The Rise or Fall of South Africa: Latest scenarios

Introduction

Ground rush is a skydiving term, used to denote what happens if you wait too long to pull the ripcord on your parachute. At first you tumble serenely through a blue-green blur, but at an altitude of 400 metres or so, the earth clicks into focus and the ground comes rushing up to meet you. An instant later, you’re dead.

Well, usually. Most skydivers die, but a handful have seen the ground rush and lived to tell the tale. Some were lucky. Others were highly skilled. Most were both.

Which brings us to the point of this somewhat laboured metaphor. If you’re South African, this book will terrify you, inflicting a brain-rattling attack of ground rush and causing you to curse yourself for not getting out while there was still time. On the other hand, it might save you by providing insights that help you survive the coming crash.

It may even convince you that all of the above is demented and that the country can be saved. The Rise or Fall of South Africa is not entirely devoid of straws, and optimists will find some to clutch at. All the advice the government needs to turn the country around is here in the form of a virtual ripcord just waiting to be pulled either by the ANC today or by one of the new political movements Frans Cronje argues will defeat the ANC and lead the country into the 2030s. 

As you presumably know, Cronje runs the IRR, a venerable liberal lobby that bedevilled the apartheid regime for decades before becoming a thorn in the side of those who threaten the country’s future today.

From the day of its founding in 1929, the IRR has urged South Africans to rip the scales off their eyes and act rationally. Frans continues the tradition here, constantly reminding us that most South Africans are moderate, reasonable people. This has always been the central finding of the IRR’s regular opinion surveys: it is the politicians who are obsessed with race, vengeance and radical transformation, not the people. Ordinary South Africans want the races to work together. They want stability and law and order. They want good schools and hospitals and, above all, they want jobs.

Cronje reminds us that there was a time when the ruling party seemed to hear these plaints, and tried to address them. This was the time of GEAR, the centrist economic strategy adopted by the ANC in 1996 at the urging of Thabo Mbeki. In the GEAR era, budgets were balanced and the national debt halved. Foreign investment poured in. The economy grew at five per cent a year, spawning millions of jobs and creating a happiness explosion of a sort never before seen in South Africa.

Cronje’s description of this golden moment will break your heart and cause you to rend your garments and wail, Why can’t we go back there? Well, we might, but the odds against that are now very great.

When Cyril Ramaphosa became president in 2018, the chattering class fell to its knees and hailed him as a saviour. Ramaphosa was the sort of man who understood that the country was hurtling towards disaster. The sort of man who would pull the ripcord, causing the parachute of hope to blossom over our heads and carry us to safety. Almost alone among public intellectuals, Cronje understood that the chattering class was fooling itself; even if Ramaphosa was seriously intent on reform, his endeavours would be blocked by the Twin Dogmas.

Dogma One is racial nationalism, which maintains that the highest good in South African society is the achievement of racial transformation targets. Our state-owned enterprises may all be dying, but that doesn’t matter very much because they have achieved a state of immaculate transformation.

Dogma Two is the doctrine of National Democratic Revolution, the Marxist-Leninist thesis inherited from the Soviet Union, where private property was regarded as theft and the state owned everything. For those who believe in the NDR, state ownership and control of the economy is a state of grace and anything else is anathema, which makes it almost impossible to solve the country’s problems.

On their own, neither of these dogmas would be fatal. They could be resisted and challenged and argued against – in time, possibly overturned. In combination they are deadly, extinguishing all hope for everyone save the vampiric elite that inhabits the upper reaches of South African society. Cronje eloquently makes the case that even the ANC is consumed by fear, because it knows we are heading for deep trouble. But the Twin Dogmas hold the party’s critical faculties in a headlock, and it cannot imagine abandoning either.

So here we are, then, hurtling towards the ground at terminal velocity. What comes next will not be pleasant. Cronje is a good-hearted man. He tries to soften the blows and sweeten the bitter pills, but in the end, the most striking line in his book is this one: ‘I have sat through too many panels and wealth seminars, investor conferences, briefings and media interviews where some of the speakers have frankly lied to the people who had come to hear them. One day, years from now, you may see me in the street and when that happens, I don’t want you to say, You knew, your people knew, but you never said . . . ’

He goes on to write that South Africa could pull out of its present dive and start growing strongly again at the end of this decade, but the intervening years are likely to be tough, and the risks are daunting. ‘It is late in the day,’ he concludes, ‘and now more apparent than ever that those who told you there was nothing to fear have been wrong all along.’

