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Copyright © 2020 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. Introduction by Vusi Khanyile, Chairperson of the Inclusive Society Institute As this is the first annual lecture hosted by the Inclusive Society Institute (ISI), let us briefly visit the whys and wherefores of the Institute itself. In a nutshell, the Institute is an autonomous and independent institution, a not-for-profit organisation (NPO), which was founded for the purpose of supporting and promoting non-racialism, non-sexism, social justice and cohesion, economic development, and equality in South Africa. The Institute has existed for just 12 months and is governed by a board of directors and advised by the Advisory Council. Vusi Khanyile Chairperson Inclusive Society Institute The Institute puts its purpose into practice by conducting research and analysis which contributes to debate on public policy. It also seeks to promote education on democracy through special briefings, seminars, and conferences. Furthermore, the Institute aims to create a portal that will archive our liberation heritage, for it is within this heritage that the division of a democratic, prosperous, caring, and inclusive South Africa is enshrined. The Institute’s motive behind carrying out these aims is to encourage the country further along the path that moves it in the direction of its strategic vision. The Institute is broadly aligned with social democracy – an ideology that promotes social and economic interventions that are aimed at advancing social justice. It does so within a framework of a democratic, free-market society. Hence, it promotes the voices of the people in determining government actions, supports a competitive economy, whilst also offering a safety net to the poorer and more vulnerable in our society. This economic growth and sustainable social development need to be balanced. The ISI considers the developmental state model as the most appropriate approach for transforming the economy and society in South Africa. It believes that the well-being of South Africa is best served by an inclusive society in which the composition of the economy, government, and civil society equitably reflects the composition of the nation. In fact, issues of public ethics, morality and social cohesion are uppermost in the national psyche and mood at the present time. It is with this in mind that the ISI hosted the first Annual Lecture – with the promise of frank and open debate on these issues, at the event and moving forward. Interview with Judge Albie Sachs (Ret.), Constitutional Court Judge, conducted by Lwando Xaso, writer at the Daily Maverick Lwando Xaso Interviewer I would like to start by focusing on how the courts, and specifically the Constitutional Court, can shape the moral character of our nation. In 1962, Nelson Mandela was arrested when he returned to South Africa, for leaving the country without a valid passport and for inciting an illegal labour strike. He was sent to the Old Fort prison, which is today the home of the Constitutional Court. During that trial, he made the decision to represent himself, against the advice of his lawyer, Bob Hepple, who knew that Mandela was going to provide a very political defence and that he was going to ask the magistrate in the trial to recuse himself, because he did not believe the magistrate was able to dispense justice. Bob Hepple, having listened to Mandela’s argument for recusal, told him that it wasn’t a legal argument he was making, but a political argument. Nelson Mandela responded that it wasn’t a legal trial, but a political trial. Nonetheless, Mandela stood up in court and said: “In a political trial such as this one, which involves a clash of the aspirations of the African people and those of whites, the country’s courts, as presently constituted, cannot be impartial and fair. In such cases, whites are interested parties. To have a white judicial officer presiding, however high his esteem and however strong his sense of fairness and justice, is to make white judges in their own case. “It is improper and against the elementary principles of justice to entrust whites with cases involving the denial, by them, of basic human rights to African people. What sort of justice is this that enables the aggrieved to sit in judgement over those against whom they have laid a charge? A judiciary controlled entirely by whites, and enforcing laws enacted by a white parliament in which Africans have no representation, laws which in most cases are passed in the face of unanimous opposition from Africans, is untenable.” Judge Sachs, or Albie, what was it like to be a lawyer at that time, one that is an accused, as Nelson Mandela was? What was the justice system like for African people, specifically, in 1962? Mandela himself said, “I feel uneasy in this court.” I get a sense that Mandela was already imagining an African court. What does an African court look like? Judge Albe Sachs I’m going to start off with a correction in relation to Bob Hepple's role. Bob and I were both sons of activists, both in the underground, both lawyers practising in courts that were, of course, promoting injustice, but we were using every possible space available to change that. Bob was thrilled with what Mandela was doing because they were comrades. But Bob said, “I can't do it. I’m an officer of the court and it would be complicated for me to make that challenge. In legal terms, it’s not going to get us anywhere. But, Comrade Nelson, you could do it.” with such power and such forcefulness and with such dignity that, I read, afterwards, the prosecutor in that case went to his office and cried. This was a white prosecutor, part and parcel of this repressive system. The magistrate listened and then sentenced Mandela to the fullest term possible. At that stage, he had the power to sentence him to five years' imprisonment. It was a very important moment in the life of our nation, it was a prelude, if you like, to the full liberation struggle. However, the fight wasn’t simply within the framework of the existing legal system to achieve greater rights. t was also to challenge the whole framework itself. Although the armed struggle had really begun before that, now Mandela’s connection with the armed struggle was highlighted. It was enormously difficult functioning in those courts. The laws were overtly racist. The law said only whites could be members of Parliament. It reserved most of the land for whites. It brought about the Native Administration Act. People like you, Lwando, weren’t citizens with rights. They were subjects to be administered. Despite the fact that they could have ‘rights’ in the Bantustans, and ‘rights’ under tribal leaders, it was a grim system in which we didn’t have rule of law, we had rule by law. It was all being challenged with characteristic dignity and poise and thoughtfulness, and also power – power that came from the oppressed, through the words of Mandela. It was difficult not only for black people functioning in the courts, but for all who had to witness the injustice. Black people had to stand at places reserved for them. Even Mandela’s law partner, Oliver Tambo, was told by the magistrate in a case to move to that reserved space to address the court. But Tambo refused to do that and, as a result, was threatened with contempt of court. Eventually, it was Godfrey Pitje who took over that role because Tambo and Mandela had political work to do. One of the functions of a legal assistant then, in addition to doing everything else, was to take the rap for your principals, so that they could carry on with revolutionary activities. Tambo was sentenced to a fine and imprisonment. The case went on appeal to the Appellate Division and the Chief Justice Steyn ruled that you can address the court as well from one place as you can from another. He upheld the indignity of being told you're not a lawyer, you're a black lawyer, and therefore you have to stand in the place in the court reserved for black lawyers in order to address the white magistrates, white prosecutors, white officials in charge of everything. And the accused were overwhelmingly black. So, for all of us practising in the courts in those days, the mental gymnastics was just terrible. We had to find the language or dignity or poise to deal with it. Even simple things, like how to address a witness, were skewed. For example, if the witness was a white woman, you would address her as Miss or Mrs and with her surname. Whereas, with a black woman, who could be the same age or older, you had to address her simply with her first name. Now, what do you do then when you are counsel and you want to call the witness? Do you say, ‘Mrs Shabalala, what did you see?’ It would be like slapping the magistrate in the face. And that’s fine, but it might be bad for the case of the accused. We were doing these gymnastics all the time, in a racist environment, with racist vocabulary, racist assumptions, trying to uphold principles of dignity in relation to laws that are racist, courts that are racist. But we tried to manage as best we could to manoeuvre in those circumstances. What Mandela was doing, in a sense, was anticipating the liberation of all of us as lawyers. He was throwing off these chains. He was standing up and saying: I have no disrespect for you, Your Worship. And what I’m saying is not directed at you as a person. It is directed at the situation that I am clearly a black man in a white man's courts, and I shouldn’t feel that way. I should feel I'm just a human being. It was one of the great moments in South African history, and I'm glad that we're starting off the discussion with that particular moment. I’m imagining Nelson Mandela at that moment, standing up in court, wearing his cultural clothing, an African kaross. What do you think he was communicating in court, being dressed the way he was? I know, when it came to conceiving a new court, what the judges would be wearing in court was something that you and your colleagues thought about. The other thing I'd like you to comment on is as to why, during the struggle, courtrooms were seen as an opportunity? Why make a statement like that from the dock, like Mandela did in the Rivonia Trial as well? I am myself a lawyer, and I don’t know if I would have wanted to be a lawyer under apartheid, because when I became a lawyer in 2008, I had to swear to uphold the Constitution of this country. That's something that I'm proud to do. But back then, we didn’t have the Constitution that we have now. You always talk about being a lawyer, but at the same time being labelled a terrorist. So, you had this dual relationship with the law, in that you were supposed to dispense justice within an unjust society, but at the same time, you were also trying to sabotage the very system of which you had sworn to uphold the laws. Let me deal with the dress, first of all. Mandela was a very natty dresser, and he could carry off good clothing. He wasn't a show-off, but he paid attention to his appearance, as did Oliver Tambo. As a lawyer, he deliberately chose not to wear a suit. He chose to wear traditional garb to make a strong statement, not just to the magistrate, the people in court and the press, but to the African people. He was saying: I am speaking as an African and I'm wearing, proudly, the clothing of an African person in the community I grew up in. Today, I'm wearing a Madiba shirt. He didn't like being trapped in the formal clothing imported from Europe, with strange things like bowties. He wanted to wear something that was expressive of his personality. He even invented a dress style – an interesting, informal, comfortable kind of garb that has a certain value, an emotion to it. It happens to connect South Africa and Asia. And so, he even made something out of the Madiba shirt, which he was wearing when he signed the Constitution. It became a representation of Africa joining with the world. It was a batik design from Indonesia, styled in a way that he felt comfortable with, expressing himself as Mandela. When it came to the Constitutional Court, the question of style wasn’t more important than substance. But it wasn't unimportant. We didn't want a building that looked like a copy of the US Supreme Court, with its grand steps and massive columns representing power. The irony of the Supreme Court is that you don’t enter it by going up those steps. For security reasons, instead, you enter around the side, the back of the building. All of that in front is just for show. It gives an indication of that court representing a certain power. We wanted a court that didn’t represent power, but, rather, control of power – in terms of ethics, values, accessibility, humanity, human dignity. Not of form over substance, but of substance of the human heart, the human soul, the human suffering, human aspirations, to be represented in the style and functioning of the court. We chose the site of the Old Fort prison to erect our court, to locate the court that would dispense justice and uphold fundamental rights, on the very site of Number Four prison. The site of pain, the site of suffering, the sword where people have been locked up and denied their rights, was transformed into the ploughshare of justice. We also wanted the building to be open, comfortable, inviting, free and friendly, with all the fabric, texture, light, and sensibility of a space in Africa. Not a space in Europe planted in Africa, but a space in Africa planted in Africa. Drawing on the imaginations of the world, the architectural possibilities of the world, but containing a strong African flavour. In 2004 we opened the building. This was before there was talk about decolonisation – we were decolonised, I'm proud to say, in our minds – before it became a very important issue that was