-Nov 29, 2021

Daily Friend

The interests of the ANC’s top leaders and those in line to succeed them now diverge sharply. This should make political and economic reforms less elusive.

As the ANC’s political machinery is the central impediment to much-needed economic reforms, it has become a major electoral liability for the party. The ANC’s old guard appears unwilling or unable to reform either its party structures or its economic policies. It seems resigned to bequeathing these tasks to the party’s next wave of leaders. 

This might seem reasonable at first glance, but the municipal election outcomes join a series of recent developments in compressing the time window before economic hardships evoke a definitive electoral backlash. If the 2024 election doesn’t inspire major pivots, the ANC can expect to be banished by voters in 2029. 

Defining economic transformation in terms of redressing historical inequities has been central to the ANC’s political branding, messaging and heritage. That it can still leverage its liberation-movement branding to anchor inequality at the centre of our nation’s economic policy debates positions it to prioritise redistribution ahead of growth. This is necessary to fund a massive patronage network which extends from a bloated civil service to tenderpreneurs, and beyond.  

The ANC’s political machinery locked up the support of its unionist and communist alliance partners and various grant recipients, yet the whole artifice was never sustainable economically. There was never a path to achieve broadly equitable outcomes without also transforming the economy to accommodate how the world’s economic growth is now driven by disruptive innovations playing out across global supply chains. 

Inherently isolationist

As the ANC’s redistribution-focused policies are inherently isolationist, global considerations receive short shrift. Given the devastation wrought by the pandemic upon our long-sputtering economy, the ANC’s leadership needed to heed investor warnings and initiate substantial policy pivots. Instead, they chose to double-down by embracing ‘localisation’ measures which provoke inflation, inefficiencies and graft while further blocking growth.

This year’s surge in demand for South Africa’s commodities has all the hallmarks of a last hurrah moment for the ANC, given the global economy’s recent acceleration in trends toward services, digitisation and decarbonisation. Yet such elevated demand could still last long enough to fund a new wave of grants for millions of adults, thus helping the ANC retain its majority in 2024. 

Such a plausible, though improbable, storyline would provide a best-case send off for senior ANC leaders approaching retirement. This scenario, along with many others where the ANC continues to reject much-needed policy reforms, would however set the stage for economic devastation.

Narrow interests and ideologies

President Ramaphosa feigns devotion to democratic principles while prioritising party interests ahead of national interests. This is telling. The party’s political machinery was designed to entrench the ANC by thwarting accountability. This was interpreted as an invitation to indulge the narrow interests and ideologies of ANC factions. Commercial logic was an early casualty. This foreclosed opportunities for the majority of South Africans, who have been left chronically poor.

The 2019 focus on corruption was not electorally damaging to the ANC. The popularity of the party’s new leader was no doubt helpful. Yet while Ramaphosa was still the leader and still popular, this year voters treated the ANC unkindly. A key difference seems to have been service delivery shortcomings alongside highly elevated unemployment and poverty. 

The ANC’s success at eluding accountability encouraged excessive indulging. Fixing the damage requires policy pivots which will be unpopular in many quarters, while the benefits will only come through after a multi-year lag. 

It is not being unfair or overly cynical to believe that only fear of the party’s downfall would motivate the ANC to seriously consider adequate reforms. In the days after a 2024 electoral drubbing, amid cascading hardships, fear of the 2029 electorate fully rejecting the ANC will loom large. 

Those expecting to succeed the party’s most senior incumbents, along with many other ANC members concerned about the party’s viability, would then be highly motivated to demand a coalition with a centrist party. As there are never easy paths to achieve major policy pivots, many democratic countries find coalitions useful for managing such T-junctions.

Performance shortfalls

The ANC’s astounding performance shortfalls trace to its tolerance of corruption, incompetence and ideological indulgences. While these causes are too tightly interwoven to prove which is most harmful, we know that dozens of countries are rated as being more corrupt than South Africa, yet most of their economies are much healthier than ours.

There is no path towards overcoming corruption and incompetence without major policy pivots. Focusing on values won’t unlock solutions, which helps explain why none of our leaders have tabled credible high-growth plans. If the 2024 poll doesn’t lead to sweeping policy reversals, by 2029 the economic damage and fraying social cohesion could take decades to repair. 

Credible scenarios whereby the ANC is dispatched in 2024, leading to rapid fixes, are difficult to imagine. It is unlikely that the ANC would reap much less than 40% of the vote in 2024 unless the economy was contracting perilously. A 2024 coalition that excluded the ANC would then have to include parties still further to the left. As we know from municipal experiments, ideologically disparate coalitions are inherently unstable.

If the economy at least sputters along, the ANC’s share of the vote would likely make it mathematically impossible to sideline both the ANC and the EFF. 

If the economy puts in a pedestrian performance and the ANC realises about 40% of the vote, the subsequent coalition talks will be pivotal. The senior members of the ANC who are not nearing retirement will need to recognise that their interests, and those of the party and the nation, are best served by aligning with a centrist party.

Broad prosperity

Such a coalition will then need to accomplish what has always eluded South Africa: developing a policy platform which will achieve broad prosperity.

Basic income grants for millions of adults will be debated in February. This provides an ideal platform to establish how counterproductive the ANC’s redistribution-focused policies are. This is fully doable and it would ransack the foundations of the ANC’s political machinery.

The national dialogue could then be reframed from focusing on inequality to prioritising jobs and poverty. This would set the stage for highlighting how extraordinarily dangerous it is to sustain high youth unemployment.

Maintaining the status quo invites the ANC’s being banished by the electorate in 2029. The party’s not-so-aged senior leaders must soon recognise that their futures will be decided shortly after the 2024 poll.