This article was published in Stellenbosch University Department of Journalism's annual newspaper, LIP.
South Africans may not be voting on economic policies in the upcoming general elections, but their vote on 8 May might determine the prospects of the country’s economic growth.
“It is hoped that the elections will prove to be a turning point for South Africa and that the country can leave the recent years of low growth and corruption behind,” says economics lecturer at the University of the Witwatersrand, Dr. Kenneth Creamer.
South Africa’s economy has struggled in recent years. A short-lived recession last year meant 2018 had only 0.8% economic growth compared to 1.4% growth in 2017, according to Statistics South Africa. FocusEconomics, a provider of economic analysis and forecasts in 130 countries, has predicted a growth of 1.6% in 2019.
A professor of politics at the University of Cape Town, Anthony Butler, sees slow growth and high unemployment as the challenges still facing South Africa’s political economy. “Gross domestic product (GDP) per person has been declining over the past four years where 37% of the labour force does not have work” states Butler.
Currently, the political economy is in a state of flux due to the impending elections. “[South Africa’s current political economy is] fluid and uncertain, given the factionalism within the ANC and the other minor parties vying for additional shares in the coming elections,” says the head of the economics division at Wits’s School of Economic and Business Sciences, professor Uma Kollamparambil.
According to Kollamparambil, the extent to which the elections will impact the economy depends on its outcome, as she comments: “A significant decline in ANC vote share is required to bring about sustained change in governance.”
The factions within the ANC also play a role in economic decisions, which the elections will not be able to influence. “Substantially reduced national government majority of the ANC will necessitate a re-assessment by the government and focus on continuing with the clean-up of corruption.
"Change in government at the provincial level, especially in Gauteng, will be a major wake-up call for the ANC,” she adds.
FocusEconomics have noted that the government bailout of Eskom could push the fiscal deficit beyond 4.0% of output in 2019.
“Policy certainty is paramount. Restructuring of Eskom and other public sector entities, that drain the coffers of the government, is vital [for economic growth],” Kollamparambil says with regards to the policies needed to sustain economic growth.
Butler also points to the role of the “state-owned enterprises crisis”, especially operational problems at Eskom, in hindering the political economy.
The World Inequality Report 2018 found that South Africa is one of the most unequal countries in the world and is classified as “extreme inequality” along with the Middle East and Brazil. “The progressive policies implemented after apartheid were not sufficient to counter a profoundly unequal socio-economic structure,” the report states.
“Given the high levels of inequality in South Africa it is imperative that we are led by ethical politicians committed to putting in place policies that will foster inclusive growth,” says Creamer.
"While the DA stands out with its liberal policy agenda, it is unclear how the EFF and other parties differ from the ANC on the policy front,” Kollamparambil says.
The DA has had economic success in the Western Cape, which it is using to help drive support. “The DA-led Western Cape created 75% of South Africa’s new jobs in the past year!” as states one of the statistics displayed on the party’s website.
Butler does not believe the economy will be greatly affected by the elections. “None of the parties have a persuasive economic policy reform programme,” says Butler. “[The elections] may provide Ramaphosa with an opportunity to introduce a coherent reform programme,” adds Butler.
“Governance and infrastructure required for reigniting investments and employment generation” are highlighted by Kollamparambil as challenges for South Africa’s political economy.
Both Creamer and Kollamparambil acknowledge that corruption must be curbed if South Africa wants to see economic growth, regardless of the upcoming elections. “What is needed for political economic improvement is corrupt politicians and bureaucrats being held to account and getting jail time,” says Kollamparambil.
The scholars point out corruption at state level’s role in furthering inequality and economic problems in the country.
“Clean government,” as Creamer calls it, as well as “effective service delivery and developmental programmes are all essential if South Africa is to achieve higher rates of economic growth, investment and job creation after the 8 May elections.”
Butler stresses that the types of policies needed are ones that will attract investment from the private sector. “Growth is driven primarily by private firms. Government must create an environment in which firms are willing to invest, so generating growth, employment, and tax revenues.”
Whether or not the upcoming general elections will affect South Africa’s economy will only be determined after 8 May.
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