The Common Sense's Christmas Diary

Twenty-twenty-five has been a good year for South Africa – in the relative sense.

There is not enough appreciation of how important it is that the unity government has held through its first full year. Had the ANC chosen the MK and EFF option, or had the DA rejected the option of governing with the ANC, there is every chance that investor sentiment would have crashed and that an ANC–MK–EFF government would have printed money. The rand would be trading well north of 20 to the dollar. Inflation would have been a multiple of the current number. Unemployment would have spiked. And the governing coalition would be working on ways to collapse our democracy to head off the fallout.

By rights that should have happened. It was in many respects the natural order of things. The nationalist populists should have gotten together. But the ANC made a different choice and the DA, showing great maturity and a sense of the national interest, came in as a partner to save South Africa from that fate. It was quite a remarkable thing.

Two weeks ago, that deal was again tested in KwaZulu-Natal when MK and others called a vote of no confidence in the DA–ANC–IFP government in that province. That offered both the ANC and the DA an exit. What happened? The ANC and the DA came together to shoot the motion down. Each time the unity government is put under extreme pressure, or the ANC and the DA are offered exits, they come together and don’t take them.

Because the radical populist option keeps getting rejected, fiscal prudence has held through this year and the Treasury has had the political support necessary to take the shrewd decisions needed to anchor a degree of confidence in South Africa’s long-term economic prospects. If the Treasury had been put under populist management, that would have been lost, and with it the prospect of South Africa holding together as a democratic and unitary state.

Here and there the right noises have been made on policy. The review of BEE is a very welcome thing. The DA alternative to BEE presented during the year, and its positive reception, is the most important policy move made in South Africa in 30 years. For the democracy to hold, the economy must grow, and for it to grow the country must stop taxing investment. The DA has shown how to do that at the same time as making broader empowerment policies more effective. The review is the opportunity to put that into practice.

The private concession to drop NHI in favour of something sensible – perhaps mandatory low-fee insurance for the employed – was just as welcome. Had South Africa’s private health industry been nationalised, as the ANC–EFF–MK coalition would surely have done by now, the middle class would have exited, and with that South Africa’s prospects of being a free, high-growth, unitary state would have been lost.

Public opinion remains the most powerful countervailing force in favour of South Africa’s success. The country is not radicalised. A good seven-in-ten people, across every line of race, class, history, politics, and income level, want essentially the same future and support the same policies. Advice to the contrary is either ignorant or fear-mongering. Strong majorities support reforming BEE and dumping EWC – even in ANC ranks.

Foreign policy has been awful but is directed by a very narrow circle of compromised individuals and exacerbated by appalling and ignorant public and private diplomacy. But that can be repaired by professional diplomacy. Using the challenge of Trump as a foreign-policy baseline, most of the rest of the world have struck deals and cut tariff rates. South Africa is an increasingly isolated global exception – and an exception in Africa. There’s a positive in that, as it shows that with shrewd diplomacy there is a lot of foreign-policy upside for South Africa.

A unity government with broad public support, fiscal prudence, a willingness to reform BEE and shoot down NHI, and a pragmatic and largely united base of public opinion is a platform from which South Africa can emerge as a highly successful free and open society over the next decade.

What does that mean? It means that if the cards dealt to the unity government are played well, then SA’s growth rate can lift to between 4% and 5%. Hold it there for 20 years and the unemployment rate will come to near 10%. That is a realistic outcome from here.

Have a very merry Christmas.