This is the future: ANC to lose power within a decade, unless……….
Among the benefits of being based at the JSE is attending events that might otherwise be missed. This afternoon threw up a pleasant example when the Investment Analyst's Society invited Dr Jakkie Cilliers to update them on the Institute for Security Studies' acclaimed "SA futures 2030" scenarios. The ISS's projections for last week's election (ANC 62%; DA 22%) were the most accurate I have seen, closer than widely quoted forecasts by Ipsos (ANC 66%; DA 23%) and news channel ANN7 (ANC 64%; DA 19%). After his presentation, Cilliers, an Extraordinary Professor at Pretoria University and on the board of advisors at Columbia in New York, popped into the Biznews studio. He shared some fascinating insights – concluding that while President Jacob Zuma's pro-business pronouncements over the weekend are a step in the right direction for the ANC (and the economy), the acid test will be exactly whom he appoints in his new Cabinet. Listen to (or download) the interview below by clicking on the picture. – AH
DR JAKKIE CILLIERS: We modelled a number of largely economic and political scenarios to 2030. We characterise our current road as 'Bafana Bafana', which is playing below your potential…dribbling along, but never really scoring a goal. Our forecasts on where the election results would end up were fairly accurate but that was informed by quite a degree of research, talking and looking at what research companies do. There were very different expectations. About three or four weeks ago, everywhere I went the expectation was that the ANC would dip below 60 percent. I think the average was about 58 percent. Many people tended to overestimate the EFF, but South Africans are concerned and our argument is that 2014 is not yet the start of change in South Africa and there are a number of factors, which relate to that. Political change in South Africa relates to the well-known leadership challenges, the challenges within the ANC, and the challenges within the Tripartheid Alliance, which relates to both COSATU as well as the Youth League and the Women's League. There is the issue of where the young voter's going to go, particularly the young black vote. Will the opposition parties – the DA in particular – be able to maintain their momentum? Certainly, looking back now that we have the results, it's evident that the ANC did well, but there is a concern. It is vulnerable, on both the left and the right. The DA has managed to improve its voter turnout/support base…on average, more than 30 percent for the third election now. It has momentum. It has a strategy. It is well poised to challenge the ANC in Gauteng in 2019 and come the 2016 Local Government elections, I think a number of metropoles for example Tshwane; will probably go to the Democratic Alliance.
ALEC HOGG: That's a big swing and certainly a long way from the DA, which had seven seats in Parliament in 1994.
DR JAKKIE CILLIERS: Yes, one needs to take one's hat off to Helen Zille, whatever one thinks of her. It must be one of the most difficult jobs in South Africa and she's managed to transform the party. Of course, two challenges remain for the DA, now. On the one side, it has to tackle the leadership challenge going forward, which is very much around Helen Zille herself. Secondly, it will have to adjust its policies to reflect, much more, the majority of South Africans. In the process, the DA may haemorrhage some of its traditional old National Party support base. However, the future likes in getting the young black vote in particular. The DA knows that, and they are well positioned with the investment they made in Gauteng. They invested the majority of their effort and time in Gauteng, knowing very well that they're not going to win, but basically as a staging ground for 2019. Firstly, 2016 with the local elections and then the national elections in 2019.
ALEC HOGG: Let's go back to the 'Bafana Bafana' scenario. It's beautifully named. You've done some research or described it that way before. Others might say 'the muddling through' scenario. Do you think that's the most likely for South Africa? If that's the case, how do the political trends go into the future?
DR JAKKIE CILLIERS: The purpose of scenario work is as an aid to thinking. It's not a prediction. They are all alternative forecasts, which all need to be rooted in current reality. We have four scenarios. We have two high roads. The one is whether the ANC dominates…it's called 'the future is ANC'. The other one is 'the rise of multi-party democracy'. Both of these give the same economic outcomes of a GDP growth rate of five-point-one percent average out to 2030, which is slightly below the National Development plan's average, which desires a five-point-four average growth rate. Our 'Bafana Bafana' average growth rate is, I think, three-point-eight percent, which is not bad by comparative global standards. Even now, the low road…what we refer to as 'the nation divided', has an average growth rate of, I think, two-point-one percent, which is almost double what we expect the European Union and the US is going to achieve over on average.
