Aluta Continua... or a Looter Continua?

BY MOHAMMED YASEEN NALLA CFA, Founder: Magic Markets and Moe-Knows.com

What happened in South Africa last month is beyond tragic. It is the worst eruption of violence, criminality, and widespread destruction that the country has arguably seen since democracy.

I will not beleaguer you with a regurgitation of the news. Many of my readers are South African. So am I. Hindsight is always 20/20, but seriously, this moment in South Africa’s journey could be seen a mile away. Therefore, I cannot take seriously views of how this is ‘shocking’.

This is personal so let’s take the gloves off...

The centre cannot hold!

Let’s get something out the way. International headlines have been laden with the assertion that this is about the former President’s incarceration. Yes, that certainly acted as a catalyst, but SA has been a tinderbox that has been carefully (or rather carelessly) laden with the tinder of broken dreams, unfulfilled promises and decades of rampant corruption and misallocation of resources.

Source: World Population Review

Source: World Population Review

This is not unique globally. But let’s show how exceptional the South African circumstances have been. It is long documented that SA has the highest Gini coefficient in the world. A view commonly aired globally is that with inequality and unemployment as high as it is, it’s an outright miracle that SA has not had a revolution already.

For those who are unfamiliar with the Gini coefficient, it measures the gap between the haves and have nots. On the map, SA has carved out its own shade of orange among the most unequal countries on the planet.

Maybe the chart doesn’t convey the story

fully. South Africa is almost twice as unequal as the world average, leaving neighbours like Mozambique and Angola in the dust. At a Gini coefficient of 63, South Africa is the world’s most unequal country, where the richest 10% hold 71% of the wealth, while the poorest 60% hold just 7% of the wealth. As such, it is not like the rest of the world. It is not a case of ‘the centre cannot hold’. Quite frankly, there is no centre!

Youth Unemployment

Source: The World Bank

The Young and the Restless

We all know how bad SA’s unemployment rate is. But more importantly, youth unemployment is the problem. At around 60%, SA’s youth unemployment is the highest in the world among G20 countries, followed by Italy around 30%.

If we include smaller economies, SA is still the highest, followed by Libya, Eswatini and the West Bank/Gaza. Yes, that is right, youth unemployment in South Africa is worse than some warstricken countries. Let that sink in.

Here’s the rub. It was 1994 when a promise of a ‘Better Life for All’ was made. A rainbow nation emerging out of the ashes of apartheid would have given birth to someone who today is a young adult of 27.

Promises need to be kept. In a country where life expectancy is just over 60, this young adult is halfway through their life. They are no closer to realising the dream of their forebears.

Yes, there is an element of poverty and desperation in the looting. There is also an element of outright criminality, which exists in the vacuum presented by absent or ill-equipped law enforcement.

Young, disenfranchised, and disgruntled people have time and energy and little else. They are happy to watch the world burn as it was a world in which they had a small perceived stake. This is not a South African phenomenon.

The profile of riots and protests globally tend to correlate with young angry populations. So, when someone says the SA protests are because people are hungry, they are right, hungry for change.

Fixed investment takes time to build and is done on a foundation of trust and confidence, both of which have been significantly eroded

This too shall pass – but at what cost?

The charts on this page are extracts from the Mass Mobilisation data project. It maps the prevalence of protests in South Africa, Egypt and Venezuela from 1990 to around 2018. The selection of countries is mine and I include the comparison for illustrative purposes.

If we were to map the recent protests in SA onto this either by number or duration, it would be the most severe since the early 90s.

Protests over time 1990-2018

Protests over time 1990-2018

Protests over time 1990-2018

Protests and unrest tend to be cyclical. If the protests yield an effective change in the status quo, a resumption of a ‘new normal’ emerges. If not, the prevalence of protests remains persistent as does the destruction of lives and livelihoods. Lives matter and they are being discarded on the side of the road. This also stopped SA’s vaccination drive in the time of a deadly pandemic.

Then there’s the financial side. Listed markets and the rand are ‘hot’ portfolio flow money. The real issue is fixed (long term) investment. The damages run into the billions. But it is more than that. Destruction of warehouses and inventories along with trucking (which makes up the bulk of logistics capability in SA) will all take its toll. The destruction of ‘strategic infrastructure’ like mobile telecoms towers appears targeted and planned.

Fixed investment takes time to build and is done on a foundation of trust and confidence – both of which have been significantly eroded, if not permanently handicapped given recent developments. Yes, SA can rebuild, but it does so off an increasingly weaker base and, dare I say again, 27 years into democracy, it may be running out of the goodwill of its citizenry before it runs out of the goodwill of its investors.

shutterstock.com

Parting thoughts

I am not an Afro-pessimist and my heart and soul is tied to South Africa, the land and its people. But SA is a country at war with itself. There lacks a sense of social cohesion and incidents like this just serve to expose the scars and tissue damage done to a nation that never truly emerged into its own.

In 2014, I wrote a piece on structural reform in response to the then recently launched National Development Plan (remember that?). Social cohesion and a ‘national identity’ were critical components I raised as fundamental to ensuring that SA stood a chance for a better future.

This was a train smash waiting to happen. The question now is, does SA wake up SA, or does it whither? Can the trend reverse, or will this spur even more people and capital to flee for fear of their safety?

I am literally in tears as I contemplate the dream that never was. But I will also fight the despair. I salute and support the amazing civil society bodies striving to make a difference. You are the true heroes. Battles are fought from the ground but also benefit from air cover. Just because I am not present does not mean I am not heavily invested in South Africa’s success.

We owe ourselves better. We need to hold leadership to account once and for all! This is a culmination and actualisation of years of mismanagement and impunity. Again, we cannot be surprised, shocked or disappointed.

Will ‘A Looter Continua’ or is it time to add the second part of the phrase, A Luta Continua... Vitoria e Certa!

This article is a reprint of an original blog post. Visit moe-knows.com for more.