being raised by young black people challenging aspects of the colonial, the old imposed value system and ways of looking at the past. We were challenging it in terms of the architecture, and in terms of our style. The last part of my previous question is that when you decided to be a lawyer under apartheid, why did you see that as an opportunity? Considering how oppressive the law was, considering how the justice system was biased, it was not impartial. Why did you think that would be a worthy endeavour, becoming a lawyer? This a question I would have loved to ask Nelson Mandela and Oliver Tambo, and many other black people who became lawyers at the time, who saw the justice system as an opportunity when it was so clearly biased and partial. It was Thuma Mina [ send me]. We wanted them to be there. Quite a few people who became lawyers had been teachers. When Bantu Education was imposed, they were thrown out of the schools where they were teaching, where they couldn’t bear to teach Bantu Education. Many of them, like Godfrey Pitje, became attorneys. But it wasn’t simply a job to earn a living, to survive. It was a terrain of struggle. You could fight in the courts; you could fight to expose the tortures, the injustices; you could fight to challenge the laws. And we won big victories. In the 1950s, we won all our cases, even the big Treason Trial, because the prosecutions were so ridiculous. Then, in the 1960s, we lost all our cases. When you took a case in those days, you were fighting against the death penalty. You were fighting to get some of the accused acquitted, to expose the torture, to give the accused a sense of dignity, and so that there would be somebody listening to them, believing them. We had some good judges: John Didcott, John Milne and Andrew Wilson were all wonderful judges. We also had other judges who were at least open-minded. Michael Corbett played an important role in the transition afterwards. He fought against Hitler; he was anti-fascist. He was an open-minded person functioning within a racist framework, and he had to use what space was available to try to shift that. There was a famous debate between Raymond Wacks and John Dugard. The question was whether the judges should resign. Raymond said that they should, that they were simply progressive judges giving legitimacy to an oppressive system. But John, who was fighting in the courts, in the trenches, said they shouldn’t resign. And we who were in the resistance also believed they shouldn’t resign. We wanted good judges there to soften the impact of the law, to win the few little victories, and to prepare the way for the day when we would have a truly democratic nation. Some of the judges of that era, like Johann Kriegler, Laurie Ackermann, I've already mentioned John Didcott, Richard Goldstone, used the tiny glimmers of space in the courts to trip up the apartheid laws, to start coming up with a vision of what law could be like one day in South Africa. They served wonderfully on the new Constitutional Court during the transition, so that the brilliant new South African Constitution could be applied with style, with dignity, with force, in an experienced way. So that we weren't tripping over our own feet, as we were starting something completely new. For those who don’t know, South Africa has had five constitutions. I would say it's had three illegitimate constitutions – 1910, 1960 and 1983 – and then our first somewhat democratic constitution was produced in 1993, after a process of negotiations between the liberation movement and the apartheid government. The significant achievement with the 1993 constitution was to establish a Constitutional Court. The sense was that having a new court would transform this judiciary, which was known to be oppressive, that the people wouldn't trust that the courts which had existed under apartheid would dispense justice in an impartial manner. Albie, at that point, I'm sure you didn’t think that you would be one of the people sitting on that court in two years' time. But when the Interim Constitution was adopted and there was a vision of transforming the judiciary, what role did you think the court could play in the country? Was it simply in legal matters? Symbolically, what role did you think the creation of a new court could play, in the effort of transforming a judiciary that was known to be so oppressive, in a broader society? We were such a strange court, with the backgrounds of the people on it being so vastly different. But that was also such a great source of strength for the court. In my own case, I never dreamt I'd be a judge. Judges were the people up there on the bench; I was simply an advocate practising on ground level. There were some judges who were kinder and more thoughtful and more open than others. There were also many who were openly racist and reactionary, and so on. To me, judges belonged to another world. Suddenly, though, when we had a Bill of Rights, fundamental rights, and everybody could vote, then we had the chance to create a new constitution. The Constitution became a richly-imagined thing, a marvellous creation of South Africans, and to be using my skills to defend it was just the most incredible experience. I still recall so vividly, it was just before the elections in 1994, when we didn’t know what was going to happen. We'd been fighting for freedom long and hard, and suddenly we were going to get it. We had to change our whole mindset. We were no longer living for the future; we were becoming part of the future. We assumed Mandela would become the President, but we were wondering who the Minister of Justice would be. We wondered whether it would be one us: Kader Asmal Zola Skweyiya, Dullah Omar, or Albie Sachs. At that point, I couldn’t bear the thought of having invested my whole life in an ideal that would now become a job. I thought about getting out of that line of politics. I could still be politically active, but not in that way. Then I realised that it would actually be fantastic to be on that court, an unbelievable opportunity for me, as a freedom fighter, to be on that court, defending the changes we'd been fighting for. But I decided that if I wanted to be available for the court, I couldn’t have a loyalty to both the ANC National Executive and to the Constitution, constantly having to choose between the two. I would still be Albie the freedom fighter, I would still have the same ideals, but those ideals would now be in a document that we would all sign, and I would have to defend that document. And if the ANC was going to be a party to litigation, I couldn’t be worrying about what the comrades would say about any decisions I gave from my position on the court. I knew it would be quite impossible to be giving decisions from my position on the court one moment, and then heading to a branch meeting the next. So my conscience told me I needed to resign from the NEC, and afterwards, to resign from the ANC, to be free and fair. It wasn’t a repudiation of my beliefs; it was a continuation of our beliefs, because the Constitution now incorporated what we'd been fighting for. It was thrilling to be with such extraordinary people … Arthur Chaskalson, whom I'd stayed with many times – a great intellectual. He wasn't in the underground, in the resistance. He fought within the framework of the courts and gave up a lucrative legal practice to set up the Legal Resources Centre. He gave up that combative style that you need to be a tough advocate – sharp elbows, witty, quick, smart – for a much more collegial, collective way of working. One where you're not fighting just to earn a good salary in fees from the cases that you undertake, to win particular battles, but you're also fighting together with a team to try and deal with the Group Areas Act, to deal with the Pass Laws, to try and trip them up, and so on. Ismail Mahomed was brilliant, sharp, brave, thoughtful, living in his head, living for the law, difficult, complicated in many ways. But he could soar, he could reach heights that none of us could reach in terms of the lyrical things. Johann Kriegler had his own particular beautiful style of writing. He was deeply, profoundly committed to the country, the cultures of the country. Yvonne Mokgoro, having grown up in a rural area, worked as a hospital nurse in order to earn money to study, and became a professor and a judge on the court. Kate O'Regan, being my colleague at UCT. And many more. A wonderful team, a group of people who couldn’t be more diverse in personality and style but couldn’t be more united in terms of our hatred of apartheid and love of the Constitution. In any event, we established a style and a way of working, sitting around the table. Those of us who'd been in the struggle were used to debating everything, through the night if necessary. We weren’t going to give that up simply because we were judges now; we continued to debate, round and round the table. Fortunately, our colleagues like Didcott and Kriegler and the others, also loved debates and openness. They loved that style. They hated formalism – if they had loved formalism, they wouldn’t have been on the court. They all had passion and they all knew we were doing something remarkable, something new. New, I would say, in the world, in terms of the kind of court, the kind of constitution and the role that was given. We knew that there would be resistance from many of the judges on the existing judiciary, despite the imbalance. At the time of the new Constitution, there were about 150 High Court judges: 148 white, two blacks, 148 men and two women. So, it wasn’t just that the public had a distrust of an institution that had been part and parcel of the system of oppression – sending people to jail because they didn’t produce their passes, forcing people out of their homes, applying all these racist laws, turning a blind eye to the torture, the police throwing people out of buildings, and magistrates saying nobody was at fault, saying that Imam Haron got all the bruises on his body by slipping on a piece of soap and falling down the stairs. It wasn't only that. It was also that they didn’t see themselves represented on the bench. They didn’t feel that wisdom, a sense of justice, a sense of fairness, an understanding of human life was represented on the bench. In fact, only a small minority of the people were. We had to be a new court both symbolically, and in terms of the way we worked and upheld the new values of the Constitution. Values that were based on human dignity, equality, freedom, on totally turning the apartheid legal system on its head. This was a marvellous challenge, and I had wonderful colleagues. I was so proud of the role that the Constitutional Court played then, and I continue to be proud of the role that it is playing today. I think one of the sad things about apartheid is that it really robbed the country of so many talented people who could have contributed so much to South Africa. It robbed the country of innovation, of creativity, by saying that certain people, by virtue of their gender or their skin colour, couldn’t assume certain positions. That, for me, is one of the truly tragic outcomes of apartheid. When I think of our constitution now, it's about opening up South Africa. It's about creating a very integrated South Africa, an imaginative South Africa, a creative South Africa. I truly believe that the Constitutional Court is one of the few examples of what a decolonised institution looks like. And I think it’s because you and your colleagues were given a blank slate and you were told to create something that was authentically South African from scratch. What you did with that was question to everything. Why do judges have to wear black robes? Why do judges have to sit above everybody else in court? Why does a court building have to look like a sterile environment with no imagination, no artwork, just bland? You questioned every single thing, and because of that, you were able to build an institution that is still strong today. Albie, I want to take you back to the 14th of February in 1995. Nelson Mandela is sitting on the bench with all 11 judges and he is inaugurating the court. You're all wearing your green robes. You're about to hear your first case, which is a very sensitive matter that could change the moral character of South Africa in a significant way. For me, it's a full-circle moment, because in 1962, Nelson Mandela said, “I do not feel at ease in this courtroom. I'm a black man in a white man's court. I'm an accused.” And there he is, in 1995, in a courtroom again. But this time, not as an accused, as a president who is inaugurating a brand-new court that is partially conceived from his imagination. That is being built by African hands and minds. What was Nelson Mandela's call to the 11 of you on that day? What did he set as an expectation to all of you as the judges of this new institution? I remember that moment so well. It was temporary accommodation. We couldn’t have a raised Bench, because the ceilings were quite low, but afterwards, in our new high-vaulted building, we decided to keep the low seating for the judges. Allow me to paint the scene. Mandela's sitting with us. It's a small room jam-packed with our relatives and friends. We're all very excited and he's in the middle. I was on the Visitors Committee, so I had to plan the whole meeting. Everything was going beautifully, until he got a bit hoarse and reached for a glass of water. But I hadn’t thought of that glass of water! So, I'm sitting up on the bench now, the biggest moment in my life, and I'm chastising myself for not thinking of that glass of water for Mandela. But he was nice about it, and put the moment sharply in context when he opens up by saying, “The last time I was in court was to find out if I was going to be sentenced to death. Today, I