It has been almost three decades since the African National Congress (ANC) came into power, and it is becoming increasingly clear where the ruling party has failed at an economic level, says Dr Francois Stofberg, senior economist at Efficient Wealth.
Writing in a research note to clients this week, Stofberg said it was the job of economists to interpret the economic results of the ruling party’s actions, or, in this case, the lack thereof.
“To do this, we try to determine how the decisions of the ruling party, in aggregate, impact on the economy and, by implication, on the livelihoods of South Africans,” he said.
He noted that while many of the ANC’s policies can be negative for the country, the one variable that ‘transcends opinion’ is South Africa’s current unemployment rate.
“The unemployment rate is probably one of the best variables to show, in aggregate, how the decisions and actions of the ruling party impacted the economy and, by implication, the livelihoods of South Africans. And with almost three decades of data, the picture is very clear. The ruling party has failed miserably, and their economic legacy is in shambles.
“When the ANC came into power, unemployment was 20% and has since increased to around 35%. If the ruling party was simply able to keep unemployment at 20%, there would have been 6.5 million more jobs today.
“That means that South Africans would have had R515 billion more income today; roughly R8,550 more for each South African. Put differently, the economy would have been at least 11% bigger.”
Stofberg said that the only way to reverse this is by returning to policies that favour economic development, especially labour policies, including:
- Spending more on capital.
- Making it easier to do business in South Africa.
- Spending more effectively on education and healthcare.
A lack of leadership
Stofberg said that it would ultimately be difficult to see a return to these policies as the country is facing a leadership crisis.
He pointed to a ‘remarkable deterioration in the quality of leadership in government’, on all levels.
Amid unaccountable politicians, not only in the ranks of the ANC, corruption also ballooned and important performance measures were never reached.
“A lack of accountability was also seen in the large number of executive orders that we had, very little of which were ever effectively implemented. One of the results of the deterioration in effective, accountable leadership is that spending, especially spending on productivity-enhancing items, was grossly ineffective.
“This is one of the main reasons our public healthcare and education systems are among the worst in the world. For this reason, trying to argue that more distribution would benefit South Africa is an absolute fallacy.”