Economists often measure things over time. There is nothing wrong with doing this as it gives us an idea of how something has changed over time. However, less often we measure something in relation to something else similar.
One example is that South Africa’s per capita gross domestic product (GDP) has increased since 1994, indicating that we have made progress. But what picture will emerge if we measure SA?
That’s what this note is about: I’m going to measure SA against other countries, or groups of countries, to get a better idea of our relative performance. Also, I decided to use certain variables, which I consider important. In fact, the most important variable, as far as I’m concerned, is life expectancy. Life expectancy correlates with everything that is good: low crime levels, quality education, wealth, and much more. Although I have used these variables, I have also considered a few others.
Just a side note: We (i.e. the world) have never had it so good. The last two years were a bit mixed, but the trends are holding steady. Income, crime levels, war, infant mortality … almost all variables are at their best or improving. Even the giant panda is no longer critically endangered.
Before I tell you the story of the ANC’s legacy, what is clear is that SA performed poorly compared to other countries and, in many cases, much worse. The only conclusion I can draw is that the “reason” for our poor performance has to do with the destructive ANC government.
Today, the ANC – in fact, the entire tripartite alliance – is a giant blob that lives off the state.
And the results are there for all to see. But let the numbers paint the picture that is worth a thousand words.
Since 1994, South Africa’s GDP per capita, compared to the rest of the world, has deteriorated by approximately 20% in relative terms. In 1994, our GDP per capita was close to 85% of world GDP per capita. Today, it is closer to 60%.
Even compared to the rest of Africa, we have deteriorated. In 1994, our GDP per capita was 2.6 times that of the rest of Africa. Today we are still much richer than the rest of Africa, but less than in 1994.
In 1994, South Africa’s per capita GDP was 4.5 times that of China. The graph speaks for itself. Today, China’s GDP is twice that of South Africa.
This shocking statistic explains a lot about our underperformance. Do you remember the display of paintings? Do you remember the capture of the state? Do you remember President Cyril Ramaphosa overseeing Eskom’s “war room”? Remember how Pravin Gordhan kept feeding SOEs his tax money and got in the way of a real restructuring when they finally appointed a good management? Do you remember all that?
Well, here the horror unfolds….
In 1994, SA generated more electricity per capita than the rest of the world (graphs indicate moving average). Today, we generate about 60% of the world average, a catastrophic collapse.
In 1994, we generated almost six times more electricity per capita than China. Today, we generate half of yours. So is our economic performance surprising?
I often write about our tax bills and how unsustainable they are. The following graph compares SA’s state debt relative to the rest of the world GDP:
Just a reminder here that data is not always available over time. However, the following graphic is a snapshot illustrating the quality of SA education:
And now the highlight of my story….
Like I said, life expectancy correlates with everything good. In 1994, our average life expectancy was close to the world average. Today, it is about 85% of the world average. But take note of the trend: Due to the ANC’s disastrous AIDS policies under Mbeki, there was a dramatic drop in life expectancy. This was changed by Zuma, probably the only good thing he did as president.
Compared to Africa, our current life expectancy is lower than that of the poorest continent in the world.
It is not that we are unaware of all this mismanagement, corruption and incompetence. Numerous indices clearly show how our perceptions are changing:
In the last graph, we see that the mid-1990s was a time of political upheaval and violence. After 1994, there was a dramatic improvement but, in recent years, political instability has returned.
My illustrated story does not show a successful country with a diligent, responsible, and effective government. And despite all the promises of a ‘new dawn’, I don’t see things changing. But as they say, a country gets the government it deserves.
Dawie Roodt, Chief Economist, Efficient Group