty reduction and as a result poverty is high for an upper middle-income country. Poverty is consistently highest among black South Africans, the less educated, the unemployed, female-headed households, large families, and children.

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  • South Africa is in the midst of an energy crisis that is causing great hardship;
  • A spate of violent crimes is heightening fear and insecurity in communities;
18 Jul 2022

What is the biggest issue facing South Africa today? ›

According to a Public opinion survey in South Africa, the common issues in the state are Unemployment, Corruption, and crime.

What are the three main causes of inequality? ›

  • A Poverty and lack of resources.
  • B Treating others without any dignity.
  • C Discrimination on the basis of caste and gender. Poverty and social discrimination are the main reasons for inequality. Poverty would lead to denial of access to the resources.

What are the biggest causes of inequality? ›

Key factors
  • unemployment or having a poor quality (i.e. low paid or precarious) job as this limits access to a decent income and cuts people off from social networks;
  • low levels of education and skills because this limits people's ability to access decent jobs to develop themselves and participate fully in society;

How does inequality affect the economy of South Africa? ›

High unemployment rate in South Africa has also resulted in discouraging many people from seeking employment because of prolonged labour market slump, with the youth being heavily affected. Thus, a high unemployment rate subsequently leads to high levels of poverty and inequality.

What happens to society when inequality increases? ›

Economic. Less equal societies have less stable economies. High levels of income inequality are linked to economic instability, financial crisis, debt and inflation.

What problems does inequality cause for society? ›

Their research found that inequality causes a wide range of health and social problems, from reduced life expectancy and higher infant mortality to poor educational attainment, lower social mobility and increased levels of violence and mental illness.

What are the major social issues in South Africa? ›

Key issues
  • Energy actions.
  • Water.
  • Coronavirus / Covid-19.
  • Economic Reconstruction and Recovery.
  • Job creation.
  • Rural development.
  • Fighting crime.
  • Gender-based violence.

What are some conflicts in South Africa? ›

List of wars involving South Africa
ConflictSouth Africa and alliesLosses
South African Border War (1966–1989)South Africa Portugal UNITA FNLA2,038 dead
Natal Civil War (1987–1994)IFPUnknown
Operation Boleas (1998)South Africa Botswana11 dead
Battle of Bangui (2013)South Africa Central African Republic15 dead
12 more rows

What are South Africa's weaknesses? ›

Expensive cost of living despite an all-time high unemployment rate. Although Africa is known to have a low cost of living, South Africa suffers from a weakness: being one of the most expensive areas in the continent. It's still more than 40% less expensive than living in the United States.

What is the current state of inequality in South Africa? ›

South Africa, the largest country in SACU, is the most unequal country in the world, ranking first among 164 countries in the World Bank's global poverty database.

What is the most violated human right in South Africa? ›

“The right to equality is based on unfair discrimination. There are various grounds for unfair discrimination in South Africa and we have found that the right to equality, on the basis of race, has been the most violated human right,” she explains.

What are the triple challenges in South Africa? ›

Inequality, poverty, and unemployment are interdependent socio-economic phenomena labelled the 'triple challenge' in South Africa.

How can we reduce inequality in South Africa? ›

Broad-based growth that generates more low-skilled jobs for the unemployed will support inequality reduction. High unemployment is a major factor behind the inequality levels. South Africa's unemployment rate is significantly higher than in other emerging markets, with youth unemployment exceeding 50 percent.

What are 3 possible solutions for the inequality? ›

Add (or subtract) a number from both sides. Multiply (or divide) both sides by a positive number. Simplify a side.

How do you solve an inequality? ›

When solving an inequality: • you can add the same quantity to each side • you can subtract the same quantity from each side • you can multiply or divide each side by the same positive quantity If you multiply or divide each side by a negative quantity, the inequality symbol must be reversed.

What are 3 examples of inequality in society today? ›

20 Facts About U.S. Inequality that Everyone Should Know
  • Wage Inequality. ...
  • CEO pay. ...
  • Homelessness. ...
  • Education Wage Premium. ...
  • Gender Pay Gaps. ...
  • Occupational Sex Segregation. ...
  • Racial Gaps in Education. ...
  • Racial Discrimination.

What are the main causes of social inequality in our country? ›

The causes of social inequality include society's acceptance of roles, stereotyping, social organization by class (or class systems) and economic disparity, as well as legislation and political inequality.

