London/Johannesburg
CNN
—
South Africa's ruling party, the African National Congress (ANC), came to power in 1994 on a platform of democracy. He ran on a platform of “building a better life for all,” and won about 63% of the vote in the country's first democratic elections.
Three decades on, Nelson Mandela's former liberation movement, which defeated the racist apartheid government, is in danger of losing its parliamentary majority for the first time, according to polls and analysts.
When South Africans go to the polls on Wednesday, an unfortunate combination of endemic corruption, soaring unemployment, severe power outages and weak economic growth will likely be top of mind for them.
The economy has been in recession for the past decade, evidenced by a sharp decline in living standards: Gross domestic product per capita has fallen from its peak in 2011, and the average South African is 23% poorer, according to the World Bank.
A third of the workforce is unemployed, a higher percentage than war-torn Sudan and of any country tracked by the World Bank. Income inequality is also the worst in the world. 18.4 million people are on welfare benefits. According to consulting firm Oxford Economics, this amounts to seven million taxpayers.
Black South Africans, who make up 81 percent of the country's population, are in the middle of this dire situation. Unemployment and poverty remain concentrated among the black majority, primarily due to inadequate public schools, while most white South Africans have jobs and fairly high wages.
Moreover, the government’s flagship policy to promote economic inclusion and racial equality in post-apartheid South Africa – Broad-based Black Economic Empowerment, known as Triple BEE or simply BEE – has failed to achieve its objectives, with wealth still concentrated in the hands of the few at the expense of the many.
“Thirty years after the end of apartheid, the economy is characterized by stagnation and exclusion, and current strategies have not actually achieved inclusion and empowerment,” concluded a Harvard report published in November by the university's Growth Institute after a two-year study.
Under apartheid, and colonial rule before it, black South Africans were violently oppressed and denied many basic human rights. They were also systematically excluded from owning land, living in certain areas, and having access to decent education and jobs.
The end of white minority rule alone cannot atone for such extreme and long-lasting injustice: reparations are needed, and BEE worked to achieve this.
Almost everyone now agrees that the policy failed to change the economic realities of the historically disadvantaged majority of black and other South Africans, including Indians and Coloureds (the official name for South Africans of mixed race and with a distinct cultural identity).
President Cyril Ramaphosa, who has previously described BEE as “essential for (economic) growth”, promised on Saturday that the ANC would “do better” if re-elected, with a focus on job creation. The opposition Democratic Party says it will replace BEE with an “economic justice policy” that “targets relief for the poor black majority, not a small well-connected elite”.
![Alexandra Township, Johannesburg, South Africa, photographed in March 2022. Millions of South Africans still live in such informal settlements.](https://media.cnn.com/api/v1/images/stellar/prod/gettyimages-1239834905-copy.jpg?q=w_1110,c_fill)
Critics of BEE argue that there has been too much emphasis on increasing black ownership of existing companies through mega-deals, when in reality it has only enriched a handful of politically connected people.
That is the view of Moeletsi Mbeki, brother of former president Thabo Mbeki and director of the South African Institute of International Affairs, an independent think tank at Wits University in Johannesburg.
“BEE creates a class of wealthy politicians who are beholden to those who made them wealthy, and it discourages people from becoming entrepreneurs,” he told CNN. “If I were president, the first thing I'd do would be to repeal BEE,” he added.
White cadres devised BEE in the early days of democracy as a way to “co-opt the ANC leadership”, Moetzi said. By giving them shares in companies that were unwilling to be nationalized. policy Many in the party agreed.
Yet, despite tens of billions of dollars worth of BEE deals, black ownership of companies remains The latest report from the B-BBEE Commission, which monitors compliance with the policy, shows that compliance averages just 34%.
“Black participation is on the rise. “While there is still much work to be done to realise the objectives of BEE, it is important to ensure that it serves people in the economy,” European Commission President Tsediso Matona told CNN.
![ANC supporters await the arrival of President Cyril Ramaphosa during an election rally in Isipingo, KwaZulu-Natal, South Africa, on May 19, 2024.](https://media.cnn.com/api/v1/images/stellar/prod/gettyimages-2153702390-copy.jpg?q=w_1110,c_fill)
Black people are also largely underrepresented in the C-suite, another key policy focus: just 19% of the 200 most valuable Johannesburg-listed companies are led by black, Coloured, Indian or Asian CEOs, according to a recent PwC report.