inaugurate South Africa's first Constitutional Court, a court on which the future of our democracy will depend.” He was far-seeing. This wasn’t just another court sitting in the background, like a longstop in cricket, to pick up any failures in society. It was a court that was deeply integral to the implementation and the development of the democracy and would be for transformation. In some countries, the courts are there just in case there's some kind of failure. You feel you're in a functional society, and the courts are simply there to make sure nobody slips up. In our country, the court is there to say we're living in a dysfunctional and unequal society, and we are trying to change that. We have a constitution that requires change and remembers the injustices of the past. At the same time, the change must take place according to law, according to the Constitution. Not through anarchy, grabbing, and self-enrichment, or corruption. So, seeing the central role the court played, it was wonderful. Mandela was so loving and protective of the court, and he showed it in the best way he could. And how did we show our respect for Mandela, who had appointed us, who had given so much of his life to the Constitution? To show our gratitude, six months after being inaugurated, we struck down two highly important proclamations issued by Mandela! People have forgotten about it now, but they were the proclamations that were supposed to give us our first democratic local government elections. They were very good laws; they were necessary laws for democracy. But we stopped them. Parliament had asked Mandela to pass the laws, to save time, to save expense, to get the show on the road. They trusted Mandela would do a good job. But it was against a profound constitutional principle, namely, that Parliament had to pass the laws itself, and not ask the President to do so... Mandela appeared on television afterwards and said that his legal advice had been that he had the power to pass that law, but that he now accepted that the legal advice was wrong. Fink Haysom, our former comrade on the Constitutional Committee, was the one who had given that legal advice. Mandela wasn’t throwing Haysom under the bus, though. He was saying that, as President of the country, he must be the first to accept the rulings of the Constitutional Court. That moment was as important as the 27th of April in 1994, when we became a democracy. On that day, later in 1995, we became a constitutional democracy, when the president accepted, and afterwards Parliament accepted, the rulings of the Constitutional Court, affirming the Constitution. Since then, each President has accepted the rulings of the court. Thabo Mbeki accepted the rulings on access to HIV antiretrovirals in the TAC case, whether he was happy with them or not. And we now have the biggest antiretroviral programme in the world. Jacob Zuma accepted the ruling of the court in the Nkandla case. I don’t think Cyril has had a ruling against him yet, but I fully expect that if there were to be a ruling against him, he would accept it too. And he wouldn’t be the first to have to accept the ruling, he would be the fourth. That is so fundamental. I saw Gloria Steinem on TV the other day, saying the Constitution doesn’t open with the words: “I, the President”, but rather with: “We, the people.” That idea was being upheld through the Constitutional Court having authority, having legitimacy and prestige, and having a Constitution that the people admired so much, that it didn’t matter whether we were in the ANC, were non-political, or in other parties, we all agreed. It wasn't your party-political allegiance that mattered, it was allegiance to the Constitution. It somehow transcended the harsh battles. Of course, you need harsh political battles, you need contestation, you need anger, you need joy, you need a whole series of different emotions in public life, But you also need a cool, calm and collected body, filled with the passion and energy of the nation, to rule. The Constitution rules, that's the fundamental theme, and that came through from Mandela, and hopefully will continue into the future. I think you're so right, Albie. That day was the day we became a constitutional democracy. First there was the ruling against a sitting president – a very popular president who'd been elected by an overwhelming majority – there was the court impeding him from doing something. Leaving the question: where does the court get the right to do that, when the judges are not elected, but Mandela is? I think the way that Nelson Mandela dealt with that moment, as you said, has really set the foundations of how the judiciary and the government interact with each other. But it hasn’t been easy, in that there was a moment where you, a freedom fighter, a revolutionary, were called counter revolutionary. What did that feel like? Did that feel like a threat to our constitutional democracy in that moment? That if you have politicians and public servants saying the judges are counter revolutionary, that could build up a resentment by the people against the judges, and against the judiciary? It did feel like a threat. It reminded me of the kind of highly schematic language used in the struggle days. I felt it was very unfortunate. Now, I'm speaking as somebody who had been in the ANC and felt the ANC's greatest achievement. But the most undeniable achievement, the most enduring achievement, was the Constitution. Though not on its own, it had to find counterparts. I was thrilled to see Roelf Meyer as part of the board or the advisory group for the ISI. But the thrust, the idea of creating the court and the values it symbolises came from Nelson, from Oliver Tambo, from ANC people. So, to start undermining and attempting to trash one of your greatest creations would have been self-defeating for the ANC at the time. I don’t think I’m giving away any secrets when I tell you that not long after Dikgang Moseneke made his controversial statement at his 60th birthday party, “I'm not answerable to the NEC or to anybody else” Kgalema, who was Deputy President at the time, came to the court for an off-the-record discussion. And Kgalema Motlanthe responded, “You're absolutely right. You're not answerable to the NEC”. He made it clear about any challenges there might have been had been made by one particular individual. An individual that is sometimes referred to as colourful, strong, a personality, and a person who says untoward things. Kgalema felt that particular individual regretted having made that statement, and although he's not the kind of person who is quick to say: “I'm sorry”, he wouldn’t repeat that particular error in future. My last questions, before I ask you questions from the audience, have to do with a time before we even got to the judgement that was made against our former president, Nelson Mandela. It has to do with the first judgement of the Constitutional Court, that of the death penalty. It's quite mind-blowing to know that in 1995, South Africa was still a state that had the legal power to kill its subjects and that this extremely sensitive matter became one of your first judgements. And in a country that, at the time, was very divided on the issue, with strong arguments for retaining the death penalty. Even to this day, people still want to retain the death penalty. What do you think the ability to kill its subjects, that power, does for the moral character of a country? What was the tension in that case, amongst the 11 justices? What did you see as an opportunity, in your first judgement, to declare as a new way of being, despite the popularity of the death penalty at the time? Why was the State versus Makwanyane such an important case, even today? Not just for us in South Africa, but globally it's seen as a landmark judgement. After the case was heard, Arthur wondered whether we had made a mistake, whether we should have started with a much more technical case with a constitutional dimension, and not with something so dramatic. I disagreed, I said we chose the most difficult case, the hardest case, and in a constitutional state, hard cases make good law. They force you to go deep into the values, and to think profoundly. Ismail Mahomed said that in some countries, you have incremental advances and then you get a Bill of Rights, a constitution, that consolidates the advances that have been made. That wasn’t the case in South Africa, where we had a radical rupture with a past that was uncaring, that was cruel, inhumane, and disrespectful to human dignity. Now our constitution envisaged a country that will be caring and respectful, and respect human dignity. The death penalty case forced us to take an issue that would be unpopular in terms of the mass feeling – kill them, they've done terrible things, they deserve to die, to confront themselves – and bring in the idea of Ubuntu. It was Yvonne Mokgoro who raised it first. Ubuntu, the idea of the interconnectedness of human beings. The idea that if we kill each other in cold blood, in a sense, we are cutting off our own limbs. We are destroying ourselves a little bit. We are destroying a part of our society. I must have appeared in about 55 cases as a young advocate, with a potential death sentence. Two of my clients were sentenced to death. One was hanged. One the judge spared through a recommendation of mercy. The feeling of horror when you are a lawyer defending someone and their life could depend upon your skill, is indescribable. To make matters worse, in those days the outcome depended on the race of the victim and the race of the accused. If it was black on black, white on white, white on black, then there was no death sentence. But black on white, that was the main cause of the death sentence being issued. The other factor it depended on was the judge. Didcott never passed a death sentence. Herbstein, in the Cape, never passed a death sentence. We had another judge, I won't mention the name, six death sentences every year. There was something arbitrary in it. And they have a similar situation in the United States, where it depends so much on which state you're in and the kinds of juries and the prejudices, and so on. It's too much that the state has the power to take the life of a human being, cold-bloodedly, whether it's done through electrocution or hanging or poisoning. There's something awful about it. We all become party to this, and it reduces respect for human life. That was our thinking. We didn’t discuss the case before we went into the court. We only discussed it afterwards as we sat around the table, all 11 of us, with our very different backgrounds: some deeply religious, others committed secular people. Different backgrounds, different life experiences, all unanimously felt, in the new South Africa, that the state should not have the power to take the life of its citizens, however horribly they've behaved. The real deterrent is not that you’ll be sent to the gallows, it's that you'll be caught. You need to improve law enforcement. You need to deter people from doing things on the basis that they'll be caught and punished with long periods of imprisonment. I was very moved yesterday to see, in the United States, the mother of one of the men killed by ISIS, saying she's so pleased that Britain said they will hand over the prisoners for trial in the United States, on the basis that they will not be executed if found guilty. She said: rather let them suffer in prison. Let them not become martyrs. Let us not become party to the cold-blooded killing of somebody else. Albie, what I've gotten from our talk is that part of creating a new country is in the small details and in the big things. The small details of how you built an institution: the symbols of the court, the character of the judges who are on the court, the character of the building. Then the big things like the big judgements that you have handed down, which has literally changed the national discourse in South Africa on very divisive matters. The Constitutional Court has been the steady hand that all South Africans, even when we do disagree with the court, we respect, out of the three arms of government. I think it's thanks to the early work that you all did in those dark days. I'm going to move on to the questions that the audience has for you. The first one is, what is your view on the current political narrative in respect of the question of race, and the impact that it has on promoting reconciliation? The second question, is South Africa measuring up to the 1994 vision? There was a clear upwards trajectory just after 1994. Where do we stand now in terms of ethics and social cohesion? Then the third question I have is, what is your view on state capture, and it's undermining of the 1994 vision? The question of race: I dealt with it when I was a political activist and when I was a judge. You can't get away from race in South Africa, and we shouldn’t try to get away from it. If you do, you might say you're colour-blind, when in fact, you are simply socially blind. You are humanly blind. It's real, it's important, and our strength in South Africa, and our capacity to get through tough times in the future, comes from acknowledging the differences and difficulties of race. It’s better to face up to them and deal with them in a principled way, rather than to say they don’t exist. Race is not just a proxy for poverty and injustice, and so on. It's intertwined with injustice, with accumulated injustice that still exists in our minds, our ways of doing things. At the same time, we must confront race in order to create a non-racial society. We must deal with it openly and honestly. We must create conditions for advancement. Acknowledging the realities of race could be extremely important for whites in South Africa. To acknowledge, also, their potential