What are the 3 types of inequality? ›

There are three main types of economic inequality:
  • Income Inequality. Income inequality is the extent to which income is distributed unevenly in a group of people. Income. ...
  • Pay Inequality. A person's pay is different to their income. Pay refers to payment from employment only. ...
  • Wealth Inequality.

How does inequality affect economic growth and development? ›

In particular, a higher level of inequality can result in less investment in human capital by lower-income individuals if, for example, there is no suitable state system of education or grants.

What are the biggest challenges of economic growth in South Africa? ›

Despite its natural wealth, the country nevertheless faces a number of socio-economic challenges, which include high unemployment, poverty, social inequality, and limited access to public services. These difficulties continue to engulf South Africans and have an impact quality of life and economy collectively.

Why is inequality a problem for the economy? ›

High levels of economic inequality may lead to lower economic growth and can have negative social and political impacts. Recent empirical research shows that income and wealth inequalities in Eastern Europe since the fall of socialism increased significantly more than previously suggested.

How does equality effect society? ›

The equality effect can appear magical. In more equal countries, human beings are generally happier and healthier: there is less crime, more creativity, more productivity, more concern over what is actually being produced, and – overall – higher real educational attainment.

What is the impact of inequalities to human development? ›

Not all inequalities are harmful, but those that are perceived as being unfair tend to be. Under the shadow of sweeping technological change and the climate crisis, those inequalities hurt almost everyone. They weaken social cohesion and people's trust in government, institutions, and each other.

How does inequalities contribute to poverty? ›

Inequality is important to poverty because the relative position of individuals or households in society is considered an important aspect of their welfare (Coudouel et al., 2002).

What government can do to reduce social inequality? ›

Redistribution. Redistributive policies can curb labor income inequalities. Direct taxes and transfers jointly reduce income inequality by more than one-third in advanced economies. However, in emerging market economies the extent of redistribution is much smaller.

What was the major conflict in South Africa? ›

South African War, also called Boer War, Second Boer War, or Anglo-Boer War; to Afrikaners, also called Second War of Independence, war fought from October 11, 1899, to May 31, 1902, between Great Britain and the two Boer (Afrikaner) republics—the South African Republic (Transvaal) and the Orange Free State—resulting ...

What are the most serious problems in South Africa today and why? ›

These include reports about corruption and mismanagement in government, significant unemployment, violent crime, insufficient infrastructure, and poor government service delivery to impoverished communities; these factors have been exacerbated by the Covid-19 pandemic.

What are the top 5 most violated rights in South Africa? ›

The top five most violated human rights in South Africa are: Equality (749 complaints) Unfair labour practices (440 complaints) Ongoing lack of access to health care, water, food, and social security (428 complaints)

What causes conflicts in South Africa? ›

Conflicts in Africa may be said to have been caused by a multiplicity of factors such as: arbitrary borders created by the colonial powers, heterogeneous ethnic composition of African states, inept political leadership, corruption, negative effect of external debt burden and poverty.

Why conflict is popular in South Africa? ›

The domestic strife in South Africa between ruling whites and subordinated blacks threatens to become a major conflict of violent dimensions in the African continent. This strife is primarily a consequence of racial policies promulgated by the white apartheid regime.

What are the root causes of conflict in Africa? ›

The reasons defer from conflict to conflict, but the main causes are colonization, ethnicity, corruption, and poverty (Bujra, 2002). The negative impact of wars and conflicts on 'Africa's socio-economic development has been followed by severe environmental degradation (Aremu, 2010) . ...

What should South Africa improve? ›

The latest OECD Economic Survey of South Africa says that improving the tax system and reducing spending inefficiencies would help to put public finances on a more sustainable path, while taking action to revive productivity growth would help to revive GDP growth and raise living standards.

What is the greatest strength of the South Africa? ›

  • Regional power with a large, youthful population.
  • Rich in natural resources (gold, platinum, coal, chromium, rare metals etc.)
  • Developed financial market.
  • Floating exchange rate regime, central bank independence.
  • Healthy banking system.
  • Public debt mostly in rand and long maturity (12 years on average)

Why is South Africa's economy under threat? ›

“Government faces large spending pressures, including the risk of higher‐than‐budgeted public‐service wages, demands for additional funding from financially distressed state‐owned companies, and calls for permanent increases in spending that exceed available resources.

