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Andile Sangqu: SA is on track to a grim economic future. Here's how we can change that

FIN24 / 01 AUGUST 2019 - 05.00 / ANDILE SANGQU

South Africa could be on course for a grim 2030 economic future, looking at findings from the Indlulamithi South Africa Scenarios 2030 project.

Indlulamithi – a Nguni noun for giraffe – is based on the intention to "look above the trees". In 2018, Indlulamithichallenged South Africans from all walks of life to collectively imagine three probable futures, or scenarios, for South Africa, addressing the question: What does a socially cohesive South Africa look like? And is it attainable by 2030?

Andile Sangqu - Executive Director and Executive Head of Anglo American South Africa.

Using a new barometer that analyses existing datasets, Indlulamithi has now shed light on which scenario the country is most trending towards. And it is clear that if South Africa maintains its current status quo, it’s heading towards the worst-case one.

In what’s known as the Gwara Gwara scenario, by 2030 average economic growth will sit at below two percent; investments in South Africa’s mining, agribusiness and manufacturing sectors will reach devastating lows; and social capital will deplete. Approximately one third of the population will remain in poverty, with South Africans growing poorer and poorer every year.

The Gwara Gwara is the third of three scenarios. The other two are Isibhujwa, epitomising an enclave nation torn by deepening social divides, and Nayi le Walk,which charts a South Africa with growing social cohesion, economic expansion and a renewed spirit of Constitutionalism. In the Gwara Gwara scenario the society is demoralised and there is disorder and social decay.

Fortunately, though probable, the Idlulamithi projections remain only scenarios – for now. This gives South African leaders the valuable opportunity to open important dialogues and make informed decisions that steer the country away from this undesirable economic future.

To avoid it, it is becoming increasingly evident that we need to prioritise and bolster efforts around improving levels of social cohesion.

Social cohesion: The heartbeat of economic growth

One of the underpinnings of Indlulamithi is that South Africa’s economic future is inextricably linked to its levels of social cohesion. Social cohesion refers to the degree of social integration, inclusion and mutual solidarity in communities. As a diverse country with generational burdens of division and inequality, South Africa depends on this cohesion for progress. Without it, any economic development and job creation strategies will flounder.

In Gwara Gwara, for example, South Africa’s low economic growth is the direct result of poor social capital. In this scenario, weakened leadership capacity causes all-time low levels of trust among fellow South Africans, immigrants, the state and social institutions.

These growing levels of inequality, the scenario projects, keep 70% of the country’s wealth in the hands of the richest 10%. Not only are the poor left worse off, but state institutions are incapacitated to deal with most of the country’s socio-economic ills.

In 2018, increasing State Capture revelations, sharp increases in the cost of living (in part due to the VAT increase), higher petrol prices, climbing youth unemployment rates, and xenophobic violence are among the factors that pulled the barometer so strongly in the direction of Gwara Gwara.

Can we change course?

One of the other scenarios outlined in Indlulamithi is Nayi le Walk, where a pro-poor economic path leads to economic growth, unemployment drops, and poverty reduces. This Nayi le Walk scenario is consistent and in line with the vision of the country and our Constitution.

While it may seem impossible in the face of our current growth trajectory, Indlulamithi’s economic modelling demonstrates that a revision of the country’s current micro- and macro-economic policies is necessary to achieve such growth.

A new consensus is required among key partners in developing a transformative social compact, which propels the country towards a path where more South Africans benefit from economic growth. The Indlulamithi barometer results offer an important reality check and inflection point – a critical moment to make fresh choices as a collective and course correct towards a path that creates lasting and inclusive prosperity.

If we do not take this opportunity, and focus all efforts on improving the basic underlying welfare for the majority of South Africans, we can anticipate an average economic growth rate of two percent and an unemployment rate of 26% in the next 10 years. Such low levels of growth can only be followed by a society of demoralisation, disorder and decay.

Andile Sangqu is Executive Head of Anglo American SA and an executive director on the Anglo American SA board. Views expressed are his own.



Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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