Ciaran Ryan, a freelance journalist with deep insight into the country’s fiscal history, stresses the need for a fundamental shift in economic policy. “The conversation around SA’s economy needs to shift from social welfare to growth,” Ryan argues, highlighting a critical issue in the current debate about the nation’s future.

Ryan’s reflections come at a time when SA is still grappling with high unemployment, debt, and economic inequality despite significant strides made since 1994. The journey from the Presidency of Nelson Mandela to Cyril Ramaphosa’s current leadership reveals a complex picture of progress and setbacks. Each leader has faced unique challenges, but a common thread through their terms has been the tension between social welfare and economic growth.

When Nelson Mandela assumed office in 1994, he inherited a country deeply divided by apartheid. The country’s economy had excluded the majority of black South Africans from its wealth. Mandela's legacy includes the construction of 1.5 million houses, marking a pivotal step in improving the lives of the oppressed. However, his time was also marked by capital flight and concerns about the direction of South Africa’s economy.

Thabo Mbeki, who took office in 1999, brought stability, working closely with Finance Minister Trevor Manuel to implement sound economic policies. Under Mbeki, SA experienced a period of fiscal discipline, with the budget deficit shrinking from 4% to 0%. During his tenure, the country saw important infrastructure projects and an economic boom, peaking at a 5.6% growth rate in 2008. But unemployment remained stubbornly high, and economic growth soon stagnated.

Mbeki’s fall from power in 2007, followed by Jacob Zuma’s Presidency, saw a marked decline in economic performance. Zuma’s leadership was marred by corruption and the rise of state capture, particularly the controversial involvement of the Gupta family in state-owned enterprises. Mismanagement of essential infrastructure, such as energy and transport, led to economic instability and a loss of public trust.

Ramaphosa took office in 2017 with promises of revitalising SA’s economy. While he brought hopes of economic recovery and an end to corruption, his tenure has seen a rise in the debt-to-gross domestic product ratio from 27% under Mbeki to over 80%. This increase has been attributed to the economic fallout from the COVID-19 pandemic and the country’s growing social welfare obligations. As of now, 26 million South Africans depend on some form of government assistance, a significant increase from 14 million in 2010.

Ryan’s argument, however, points to a crucial issue; the persistent gap between social welfare and job creation. Despite the growth of the black middle class, policies like Black Economic Empowerment (BEE) have not substantially reduced inequality or generated the large-scale job creation necessary for economic stability. The Employment Equity Amendment Act, which seeks to further enhance BEE, has sparked debate about whether it is truly addressing the structural issues at play.

"The focus now needs to be on creating an environment conducive to business and job growth, rather than relying heavily on social redistribution," says Ryan. As the nation is in its fourth decade of democracy, the challenge remains; how can SA balance the need for social equity with the imperative for economic growth?

With the future of the country’s economic policy in question, the coming years will determine whether SA can achieve the growth needed to sustain its social goals and ensure the long-term prosperity of its citizens.

--ChannelAfrica--