ALEC HOGG: We are a developing country, so at least we're going to go… 'The low road' is not one that anyone would conceivably believe would be good for this country, given its high unemployment.
DR JAKKIE CILLIERS: That's correct. We face the three challenges of unemployment, poverty, and inequality, and we have to deal with all three. In my view, unemployment is the biggest challenge because that lies at the heart of inequality in particular, which many analysts such as Adam Habib and many others would consider the real challenge of South Africa. Our challenge is providing work. We have alleviated deep-seated poverty by focus on social grants, which has been a great success for the Zuma administration in particular. Going forward, we need to grow the economy. We need to provide jobs so that we can bring/include the majority of South Africans in the economy. If they feel consistently and perennially excluded, the conflict and tensions within our society will not go away.
ALEC HOGG: Jakkie, I think the part that fascinates most people is when you look into your (not in your case) a crystal ball… When you look into your trends/your future scenarios, if we continue along the line of 'Bafana Bafana/muddling through', what is likely to happen at the polls at the next big election in 2019 and thereafter?
DR JAKKIE CILLIERS: In fact, we've done a forecast of what we think the associated trends could be. We would say that the DA would pick up four or five percent in the next elections. The ANC would lose three, four, or five percent. Even by 2029, the ANC would still be the majority party and in government under 'Bafana Bafana'. They have a tremendous asset – more than 100 years of history/legacy, and the support of the vast majority of South Africans. The DA faces an uphill struggle. They've done exceptionally well. The important thing to recognise is that as elections become more competitive… Currently, voter turnout is declining because the majority of ANC supporters say 'we're unhappy and our party's going to win in any case'. As the elections become more contested, the DA will always have a high turnout of its supporters. It's the minority challenging the majority, but as the polls become more contested, much more latent ANC support may come to the polls, people who would ordinarily have said 'I don't need to vote. My party's going to win'. They may be convinced to come and vote.
ALEC HOGG: So for the next 15 years, it's an ANC-ruled country, along the most likely scenario. What about the provinces? You did mention a little while earlier that there could be a swing in the heartland in Gauteng.
DR JAKKIE CILLIERS: Yes, I think the DA is well poised to take Gauteng in 2019. It won't be easy, but they'll certainly be able to put together a governing coalition. On current trends, the ANC will dip below 50 percent in Gauteng. If the DA can put a governing coalition together, it controls Western Cape and Gauteng, which is very much the economic heartland. In a sense, the writing is then on the wall for the ANC – looking long term – but that economic policy in the future of the country is going to be determined largely as it is everywhere in the world, in the metropoles and the urban areas, and the ANC will struggle to live with that. It will fight tooth and nail to try to avoid that scenario, but of course, things can change.
ALEC HOGG: That's the 'muddling through', so let's look at those other scenarios and maybe the most optimistic one where the ANC continues to rule as the dominant party.
DR JAKKIE CILLIERS: Well, we have two optimistic scenarios, which deliver the same economic results. The one is 'the future is the ANC' where the ANC stays at a 62/63 percent majority. The other is 'the rise of multi-party democracy' where the DA really does well and the ANC and the ANC doesn't do that well going forward. From a structural political point of view, a competitive multi-party system is inherently much more desirable than a single-party dominance system. The real high road is a real multi-party democracy where we have competitive elections in South Africa, where government really can change from one election to the next, where you and I as voters determine our vote based on which party delivers – that's where we want to be. We think that the potential for a reformed ANC to grow the country is real. It's a remarkable organisation – the ANC. It's full of committed people who really have the country's interests at heart, but their constituency are poor South Africans. The have to look after that and they will look after that constituency. For an opposition party to fight against that inertia is indeed a steep mountain to climb. Those two scenarios, both 'the future is ANC' and 'the rise of multi-party democracy' can deliver a much larger economy, around 23 percent larger than what we forecast 'Bafana Bafana' will deliver by 2030. Much higher employment, a much happier and more content South Africa than where we are now.