Which country has the greatest inequality? ›

Typically, developing countries are characterized by greater inequality than developed countries. However, there are exceptions to this rule: in some developed countries, such as the United States and Russia, the Gini coefficient is generally high.
Wealth Inequality by Country 2022.
CountryGini Index2022 Population
139 more rows

What country violates human rights the most? ›

In 2017, South Sudan ranked last for Human Rights Protection, followed by Syria, Sudan, and Myanmar.
Countries with lowest Human Rights Protection Scores as of 2017.
CharacteristicHuman rights score
South Sudan-2.59
9 more rows
13 Aug 2021

What are three main causes of human rights violations in South Africa? ›

Corruption, poverty, high unemployment, and violent crime significantly restricted South Africans' enjoyment of their rights.

How is the right to equality being violated in South Africa? ›

The right to equality remains the right most frequently litigated by the Commission in the Equality Courts. Most of these cases involve the use of the “k-word” and other derogatory comments with racial undertones, such as use of the terms “baboon” or “monkey”.

What are 5 top challenges facing Africa today? ›

All of these features made the continent face the hardest challenges in the world.
  • Poverty. ...
  • Poor Education. ...
  • Ill Health. ...
  • Violence. ...
  • Hunger. ...
  • Sustainable agriculture, nutrition and food security. ...
  • Access to financing. ...
  • Economic growth rate is far too low.
5 May 2016

What is the chaos in South Africa? ›

The 2021 South African unrest, also known as the Zuma unrest or Zuma riots, was a wave of civil unrest occurred in South Africa's KwaZulu-Natal and Gauteng provinces from 9 to 18 July 2021, sparked by the imprisonment of former President Jacob Zuma for contempt of court.

What is the impact of equality in our society? ›

Equality is about ensuring that every individual has an equal opportunity to make the most of their lives and talents. It is also the belief that no one should have poorer life chances because of the way they were born, where they come from, what they believe, or whether they have a disability.

What is the impact of gender inequality on society? ›

Gender stereotypes affect behaviour, study choices, ambitions and attitudes about relationships. Girls are less likely to take part in organised sport. Girls are less likely to do advanced maths subjects in their final years of school.

How does inequality affect a country? ›

There are a number of reasons why inequality may harm a country's economic performance. At a microeconomic level, inequality increases ill health and health spending and reduces the educational performance of the poor. These two factors lead to a reduction in the productive potential of the work force.

How does inequality affect the economy? ›

At low-income levels, inequality tends to boost economic growth by increasing physical capital investment. As income levels increase, human capital becomes more important than physical capital, and inequality tends to impede economic growth by affecting human capital accumulation.

What are the causes of inequality in society? ›

Some of key factors behind the increase in within-country income inequality noted in the literature include technological progress, globalization, commodity price cycles, and domestic economic policies such as redistributive fiscal policies, labor and product market policies.

What causes social inequality? ›

The causes of social inequality include society's acceptance of roles, stereotyping, social organization by class (or class systems) and economic disparity, as well as legislation and political inequality.

Why should we care about inequality? ›

Inequality erodes the connections within and between communities. Rich and poor live in different neighbourhoods and go to different schools. This creates distance between them that generates distrust, social conflict and crime.

How is gender inequality a barrier in the growth of a society? ›

Overall, gender inequality can be conceptualized as a source of inefficiency, to the extent that it results in the misallocation of productive factors, such as talent or labor, and as a source of negative externalities, when it leads to higher fertility, skewed sex ratios, or lower human capital accumulation.

How gender inequality can affect the development of a country? ›

In many developing countries, disparity in access to quality education between girls and boys adversely impacts the girls' ability to build human and social capital, lowering their job opportunities and wage in labor markets.

What are the four effects of gender inequality? ›

less pay for similar work. higher levels of stress. higher rates of unpaid work, such as caring for sick relatives. exposure to higher rates of sexual assault, intimate partner abuse, and gender-based violence.

What country has the most inequality? ›

Top 10 Countries with the Highest Wealth Inequality (World Bank Gini index):
  • Suriname - 57.9%
  • Zambia - 57.1%
  • Sao Tome and Principe - 56.3%
  • Central African Republic - 56.2%
  • Eswatini - 54.6%
  • Mozambique - 54.0%
  • Brazil - 53.4%
  • Botswana - 53.3%


1. Power and Inequality in the South African wine value chain
(Institute for Poverty, Land and Agrarian Studies)
(Nelson Mandela University)
3. CESPIC - Different aspects of inequality
4. African Infrastructure Futures: Opening Session - Soft Infrastructure of the Soul
(African Centre for Cities)
5. Persistent Structural Inequalities: Settler Colonialism, Segregation and Apartheid
(Sharjah Art Foundation)
6. Inequality is increasing, not decreasing in South Africa — Dirk Kotzé


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