vulnerability because of race, because of stereotyping of whites, because they are in a minority and they are seen by many as the source of all evil. We've got to combat the realities of anger and the tensions that are created around race, but we need to do so in a manner that is non-racial, principled, and based on the Constitution, which is there for everybody’s protection. When we drafted the Constitution, I remember people saying they simply wanted to forbid unfair discrimination, that that would be enough, but many of us didn’t believe that was enough. We looked at the Supreme Court in America, which struck down the rule in Richmond, Virginia, that said in any transactions that were undertaken, 15% of municipal contracts had to be set aside for minority service providers. The Supreme Court majority struck that rule down, saying that it was taking account of race, and they believed in a race-free society. Thurgood Marshall almost wept when he wrote his dissent, and he said those of us who knew the realities on the ground, knew how important it was that here was Richmond City Council, mainly whites, taking a progressive step to undo hundreds of years of oppressive history, and the Supreme Court, in the name of non-racism, just struck it down. So, we added section 9[2] to the Constitution, which expressly allows for measures of redress based on race and gender to be taken. If you look at the preamble, look at the injustices of the past, all of this relates to race. But we're not trapped in race, it’s not the only factor. We can't use race, then, as a proxy for self-advancement, corruption, getting ahead or for deployment of people who are not qualified for particular jobs, whatever their race might be. Furthermore, we can't use identification of people because they happen to be of Indian origin or from the coloured community, as mechanisms for marginalising them or denouncing them or creating rage against them. I don’t want to get into the subject of hate speech, that's very much before the courts at the moment, but in cases where hate speech has cropped up, the Constitutional Court has made it very clear that freedom of speech doesn't allow freedom to promote hatred in a way that undermines the very foundations of our society, which depends upon respect for every person. Hate speech, from that point of view, has to be looked at with constitutional eyes. I won't say anything more on the subject, because the Constitutional Court is in the process of dealing with that particular issue. In terms of the 1994 vision, our vision then, in creating the Constitution, wasn't to say now that we have the Constitution, we'll have a great society. The Constitution doesn’t create the society, it provides the mechanism and the values for creating the society. It doesn’t build homes, it doesn't build schools, it doesn’t stop corruption. It doesn’t end racism. And it doesn’t eliminate racism. But it gives you the mechanisms for doing that. Our vision then, of empowering the people through elections, through voting, through having fundamental rights, to that extent our vision has been maintained. South Africans speak freely. They speak their minds. They can set up different organisations and groups. They campaign. We have wonderful investigative journalists. We, South Africans, can take pride in the fact that we brought down Bell Pottinger. They were supporting the crooks and the rascals all over the world. South Africa brought them down. They struck a rock, in that sense, a hard, painful one. It's not just the President of the country who had to pay back the money, South Africa forced KPMG to pay back the money too. We have institutions that work. We have electoral mechanisms that work. They could work better, but they are working. Our elections are freer and fairer than the elections coming up in America quite soon. Some of the vote suppressing mechanisms that are being tried there, would never be allowed in South Africa. We have a strong judiciary, a wonderful constitution that can be invoked, and strong institutions. We have a strong civil society that is free to function, to operate – whether it's marching in the streets, or thinking things through, or having debates. We also have a people that speak their minds. So, from that point of view, the 1994 project is alive and kicking. Unfortunately, it has to kick a bit harder than we thought it would have to do. I'd like to mention at this point, I lived in Mozambique from about 1977 to 1988. It was a wonderful experience in so many ways. Great people who were very progressive on the emancipation of women, and on combating racism, on doing things for the poor. But we couldn't pull it off, and we ended up with a bitter civil war. I lost an arm, and many others lost limbs because of the landmines. So, when I came back to South Africa and my comrades were still waiting for the Revolution, and as we were on the verge of it, there was a decision made to bring about a constitution, to go the peaceful road, I was so relieved. I’m so grateful that we didn’t have the violence that beset Mozambique. We have violence and corruption, but we don’t have it to the degree that they have had it there. And we have mechanisms to deal with it. From that point of view, I feel the project that we embarked upon of having a constitutional democracy where the people can make their claims, and try and right their wrongs, that project is strong. Albie, before we run out of time, there is this last question that has come in. It says, we said no to the death penalty, but did we change the culture of violence in the country? How do we change the culture of violence in South Africa? We don’t change it through state violence. That's not the way to go. We change it through developing a culture of non-violence, and that's hard. It's not just violence from the state, it's gender-based violence. Our constitution is the only one in the world that provides a constitutional right, a protection against violence in the home, not just criminal law violence. That requires men to come forward and women to speak out. It requires education in the schools and jobs for everybody, so that people don’t go joining gangs, because there's no other occupation for them. It's a whole range of measures that have to be taken. The one thing that gives me a source of hope is that the issue is out there in the open. We don’t take it for granted. In that sense, we're not passive, we're not immobilised. We do stand up against violence and speak out against violence. We try to hold people to account for violence that is illegitimate and unacceptable. State capture, I leave that to my former colleague, Zondo, to deal with that. It's a whole other big issue in itself. What is important is that we don’t take these things for granted. We need to fight against the negative. We can use the Constitution as a mechanism to advance the positive, to advance hope, humanity, human dignity against all the things that are resisting and undermining our country. Thank you so much, Albie. One thing I've learnt from clerking at the court for Justice Edwin Cameron, and working with you now in the work that we do for Constitution Hill, is that we run the risk of overburdening our judiciary with issues that should be dealt with through other tactics and strategies. And that the Constitution was never meant to be a panacea for all the things that ail our community. What the Constitution is, is merely an opportunity, and unless we take that opportunity, then we can't expect it to self-actualise, because that's not what documents do. I'd like to thank you for this very enlightening conversation. I hope people have gleaned from your answers that there's so much we can do, in terms of looking at the world through a creative way. If we change our institutions and learn from how the court built itself, if we take some of the lessons from the court, we can really build inclusive societies. We could really build a better South Africa, just through small things that we decide to do within our sphere of influence. So, thank you so much. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. Author: Daryl Swanepoel Language editor: Olivia Main 31 January 2021 CONTENT Abstract Introduction Literature review Methodology Limitations Findings Discussion and interpretation Conclusions Recommendations References Acknowledgements Cover page image: www.popsci.com Abstract The South African economy is currently on its knees, with public policymakers seized with finding solutions to bring about economic recovery. In tinkering with the economic architecture, no effort is being spared to promote GDP growth. This report suggests, however, that GDP growth on its own is incapable of placing the economy on a sustainable growth path. Equal importance has to be afforded to reducing the currently too high population growth rate. One without the other will fail to address the most pressing problem confronting the economy – unsustainably high unemployment. Through analyses, a number of scenarios linking GDP and population growth variations are explored to test the impact of their interconnectivity on reducing the country’s critically high levels of unemployment. It finds that unless the country is able to place its population growth rate onto a downward curve, it is highly improbable that sufficient GDP growth can be established to adequately address the country’s unemployment crisis. It recommends that the South African authorities, and indeed broader society, grasp the urgency to start addressing the population growth problem, that they prioritise programmes to give effect thereto, and that they recognise that avoiding the inevitable will come with prolonged suffering and at great cost to the economy. Introduction Unemployment has reached an all-time high in South Africa. As at the end of the first quarter of 2020, the official unemployment rate stood at 30,1 percent. Whilst it did decline to 23,3 percent in the second quarter of 2020, this was because of the increase in the expanded unemployment rate, which rose by 2,3 percentage points compared to Q1:2020. This was due to the significant increase in the number of people that were available for work, who are no longer actively looking for work (Stats SA, 2020(a)). In terms of the expanded definition of unemployment, the rate soared from 39,7 percent to 42 percent (Zwane, 2020). Of particular concern is the extreme unemployment amongst the youth of South Africa. Unemployment in the age group 15-24 for 2020 stood at 55,97 percent (Statista, N.d.). At the same time, GDP has also been falling. According to Statistics South Africa, the economy, at the time of writing this article, registered three consecutive quarter on quarter declines. GDP (seasonally adjusted and annualised) in the first quarter of 2020, fell by two percent. It contracted by 1,4 percent and 0,8 percent in the fourth and third quarters of 2019, respectively (Stats SA, 2020(b)). Much emphasis has been placed on the need for material GDP growth to arrest the spiralling unemployment. To reduce unemployment to about ten percent, the South African economy will have to register growth of around five to six percent per annum for the next twenty years (Cotterill, 2019). This, whilst average GDP growth over the ten-year period 2009 to 2018 averaged a mere 1,5 percent (CRA, 2020:86). Mainstream arguments advanced by the South African government as to the root causes for the growing unemployment include the legacy of apartheid and poor education and training, labour demand – supply match, the hangover effect of the 2008/2009 global recession, the role of trade union federations in government, a general lack of interest for entrepreneurship and slow economic growth (RSA, N.d.). Little mention is made in the general public discourse of the impact that the relatively high population growth has on the economy’s ability to generate sufficient numbers of jobs to satisfy the demand. This whilst empirical evidence confirms the link between population growth and the economy’s ability to generate sufficient jobs. It furthermore suggests that by reducing population growth in middle income countries, it seems to benefit mainly young workers aged 15 to 19 (Newhouse, 2015), which is of great importance in the South African context of extreme youth unemployment. Over the nine-year period 2011 to 2019, the South African population grew by an average of 1,65 percent. In hard numbers, the population has over the period 2011-2019 grown by an average of 898,000 per annum (Trading Economics, N.d.). On average, there are 600,000 new entrants into the labour market each year (Altman, N.d.:159). It is evident that should the population grow at a pace greater than the number of new jobs in the economy, unemployment will rise. The average number of jobs created in the economy in the same period averaged about 278,222 (CRA, 2020:246). That means that, on average, new jobs are created for only around half of new entrants into the labour market. This report examines the relationship between population growth in South Africa and growing unemployment. It, in the first instance, imagines what the state of unemployment would have looked like today, had South Africa been able to since the advent of democracy in 1994 achieve the half a percent population growth rate envisaged as the ideal in the country’s National Development Plan (NPC, N.d:29). It will then unpack two sets of scenarios: In the first set of scenarios, it will project, over a ten-year period, the South African unemployment rate on the basis of the population growth continuing along its current trajectory. It will consider the outcome based on low, medium and high GDP growth paths. In the second set of scenarios it will project, over a ten-year period, the South African unemployment rate on the basis of