RIAN MALAN

February 2020

Chapter 1

______________

A time for choosing

The rise or fall of South Africa will be determined by the clash of four great forces that have the country in their grip. You can almost think of the situation in terms of a compass needle being pulled across two axes, such as those set out below. The east–west axis of the compass represents the ideological battle of ideas over whether South Africa will be governed as a free, open, prosperous and democratic society, or whether it will fall into a morass of socialist autocracy. The north–south axis of the compass represents a psychological battle over whether South Africans will ultimately define themselves as individuals with the personal agency to overcome the country’s historical traumas or whether they will surrender to those forces, conceding that their consequences were insurmountable.

We start with the ideological axis.

As South Africa moves through the 2020s and into the 2030s the country will be forced, ever more, to make a choice between two ideologies. The first is that built around the tenets of National Democratic Revolution (NDR). The second, very different, is that built around the tenets of liberal democracy. It is a choice South Africa has battled with for a very long time, and a milestone from which to understand that struggle is 1912 and the establishment of the organisation that would become the African National Congress (ANC). Initially a moderate, pragmatic, elitist and even conservative organisation, the ANC would remain so for its first four decades – even suspending some of its liberation demands in support of General Smuts’s efforts in the Second World War. But the brave commitment of many black South Africans to the fight against fascism in Europe proved insufficient to win them substantive civil rights concessions at home, and when in 1948 Smuts was defeated and white South Africa hurtled towards grand apartheid, as the ideological poles of the Cold War crystallised, the ANC was hounded into the waiting arms of the Soviets and the East Germans. That embrace would infuse the party with much hard-left ideology, particularly after the adoption in 1962 of the doctrine of the NDR by the South African Communist Party (SACP), whose lobbying efforts would see the ANC also adopt the doctrine at its conference at Morogoro in Tanzania in 1969.

The doctrine of the NDR is based on Lenin’s theory of imperialism, which held that the wealth of the colonial powers arose solely from their oppression and exploitation of the colonised. From this foundation, Lenin argued that the purpose of anticolonial revolutions must always be to dispossess the coloniser and then embrace communism, failing which the colonised could never be free. The SACP made this theory applicable to South Africa by developing the notion of ‘colonialism of a special type’, meaning that both the coloniser and the colonised lived together in the same country, into which the coloniser had become permanently integrated. But despite that integration, middle-class and capitalist prosperity remained solely the result of the oppression and exploitation of the black majority, and indeed prolonged that poverty – and the coloniser, despite that integration, would have to be dispossessed if the colonised were ever to be free. The ANC has annually recommitted to the NDR, with greater and lesser enthusiasm, right up to the time of writing.

The greater and the lesser are very important.

In 1992, 23 years after the Morogoro meeting, matters took a turn. This time the venue was Switzerland, where former president Nelson Mandela appeared at Davos and delivered an address in which he seemed to jettison such revolutionary dogma. The world’s business, political and investment elite had come to see the man who would surely become South Africa’s next leader, and to hear from him whether an ANC government would ‘nationalise the commanding heights of the economy’, as NDR dogma demanded – or whether, perhaps, it would follow a more pragmatic path. The backstory to that address is that he had seen to it that the paragraphs prepared for him on economic policy were rewritten and moderated – a great risk for him, as the ANC was yet to concur on questions of policy. Enthused by the positive reception to his pragmatism, and perhaps also inspired by the example of the Chinese who were achieving such stunning economic success following their post-Mao ideological modernisation, he emerged from Davos to tell his party that Afro-socialist experiments had failed, and that South Africa would pursue a more pragmatic path. That, in turn, set in motion the chain of events that would isolate the left wing of the ANC alliance and culminate in the Growth, Employment and Redistribution (GEAR) policy that sought to promote socioeconomic upliftment through investment-driven growth.

There is a dispute in our office about what happened at that 1992 meeting and in the five years thereafter. Was it a genuine ideological reversal on the part of the ANC? Or was it a ruthless and brilliant concession by Mandela, who understood that, without pragmatic reforms, the economic wreckage inherited from the National Party government would soon force the ANC into an IMF-financed bailout – which would mean the end of their revolution? Was the pragmatism of Davos and GEAR, therefore, just a temporary ruse to stabilise the economy sufficiently, so that it might in time be harnessed to the revolutionary agenda of the state? While some contemporary analysts remain unconvinced, my take, having spoken to many people over many years, is that Mandela had been pondering the paradoxes of the collapse of the Soviet Union for some time.

