South Africa is turning into a mafia state, with failure to uphold the rule of law, rising unemployment, deepening inequality and an inability to grow the economy allowing criminality and corruption to thrive unchecked.
Unless urgent measures are taken to accelerate economic growth, the structural problems and volatile security situation will worsen — potentially sparking social unrest and even triggering national and provincial elections on the country before 2029
This is according to Colin Coleman, former CEO of Goldman Sachs sub-Saharan Africa and a non-resident fellow with the Atlantic Council’s Africa Center, a global think tank.
Coleman said the failure of the government to grow the tax base and reallocate budget spending towards productive investment — along with failing to uphold the rule of law and hold wrongdoers accountable — was causing a slow systemic meltdown, echoing the early warning signs seen in countries prior to the Arab Spring.
“I believe that the balance of risk suggests that it is unlikely — without changing trajectory — that the country will be able to hold together without calling an early national election.
“This is because society may either become too unstable — as unhappiness grows due to the lack of implementation of the rule of law, high unemployment and high inequality — or that something will give in society, in the ANC or the GNU, resulting in a build-up of pressures.
“It’s likely that the boiling point may be reached sooner than 2029.”
Coleman, who is co-chair and non-executive director of the Youth Employment Service, warned that the spiral towards a mafia state risks becoming irreversible in the absence of leadership capable of enforcing the rule of law and implementing the growth-enhancing reforms needed to create jobs on a large scale.
“When corruption enters society, it becomes part of the furniture and is extremely difficult to extract. So then your political/economic system becomes a mafia-like system … an extractive system.”
When corruption enters society, it becomes part of the furniture and is extremely difficult to extract. So then your political/economic system becomes a mafia-like system … an extractive system.
— Colin Coleman, non-resident fellow with Atlantic Council’s Africa Center and co-chair and non-executive director of the Youth Employment Service
This everyday slide into a mafia state manifested itself in the proliferation of an underground, illegal, untaxed economy, driven by politically connected “tenderpreneurs”, the construction mafia, armed gangs and other illicit formations — all of which posed a threat to democracy, he said.
“Some time ago, I warned that without spreading economic opportunity far and more widely, the current merging of criminal and political interests to illegally access economic opportunity would accelerate. New forms of illegal economic organisation would crowd out legal, formal and taxed economic activities. This growth in the informal, untaxed, illegal economy enmeshed within the politics of the ruling party and others is going to completely contaminate democracy.”
Coleman said South Africa had experienced high population growth — including an influx of undocumented migrants — but this had not been matched by growth rates, which had hovered around 1% for 15 years. GDP had remained stagnant at around $400bn (R6.9-trillion), the same level it was in 2010.
He contrasted this with emerging market peers, including Türkiye, with a population of 80-million supported by a GDP of $1.2-trillion; and Poland, which has added $300bn more to its GDP since 2011. He repeated previous sentiments that with higher economic growth, the government could work South Africa out of its R6-trillion debt problem.
“We have a growth problem and we have a debt problem; but we’ll only be able to deal with our debt problem by sustainably achieving high rates of growth. The US under [former president Bill] Clinton, for instance, worked themselves out of a debt problem by turning a massive deficit into a surplus by significantly growing the economy. No amount of austerity without growth will solve our debt problem in South Africa.”
Coleman questioned whether there was enough capacity in President Cyril Ramaphosa’s cabinet — specifically in the key economic and security departments — to drive the required reforms and restore the rule of law.
“In any system, the ability to implement and to succeed and execute is entirely based on the people you have. Unless you change the team, you won’t get a different outcome. So Ramaphosa needs to have — in critical portfolios — a much more capable and much more authoritative team, one that can execute. He doesn’t have those people with him.”
The former senior fellow and lecturer at Yale University’s Jackson Institute for Global Affairs believes the government of national unity (GNU) has, to date — with a few exceptions, such as fixing loadshedding and improvements at the department of home affairs — been ineffective in driving economic reforms and restoring the rule of law.
He said should a national election be called earlier than 2029, current polling forecasts suggest the ANC may slide to 30%, from 41%, while the DA may increase support from 21% to 30%, which would then bring the balance of power in a GNU much closer to a genuine sharing of power between the two.
“Together, this rebalanced GNU will arguably be more capable of executing on a growth and rule of law mandate, deploying the best South Africans to lead and execute on the key portfolios. That will constitute the glue that can hold the centre.”
Coleman said time is running out for South Africa if it hopes to mend relations with the US and strike a fairer trade deal that could see import tariffs on locally made goods and products eased towards 15%, in line with emerging market peers.
The US has imposed 30% tariffs on key South African exports and a 25% levy on vehicle and automotive components entering its market from the country.
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