The ANC’s African liberation-movement economic development model casts the state as the primary engine of development, employment creation and social welfare provision. Under this approach, many party leaders dismiss the idea of anchoring economic policy in growth – the strategy pursued by China, Japan and Singapore – as a World Bank neoliberal concept.
The same mindset views foreign investment with suspicion, fearing it will allow foreign “capital” to dominate local markets. Yet vast inflows of overseas capital – bringing new technology, capital and skills – are precisely what have fuelled fast-growing emerging economies such as China, Vietnam and India.
Similarly, promoting small and medium enterprises (SMEs) is rarely treated as a serious route to mass employment, instead attracting scepticism as yet another Western market-driven orthodoxy.
Many ANC leaders also see SMEs as low-level “survivalist” micro-enterprises, which during apartheid came to be associated with “blacks only”. For example, the ANC’s black economic empowerment (BEE) strategy has prioritised creating “big” black industrialists to rival the Oppenheimers and the Ruperts.
Promoting SMEs may be stated as an official BEE objective, but in reality it is only a passing concern for many ANC leaders. Across post-Second World War developed and emerging markets, SMEs have created the most jobs and reduced poverty and inequality on a mass scale. The ANC government’s neglect of small businesses is a key reason South Africa has failed to make meaningful inroads into unemployment, poverty and inequality.
Under the ANC’s liberation-movement economic model, the party still relies on a post-Second World War formula in which the state and big factories create mass jobs and fossil fuels power the economy. This persists even though rapid technological advances have reshaped modern economies and peer nations are urgently seeking alternatives to fossil fuels. The ANC has been slow to develop clean energy alternatives, and has not invested in new technologies – such as microchips and artificial intelligence – the way countries like South Korea, Malaysia and Vietnam have.
Indigenisation strategy
Like other African liberation movements, such as Zimbabwe’s Zanu-PF, the ANC has pursued a BEE or indigenisation strategy to foster a black business class – compelling private and foreign firms to hand over shares to locals, who in most cases are leading party politicians, while granting companies linked to those leaders preferential procurement for state contracts, resource rights and trading licences.
Under the African liberation-movement economic model, while the elite get state and private-sector empowerment, indigenisation, resource deals and licences – as well as deployments to legislatures, councils, the public service and SOEs – the poor get social grants, food, fuel and agricultural subsidies. The ANC’s push for a basic income grant is, in effect, the party’s version of BEE for its poor supporters.
Within this framework, South Africa’s mineral wealth offers bountiful resources for both national development and liberation-movement elites. Across liberation-movement governments, mines are either nationalised or required to cede shares to ANC-connected politicians under BEE – much like indigenisation policies in Zimbabwe, Tanzania and Mozambique.
In countries run by African liberation movements, their mineral bounty often sees these governments neglect the development of the non-mineral sectors of their economies, such as technology and education.
A key pillar of the African liberation-movement economic development model is land reform, in which land owned by former settlers, whites or foreign owners is either nationalised – as was done in Tanzania, Mozambique and Algeria – or seized and given to people connected to liberation movements, as happened in Zimbabwe. Such land reform is often carried out with little consideration for food security or agricultural industrialisation, with resultant food shortages, inflation and starvation.
Property rights are often treated as secondary under the African liberation-movement economic model, even though they are a pillar of any modern economy. Countries that fail to respect ownership protections will not attract domestic or international investment, savings or capital. Attacking these rights through expropriation and nationalisation caused massive capital outflows, record inflation and widespread business closures – collapsing the economies of Zimbabwe, Algeria and Tanzania.
Under the ANC’s liberation-movement economic model, the government believes it can dig itself out of an economic crisis by taxing the wealthy – whom many party leaders wrongly assume are mostly white, thereby treating higher taxes as a form of reparations for apartheid. In March 2024, Finance Minister Enoch Godongwana told the SABC that the government was not running out of money and could never run out, because it could always tax its citizens.
This economic development model has failed spectacularly in every African country run by a liberation movement in the past 60 years, whether Zimbabwe, Algeria or Tanzania. It has failed in South Africa over the 30 years in which the ANC held an outright majority.
The ANC-SACP-Cosatu Tripartite Alliance has been South Africa’s dominant governing force since the end of apartheid, with its leaders and members shaping every facet of the country’s political, economic, ideological and cultural discourse.
Consequently, the ANC’s liberation-movement economic development model has become embedded in wider society. Spin-off movements, such as the Economic Freedom Fighters (EFF) and the uMkhonto Wesizwe (MK) party, have replicated this economic ideology, albeit in more extreme versions.
The populist left
Other groupings on the populist left have likewise adopted from the black populist left have also taken the ANC’s economic orthodoxy as the answer to South Africa’s economic challenges. Young black people who identify as “activists”, “politically active” or “progressive” have also imbibed this worldview.
The Tripartite Alliance came to power as a movement of associated civil society, non-governmental organisations and community groups that shared the ANC’s economic development model. So, even as the ANC declines as a governing party, its state-led economic model will still have a substantial following within black society.
Many may reject the ANC’s corruption, incompetence and mismanagement of the economy, yet they still agree with its underlying economic policy. In fact, many believe the party has failed to implement this model effectively – arguing it was ideologically corrupted by “big business”, “white monopoly capital” and global multilateral institutions such as the World Bank and the International Monetary Fund.
African liberation movements dominate their societies for such long periods that their economic development model becomes accepted by large numbers of their citizens as doctrine. Many African liberation movements in government have succeeded in making their economic development model synonymous with their party identity – treating it as gospel truth handed down from the mount, beyond question.
Because South Africa suffers from low levels of economic literacy, the ANC’s liberation-movement development model has become the dominant viewpoint among the broader public, civil servants and civil society. This has proven costly, leaving many citizens vulnerable to misinformation and ill-equipped to evaluate policy choices. It has degraded public debate on the economy and acted as a binding constraint on growth, job creation and poverty alleviation. DM
Comments
Scroll down to load comments...