Summary
- The Republic of South Africa (RSA) is a country located at the very south end of the African continent.
- The RSA economy is growing by less than 2% a year
- Energy supply is not keeping up with demand
- ~72% of the population is unemployed
- There is a small middle class in RSA
- Education standards are lacking, with only ~7% of children in their final year meeting numeracy standards
- Government expenditure is too constrained to invest in other areas
- Armed robberies have increase three fold from 2005 to 2014, but murder rates have decreased to ~33 per 100,000
- Voters are increasingly becoming non-voters with every election
- RSA is most likely heading towards a development of a socialist state and either an erosion of democratic institutions or a free open society under the rule of law
Introduction
The Republic of South Africa (RSA) is a country located at the very south end of the African continent. Formally a colony of Britain known as the Union of South Africa, they became independent of Great Britain in 1931. In 1948, Apartheid was instituted until the Union of South African elections in 1994. From 1994, the Union of South Africa was renamed the Republic of South Africa, and the African National Congress (ANC) has been in power with a majority. But, every election it looses more and more of its majority seats.
This blog post is a two part summary of a report given by the South African Institute for Race Relations Center for Risk Analysis at the CATO institute in Washington D.C., United states in 2015. The first part will summarise the presentation. The second part will summarise the question time after the presentation. Points of analysis will be added.
Link 1 is the link to the PowerPoint presentation that was given during the conference. Link 2 is the link to the full presentation on YouTube.
Link 1
https://object.cato.org/sites/cato.org/files/articles/outlook-2015-south-africa-world.pdf
Link 2
Economy
- Since 2000, the Republic of South Africa's (RSA) economy has been growing mainly between 3% and 6% ( 2015). However since 2011, growth has decreased to below 2%.
- Most developing economies have an average growth rate of around 5 - 6% from 2012, however RSA's growth has been less than 2%. Projections into the future are expecting growth to remain below 2%.
- 10% of the GDP of the RSA is from mining
-- Analysis: Given mining prices have decreased since 2011, and this percentage of contribution has not changed, overall the RSA have not made up for the loss of revenue from mining with any other investments. - The RSA currency, the Rand, has been getting weaker compared to the USD since 1982
-- Analysis: This is expected to continue to get weaker if the economic problems of the country are not addressed, and investment does not pick up (Cronje 2015) . - From 1994 to 2015, service sector has increased from ~20% to ~27%, manufacturing has decreased from ~23% to ~11.5%, mining has almost remained the same from 8.5% to ~9% and agriculture has been slightly decreasing from ~4.5% to ~3%.
-- Analysis: As RSA develops, it look like it is following the same path as most developed countries have. Turning to less manufacturing jobs and more towards the service sector.
Infrastructure
- Power consumption and the demand for electricity is increasing to a point where existing power structures are breaking down.
-- Analysis: If investment into power supply does not increase, more and more areas of RSA will have power outages, dampening growth and increasing uncertainty.
Employment
Out of a population of ~54 million
-- ~32 million (~59%) are over 20 years old
-- ~15 million ( ~27%) are employed
-- ~16 million (~30%) are on welfareFrom the statistics above, we can conclude
-- ~72% of the population is unemployed
-- ~40.7% are youths under 20 years of ageOfficial unemployment rate
-- ~8% of those aged between 55 and 64 are unemployed
-- ~14% of those aged between 45 and 54 are unemployed
-- ~19% of those aged between 35 and 44 are unemployed
-- ~30% of those aged between 25 and 34 are unemployed
-- ~53% of those aged between 15 and 24 are unemployed
-- Analysis: A high number of youths unemployed coupled with a low welfare number of the population receiving welfare means youths may turn to crime to make a living (eg. drug dealing, prostitution, gangs). This bubble of unemployed will move through the age brackets if it is not addressed (Cronje 2015).
Lending, Debt and Spending
- A large majority of black people do not have an active home. Primarily because they are unable to obtain one or to access these financial services.
-- ~4.00% of back people have a home loan.
