This is a paid article which your subscription is allowing you to read.

This newspaper’s new scenario special report for South Africa’s next decade rests on a central thesis: South Africa’s future is not defined only by what happens to the state, but by how the economy reorganises itself when the state becomes less effective. At the heart of this thinking is the idea that South Africa is moving toward an enclave-driven economy, where private systems increasingly substitute for public capacity.

This is not presented as an ideological preference, but as a structural observation. Of the three scenarios for South Africa in 2034 produced by the newspaper, each with their own probabilities, the dominant assumption is that state capacity is no longer strong enough to be the sole driver of economic stability or growth. Instead, the ability of private actors to step into gaps left by the state will become the decisive variable shaping South Africa’s long-term future.

The scenarios identify a clear chain of causation that explains why this is the mostly likely thing to happen. Political uncertainty weakens the state’s ability to implement coherent reform. Weak reform then constrains national growth. Slower growth forces households, firms, and institutions to adapt. That adaptation gradually produces parallel systems outside of the state itself. Over time, these systems evolve into what the model describes as enclaves.

A key argument that flows from this is that economic collapse is not the inevitable result of state weakness. Instead, the newspaper’s analysis suggests that South Africa’s adjustment process is more likely to produce fragmentation rather than failure. In this view, declining state effectiveness does not automatically lead to widespread economic breakdown. It leads to a reallocation of capacity, where private and regional systems begin to perform functions that were previously monopolised by the state.

These enclaves are defined by their ability to operate independently of national constraints. They are typically capital-rich, globally connected, and more institutionally flexible than the national system. They are also able to substitute for missing state services, particularly in areas such as security, energy, education, healthcare, and infrastructure. As a result, they become increasingly self-sustaining over time.

The consequence is the emergence of a dual economy. On one side is a national system characterised by weak growth, constrained fiscal space, and uneven service delivery. On the other side are enclave systems that maintain higher levels of productivity, investment, and employment. Even if national growth remains structurally low, these enclave zones can continue to expand and deepen, driven by private adaptation rather than state-led reform.

This is why the most probable scenario for South Africa’s next decade explicitly rejects a typical post-colonial emerging market collapse narrative. In most failing states, weak institutions lead to capital flight and broad economic contraction. The enclave thesis argues something different for South Africa: capital does not fully exit the system. Instead, it concentrates. Skills remain partially embedded. Investment reorganises around functioning nodes. Economic activity does not disappear, but it becomes unevenly distributed across space and institutions.

The benchmark scenario produced by this newspaper, to which is has assigned a probability of 65%, is built around this logic.

It assumes no decisive political breakthrough and no systemic collapse. Instead, it assumes continuity: coalition governance, limited reform, and gradual institutional strain. Under these conditions, enclave formation becomes the default adjustment mechanism. It is not a side effect of the model, but its central organising outcome.