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Is the Clock Running Out for South Africa?

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MANDELA
Richard I'Anson via Getty Images

South Africa is in a political and economic quagmire and time is running short. Deep governance and market-oriented policy reforms are required to avert disaster, but the political leadership has been unwilling to make long-term and meaningful changes.

Next week, South Africa will mark 20 years of free-democratic rule, and this week the country held its fifth national, and first post-Mandela, election. The nation's "born-free" generation, those born after the apartheid regime, also became eligible to vote for the first time. Results from the May 7 polls are expected by May 10, but given the challenges in South Africa including a sluggish economy, high-unemployment, presidential corruption scandals, and poor service delivery, the country is in need of serious leadership to bring about robust economic and governance reforms.

Today's South Africa is very different from the South Africa of mid-90s. While the remarkable and peaceful democratic transition that began in 1994 opened up the political system and dismantled the racist apartheid regime, the country has hit debilitating political and economic roadblocks, potentially derailing the country completely. Economic growth in South Africa crawled at a snail's pace in 2013 at only 1.9 percent and is projected to expand by just 2.3 percent in 2014. The country's debt has grown by 44 percent and the trade deficit stands at six percent. The rand (South African currency) lost 20 percent of its value in 2013, causing the price of goods in the country to increase significantly.

South Africans effectively been a one-party state under the African National Congress (ANC) since the first free elections were held in 1994 and, following the May 7 polls, the will now be entering into its third decade of ANC rule. South Africa's President Jacob Zuma is mired in scandals, allegedly misusing $24 million in taxpayer money to renovate his private home. As a result, the author of the report implicating Zuma, Thulis Madonsela, was named by Time Magazine as one of the world's 100 most influential people.

Many in South Africa see the ANC as a corrupt class of political leaders, but many of the breakaway options are no better. Most adhere to populist agendas and lack serious policy-solutions to the everyday problems faced by South Africa's poor. The Economic Freedom Fighters (EFF), led by the ANC's former youth wing leader, Julius Malema, who was expelled for hate speech and is facing trial for $1.4 million in unpaid taxes, wants to seize and nationalize (without compensation) mines, farms and banks throughout the country. Malema clearly did not learn the lessons of neighboring Zimbabwe, a country continuing to suffer from one of the world's worst self-imposed economic crises. Of course nationalization would severely damage South Africa's economy and discourage all foreign direct investment in the absence of secure and legal property rights -- the last thing South Africa needs right now. But given Malema's fondness for Venezuela's late dictator, Hugo Chavez, what else would you expect? His radical leftist party will likely pick-up 14 parliamentary seats, less than five percent.

The most competitive and viable opposition party to the ANC, the Democratic Alliance (DA), traditionally supported by white South Africans, has been drawing on new support from middle-class black South Africans, and campaigning in townships with messages such as "Together for Jobs." In 2009 the party garnered around 17 percent of the vote, while small in caparison to the ANC's level of support at more than 60 percent; the DA has been steadily increasing. In 1994 as the then "Democratic party", the DA garnered 1.4 percent of the vote, growing to 9.6 percent in 1999, and then 16.7 percent, including capturing the majority in the Western Cape Province, in 2009. The DA has also been running a highly competitive race with the ANC at the provincial level in the Gauteng, the country's financial hub and the richest province in the country. This year the DA is expected to win about 23 percent of the vote. An impressive increase, but a viable opposition takes time to develop -- India, following independence from Great Britain, was governed for the better part of 40 years by the National Congress Party. This is time South Africa doesn't have.

The ANC and its tripartite coalition will retain control of the parliament and Zuma will remain in the Mahlamba Ndlopfu, (the official presidential residence) but time is running out for effective reforms and economic changes that will jump-start the economy. The official unemployment number remains at 25 percent and jobs created since the recession in 2009 have been primarily in the public sector. South Africa needs true economic freedom, a significant portion of South Africa's apartheid-era land confiscation remains in the hands of the ANC government. This land could be returned so the landless poor through a titling process, property that would give them access to greater capital for future investment.

South Africa's poor needs policies that empower them through entrepreneurship, investment and strong rule of law, not more state-owned businesses, regulation, and ineffective government programs. Many of the ANC's economic development programs have only created greater opportunities for corruption and a class of political elites known as the "tenderprenuers," individuals that have political connections to the ANC and receive government contracts based on these connections. Despite the relative economic success in the years that followed the end of apartheid system as South Africa's economy was opened up and privatized, commitment to the reforms and the crippling effect of corruption has overrun the country's progress of the 1990s.

It's not the lack of South Africa's ability to get back to the path of equitable growth and prosperity, it's the leaders' unwillingness to pursue policies that remove their hands from government pockets and require transparent and results-driven governance. Mandela helped start the liberal democratic transition, South Africans need to finish it.