South Africa's Crisis

 After almost three decades of democracy, South Africa faces multiple crises. South African governments has largely gone from crisis to crisis without fundamentally dealing with the political and economic root causes of the crises themselves.

The country has world-leading level of inequality, with a Gini coefficient for income distribution of 0.7. Wealth is even more unequally distributed with the wealthiest one percent of the population owning half of all wealth, while the top 10 percent own at least 90–95 percent.

 Stubbornly high levels of unemployment were already at 29.1 percent in the end of 2019. Poverty remains unconscionably high. In 2015, over half of the population — 30.4 million people — lived below the official poverty line, higher for female-headed households than male-headed households (49.9 percent versus 33.0 percent). A quarter — 13.8 million people — lived in “extreme poverty,” unable to afford enough food to meet their basic physical needs.

The Covid-19 crisis came at a time when South Africa was already in a recession. The 2020 supplementary budget presented a net increase to non-interest spending of just 36 billion Rand, or less than one percent of GDP. Most of the rescue package, therefore, came from existing funds or off-budget expenditure. The deliberate misleading of citizens into believing that hard cash was pumped into the economy is one of the factors fuelling the violent protests. The public sentiment is that the “stimulus” was largely looted.

39 percent of households ran out of money to buy food in January and 17 percent of households experienced weekly household hunger. The special Covid-19 “Social Relief of Distress” (SRD) grant — a cash distribution to unemployed adults not receiving other social security — introduced in the initial relief package has been terminated. Food price inflation has increased. School feeding programmes which many children rely on are closed. After a seven percent economic contraction in GDP in 2020, the economy continues to shed jobs as the unemployment rate reaches a record high of 32.6 percent.

South Africa’s National Treasury has remained committed to its austerity programme — the cutting of expenditure to address debt during economic downturns — endorsed by the International Monetary Fund (IMF) and much of the business press. This has severely undermined the provision of essential social service and the realisation of socio-economic rights. Cuts to the budget entail a fall in spending per person and leads to real reductions in health, learning and culture, and general public services.