Founder and Executive Chairman of Sygnia, Magda Wierzycka, says that warnings of South Africa becoming a failed state are lagging reality – we are already there.
Speaking at a recent Brenthurst Wealth webinar on investing during turbulent times and how to navigate the possibility of the South African state failing, the executive was frank in her assessment of where the country stands.
“In my view, we are a failed state. We became a failed state a while back, and I don’t think there is anything on the horizon that will change that in the near future,” she said.
According to Wierzycka, the reason for this view is that South Africa’s municipalities are failing, and many have already failed – and municipalities are the core of the country and the backbone of the government.
Municipalities are essential, Wierzycka said, as they are constitutionally mandated to procure and provide critical services and wield more power than national and provincial governments in this regard.
Therefore, if South Africa’s municipalities fail, the country fails.
Wierzycka noted that municipalities are failing on the most basic of the basics, unable to deliver core needs like water and electricity.
The problems on the electricity side are well-established, with load shedding a daily feature in South African life – and municipalities cannot offer any real relief while also having to deal with the fallout.
However, the Sygnia chair highlighted that water is in the same crisis.
Citing data from the Department of Water and Sanitation, she said that 45% of water in South Africa is lost within municipal water systems due to poor infrastructure, poor maintenance, and illegal connections. The average global norm is 15%.
As a water-scarce country with one of the world’s highest rates of water consumption, this is untenable, she said.
Wierzycka has dim hope for the future, noting that the coming 2024 elections – which many are characterising as “The Great Hope” for things to improve – have delivered misplaced optimism.
Opposition parties, in particular, are hoping for the ANC to lose its majority in 2024, opening the way for coalition governments to come in. They are already campaigning on ‘pacts’ and promises of clean government.
However, Wierzycka said that the past few years have already shown what’s in store.
“If the municipal elections are anything to go by, we are looking at complete chaos of coalition governance. We don’t need to look further than the City of Joburg and Tshwane and what happened there.”
The City of Johannesburg was taken over by a DA-led coalition of various parties in 2021. However, the city has been hit with major instability as some parties switched “teams”, collapsing the alliance and allowing an ANC-led coalition to regain power.
Similar horse trading has occurred in Tshwane and other metros and municipalities across the country.
Wierzycka said that “clobbered together” alliances have formed in many municipalities after the 2021 local elections, only to completely collapse a year or so on.
“That affects absolutely everything we know – from service delivery and passing of budgets,” she said. Without a stable municipal government, the delivery of services is likely only to be crippled further.
She added that the prospects of a DA/ANC coalition – which many analysts have pegged as the best hope for coalition governance to succeed – are incredibly slim. “The DA is nowhere near that table,” she said.
While Wierzycka believes South Africa has already reached D-Day for state failure, many executives and analysts believe the country is still circling the drain.
Many industry experts have noted and warned that South Africa is at risk of becoming a failed state – with the latest being chairman-designate of Nedbank, Daniel Mminele, who said in April that high unemployment, poverty and inequality need to be addressed with urgency. He said the country is running on borrowed time.
In March, Lord Peter Hain – a member of the United Kindom House of Lords and an anti-apartheid activist – said that corruption and state failure on multiple levels abound. In the same month, MTN Group CEO Ralph Mupita noted that South Africa faces becoming a failed state unless the government effectively tackles the load shedding crisis.
The Institute of Risk Management South Africa (IRMSA) also said that South Africa risks becoming a failed state if its “lack of decisive, ethical, and courageous leadership” continues and no action is taken to improve and boost economic growth.
While there is no set definition of what makes a failed state, a broader analysis of countries that have failed defines it as a nation that has sovereignty but experiences a breakdown of political power, the rule of law and civil society, pointing towards anarchy.
The Fragile States Index by the US think-tank Fund for Peace attempts to quantify the risk of a state failing by looking at indicators across social, political and economic segments.
These include demographic pressures, loss of skill through the brain drain, and civil unrest among social indicators; inequality and rising poverty in the economic sectors; and a breakdown in public services, human rights, the rule of law and a growing class of factionalised elites when looking at state legitimacy.
Many of these indicators have worsened for South Africa in recent years.
The latest index for 2022 ranks South Africa 79th out of 179 countries – where the higher the rank, the higher the risk of state failure. This position is up from 89th in 2021, 115th in 2012, and 132nd in 2007 – its best position on the list.
Zimbabwe ranks 15th on the index, with Yemen ranked in the top spot.
“I don’t want to say I’m negative about (South Africa), but I am negative about it,” Wirzyka said.
“I don’t want to leave this country, I love this country. But I am out of ideas in terms of what we need to do to fix what we are facing right now.”
[Image credit: Gareth_Bargate / Shutterstock.com]