A prominent think tank in South Africa says the decision to charge finance minister Pravin Gordhan with fraud ties into the scenario that a new right wing is taking charge of the country. The Institute for Race Relations (IRR) says although it is one of the less explored policy avenues open to the South African government, it certainly follow the examples of the current Ethiopian and Rwandan governments. “These are quite authoritarian regimes that use that authority to force investment-friendly economic policy. Civil rights are suppressed by a corrupt administration in order to force through reforms that have the effect of increasing the rate of economic growth. The model approximates that of the Asian-Tiger economies – with important differences.”
IRR head of risk, Kerwin Lebone, says he would not advocate for such a model because the IRR believes economic reform in South Africa is more than possible within the existing constitutional and democratic dispensation. “However, we expect that such an authoritarian reform model may become attractive to South Africa’s government as the political consequences of current low rates of domestic economic growth are felt by the government and the ruling party. Yet very few South African analysts and investors have this outcome on their radars.”
He says the danger is that the model will demand of South Africans that they surrender some of their rights and freedoms in exchange for the promise of prosperity and stability. “But, where such stability is not forthcoming, they may find themselves trapped under a dictatorial regime. However, where prosperity is achieved, South Africa’s example will almost certainly be influential in shaping the evolution of high growth economies across the continent.”
The IRR has now released a policy paper titled The Rise of the New Right: South Africa’s Road to 2024 on the prospects for a forced, quite authoritarian, economic reform process in South Africa.
The paper says one of the outcomes for SA could be that right wing reformists gain a balance of power in the ruling party over the next eighteen months. They seize control of the party at its internal leadership elections in December 2017 and lead the party to contest the 2019 national elections and choose a reformist cabinet – possibly with support from the centre-right of the opposition
spectrum. The cabinet moves quickly and firmly to secure property rights, deregulate the labour market, professionalise the sluggish civil service, and employ the private sector as partners on the road to rebuilding the South African economy.
“Where opposition to the government’s reformist agenda is encountered, we expect it to act decisively and harshly to ensure that its reformist agenda is not derailed – as harshly, possibly, as the ANC dealt with its political opponents 30 years ago. Such firm action may extend to the point of undermining civil rights, free speech, the sanctity of the courts, rights to free political association, and the standing of trade unions and other civil society groups. If such a reformist agenda were to be pursued with vigour, we anticipate South Africa’s debt and interest rates peaking in the period around 2020, before declining back to levels last seen around 2006. Growth levels will have averaged below 2% of GDP into 2020, but will then commence a gradual rise, to average in excess of 5% of GDP by 2024–2026.
“The currency will strengthen back to purchasing power parity levels by the mid-2020s, while the current account and budget deficits will narrow. Rising employment and living standards will stabilise the politics of the country – as they did for much of the period from 1994 to 2007. Factor in a global economic recovery and commodity comeback, and South Africa’s economy may perform very strongly. As confidence in the government returns, restrictions on civil rights and free expression may concomitantly be lessened,” read the paper.
It concludes that if South Africa follows the trajectory described above, the model may well become influential in further shaping the evolution of high growth economies across the African continent. South Africans would cede some of their political freedoms in exchange for growing prosperity and the promise of stability. Where growing prosperity is achieved, it will resemble the development model that was followed by many of the Asian Tiger economies – albeit with very important differences. It is also the model that is being pursued with some economic success in Rwanda and Ethiopia.
However, where prosperity is not forthcoming, it is also a model that invites a system of rule with impunity, from which South Africa may not escape for some considerable time.