The debate remains unresolved, but what is clear is that in practical policy terms much of what was done after 1992 saw the ideological and policy pendulum swing from the revolutionary and the socialist to the pragmatic and the liberal. In government, the ANC spoke of financing social development through growth and not through borrowing – something that would pass for hardcore fiscal conservatism in western capitals today. The party pursued policies that later culminated in a budget surplus. Government debt levels were cut in half from just below 50 per cent of GDP in 1995 to just above 25 per cent in 2008. Tax rates were cut and receipts soared. The number of people with jobs doubled. Ten formal houses were built for every new shack being erected. The number of university students doubled. The murder rate was cut in half. The number of black buyers of suburban property rose to rival the number of white buyers. In some private schools, black enrolment in lower grades came to exceed white enrolment. Economic growth rose to average 5 per cent between 2004 and 2007 (the first time it had done so for that number of years since 1970). Today, as a continuing legacy of that early era, there are more black than white households in the top monthly expenditure bracket recorded by the government’s statistics agency. Had South Africa maintained the trajectory it was on in the years to 2007, then GDP today would be roughly double what it is and the country would be on track to become a middle-income society by the late 2020s, with an unemployment rate below 10 per cent.

Despite the progress that was being made in the years to 2007, leftist influences in and around the ANC, and most especially in the SACP and trade unions, complained loudly about what they saw as the ‘conservative’ or ‘Washington consensus’-driven policies of the new government – and that these amounted to a betrayal of its revolutionary agenda. However, the ANC remained firm in its resolve and, outside of the terrain of labour policy, mineral rights and water policy, generally pushed its leftist partners to the irrelevant fringes of policymaking.

However, the successes that were being achieved in the economy, the uplifting of living standards and the apparent moderation of the government of Thabo Mbeki began to breed complacency. In organised business and diplomatic circles, the thinking became that South Africa’s democratic transition was complete, its policy and ideological trajectory assured, and its success inevitable. All three calls were wrong.

Like many South African political leaders before him, Mbeki was an enigma. Even as he was driving a socioeconomic recovery, he was planting the seeds of its collapse. His cruel health policies killed hundreds of thousands and saw life expectancy fall by ten years; it was under his watch that the arms deal corruption set the precedent for the looting by the Gupta family, VBS bank, Bosasa and the many other horrors that lie waiting to be uncovered. It was during Mbeki’s presidency, analysts forget, that South Africa first ran out of electricity. His Cabinet was instrumental in seeing merit give way to race in the civil service, which in turn set up the collapse of so many government functions. It was his own unconscionable diplomacy towards Zimbabwe that enabled the collapse of both the rule of law and the economy in that country, and marked South Africa’s departure as a foreign policy peer of liberal democracies. His support for Jacob Zuma to wrest what remained of the rural Zulu nationalist vote from the Inkatha Freedom Party (IFP) was done without any apparent forethought that should Zuma succeed he would come to inherit the mantle of Zulu nationalism and wield ethnicity as a weapon in the ANC – exactly as came to pass.

The mistakes on HIV and Aids and KwaZulu-Natal would prove fatal and bring a premature end to Mbeki’s political career. The consequences of his government’s HIV and Aids policy allowed the long-isolated left within the ANC to regroup, fundraise (often with corporate and western donor support) and develop platforms of influence regarding the Aids pandemic that they later used to stunning effect to undermine Mbeki’s entire economic policy framework – and in so doing turned public and popular opinion against him. The consequences of Zuma’s successful efforts in KwaZulu-Natal turned the balance of power in the party towards that province creating ethnic populist platforms from which leadership battles were fought.

Singly, Mbeki may have survived either onslaught, but their timing was such that both intersected perfectly with the Polokwane conference of the ANC in December 2007. The left of the ANC was happy to exploit Zuma’s populism to eject Mbeki, while Zuma was happy to ride the wave of ideologically inspired anti-Mbeki media sentiment crafted by the left. After Polokwane, the Zuma camp would go on to loot the state, while the ANC’s left flank clawed back, to use the revolutionary term, ‘the levers of policy influence’ denied to them since Davos. And with those levers in hand they turned the policy clock back to the climate of the Morogoro conference of 1969, cancelling more than ten bilateral investment treaties, hiking minimum wage levels, introducing South Africa’s mad immigration rules, the even madder National Health Insurance proposal and the draft Mining Charter, and turning the screws on ever more onerous racial edicts – all of which was dead in line with NDR dogma.

