South Africa’s two-tier economy (2012-2022) by Keith Hart

This analysis is based on the World Economic Forum’s Global Competitiveness Report for 2011-2012. It identifies twelve “pillars” of sustainable national competitiveness: institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation. 142 countries were ranked in a Global Competitiveness Index. South Africa came number 50 overall, but the BRICs were not much different: China 26, Brazil 53, India 56 and Russia 66. The top ten was dominated as usual by European countries, with Switzerland (the source of the report) number 1. Inequality is endemic to this world economy, but South Africa’s profile is two-tiered to an astonishing degree.

Analysis and commentary

I have selected two groups of indicators from South Africa’s detailed profile to highlight the contrast between extremes. In the last report before the pandemic (2019), the country had slipped to number 60. In 2021, South Africa erupted into mass violence, something that could have been predicted a decade before, but wasn’t.

South Africa’s rank out of 142 countries (2011-12)

Security exchange regulation 1

Soundness of banks 2

Efficacy of corporate boards 2

Financial services availability 3

Financial market development 4

Management schools 13

Air transport infrastructure 17

Professional management 18

Home market index 24

Scientific research 30

Firm technology 30

Buyer sophistication 31

Marketing 31

* * * * * * * * * * *

Electricity supply 97

Internet use per capita 105

Supply of scientists & engineers 112

Pay and productivity 130

Life expectancy 130

Education system 133

Crime and violence 136

Hiring and firing practices 139

HIV prevalence 139

TB prevalence 141

Businessmen listed the most problematic factors as inefficient government bureaucracy (20%), poorly educated workforce (17%), restrictive labour regulations (16%), corruption (12%), crime and theft (10%) and poor infrastructure (8%).

What we have here is a world-class business environment surrounded by some of the lowest human development conditions in the world. It would have been easy to explain such dualism not long ago, when South Africa was notorious as a mining enclave run for the benefit of whites only; and perhaps two decades of African National Congress rule (supported by the black union federation COSATU and the Communist Party) could not be expected in such a short time to undo the neglect and harassment endured by the poor black majority for a century or more. But South Africa’s first world corporate capitalism and the third world conditions most citizens live in are both significantly a product of post-apartheid government.

The decade since the report considered here has seen a marked deterioration in the quality of government and the living conditions of most black people. Public discourse in South Africa could hardly be said to reflect these stark contrasts then. The arrival of “democracy” to the “rainbow nation” in the form of black majority rule in 1994 was still celebrated without any apparent irony. Political discourse is now openly racist in some quarters and the social fabric teeters on the edge of collapse.

The ANC’s hold on power rests increasingly on its ability to count on the votes of the poor black majority whose interests it systematically neglects. It is already being replaced in the main cities by a variety of insurgent parties and is split into warring factions. South Africa’s growth rate a decade ago at an average 3% a year is less than half that of the seven African countries who (with China, India and Vietnam) that then made up the top ten fastest- growing economies in the world. This relative stagnation is surely an effect of the country’s business-friendly (some would call it “neoliberal”) economic model. The prospect for major social explosions then seemed to be low, not least because South Africans have been told they are superior to the rest of the continent and are easily diverted by resentment of other Africans who come there for work. That complacency has vanished now, if the not the xenophobia encouraged by several parties, not least the ANC.

Source:

Keith Hart: Honorary Professor, School of Development Studies, University of KwaZulu-Natal; Co-director, the Human Economy Group, University of Pretoria; Founder, the Open Anthropology Cooperative.

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