Home Finance Is the economic damage caused by the “new” democracy in South Africa irremediable? 

Is the economic damage caused by the “new” democracy in South Africa irremediable? 

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Is the economic damage caused by the “new” democracy in South Africa irremediable? 
Photo by N Jilderda on <a href="https://www.pexels.com/photo/crowd-of-people-marching-on-a-rally-2975498/" rel="nofollow">Pexels.com</a>

In this article, we will look at the damage caused to the South African economy in its efforts to transform equality in the economy, and whether the destruction is irremediable. We will look at the state in which SOE was handed over to the new democracy and compare it to the current state.

South Africa has a rich and diverse history. From 1948 up until 1994, the white minority oppressed the black majority through a discriminatory political and economic system of racial segregation. The release of Nelson Mandela in February 1990 saw the end of this segregation era. In 1994, South Africa had its first democratic election. This was the period when the struggle of “apartheid” ended and many previously oppressed majority were guaranteed freedom in this new democracy. 

To correct the disadvantages from the past, the new leaders in power had to think strategically. This was where the Black Economic Empowerment concept was born. This seemed to be the best way forward, however; this created a culture where Transformation was chosen over Skill. This would mean that, when awarding a government contract, or when applying for government stimulus, one first needs to comply with the BEE guidelines. This would mean that no person properly equipped for a certain managerial position would be considered. Transformation needs to take place first, i.e. a previously disadvantaged person, irrespective of skill and qualification, needs to fill that position prior to other minority groups being considered.

The consequence of these decisions caused major damage to our economy. People were placed in leadership positions because of race and not because of skill or qualifications. This was done, of course, to correct the imbalance through transformation.

Let’s briefly take a look at our SOE before and after the transition in 1994.

The ANC government did not get a country with a clean slate when it came to power in 1994. Due to the sanctions because of apartheid, the NP lead government’s pre-1994 coffers were running empty. Although many SOEs were in good, and some like ESKOM and DENEL, were in an excellent state didn’t mean that the budget had a good outlook.

When the ANC took over in 1994, all the black people that were forced to live in the Bantustans during apartheid were now flocking to the cities. This has put enormous pressure on all infrastructure and budgets.

Together with the latter, positions in parliament had to be filled with the leading political party members. Many were not properly trained and were mostly in prison at Robin island or in exile abroad. They now had to master these difficult ministerial and other executive government positions. Most of the white counterparts either emigrated due to fear of conviction, or they merely left their jobs which they were well capable of doing.

To further depreciate matters, some of these new ANC top candidates felt they need to catch up on potential wealth lost due to apartheid. This led to the door for corruption being opened. To protect the looting from running out, more stringent BEE rules were put in place. It is now called Broad-based Black Economic Empowerment (BBBEE). All of this has led to the demise of all SOEs which are currently dysfunctional and in some cases non-operational.

Reckless decision-making by politicians, looting of government (taxpayers) coffers, and corruption has left the citizens in this country impoverished and without room for growth. More young black graduates are leaving the country than whites. This means that more skilled and educated tax-paying young South Africans are leaving the country than ever before. The only way for the government to prevent further loss of black graduates is to push the Radical Economic Transformation narrative. With 47% of South Africans on social grants, the highest unemployment rate ever, and the exodus of skilled and academic citizens, the brain drain will shrink the tax pool and this will lead to a total collapse of the economy. Our debt repayment is currently 1/3 of our GDP with the Government Payroll another third.

Can the economy be saved?

Yes, the economy can be saved. With having leaders in place with the necessary ability, knowledge, or skill to do their job successfully. It will change when our mindset change from that of choosing transformation over skill and academically equipped candidates. We need to select the skilled before transformation. This will only work when education is more accessible to the youth.

In conclusion, the 1994 ANC government did not take over a country without its issues, however, with 27 years since 1994, things could have been different today if we employed executives in parliament with the proper education and knowledge to do the job. Not merely for the sake of transformation. Good things take time to happen.

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