a reducing population growth rate applied to the same three GDP growth projections. And finally, it will attempt to reflect the scenarios in projected South African unemployment rates. It does so, to highlight the need for a greater emphasis to be placed on public policy initiatives aimed at reducing South Africa’s population growth rate, as a tool to reduce unemployment. Literature review The objective of this investigation is to determine the relationship between GDP growth and population growth on unemployment in South Africa. The review will therefore peruse precedent related to the two concepts: The impact of GDP growth on unemployment and the impact of population growth on unemployment. It will also, in an effort to provide lessons from other jurisdictions, explore what the impact was on economic growth and employment in territories that have managed to contain their population growth. And finally, what public policy interventions can be employed to achieve the objective of curbing population growth. The relationship between GDP and population growth According to Mandel and Liebens (2019:18), authors agree “that among all economic variables that have high impact on the unemployment rate, GDP is probably the most important”. Most argue that there is a negative correlation between the GDP and the unemployment rate in a country. Whilst there are a number of factors that influence GDP and unemployment, historically, in line with Okun’s law (Okun, 1962:89-104), unemployment increases at around double the rate that GDP decreases (Sánchez & Liborio, 2012). However, a 2014 International Monetary Fund study found that, although professional forecasters believe in the basic tenets of Okun’s law, which is that unemployment forecasts are revised down when GDP forecasts are revised up (Ball, Jalles & Loungani, 2014:12), many economists now use a dynamic version of Okun’s law. This is due to the accuracy of Okun’s law being eroded in the past decades. The dynamic version suggests that both past and current output can impact the current level of unemployment. This “would have current and past real output growths, and past changes in the unemployment rate as variables on the…[one] side of the equation”, which “would then explain the current change in the unemployment rate on the…[other] side”. (Rahman & Mustafa, N.d.:42,48). That said, it does not always hold true that low population growth spurs GDP growth. There are analysts who believe that although high population growth in low-income countries may slow their development, a low population growth rate can result in high-income countries experiencing relatively slow economic growth. One reason advanced for this is that it requires new adjustments to support the growing burden of dependent elderly (America, N.d.:82). The South African age demographics are, however, heavily skewed towards the youth. It seems the effects vary with the level of a country’s development, the source or nature of the population growth, or other factors that lead to non-uniform impacts (Wesley & Peterson, 2017:1-2). It depends on the institutional, economic, cultural, and demographic setting (America, N.d.:105). Nevertheless, rapid population growth, in most developing countries today, acts as a brake on development. It has resulted in less progress and lost opportunities for raising living standards, particularly among the large numbers of the world's poor (America, N.d.:79). The relationship between population growth and unemployment A growth in population is connected to other economic dynamics, particularly poverty and unemployment. A study into the impact of population growth on poverty and unemployment in India, suggested that population growth gave rise to a growth in unemployment within the labour force of the community which leads the substantial chunk of population (Pethe, in Singh & Kumar, 2014:5919). In a similar study to test the impact of population growth on unemployment in Nigeria, the authors cited literature which suggested that population growth has a direct relationship with unemployment. This was so, given that when the working population grows, it means an increase in the supply of labour to the labour market, thereby creating an excess supply of labour over its demand, which is what causes persistent unemployment (Maijama’a et al, 2020:81). It found that a population increase of 1 percent causes the rate of unemployment to increase by 2.577 percent (Maijama’a et al, 2020:87). The Maijama’a study thus provides further empirical support for Okun’s law, albeit that Okun’s law is somewhat more conservative. On the other side of the dialogue are those who argue, such as the position expressed in South Africa’s National Development Plan, that having a large number of young people who are able and willing to work is an advantage – the so-called ‘youth dividend’ (NPC, N.d.:29). It has been intimated that former US President Bill Clinton, held a similar view. He is reported to have opined that “because most of America’s competitors – Russia, Japan, China, and Europe – have low birth rates and aging populations, we will have a younger workforce with a lower old-age dependency ratio”, so the growth in the youth population will solve the US’ unemployment problems (Kummerow, 2012). Kummerow, however, maintains that “the notion that population growth cures unemployment is false”. He argues that a growing population leads to high unemployment. He asks: “If a young population leads to prosperity, why aren’t places like Nigeria, Rwanda, and Uganda thriving? Why has China gotten so much richer since starting its ‘one-child policy’?” It’s common sense, he says, that should the population continually increase, it would be harder, not easier, for everybody to be employed. “The problem is not too few jobs; it’s too many people”. Lessons from territories that have successfully curbed population growth South Korea is hailed for its miraculous transformation, which it managed to achieve in a mere 60 years. It progressed from being a poor agriculture-based economy in the 1960’s to the 10th-largest economy in the world in terms of GDP in 2019 (The Korea Times, 2020). World Bank data on South Korea’s population growth trend reveals a sharp decline in the country’s population growth since 1960 to 2018 (World Bank, N.d.). It dropped from 2,9 percent in 1960, to 0,3 percent in 2018. The year-on-year decline is reflected in Figure 1 below: Figure 1: South Korea population growth 1960-2018 Over more or less the same period, that is 1960 to 2020, South Korea’s GDP rose at an average of 1,74 percent per annum. It has, apart from brief periods, remained largely in positive growth territory (Trading Economics, N.d.). The combined effect of the healthy GDP growth and population growth decline resulted in a dramatic decline in unemployment. The non-agriculture unemployment rate reduced from a 16,3 percent high in 1963 to 2,3 percent in 1996. For the aggregate economy, it decreased from 8.1% in 1963 to 2.0% in 1996 (Chang, Nam & Rhee, 2003:2), suggesting that the non-agricultural and agricultural sector were now more closely aligned. Figure 2: South Korea GDP, population and unemployment interplay 1960-2000 Brazil has a different story to tell. In 1991, Brazil had an unemployment rate of 6,37 percent (Macrotrends, N.d (a)). Despite a dramatic decline in its population growth rate from 2,9 percent in 1990 to 0,8 percent in 2018 (World Bank, N.d.), its unemployment rate rose to 12,08 percent. The differentiating factor has been its erratic GDP growth, which declined from 10,28 percent in 1960 to 1,14 percent in 2019. Furthermore, it has recorded a series of dramatic dips over the period. A dip from 13,98 per cent to -4,39 percent was recorded over the period 1973 to 1981. Another dip was recorded from 7,53 percent in 2010 to -3,55 percent in 2015 (Macrotrends, N.d.(b)). The review confirms that a decline in the population growth rate in itself will not reduce unemployment, it needs to happen in tandem with GDP growth. Tools available to curb population growth One of the tools, amongst a whole suite of economic structural reforms, that China used to help eradicate poverty, was to address high population growth. China introduced a one-child policy in 1979 with the aim of limiting families to just one child. The programme was initially introduced on a voluntary basis but was, however, made compulsory in 1980. A number of enforcement mechanisms were deployed, including making contraceptives widely available, offering financial incentives and preferential employment opportunities for compliant citizens. The authorities also imposed economic and other sanctions against those that did not comply. At times, even stronger measures such as forced abortions and sterilizations were invoked. By the mid-1990s the fertility rate dropped below two children per woman and China’s overall rate of natural population increase declined (Pletcher, 2020). Within South Africa’s constitutional dispensation, the enforced introduction of a one-child policy similar to that of China’s will not be judicially permissible. Article 12 (2) (a) of the Bill of Rights in the Constitution of South Africa, for example, guarantees everyone the right to bodily and psychological integrity, which includes the right to make decisions concerning reproduction (RSA, 1996:6). Nevertheless, the advantages of a one or two child family should be actively promoted to coerce citizens into voluntary compliance. Since the 1960s the implementation of voluntary family-planning programmes have advanced. Contraceptives have been made widely available, often on a subsidised basis. The key reason has been to reduce the number of unwanted pregnancies and abortions. In the developing world, around 74 million unplanned pregnancies occur, half of which end in induced abortion (Bongaarts, 2016:409-412). Reasons advanced for the unwanted and unplanned pregnancies range from low levels of female education, insufficient knowledge about access to contraception, insufficient distribution services, and cost. Other problematic issues include opposition from spouses and families and traditional customs that desire large families (Bongaarts, 2016:419-512). Many religious beliefs, such as Catholicism and Buddhism, are also opposed to contraception and abortion, as are cultural customs (FPA, 2016). In the South African context, the impact of the high prevalence of gender-based violence (GBV) will need to be considered. For example, in 2012, a study conducted by Gender Links found that 77 percent of women in Limpopo, 51 percent in Gauteng, 45 percent in the Western Cape and 36 percent in KwaZulu-Natal had experienced some form of GBV. Men were the main perpetrators of this violence. To illustrate, 76 percent of men in Gauteng, 48 percent in Limpopo and 41 percent in KwaZulu-Natal admitted to perpetrating GBV. In a 1999 study by Abrahams et al. surveying 1 306 women in three South African provinces, it was found that 27 percent of the respondents from the Eastern Cape, 28 percent from Mpumalanga and 19 percent from Limpopo, had been physically abused in their lifetime by a current or ex-partner (CSVR, 2016). These and other obstacles need to be reduced and eliminated. Cross-sectional coordination will be required. It will have to be promoted at an individual, community and public level, also, in an effort to bridge the divide, in consultation with the religious and cultural fraternity. To this end, academics from The Overpopulation Project (TOP) have compiled a list of actions, reflected below, that, amongst others, could help reduce population growth trends. Actions on the individual level Have fewer children! One is good, two is enough Consider adoption! Read, educate yourself about population issues Reduce your personal consumption: go vegan, limit flying, share your household with others, and Educate your teenage child(ren) about sex and contraception early, without taboos Spread your knowledge and concern among your friends and family, raise awareness about overpopulation on social media Donate to family planning programmes in your own or other countries Vote for politicians who acknowledge the detrimental impacts of population growth and propose political solutions Actions on the community level Join local environmental groups, encouraging them to “connect the dots” between population and the environment and address population issues Write opinion pieces for local newspapers, contact local media sources requesting more reporting on population issues Municipalities should set growth management boundaries, discouraging sprawl development on their fringes Towns and cities should purchase surrounding lands, or the development rights to such lands, in order to set them aside as nature preserves and open space City councils should pass resolutions accepting limits to growth, and directing their national governments to develop policies to stabilize or reduce national populations Actions on the national level In high fertility developing countries, governments should … Generously fund family planning programs Make modern contraception legal, free and available everywhere, even in remote areas Improve health care to reduce infant and child mortality Restrict child marriage and raise the legal age of marriage (minimum 18 years) Introduce obligatory education as long as possible (minimum until the age of 16), and generously fund the necessary infrastructure In low fertility developed countries, governments should … Embrace rather than fight aging and shrinking societies Reorganize pensions and other socio-economic systems to accommodate aging societies Eliminate baby bonuses, government funding for fertility treatments, and other incentives to raise fertility rates Reduce immigration numbers (at least to a level that will stabilize national