Over the past few years South Africa’s public finances have come under more and more strain, as the size of the economy per person declines and there is rising unemployment. These hard times have three main origins: the economic legacy of apartheid, the effects of the 2008 global financial crisis, and the massive damage done by inaction and state capture during President Jacob Zuma’s tenure.
Apartheid limited development for the majority of the population in South Africa. It created many negative implications for the country including high unemployment, high transport costs for workers, dependency on the state as well as high crime rates. This consequently destroyed communities, created costly spatial inequalities and led to extreme inequality between race groups.
Even so many years after the apartheid, the country remains in debt despite different measures put in place. This has resulted in worsening finances that has caused public finances to become a burden on the economy due to the tax revenues required.
This has resulted in South Africa to be faced by a combination of challenges, making the country’s economic problems vastly more difficult. Policies that have been used in other countries cannot be used or imitated in South Africa, as it is not that simple.
South Africa lacks financial and economic experts making it difficult for political leaders to come up with policies. Such as former deputy finance minister, Mcebisi Jonas’ idea of “shock therapy”, to introduce various aspects of capitalism. This would be inappropriate for South Africa, where the private sector controls more of the economy than the state. This ignores the harm caused by austerity measures and fails to acknowledge the structural origins of South Africa’s high unemployment rates.
Due to high levels of debt and non-existent economic growth means that there is very little room for creativity in public finances. Instead, reports attempt to paint a positive picture of future prospects, when they should be focused on crisis management. In the absence of a clear-eyed vision for the role of the state in relation to the economy and socio-economic outcomes, only good fortune will spare South Africa from stagnation, or further worsening of public finances.