-- ~34.9167% of white people have a home loan - Whites make up the majority of the middle class, and spend a lot more money than black people on average
-- Analysis: It should be noted that combining blacks, whites and other ethnic groups that form the middle class, it is a very small middle class that currently exists in RSA.
Education
- From 1955 to 2015, there has been a exponential increase of black Africans passing schools.
- However, the quality of the teaching has significantly decreased. In Grade 1, only 60% of children meet numeracy standards this sharply decreases per year, to the point where only ~7% of children in their final year meet numeracy standards.
-- Analysis: The second dot point is a study done that, we can assume, includes both blacks and whites. Since it can be assumed whites may make up a vast majority of those succeeding, the failure rate of back people may be much worse than the statistics show.
Government Expenditure
- Free or subsidized housing healthcare, education and utilities (~60%), State Debt (~10%), Defense (~5%), Police (~7%), Transport (~7%) and others (~11%).
-- Analysis: The government as a result has little room to allocate funds for other projects, or to even grow the welfare state for children who may rely on it when they grow older to avoid turning to crime or just getting by. - The government pays welfare to more people than there are employed
Crime
- Murder rate has decreased from ~70 per 100,000 in 1994 to ~33 per 100,000 people in 2014. However are still much higher than Australia and the United States with murder rates of ~3 per 100,000 and ~5 per 100,000 respectively.
- Armed robberies have substantially increased from 2005 to 2014 by ~3 times (Refer to Appendix), however convictions of criminals have not kept up with rising crime levels. This is primarily due to the courts being overburden with cases.
Government
- A poll of the number of people who thought the government in power (ANC) was doing well has dropped from 72% in 2000 to 54% in 2014.
- The amount of riot police employed by the government has begun to increase since 2006-2010 from 2595 to 4500 respectively. The amount spend on riot police is a good indication on how governments see their own future as they respond to a perceived threat (i.e. the more money spend on riot police relative to their budget, the more they may use force to keep power).
- Votes cast show ANC (current majority party), other parties have all decreased in voter support. Non-voters have increased from 14% in 1994 to 40% in 2014.
- Violent protests have increased from 971 in 2001 to 1975 in 2014.
-- This shows either a dissatisfaction or a loss of hope for a political party to solve these non-voter's issues. As Cronje (2015) states, this is the start of a protest movement.
2024 Possibilities
- Four possibilities are mentioned
-- Narrow Road: Market driven economic reform and erosion of democratic institutions
-- Rocky Road: Development of a socialist state and erosion of democratic institutions (Most likely trend)
-- Wide Road: Market driven economic reform and free open society under the rule of law
-- Toll Road: Development of a socialist state and free open society under the rule of law (Most likely trend) - Economic upsurge of trading partners with an increase in global commodity prices will give pause to the trend towards Rocky/Toll road and even may reverse it towards Narrow/Wider roads.
Sources
Cronje 2015, 'The Time Traveller Scenarios: South Africa's next 10 years, South African Institute for Race Relations Centre for Risk Analysis, retrieved 29 June 2017, https://object.cato.org/sites/cato.org/files/articles/outlook-2015-south-africa-world.pdf.
Diagonal Views 2015, 'Every South African Needs To Watch This - Scenario Expert Discusses South Africa's Future', CATO Institute, YouTube, retrieved 29 June 2017, www.youtube.com/watch?v=etpWnbqBc5I
Appendices
Calculation of the percentage of RSA citizens that are unemployed
-- (54-15)/54 million * 100 = ~72.2222%Calculation of the percentage of youths under the age of 20
-- ((54-32)/54) * 100 = ~40.7407%Calculation of the percentage of back people that own a household and/or home loan
-- (479,000/12,000,000) * 100 = ~3.9917%Calculation of the percentage of white people that own a household and/or home loan
-- (419,000/1,200,000) * 100 = ~34.9167%Calculation of the percentage increase in crime from 2005 to 2014
-- (37/12) * 100 = ~3.0833
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