Many private companies “are not implementing the spirit of the (BEE) bill, they are just ticking the box,” said Kganki Matabane, CEO of the Black Business Council, a lobbying group for black businesses. “Companies cannot continue to exclude the majority. At some point they will make the country ungovernable,” he added.
Matthew Parkes, parliamentary coordinator for the Congress of South African Trade Unions, a trade union umbrella body and partner of the ANC, says BEE has contributed to the growth of South Africa's black middle class, but more must be done for workers, especially those on the minimum wage.
He also argues that the policy needs more time to bear fruit: “Thirty years is not enough time to overcome the effects of three centuries[of white oppression].”
The European Commission's Matona said BEE was “only one part of a suite of policy tools to achieve transformation”, which also included laws on public procurement, competition, employment equality and skills development. “The overall outcome of economic transformation requires an evaluation of all these policies”, he said.
The most severe criticism of BEE is that it is corrupted by private interests and has led to serious maladministration in the public sector. “The agency is a major engine of corruption in the country,” Mbeki said.
He and other experts who spoke to CNN said that in the name of promoting empowerment, politically connected black people In some cases, people are promoted to senior positions in state-owned enterprises despite lacking the appropriate qualifications or experience.
Similarly, some officials Public Procurement Regulations Support black-owned businesses The practice of awarding high-value government contracts to struggling companies in exchange for bribes, a phenomenon sometimes referred to locally as “tenderpreneurship.”
“Tenderpreneurship” has decimated state-owned enterprises and local governments across the country, said Ricardo Hausmann, director of Harvard University's Growth Lab, a research center for economic growth and development. “Poor implementation of affirmative action in the public sector” has led to “the collapse of state capacity,” he told CNN. “The power sector is a prime example of this.”
For much of last year, South Africa was without electricity for at least part of the day. State-run power company Eskom said outages, known locally as “load shedding,” lasted a record 335 days. The years-long power crisis has eased in recent months, but it's not over yet.
Haroon Borat, a professor of economics at the University of Cape Town, said widespread corruption at Eskom and other government agencies, mainly under the rule of former president Jacob Zuma, was a major cause of the collapse of South Africa's power, transport and, more recently, water infrastructure.
![A store is seen during a power outage in Namahadi area outside Frankfort, Free State province, South Africa, in June 2023.](https://media.cnn.com/api/v1/images/stellar/prod/gettyimages-1258459699-copy.jpg?q=w_1110,c_fill)
As a result, economic activity has stagnated: Economists predict that GDP growth could reach 3-5.4% this year if infrastructure were not collapsing, but the International Monetary Fund predicts growth of just 0.9%.
The “bottom line” of collapsing infrastructure will lead to lower economic growth “A ruling party that is slowing growth will struggle to convince urban voters that it can turn the economy around,” Borat added.
South Africa's economy wasn't always in dire straits: for the first 15 years of democracy, the ANC “managed the economy relatively well,” Borat said.
Under Thabo Mbeki, public debt was significantly reduced and the government ran a small budget surplus between 2006 and 2008, meaning spending was less than tax revenue. Economic growth averaged about 4% per year.
In contrast, under Zuma, South Africa's credit rating was downgraded to junk status by S&P and Fitch, and the debt-to-GDP ratio has more than doubled from its post-apartheid low of 24% in 2008 to around 75%, according to the IMF.
South Africa under Mbeki was far from perfect – violent crime was high, the country remained highly unequal, and public services, especially education, needed serious work – but the economy was much stronger. It provides a foundation for addressing many of the post-apartheid challenges.
It is that very foundation that the country must now painstakingly rebuild.
The one bright spot in South Africa's economic crisis is the close cooperation between government and business in addressing the situation.
It was formed by the chief executives of more than 130 of South Africa's leading companies, including Investec and Discovery, as well as local leaders from JP Morgan, Shell and Unilever. The initiative is called “Business for South Africa”.
The group meets regularly with senior government officials, including President Ramaphosa and the heads of state-owned enterprises, to deliver targeted interventions in areas such as transport infrastructure and electricity.
these Cath Coovadia, CEO of Business Unity South Africa, the country's main business lobby group, said positive results were already being seen and the blackouts could be permanently ended as soon as next year.
“This has proven to be a true partnership… We are moving forward,” he told CNN. “The purpose of this intervention is to stop the decline and give us the space to start turning this big ship around.”
For Hausman of the Harvard Growth Institute, the ANC's waning influence may be just what the party needs: Increasing contests for political power “will make the government feel even more fearful of public anger and therefore more urgency to improve its performance,” he said.
“Generally, what disciplines governments is the fear of losing an election.”