South Africa faces a precipitous economic and political collapse by 2030 unless it changes its economic model and implements growth-friendly policies, according to Eunomix Business & Economics Ltd.
"Bar a meaningful change of trajectory, South Africa will be a failed state by 2030," Eunomix said in a report.
The Johannesburg-based political and economic risk consultancy forecasts the country will rank near the bottom of a table of more than 180 countries in terms of security, similar to Nigeria and Ukraine, and have prosperity akin to Bangladesh or Ivory Coast.
The consultancy blames a structure created during the White-minority apartheid era that was designed to exclude the Black majority, creating one of the world's most unequal societies. Since the advent of democracy in 1994, the ruling African National Congress perpetuated that situation by rejecting job-intensive growth policies and instead raising wages and subsidizing the poor through welfare, Eunomix said.
While less than a quarter of the population is in work, South Africa's wage bill as a percentage of gross domestic product significantly exceeds that of countries such as India, Thailand and the Philippines.
The ANC's strategy is "a dichotomy born of apartheid, resistance and crystallized by ideological puritanism and entrenched interests," the consultancy said. "The country should not choose between imagined opposites. It should adopt a dual-track approach that reconciles them."
"The pandemic is the last nail in the coffin of strategic fiasco," Eunomix said. "The economy is unsustainably narrow and shallow. It rests on a small and declining working population burdened by very high debt and taxes."