Western media and academia express so much anti-Westernism that they seem unable to acknowledge that Western consumers are essential to expanding good jobs for Africans. Our domestic denials are also misconceived.
The West will increasingly rely on motivated African workers. Their counterparts in many Western and Asian countries are often the sole children of affluent parents, and many of them realise that if they forgo having children, they need never work hard. Neologisms like ‘lying low’ and ‘quiet quitting’ reflect such sentiments.
Africa’s share of global births exceeded a third last year and it will keep rising. This is mostly because rising living standards in other regions are slashing birth rates – largely through urbanisation and educating of women.
While technological progress will likely result in affluent people working less, poor people will remain highly motivated to accept unattractive jobs for low wages – if they are available. Otherwise, they will find ways of coping – or they will revolt.
Quality-of-life improvements from increased income are much more impactful at low-income levels. Going from being extremely poor to being poor is a major upgrade. The next step, becoming lower-middle class, is also a huge improvement. Once people achieve a stable lower-middle class lifestyle, income increases improve satisfaction much less dramatically.
Poor communities need market access. Prospects are far better for small low-income communities adjacent to large thriving high-income communities. Mexican communities along the border with the US have long been outperforming their counterparts bordering Guatemala.
As our long-stagnating per capita income offers extremely meagre capacity to spur upliftment, most of our population remains poor and most young South African adults will never be meaningfully employed. As long as we embrace isolation, progress will elude us.
Aroused daily
While today’s teenage Africans are frequently as poor as their ancient ancestors, many are aroused daily by the sight and sound of people living affluent lives. Increasingly ubiquitous smartphones spark youthful aspirations; realising them requires getting work from consumers with disposable income.
Phenomenal upliftment has accompanied the creation of over a billion jobs in recent decades through companies hiring poorly educated, low-skilled workers and having them add value to goods and services destined for affluent consumers. Africa’s market access to such consumers has been blocked by barriers which will not withstand the demographics and technologies now conspiring against them.
The rapid rise of Asia is high among humans’ most impressive accomplishments. It didn’t happen by first upgrading education outcomes. That was a delayed consequence. The key drivers were sharp declines in transport and communication costs, alongside lower tariffs.
While regulatory arbitrage also offered cost incentives, the important factor was labour cost differentials. Management science has made great strides at coordinating workers with highly diverse skill sets and education levels across geographically scattered jurisdictions. In effect, the world’s dispersion of income inequality has been harnessed to propel massive upliftment.
Income inequality arbitraging soared as the fall of the Berlin Wall signalled the end of the Cold War, just as the internet began to pummel communication costs. If we combine the advantages of 20/20 hindsight with an external perspective, it is obvious that our 1990s political transition should have provoked a no less dramatic set of economic pivots.
Broad prosperity
We should have adopted the goal common to high growth emerging nations: broad prosperity. This would have highlighted the need to transform the economy from a highly commodity-dependent one, isolated by geography and sanctions, into one that was growing rapidly through intense integration into global supply chains.
Instead, our political economics were fixated on redressing racial inequality. Early attempts to balance redistribution and growth failed as the politics of patronage metastasized across our political economy.
Rather than managing income inequality to fast-track broad prosperity, the ANC exploited racial inequality to justify pro-patronage policies. As a consequence, if you research which countries are the most unequal or have the highest youth unemployment, South Africa tops both lists. If we exclude whites, our youth unemployment level is worse than ever, while our inequality remains extreme.
In 1984, China’s leader famously said, ‘let some people get rich first’. He, like other leaders in that region, focused on sustaining high growth through adding value to Western-bound exports. Thus they were well positioned when the Cold War ended and the internet era emerged.
Given the challenges our leaders faced a decade later, it was never easy for Mandela, Mbeki and Manuel to navigate the trade-offs between the political imperative for redistribution and globally determined growth drivers. What has become apparent over the last decade is that many among the party’s leadership had always sought simply to ‘let some people get rich.’ Tenderpreneurs sit atop a patronage structure dependent on anti-growth policies ranging from BEE to localisation, and a political culture that accommodates rigged tenders.