populations, preferably to one that will lower them) Reduce resource consumption and pollution through an effective mix of taxes, incentives and regulations In every country, governments should … Empower women, assuring equal rights, treatment and opportunities for both genders Provide information and access to reproductive health care, including all types of low cost, safe, effective contraception Make sterilisation free, for men and women, or at least covered under all healthcare plans Legalise abortion without restrictions or social stigma Integrate family planning and safe motherhood programmes into primary health care systems Make population and environmental issues and sex education part of the basic educational curriculum Disincentivise third and further children non-coercively, by limiting government support to the first two children* Create a national population policy built around an optimal population size, and work to achieve it Set aside half the national landscape free from intensive development and dedicated to biodiversity protection * Disincentivising a third or subsequent children from public benefits such as social grants or subsidies for health or education would be unconstitutional in South Africa, where the right vests in each individual child, not the parent or caregiver (RSA, 1996). The past practice of focussing exclusively on family planning to reduce rapid population growth is no longer adequate. “Population policy needs to be broadened to include health care, education, and poverty reduction” (Bongaarts, 2016:409-412). Special emphasis should also be placed on including women in the workplace, since there is a high correlation between smaller families in households where women are employed. This is confirmed in a study by Sutanto (2000) delving into working women and family. It found that there is a strong association between women's rising labour force participation and drastically lowered fertility rates. Methodology As mentioned in the introduction, in examining the relationship between population growth and growing unemployment in South Africa, three analyses were performed: The first analysis took the form of an imagined outcome of what the state of unemployment would have looked like today, had South Africa been able to since the advent of democracy in 1994, achieve the half a percent population growth rate envisaged as the ideal in the country’s National Development Plan (NPC, N.d:29). The second analysis contained a set of scenarios, in which it projects, over a ten-year period, the South African available jobs to potential labour force (age group 15-64) ratio, based on the population growth rate continuing along its current trajectory; that is a 1,48 percent average population growth rate over the last five years (CRA-SA, 2020:12). It considered the outcome based on low, medium and high GDP growth paths, that is two, three and four percent respectively. A healthy GDP growth rate for middle income countries is between two and three percent (Ngugen, 2019). The third analysis also contained a set of scenarios, in which it projects, over a ten-year period, the South African employment scenario based on a reduced population growth rate being applied to the same three GDP growth projections. The population growth rate applied in this scenario was half a percent, as this is the growth rate aspired to in the NDP. The exercise is done with the caveat that in the real world it would not be possible to change the population overnight from the existing 1,48 percent to half a percent. What the exercise does do, is to give an indication as to what the future could have looked like, had the country been able to by 2020 bring its population growth rate down to half a percent. These three analyses enabled conclusions to be drawn on the combined impact of three GDP growth scenarios and two population growth scenarios on the basis of ratios representing the number of potential workers for each job in the economy. It is not a representation of the unemployment rate. For this, a separate calculation was required, which calculation needed to draw on a combination of source information and the outcome of the three analyses. These analyses and the unemployment rate calculation enabled conclusions to be made regarding the impact of population growth on unemployment in South Africa. It emphasises the importance that public policymakers should be attaching to the population growth phenomena in the country. First analysis: Imagining South Africa’s employment scenario based on a consistent half a percent population growth rate for the period 1994-2019 In undertaking this analysis, three sets of population data was required. The data was then captured in a five-column table as illustrated in Table 1 below. The first column contained the actual number of employed persons for each of the years 1995-2019. This is an indication of the number of jobs that were available in the country over that period. The second column contained the actual population numbers for the age group 15 and older (the economically active population) as at 1995 (one year into the new democratic dispensation) and 2019. The third column contained year-on-year calculations, in which half a percent was added to the preceding year’s number. The first number reflected the actual number of employed in 1995. This calculation simulated an imagined population growth over the period based on a half a percent population growth rate. Columns four and five reflected the ratio of the number of jobs available to the potential labour force: Column four being the true position, and column five the imagined position based on a half a percent growth in population. By comparing the two ratios, conclusions could be drawn as to how the employment position could improve by curbing the population growth. Table 1: Calculation method workers to available jobs ratio under actual and 0,5% growth scenarios Second analysis: Ten-year available jobs to potential labour force ratio based on current population growth trajectory This analysis required four sets of data. The data was captured in an eight-column table (see Table 2 below). Line one of columns one to three, contained the true number of employed people, representing the number of jobs available as of 2019. Columns one to three were then further populated by adding double the GDP growth rate to the preceding year’s available job number. For example, column one represented jobs to be created at a two percent GDP growth rate. In accordance with Okun’s law, jobs grow at approximately double the GDP growth rate. Thus, the number of jobs were escalated at four percent per annum. At a 3 percent GDP growth rate (column two) jobs would be escalated at 6 percent, and at a 4 percent GDP growth rate (column three) jobs would be escalated at an 8 percent year-on-year growth rate. Column four represented the size of the potential labour force. Row one contained the true actual size of the labour force, that is the number of people aged 15 and older as of 2019. Each row (year) thereafter was escalated by 1,48 percent, being the current population growth trajectory. Columns five to seven represented the respective ratios of potential labour force size over the number of jobs available as reflected in the three GDP growth scenarios. Table 2: Method for calculating workers to available jobs ratio under 2, 3 & 4% GDP growth scenarios The analysis was then repeated in line with the dynamic version of Okun’s law, that is based on the actual historical GDP and labour growth trends for the 10-year period 2011 to 2019. Historical data suggests that in the South African environment, employment grows at around 0,43 percent of the Okun’s law ratio, that is 1,72 percent for the 2 percent GDP growth rate, 2,58 percent for the 3 percent GDP growth rate and 3,44 percent for the 4 percent growth rate. The formula below illustrates: GDP growth rate x 2 (Okun’s law) x 0,43 (historical trend in South Africa) = employment growth 2% x 2 x 0,43 = 1,72% 3% x 2 x 0,43 = 2,58% 4% x 2 x 0,43 = 3,44% The aforementioned analysis allowed conclusions to be drawn as to how the employment scenario can be expected to develop under low, medium and high GDP growth scenarios based on the current population growth trajectory, firstly forecasted in terms of Okun’s law and secondly in terms of the dynamic version of Okun’s law. Third analysis: Projected ten-year employment scenario based on a half percent population growth rate This analysis is a repeat of both versions of the second analysis, with the exception of changing the population growth rate from 1,48 percent to half a percent. The aforementioned analyses allowed conclusions to be drawn as to how the employment scenario could have expected to develop under low, medium and high GDP growth scenarios based on an aspired to half a percent population growth rate. Determining impact on the unemployment rate (expanded definition) The aforementioned analyses do not interpret the impact on the unemployment rate. An attempt is made to make such a determination, based on the calculation set out in Table 3 below. Table 3: Method for calculating unemployment rate @ 2% GDP and 1,48% population growth scenario Limitations The research is reliant on secondary data, although the base data thereof is the official statistics of Statistics South Africa. Furthermore, no attempt was made to make actuarial adjustments based on potential changes to South Africa’s mortality rate, which may very well, in line with international precedent, improve in tandem with economic recovery. That said, the effect if any, over the ten-year period tested, will, in all likelihood, not be material, given the marginal impact on the unemployment rate and struggling social and health services of the country. In terms of the available workers to jobs ratio, the workforce includes people over 65, since in the modern world people work beyond the age of 65 and/or get involved with charity/advising activities. The workforce may thus be slightly overstated, but by no more than five percent. Once again, the objective of the study is not to project an exact position, but rather to illustrate realistic trends. This paper has been written in the midst of the COVID-19 pandemic. The latest full-year statistics available at the time of writing was year-ending 2019. The statistical abnormalities registered in 2020 as a result of the pandemic could not be factored in. Nevertheless, a V-shape recovery is expected once the economy re-opens after the COVID-19 lockdown, enabling the trendline to re-establish itself. Moreover, the paper essentially holds the structure of the economy and the existing technology constant, and then makes future projections. It does not consider the potential positive impact that an improvement in the quality of the education system holds, nor advances in technology. It takes a ‘business as usual – all things being equal approach’, and views the problem as one dimensional, whilst in reality the economy is multi-dimensional. It does so, not to predict precisely where the real economy is going, but rather to demonstrate the correlation between the rate of population growth and the rate of unemployment over the next decade. Whilst recognising that changing the education system and transforming the technological environment will impact employability, composition of the economy takes some time and will thus not be immediately visible in labour absorption. Furthermore, whether the impact of the 4th Industrial Revolution will be a net contributor to jobs or not remains a topic of much debate and research. Findings The findings of the three analyses envisaged in the aforementioned methodology section are set out hereunder. Analysis 1: Imagining South Africa’s employment scenario based on a consistent half a percent population growth rate for the period 1994-2019 Table 4: Calculation of imagined employment scenario assuming 0,5% population growth since 1994 Analysis 2: Ten-year available jobs to potential labour force ratio based on current population growth trajectory Table 5 below reflects employment growth projected in line with Okun’s law, which is two times GDP growth. Table 5: Projection of ten-year labour force to jobs ratio scenarios at 2, 3 & 4% GDP growth – based on current population growth trends (using Okun’s law) Table 6 below reflects employment growth projected in line with the dynamic version of Okun’s law, calculated as around 43 percent of Okun’s law ratio, or, 0.86 times the rate of GDP growth. The average GDP growth over the period 2011 to 2019 was 3,2 per cent, whereas actual jobs over the same period only grew at 1,31 percent per year on average. Table 6: Projection of ten-year labour force to jobs ratio scenarios at 2, 3 & 4% GDP growth – based on current population growth trends (using dynamic version of Okun’s law) Analysis 3: Ten-year available jobs to potential labour force ratio based on a half percent population growth rate Table 7 below reflects employment growth projected in line with Okun’s law, which is two times GDP growth. Table 7: Projection of ten-year labour force to jobs ratio scenarios at 2, 3 & 4% GDP growth – based on 0,5% population growth (using Okun’s law) Table 8 below reflects employment growth projected in line with the dynamic version of Okun’s law, calculated as around 43 percent of Okun’s law ratio, or, 0.86 times the rate of GDP growth. The average GDP growth over the period 2011 to 2019 was 3,2 per cent, whereas actual jobs over the same period only grew at 1,31 percent per year on average. Table 8: Projection of ten-year labour force to jobs ratio scenarios at 2, 3 & 4% GDP growth – based on 0,5% population growth (using dynamic version of Okun’s law) Unemployment rate (expanded definition): 2029 calculations based on current true population growth