That the ejection of Mbeki further coincided with the global financial crisis created the perfect governance, policy and economic storm; South Africa’s rate of economic growth peeled away from the global average in a pattern last seen in the late 1970s as job creation rates slipped and confidence in the future, measured in polls, collapsed. That collapse would in turn feed through into the 2014 national and 2016 local government election results – the latter seeing the ANC surrender political control of South Africa’s political and economic capitals (which, together with the already lost Cape Town metropole, meant that ANC local authorities were governing over less than 50 per cent of GDP).

For ANC leaders, the consequences generated the once-unthinkable proposition that the party might surrender its national majority. That fear triggered an internal power struggle between the party’s left flank and the ethnic nationalists (the two victors at Polokwane), as both factions sought to escape responsibility for the ANC’s reversals. This was a struggle in which the left flank ultimately prevailed, by using the thesis of ‘state capture’ to so discredit Zuma that Cyril Ramaphosa came to power as ANC leader. However, Ramaphosa beat Nkosazana Dlamini-Zuma (the candidate of the ethnic nationalist camp) by the narrowest of margins – 179 votes out of over 4 700 delegates – meaning that, had just 90 people voted differently, Ramaphosa would not have become South Africa’s president. And while state capture had done terrible damage to the economy, it was only half the problem: the resurgent NDR thinking of the left flank made up the other half, although that narrative never featured in the headlines or reached the public mind.

Never having been exposed to much by way of critical scrutiny, today the left flank of the ANC – whose policies caused such damage – are still in the ruling party and the government, pressing ahead with many of the same policies that they pursued through the Zuma years. The primary target of these remains the erosion of property rights, now the single most serious threat faced by the country given that such rights anchor substantive human liberty in every free and open society. Surrender those rights and you open the door to a socialist future in which civil rights and the rule of law will be greatly eroded.

My colleague Dr Anthea Jeffery writes that this is the ultimate objective of the NDR:¹

The NDR’s objective is to shift the country’s economy from a predominantly free-market or capitalist one to a socialist and then communist one. This is to be achieved by slow and incremental steps and over a period of at least 40 years. NDR aims are often openly acknowledged in ANC and SACP documents, yet most South Africans have little or no knowledge of the revolution … [because] a transition to socialism would be difficult to achieve if South Africa’s free-market economy was thriving, if unemployment was low, and if most people’s incomes and living standards were rising … a shift to socialism is far more likely to occur when joblessness is growing, inequality is worsening – and the population is growing faster than the economy, making everyone poorer over time … [many] NDR interventions are therefore aimed at deterring investment, limiting growth, adding to unemployment, and bringing business under ever greater state control … many NDR interventions also seek to increase dependency on the government and expand state ownership over land and other vital ‘means of production’. The immediate objective, as the SACP states in its current policy programme, The South African Road to Socialism, is to bring about a ‘socialised’ society. This is one in which the private sector is still present, but ‘the socialised component is dominant and hegemonic’.

There is much that is paradoxical here. In theory, politicians should abandon bad policies that deliver poor socioeconomic results. However, in South Africa’s present case, and given the balance of power in its government, this should not be taken for granted. Rather be open to the possibility that the consequences of poor policy will open doors to even worse ideas in pursuit of an ideological objective. This understanding has become the watershed between those observers who are able to anticipate the next moves of the South African government and those who remain surprised that reform fails to materialise.

Our track record is of getting such predictions right. When many observers were warning about civil wars in the 1980s, the IRR could see enough to know that a negotiated settlement was inevitable. When the Mbeki administration was at the peak of its success, we could see the paradoxes and internal contradictions within it sufficiently clearly to warn, years in advance, of its collapse. Five years before Ramaphosa won at Nasrec, we published a scenario called New Dawn, in which we warned ANC sceptics that the party might just pick a better leader at the last moment – in a last-gasp attempt at reform. When that happened at Nasrec in December of 2017 – and Ramaphoria swept the land – we regretted having to send a note to our clients in which we warned that it had probably happened too late and that little by way of substantive structural reform should be expected to materialise, as the election had not addressed the ideological inflection of ANC thinking.

The counterweight to socialist ideology or NDR thinking can be found in the liberal tradition. Whereas socialist ideas prescribe that the state should determine what you are allowed to think, say, or do, how you should be allowed to participate in the economy, and what you should be allowed or not allowed to have, the liberal tradition is very different. In South Africa that tradition is