ALEC HOGG: If you were now advising, given your scenarios, to the ANC itself, what would you be advising them to do to ensure that 'the future is ANC' scenario of yours actually prevails?
DR JAKKIE CILLIERS: A host of internal reforms need to happen. Firstly, appoint a Deputy Executive President with the authority and power to implement the National Development Plan, and a streamlined, smaller cabinet that is focused only one thing, which is implementation of the National Development Plan and everything that goes with that.
ALEC HOGG: Get the economy right and you're going to keep power.
DR JAKKIE CILLIERS: Yes, that's the central message. The alternative is that the ANC can stay in power, but the investment it would take to buy off South Africans by taking, in a sense, money into ever-increasing government subsidies is not economically sustainable in the long term. It runs out of road, as we saw in Zimbabwe, which is a worst-case situation. However, over the long term, which we would consider to be up to 20/30 years, you need a reformed ANC that provides the leadership, the vision, and focuses on real implementation of a clear set of policies. Many of the challenges we have today in South Africa is apparent contradictory policy environment from government.
ALEC HOGG: So we do have a blueprint for the ANC to follow. What about if you were advising Helen Zille?
DR JAKKIE CILLIERS: I think the DA have done quite well from the last three elections. It has positioned itself as a real multiracial party. It now needs the two challenges of – eventually – leadership transition… I think Helen Zille has taken the party to amazing heights, if you look where it came from. It needs to adapt its policies to break into the young black vote, and that means that some of its traditional policy frameworks may have to be amended, going forward. They'd have to modernise in a sense. It's already come a long way. It's well positioned. What is interesting in these elections is that we saw the DA associate itself with the legacy of Mandela and Mbeki, and we also saw within the DA, debates about employment equity…issues that previously would not have been raised. Those debates need to carry on and it needs to carry on raising the talent of young black leaders within the DA, as we have seen.
ALEC HOGG: So she's doing the right thing.
DR JAKKIE CILLIERS: Oh, yes.
ALEC HOGG: If you were advising Julius Malema on the role he could play into the future, given the EFF perhaps didn't do as well as some anticipated, but better than many others did?
DR JAKKIE CILLIERS: Again, from a structural point of view, the fact that the EFF is in Parliament is very important and it's a huge positive. What we now need is for organised labour to get into Parliament as well because we need to include South Africans. We need to get South Africa where all the sectors of our society are within Parliament, are represented, and form part of the National Assembly that governs, oversees, and makes the laws that govern our country. However, I think the EFF will face many challenges going forward, to stay coherent as a party of largely, disaffected ANC supporters have moved away. Do they have a management team and the staying power to maintain a party in Parliament? It's one thing to be in Parliament. It's a different thing to be out in the street, canvassing. The EFF face a difficult challenge and I think that if NUMSA establishes a left-wing labour party, that would squeeze the EFF much more than it squeezed anybody else except of course, the ANC itself.
ALEC HOGG: Jakkie, just to close off with, I saw the presentation so I have an idea of how you're going to answer this. Going into the future with a multi-party democracy, is there a time when the ANC actually loses power?
DR JAKKIE CILLIERS: Yes, we believe that by 2024, the ANC could dip below under two scenarios – below 50 percent, which means that in theory an alternative alliance is possible. One of the two scenarios is 'the rise of multi-party democracy' and the second is 'a nation divided', which is not a very positive scenario – but not before 2024, although 2024 is two elections away. It's not that far and I think the ANC is quite concerned. The trends are clear and the reform needed to maintain power for the ANC are either clear, rational, and economic choices, which means certain risk, or more populists policies that also have risks. It's a difficult challenge if you're the President.
ALEC HOGG: Over the weekend, he did say he would like to be more business friendly in the next term.
DR JAKKIE CILLIERS: The announcements and pronouncements after the elections have been heartening. It's all been about implementation of the National Development Plan, about competency, about implementation and delivery, and this is good news. What we need in South Africa is clarity on policy, a predictable investment environment, and this is what we hear. The rubber hits the road on the announcement of Cabinet and that's the next big thing we all have to watch out for.