The breakdown of the rule of law in South Africa has caused the increasing informalisation of the economy, rather than its industrialisation, which fosters growth, creates new jobs and sustainably reduces poverty.
The rise of the so-called zama zamas, informal miners, is a case in point, of how the total breakdown of law and order, enforcement and rules, leads to the increasing informalisation of South Africa’s economy.
This is causing the formal economy to shrink, industries to close down and markets to collapse. An economy can only grow, create new jobs, and reduce poverty if it industrialises, not informalises. Industrialisation is when a country creates an increasingly sophisticated, diverse system of industries on a wide scale.
This means a country manufactures sophisticated, value-add goods for local and sophisticated foreign markets, that demand ever-increasing new kinds of skills, technology and innovation. Deindustrialisation is the reversal of industrialisation — especially in manufacturing and heavy industry, technology, skills, innovation and investment capacity.
Because of the breakdown of the rule of law, mines are increasingly hijacked by informal syndicates, which leads to a situation where the formal mining associated with South Africa disappears and becomes replaced by informal mining. Big formal mining companies close down or leave, and investors are reluctant to establish new formal ones. Formal jobs are lost.
The ANC as a governing party itself has become informalised — many of the party’s structures have been hijacked by criminals and opportunists
The business ecosystem linked to the formal mining industry also collapses. An informal business ecosystem now serves the informal mining “industry”. There are no rules, safety or health standards in the informal mining industry. Taxes are not transferred to the fiscus and formal tax income is reduced. The country’s GDP shrinks.
The public transport sector in many parts has also been informalised because of the breakdown of the rule of law. The minibus taxi industry is the prime example of the informalisation of the transport industry. Because of the absence of law, formal train and bus transport has in many instances been destroyed by corruption, mismanagement and vandalism. The informal taxi industry follows very few formal rules, is violent and uncaring of passengers or other road users. The breakdown of formal public transport undermines the economy as citizens cannot safely travel to workplaces, and injuries and deaths cause mental, health and economic devastation.
The informalisation of the economy has caused critical skills to leave the country — business and capital emigrate and potential new skills, businesses and investment go to other formal economies which follow the rule of law and have respect for rules and social order. The flight of skills, business and capital reduces the country’s income, business formation, job creation, and social cohesion.
Housing is another area in which the breakdown of the rule of law is manifestly clear. Houses, flats, buildings and farms are increasingly hijacked because of the breakdown of the rule of law. This increases the informalisation or ghettoisation of housing in the country. Bylaws, building regulations and hygiene are not enforced. Water, sanitation and energy infrastructures strain or collapse.
Municipalities do not get revenue from rates, water or power. Areas with informal housing are also dens of violence, gangs and drugs. The deadly fire that broke out in Johannesburg early this year is a case in point of how the breakdown of the rule of law causes the informalisation of housing, which in turn leads to a total infrastructure breakdown, which ultimately caused the deadly inferno.
Finally, corruption, cadre-deployment incompetence, capture by criminals and non-sensical and ideologically outdated policies have increasingly caused the informalisation of the South African state — whether national government departments, provinces and municipalities or public services and state-owned entities.
Whole national government departments, provinces, municipalities and SOEs have in many cases been hijacked, in the same way that cars, buildings and mines have been hijacked by criminals, corrupt cadres and BEE tenderpreneurs. This has hollowed out the state. This is one reason the state has been unable to deliver public services.
The ANC as a governing party itself has become informalised — many of the party’s structures have been hijacked by criminals and opportunists. Rules, processes and procedures have been corrupted or are not enforced, with party structures largely functioning informally. The elections of leaders have been hijacked with “informal” leaders, the corrupt, incompetent and ignorant now dominating. Sadly, many of South Africa’s new political parties, particularly spin-offs from the ANC, such as the MKP, have also been informalised, where rules, appointments and decisions are made entirely by the leader, not through democratic procedures, policies and structures.
No economic growth or public services, no poverty reduction and employment creation are possible without the rule of law, order and a rules-based society. It is critical that the government of national unity brings back the rule of law, societal order and rules, and accountability or South Africa’s economy will continue to be become informalised and deindustrialise.
• William Gumede is Associate Professor, School of Governance, University of the Witwatersrand, and author of ‘Restless Nation: Making Sense of Troubled Times’ (Tafelberg)
For opinion and analysis consideration, email Opinions@timeslive.co.za
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