South Africa’s problems often seem unsolvable and unique. South Africa is an exceptional place in many ways. But its remoteness and uniqueness should not hide the fact that the Covid-19 era had a devastating impact on a multitude of countries that were once considered the champions of tomorrow.
Tim Cohen is the editor of Business Maverick. He’s been a business and political journalist and has been a commentator for more years than he’d like to admit. His freelance work included contributions to the Wall Street Journal and the Financial Times, but he spent most of his life working for Business Day. After a midlife crisis that didn’t involve the traditional fast car, Cohen now lives in the middle of nowhere in the Karoo.
First published in Daily Maverick 168 weekly newspaper.
I recently read a story in the Wall Street Journal about Lebanon, a country of tremendous resilience and attraction. But lately it has been heading south at a spectacular rate.
Power outages have become common; Inflation is 400%; Buyers hurry to buy bread, sugar and cooking oil before they run out. Doctors are going in droves and murder rates are rising rapidly.
The article quotes debt finance expert Mike Azar as saying, “At some point the crisis will get so bad that even the building blocks of recovery will disappear.”
It also points out that while many economic crises stem from wars and natural disasters, or more recently the pandemic, the collapse of Lebanon “reveals the almost limitless ability of the government to cause self-inflicted harm”. I couldn’t help but feel that it was so reminiscent of South Africa; an almost limitless capacity for self-inflicted harm.
Lebanon, which has survived a civil war, millions of refugees from neighboring countries, countless conflicts with Israel and a large number of political assassinations, is finally crushed by the pandemic. It is wonderful.
But look around the world and you will find that Lebanon is not the only place that is struggling. The Economist warned this week that Colombia has suffered violent protests and Tunisia is facing a constitutional crisis. Also, illiberal governments are in vogue. Peru has just sworn in a Marxist as its president, and independent institutions are under attack in Brazil, India and Mexico.
Which brings us all back to an interesting question: what has happened to this strange concept of “emerging markets” in the past two decades?
In the first decade of the new millennium, the “emerging economies” grew, roughly speaking, much faster than the developed economies. The idea of the BRICS countries was on everyone’s lips; they were the future. But in the second decade of the millennium, the group’s countries began to separate.
The “Up” group was of course led by China and, to a lesser extent, India. Brazil and Russia have both faltered and are now run by autocrats.
Of course, South Africa also belongs to the “downs”, which is a more unequal society today than it was during apartheid. Growth has flattened, unemployment has risen, and while some post-apartheid GDP per capita gains can still be seen, the gains of the first decade are undone by the second.
The Economist article contains an interesting statistic: the proportion of countries that grew economic output per capita faster than America increased from 34% in the 1980s to 82% in the 2000s. But in the 2010s the proportion of countries catching up fell to 59%.
There have been some quieter success stories, particularly in Asia – Malaysia, Indonesia, and Vietnam. And there have been some very noisy disasters, including Venezuela’s ruinous experiment with deep socialism and Turkey’s transition to authoritarianism.
What should South Africa learn from all of this? In my opinion, the first point is that obvious problems cannot be left lying around. The SA’s catastrophic failure to improve its educational system is a blatant eyesore. Corruption is destroying South Africa as it is destroying Russia.
But the curious thing is, why isn’t it used when you have some pretty obvious “catch-up” guide (absorb foreign technology, invest in manufacturing, and open up the economy to trade)?
This simple system, with some geographic help, has been the recipe for success for any country that continues to be successful.
What the confused and confused business mandarins of the ANC have to answer is this: Why shouldn’t this work here? DM168
This story first appeared in our weekly newspaper, Daily Maverick 168, which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest specialist dealer, please click on here.