trajectory and a simulated half a percent population growth percentage In the calculation (Table 9) hereunder, unemployment is projected on Okun’s law, which is double the GDP percentage of jobs growth. Table 9: Projecting 2029 unemployment scenarios based on Okun’s law at 2% GDP growth using current (1,48%) and ideal (0,5%) population growth trends In the calculation tables hereunder, unemployment is projected on the dynamic version of Okun’s law, that is using historical date, which equated to jobs escalating at 0,86 percent of the GDP growth rate. For two percent GDP growth, as illustrated below, jobs would grow at 1,72 percent year on year. At three percent GDP growth it would be 2,58 percent and at four percent it would be 3,44 percent. Table 10: Projecting 2029 unemployment scenarios based on dynamic version of Okun’s law at 2% GDP growth using current (1,48%) and ideal (0,5%) population growth trends Table 11: Projecting 2029 unemployment scenarios based on dynamic version of Okun’s law at 3% GDP growth using current (1,48%) and ideal (0,5%) population growth trends Table 12: Projecting 2029 unemployment scenarios based on dynamic version of Okun’s law at 4% GDP growth using current (1,48%) and ideal (0,5%) population growth trends Discussion and interpretation The various analyses revealed that South Africa will continue to face a jobs crisis well into the future. At best, over the next decade, it will be able to cut its unemployment rate to about a third of the current position. This is however highly unlikely, as will be elaborated on in this section of the report. Available jobs in the market As at the end of 2019, there were jobs for only about one out of every three (2,57) citizens in the age group 15 and older. The actual number of persons employed numbered 16,3 million, whereas the actual number of persons aged 15 and older numbered 41,9 million. Based on the current population growth trajectory, that is 1,48 percent growth per annum (based on the actual past five-year trend), the position is likely only to improve by around 2,3 percent by 2029 should South Africa be capable of maintaining a constant 2 percent annual GDP growth rate. This is based on the dynamic version of Okun’s law. There is no evidence to suggest that the country would miraculously break from the current 10-year historical trend of achieving jobs-growth at around 43 percent of the standard 2 to 1 ratio of Okun’s law. It would mean that, by the end of 2029, there would be around 2,51 persons (as opposed to 2,57 in 2019) in the age group 15 and older for every available job. Even if the country were capable of accelerating its GDP growth rate to a constant 3 or 4 percent over the next decade, the position would only improve marginally. At a GDP growth rate of 3 percent, there would be 2,3 persons (2,57 in 2019) for every available job (a 10,5 percent improvement), and at a 4 percent GDP growth rate there would be 2,12 (2,57 in 2019) persons in the age group for every available job (a 17,4 percent improvement). As alluded to in the earlier part of this article, the reduction of unemployment requires both an increase in the GDP growth and a decrease in the population growth rate. Given the improbability of maintaining a GDP growth rate in excess of the two to three percent range (the literature review suggests such a range to be healthy in a developing economy), the authorities will have to place renewed emphasis on the second part of the equation, that is to reduce the current unsustainable level of population growth. To illustrate, had South Africa, since the advent of democracy in 1994, been able to sustain a half a percent population growth rate (as is the ideal reflected in the country’s National Development Plan), the unemployment situation in South Africa would have looked completely different as to the actual 2019 reality (2,57). In such instance, there would have only been 1,7 persons in the age group available for every job in the country. It would have cut a third off the current jobs / available workers reality. Moreover, projections indicate that the persons to job ratio would improve by between nine and ten percent over the next decade should South Africa be able to cut its population growth rate from the current 1,48 percent annual average (based on the last five years) to half a percent. The aforementioned ratios do not have a bearing on the expanded unemployment rate per se, as it includes all persons in the age group 15 and older. Currently (as at the end of 2019) 36,62 percent of persons in this age group were not seeking employment. These would typically include students, people in retirement or not seeking work, etcetera. It is, however, useful to illustrate the impact of population growth on the likelihood to improve one’s ability to find a job. The impact on the unemployment rate is discussed in the section that follows. Should the 36,62 percent be excluded from the ratio determination, the position in 2029 would be as follows: *Note: A cross-check against the unemployment calculations in tables 9-11 revealed a similarity of 99,999%, or a discrepancy of 0,0001% due to rounding. On a side note, the same exercise repeated on a one percent per annum GDP growth trajectory reveals an alarming position. On the current population growth path, the unemployment position would worsen from 1,64 workers per available job in 2019 to 1,73 workers per available job in 2029. And, whilst at the half a percent growth rate the position would improve marginally from 1,64 workers per available job in 2019 to 1,57 workers per available job in 2029, it should be borne in mind that this is an illustrative scenario in that it is not possible to reduce the population growth rate from the 1,48 percent to half a percent overnight. What this means is that unless the economy grows at 2 per cent GDP per annum or higher, unemployment is bound to continue to increase. *Actual population 2019 x 63,38% / actual number employed (see Table 4) Impact on unemployment Once again, the focus of this discussion will be on the analyses using the ratios attached to the dynamic version of Okun’s law, since historical trends point to this version being the more likely outcome of any interventions. Nevertheless, for academic purposes, projections based on Okun’s law reveal that the expanded unemployment rate will, based on a 2 percent GDP growth rate and a continuation of the current population growth trend of 1,48 percent year-on-year, reduce from the current 38,5 percent, that is 10,2 million unemployed versus 16,3 million employed (CRA, 2020: 246 & 285) to 21,44 percent by 2029. At half a percent population growth, unemployment cut dramatically to 13,44 percent by 2029. This is however, given the historical trends over the last decade, an unlikely outcome. The application of the dynamic version of Okun’s law is likely to deliver a more probable outcome. These scenarios paint a bleak picture with regard to the persistence of high unemployment in the country, should GDP growth not be accompanied by a significant reduction in the population growth rate. At current population growth rate levels, a constant two percent increase in GDP over the next decade, that is to 2029, will see unemployment being cut by an insignificant 1,44 percent, from 38,5 percent (2019) to 37,06 percent (2029). At three percent GDP growth over the same period, unemployment will drop to 31,54 percent, and at 4 percent it will drop to 25,57 percent. However, a somewhat more encouraging outcome reveals itself when applying half a percent population growth rate to the scenario modelling. Under this scenario, unemployment will be reduced from the current 38,5 percent to 30,65 percent by 2029, and at three and four percent constant GDP growth to 2029, even though still high, more respectable percentages of 24,56 percent and 17,99 percent, respectively. It would signal a significant downward curve in the unemployment rate. Conclusions The South African economy is in a precarious position, with the current record high level of unemployment threatening to cripple any significant recovery. For the foreseeable future it is foreseen that the country’s GDP rate will not grow significantly above the two percent range (IMF, N.d.). This will, at the current level of population growth, at best stabilise unemployment at its existing unsustainable levels. Even at three to four percent GDP growth, the fortunes will not be significantly reversed. Growth in excess of four percent will be required to turn the unemployment tide. This is highly improbable, as there is no evidence to suggest that South Africa is poised to buck the economic trends normally applicable in developing economies, let alone its own decade-long low growth historical trend. Similarly, the current levels of population growth serves to exacerbate the economic woes, and will, if unattended to, prolong the pain. Evidence suggests that, were the country able to place population growth onto a lower growth path, its combination with achievable GDP growth goals of between two and four percent, could serve as the catalyst to significantly reduce unemployment. Changing population reproductive behaviour is a long-term endeavour facing many obstacles, such as cultural and religious hurdles. It will require a concerted national campaign and short-term dividends should not be expected. That said, avoiding the issue will be at the country’s peril, in that it will serve only to prolong and deepen the economic defects. If left unaddressed, it could very well push the economy over the proverbial fiscal cliff. Any future economic recovery plan will have to place equal importance on the reduction of the population growth rate, as it does on interventions to spur GDP growth. The two concepts are tied at the umbilical cord. Recommendations This report has highlighted the importance, for purposes of economic sustainability, of reducing the population growth rate. Projections contained herein, as they relate the reduced level of half a percent year-on-year population growth, paint an encouraging picture. However, expectations must be tempered, since, as can be learned from the transitions in other societies, a reversal of the current trend will take some time to effect. It will require heightened levels of education and will need to confront cultural and religious dogmas. 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[Online] Available at: https://www.news24.com/citypress/news/jobless-rate-drops-to-233-while-expanded-measure-soars-to-42-20200929#:~:text=The%20rate%20in%20the%20expanded,42%25%20in%20the%20second%20quarter [accessed: 21 October 2020]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

A response to the Constitutional Court judgement declaring the current electoral legislation unconstitutional Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. Cover photograph: www.briefly.co.za Setting the scene In the light of the recent Constitutional Court judgement declaring the current Electoral Act unconstitutional, the Inclusive Society Institute (ISI) embarked on a process to design a potential new electoral model for South Africa. The institute appointed an expert panel, convened by Mr. Roelf Meyer, to undertake the work and mandated the panel to design an electoral model that will meaningfully give effect to the judgement, respect the boundaries set out in the Constitution, retain proportionality as a basis for representation in that it best promotes inclusivity, and which enhances representativity, accountability, and transparency. The court has given the legislature 24 months to introduce new legislation that will enable independent candidates to stand for election in the national and provincial spheres of government. The institute has prioritised the development of proposals in this regard so as to, in an effort to enrich the public dialogue, timeously provide its findings to the political stakeholders and public policymakers, of potential solutions. This report will also form the basis of the institute’s own advocacy in the legislative process that lies ahead. The institute wishes to acknowledge the work of the panel and thanks its members who generously gave of their time and expertise. The members were: Mr. Roelf Meyer: In Transformation Initiative. Chief Government negotiator during the democratic transition in South Africa, former Minister of Constitutional Development, and currently a director of In Transformation Initiative. Ms. Deyana Isaacs: University of Stellenbosch. Researcher and lecturer in Political Governance at the School of Public Leadership, University of Stellenbosch. Prof. Dirk Kotze: University of South Africa. Professor in Political Sciences at the University of South Africa (UNISA), a Vice President of the International Political Science Association and National Secretary of the South African Association of Political Studies. Prof. William Gumede: University of the Witwatersrand & Democracy Works. Professor at the University of the Witwatersrand School of Governance and Chairperson of Democracy Works Foundation. Mr. Ebrahim Fakir: Auwal Socio-Economic Research Institute. Political commentator and Director of Programmes at Auwal Socio-Economic Research Institute. Former head of political parties and parliamentary programme at the Elecoral Institute of Southern Africa (EISA), researcher at the Institute for Democracy in South Africa (IDASA) and the Centre for Policy Studies (CPS). Visiting fellow at the Institute for Development Studies at the University of Sussex for 2006 and visiting Draper Hills Summer Fellow at Stanford University for 2011. Ms. Dren Nupen: The Elexions Agency. Former Executive Director of the Electoral Institute of Southern Africa and former Regional Director for Africa at the Open Society Initiative. She brings extensive election experience to the dialogue. Prof. Firoz Cachalia: University of the Witwatersrand. Professor at the Law School at the University of the Witwatersrand. Professor emeritus Jørgen Elklit: Aarhus University, Denmark. Member of the South African 1994 IEC and of the 2002-2003 Electoral Task Team (aka the van Zyl Slabbert Commission). 