South Africa could become a failed state by 2030 – Eunomix report claims

Cyril Ramaphosa. Image credit: Twitter/The Presidency

South Africa risks becoming a failed state by 2030 unless it changes its political and economic trajectory, a report by Eunomix Business & Economics Ltd claims.

The Johannesburg-based risk and consultancy group said South Africa’s economy could sink to Ivory Coast or Bangladesh levels, according to a Bloomberg news report published on Thursday.

Security situation

Similarly, the country’s security situation could worsen and resemble those in Nigeria and Ukraine, which rank near the bottom of a list of over 160 countries. According to the 2020 Global Peace Index, South Africa currently ranks 123rd.

“Bar a meaningful change of trajectory, South Africa will be a failed state by 2030,” Eunomix claimed.

The consultancy group said the structure of South Africa’s economy is a legacy of apartheid and was designed to exclude the black majority. The country therefore remains one of the world’s most unequal societies.

The ruling African National Congress (ANC) has so far failed to consistently promote job-intensive growth policies, Eunomix said, preferring instead to increase wages and subsidise the poor through social grants.

As a result, the government wage bill as a percentage of gross domestic product (GDP) is higher than those in peer countries such as India, Philippines and Thailand, the group explained.

‘Ideological puritanism’

It said the ANC’s strategy is heavily influenced by “ideological puritanism and entrenched interests,” adding that South Africa “should not choose between imagined opposites. It should adopt a dual-track approach that reconciles them.”

Eunomix advised the government to develop and maintain high levels of social support and fund this through its special economic zones policy, which should be aggressive enough to enhance growth and employment.

President Cyril Ramaphosa has stated that the government is finalising an economic recovery strategy which he said will build a more inclusive economy and boost growth.

“We now need to move forward so we will be able to put the plan to the nation. I want to see the implementation taking place and it will be directed from the president’s office,” he said during an engagement with the SA National Editors’ Forum on Wednesday.

Earlier this week, Statistics SA revealed that the economy had shrunk by a massive 51 percent in the second quarter of 2020 compared to the same period last year. It had also contracted by 16.4 percent compared to the first quarter of 2020. This was occasioned in large part by the COVID-19 lockdown imposed in March.

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