From Lockdown to Thuma Mina: Impact of Economic Reform on South Africa’s Prospects
The COVID-19 crisis has shaken South Africa, and indeed the world, to its core. But addressing the nation on 21 April 2020 President Cyril Ramaphosa sought to turn the crisis into an opportunity, promising ‘not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality.’ That, he argued, required a new social compact to accelerate the structural reforms needed to reduce the cost of doing business, promote localisation and industrialisation, overhaul state-owned enterprises and strengthen the informal sector. This policy brief updates the findings contained in a longer research paper, South Africa First! Getting to Thuma Mina, published shortly before the global pandemic hit. The paper argued that South Africa had been caught in a classic middle-income growth trap and that it was steadily falling further behind the average for high-growth middle-income countries. The reasons for this situation stem from the country’s apartheid legacy but were further worsened by the global financial crisis of 2007/8 and the impact of poor governance and state capture. It occurs despite the country’s demographic dividend, political transition and substantial natural assets. With COVID-19 the situation is increasingly precarious.