Anti-Western biases
South Africa’s anti-Western biases are tame, except within the ANC where they simmer. As feeding a patronage network is incompatible with becoming internationally competitive, our economic policies preclude effective remedies to rampant unemployment and poverty. Our path of least resistance is towards rising authoritarianism, leading to rigged elections within a few years.
As the ANC’s autocratic biases are destined to become more apparent and destructive, party leaders no doubt anticipate Western criticisms to increase. So of course, they prefer meeting with their counterparts from China or Russia to meeting with Western leaders, who are vastly better positioned to help with job creation in South Africa.
While it is easy to fall into the trap of associating international employment with high educational achievement, most of the hundreds of millions of jobs created in Asia in recent decades did not require a high school education. Today, education paths are becoming radically disrupted. Meanwhile, the global population of students is set to stabilise in the coming decades while the geographic mix will shift. Africa is becoming too big not to prioritise.
Eradicating poverty through employment continues to get easier. About 70% of the world’s extreme poverty is in Africa, and this percentage continues to rise, due to tremendous progress elsewhere.
While here in South Africa we have a front-row seat for assessing impediments, we must crane our necks and tamp our biases to see what opportunities are forming. Probably the easiest high-volume path is to have recent school leavers remotely joining teams selling services to affluent consumers. This trend is reinforced daily, as determined young South Africans find that despite modest academic success they can earn micro-credentials online, leading to online freelancing or remote employment.
Productivity
Science and commerce have advanced to the point that it is quite easy for humans to achieve productivity many multiples above what subsistence requires. The primary impediments today tend to be isolation and predatory governments. Africa stands out in both regards.
Many sub-Saharan economies rely on exporting commodities, with China being their top customer. South Africa’s youth unemployment crisis reveals that while exporting commodities is great for supporting patronage, it undermines economic development. From a geopolitical perspective, the more South Africa aligns with autocracy-promoting China, the more room the ANC has to ignore Western concerns about how patronage threatens our democracy.
The ANC’s embrace of patronage and isolationism is so extreme that it has produced the world’s most severe youth unemployment crisis. Rather than exploring solutions, the ANC brags about how many people rely on grants – thus joining the lowest rung on its patronage ladder.
The ANC’s response to most of our young unemployed adults is to pay sub-subsistence payments. This requires strong commodity exports and it converts our young would-be workers into life-long liabilities of the state. This is not viable, but the ANC can’t offer solutions as it is hemmed in by the insatiable appetite of the patronage network it spawned.
Under-utilised assets
The 1990’s political transition needed to provoke an economic transformation seeking to achieve broad prosperity. This requires increasing value-added exports as opposed to reliance on commodity exports. While such transformation challenges mimic those of Middle East energy exporters, our underutilised assets, low-income workers, more resemble those of many Asian nations.
The paths taken by their elders will not uplift those born this century in patronage captured countries. Emigrating physically will be an option for few whereas learning online and working remotely within international supply chains will become increasingly common.
As the ANC’s DNA lacks the chromosomes to foster a builder’s mindset, the party morphed from being a liberation movement into being a patronage network. By using redistribution rhetoric to camouflage the spread of its patronage, the ANC weaponised racial inequality thus undermining our economy and eroding our democratic principles.
Our geology and geography play key supporting roles through combining export income and isolation. Not only is this approach unsustainable, but the country’s anti-business and anti-competitiveness policies have undermined the ability of South African companies to employ people to add value to exports – which is to 21st century development what assembly lines were to the 20th century.
More proactive peers
Our young adults must be guided by their more proactive peers. Their role models must be those who see the big picture which is emerging – yet are too young to visualise what loading film into a camera may have entailed.
Their role models must be the young South Africans who are developing skills and credentials online – leading to international online opportunities. The source of their competitive advantage is the hunger that rampant poverty and unemployment bestows on them, as that is what they inherit. The first sentence reflects a new 21st century reality; there is nothing new about the second.
The awkward irony is that even if our Constitution is consumed by patronage politics, the next generation can find economic freedom through relying on engaging the emerging possibilities of a very dynamic, merit-based global economy.