The Budget: accelerating South Africa's economic failure

 In 2000 South Africa's GDP was $152 billion. Its peers - developing and middle income countries - achieved an average 4.5% growth annually, including the bounce back after 2008 and Covid. Had SA reached that, or even a modest 3%, it would be around $1 trillion by now.

The ANC has collectively made us poorer. Despite the evidence and suggestions and advice year in year out of what ought to be done, for the most part impartial experts, they refuse to change, the tax and spend policy being one of them. What's driving them is anybody's guess - communist/socialist ideology, their cornerstone NDR, fuelling their patronage and corrupt networks or just stupidity and naivete, or all of that.

This week Ann Bernstein of the Centre for Democratic Enterprise wrote about her interview with Argentina's Minister of Deregulation and State Transformation Federico Sturzenegger. As she describes, Argentina had similar conditions to SA but incoming president Javier Milei told citizens "there's no more money". They made the urgent and necessary cuts that quickly resulted in Argentina going from inflation of over 200% to growth of 5%. 

None of this is novel economics and finance but common sense. But the ANC refuse to do do because there are too many mouths - cadres and government workers - to feed at all levels of state. 

Enoch Godongwana is quoted saying they had no alternative to the VAT increase, now 0.5% this year and 2026 after the original shocking proposal of 2%. But I doubt he tried, especially given the advice given of where savings in expenditure could be had. It's not a stretch that the order not to cut expenditure came from on high - NEC and\or Ramaphosa; the hubris of the 2% Vat proposal that the ANC largely supported. I'm loath to agree with Steenhuisen the ANC still act as if they're running government (they are I suppose).

Seven years ago I predicted that within 15-20 years Ethiopia's GDP would match and surpass SA's. At the time theirs was $82 billion. It's now $164bn. At respective country's rates, my prediction will come to pass by 2030, when I also predicted SA would be a near-failed nation (it's now defined as fragile).