1996-2009, a member of the board of directors of EISA. Secretary to the 2008 Independent Review Commission in Kenya. 2013 recipient of IFES’ Joe Baxter Award. Prof. Cherrel Africa: (Flexi-member) University of the Western Cape. Formerly at the Institute for Democracy in South Africa, election analyst for the SABC and ENCA and currently associate professor and chair for political sciences, University of the Western Cape. Prof. Rassie Malherbe: University of Cape Town. Currently offers an extra-curricular programme in the drafting of legislation at the University of Cape Town. Former professor of public law and Head of the Department of Public Law at the University of Johannesburg. Mr. Grant Masterson: Programme Manager: Africa Peer Review Mechanism at the Electoral Institute of Southern Africa. He has lectured at the University of Witwatersrand on international relations and the international political economy. Mr. Daryl Swanepoel: Chief Executive Officer of the Inclusive Society Institute and former Member of Parliament. Acronyms and abbreviations CC Constitutional Court ETT Electoral Task Team FPTP First past the post MMC Multi-member constituency MMP Mixed-Member Proportional (system) NCOP National Council of Provinces IEC Independent Electoral Commission PR Proportional representation Content Setting the scene Acronyms and abbreviations Chapter 1: The Constitutional Court judgement 1.1 Unpacking the Constitutional Court judgement declaring the Electoral Act unconstitutional 1.2 Discussion on the judgement and preferences related to new models that need to be developed 1.3 Assessing and determining the degree of electoral reform that is required 1. 4 Conclusion Chapter2: Interrogating options for a new South African electoral system 2.1 Introduction 2.2 Minimalist approach 2.3 Multiple modelling approaches regarding multi-member constituencies and PR balancing lists 2. 4 Hybrid parallel electoral model combining majority ‘first past the post’ with closed list proportional representation 2.5 Additional points to be considered in developing a new electoral model 2.6 Conclusion Chapter 3: A proposed new electoral system for South Africa 3.1 Introduction 3.2 Specifics of the proposed electoral system 3.3 Illustration of the outcome of proposed electoral model based on the 2019 national election 3. 4 Ancillary matters to consider 3.5 Testing the new system against the guiding principles and criteria 3.6 Question and answer guide to understand the proposed system References Annexure A 1. Introduction 2. Findings of Van Zyl Slabbert Commission & Presentation on the Danish electoral model: Presented by Prof Emeritus Jørgen Elklit, Aarhus University, Denmark 2.1 The Van Zyl Slabbert Commission 2.2 Danish Electoral Model 3. German mixed member proportional (MMP) system: Presented by Prof Michael Krennerich, University of Erlangen-Nurnberg 4. The Irish system - Proportional representation by the single transferable vote: Presented by Prof David Farrell, University College Dublin 5. Spanish electoral model: Presented by Prof Ignacio Lago, University Pompeu Fabra, Barcelona 6. Turkish electoral model: Presented by Prof Ali Çarkoglu, KOÇ University, Istanbul, Turkey Chapter 1: The Constitutional Court judgement 1.1 Unpacking the Constitutional Court judgement declaring the Electoral Act unconstitutional On 11 June 2020, the Constitutional Court declared the following: “4. It is declared that the Electoral Act 73 of 1998 is unconstitutional to the extent that it requires that adult citizens may be elected to the National Assembly and Provincial Legislatures only through their membership of political parties. 5. The declaration of unconstitutionality referred to in paragraph 4 is prospective with effect from the date of this order, but its operation is suspended for 24 months to afford Parliament an opportunity to remedy the defect giving rise to the unconstitutionality.” Upon assessment, the judgement does not provide extensive guidance but is focused on the shortcomings or deficiency of the Electoral Act with regards to independent candidates. Moreover, the judgement also does not provide guidance as to how the act should or can be amended. The Electoral Act is subject to the Constitution, and therefore the task of the panel must be accomplished without breaching the constitutional boundaries relating to electoral systems. The following provisions in the Constitution can be considered boundary posts regarding the amendments that can be made to the Electoral Act: Section 1(d): Multi-Party democracy Section 1 in the Consitution is the value clause that speaks of multi-party democracy. The Constitutional Court was requested to consider this clause in respect of independent candidacy in elections. Its view on the matter, however, is that independent candidates do not stand in the way of or impede on the functioning of multi-party democracies. This is considered a boundary post, as the amendments that give effect to the judgement may not undermine this value clause. It is also of importance since this value clause is in the Constitution to safeguard South Africa from becoming a one-party state. Section 19(3)(a): Right to vote This section is normally seen as comprising four aspects: General - For all who qualify according to the basic requirements to vote. Equal - To ensure that some votes do not weigh more or less than others, which has an implication for the type of electoral system that is established and how, in this case, independent candidates can be accommodated. Direct - Every vote has a direct influence on the outcome. Secret - Every voter votes voluntarily, without coercion, intimidation or duress and in secret. Therefore, equality of the votes forms another boundary post that affects the amendment. An electoral system cannot be established where some votes outweigh others. Independent candidates cannot be accommodated in such a way that the votes brought out for them weigh more or less than for others. Section 19(2): Right to Free, Fair and Regular Elections is of importance as it is the basic political right contained in the Bill of Rights. Three aspects are contained in this section: Regular elections - Legislature has a fixed term, enforcing that there will be elections at regular intervals. Free - To participate without interference or coercion and to ensure that candidates and political parties must be able to participate. Fair - Equal opportunity for all parties or candidates to contest the elections. These aspects will have a bearing on the type of amendments made to the electoral system. Sections 46 and 105: Electoral system that results, in general, in proportional representation Section 105 refers to the provinces. Proportional Representation (PR) is not defined in the Constitution. However, it may include: Proportional Representation of political parties and Proportional Representation reflecting voter preference. There are many PR systems that give effect to both PR for political parties and voter preference such as list systems, preferential systems, and combined systems. The current South African electoral system is based on party list proportional representation, which means that parties are represented in proportion to their electoral support. The preferential system entails that the voter can indicate preference for a party and candidates on the ballot. The ballot can list party representatives in order of preference and can also move over party lines in this system. The combined systems incorporate PR with constituencies. Therefore, section 46 and 105 of the Constitution serves as another boundary post within which amendments to the system must be made. The system chosen must result, in general, in proportional representation. Additionally, within the Constitution and, consequently, because of the court judgement, Parliament assumes the responsibly to choose a particular electoral system. The particularities of the system are left to Parliament and it has some leeway on how to give effect to the judgement. Section 19(3)(b): Right to stand for and if elected to hold public office This is the provision that the Constitutional Court judgement focused on, and forms the main grounds for the Electoral Act being declared unconstitutional. Within the current electoral system, the exercising of the section 19(3)(b) right can only be channelled through political parties. Therefore, the act does not provide for candidates to participate in elections as individuals or independent candidates. This is the crux of the judgement and what the majority of the courts’ ruling dealt with. Furthermore, Justice Mandlanga added another aspect, which can also be considered a boundary post, namely: section 18, Freedom of Association. Justice Mandlanga’s argument was that this also includes the freedom NOT to associate. Under the current Electoral Act, candidates are “forced” to join a political party in order to be a candidate and exercise their right under 19(3)(b), which negates the right NOT to associate while simultaneously seeking to stand for representative political office. Therefore, the Electoral Act violates this right. Furthermore, the court also dealt with a number of other provisions that were put to the court, including: Sections 46(1)(a) AND 105(1)(a): The electoral system is prescribed by national legislation. The national legislature (Parliament) is subject to the Constitution, thus whatever the national legislature decides, its decisions are still subject to the Constitution. Sections 47(3)(c) AND 106(3)(c): Loss of membership of legislatures. The Constitutional Court said that this only applies to political parties and does not affect the issue of independent candidates. Sections 57(2), 70(2), 116(2), 178(1)(h), 193(5) AND 236: Participation by parties in legislatures. 57(2): Deals with the rules and orders of the National Assembly providing for minority parties to participate in the proceedings. – Section 70(2): Rules and orders of National Council of Provinces providing for participation. – Section 116(2): Rules and orders of provincial legislatures providing for participation. – Section 178 (1)(h): Participation of opposition or minority parties in the process for the appointment of members of the Judicial Service Commission. – Section 193(5): Deals with chapter 9 institutions where minority parties will also participate. – Section 236: Legislation to be made for the funding of political parties. All these provisions are about political parties’ participation in legislatures. The court found that these provisions strengthen multi-party democracy and do not prevent making provision for independent candidates to participate. These are boundaries which dictate that whatever amendments are to be made; they cannot undermine the participation of parties in the legislature. Section 157(2)(a): The municipal election system can either be a pure PR system according to the list system, where only parties are being presented on the ballot or a PR system combined with wards. This section does not affect the national and provincial spheres. Thus, this only affects the municipal level and does not prevent the court from declaring the Electoral Act unconstitutional. Section 6, Items 6(3)(a) and 11(1)(a): Nominations by Political Parties. This only refers to the first elections after the 1996 Constitution came into effect and is thus not applicable anymore and has no current influence. In conclusion, all the above listed sections are boundary posts that the Constitution imposes on the Electoral Act and the amendments brought to the act. These can be viewed as the most important ones within which the amendment of the act must take place. Below is a diagramme representing the constitutional boundary posts. 1.2 Discussion on the judgement and preferences related to new models that need to be developed “Proportional Representation (PR), in general” was an important point of discussion. The panel was of the view that “in general” was an important qualification that needed to be taken into account when considering how to give effect to the court ruling as it pertains to the inclusion of independent candidates. It was adamant that PR, as stipulated in the Constitution, must continue to remain a prominent feature of the new electoral system that will provide for the participation of independent candidates. Absolute proportionality under any system does not exist. It is for this reason, the panel believes, that the term “in general” has been used. More often than not, political parties fall short of the votes to secure the next member to represent them in the legislature. The surplus is then allocated elsewhere and, accordingly, the end result is not 100% proportional. That said, the panel noted that, currently, South Africa has the most proportional electoral system in the world, due to it not having an electoral threshold for a party to be represented in the legislature and due to the size of the National Assembly. Proportional representation means that parties get a certain number of seats in the legislature in accordance with the percentage of votes that they received in an election. So, for example, if a party gets 15% of all the votes in the country, then it gets close to 15% of the seats in Parliament. In South Africa, there are 400 seats in the national parliament, so for every 0.25% of the vote a party gets, in principle, one seat. Consequently, when independent candidates are incorporated into the new electoral system, the requirement pertaining to PR, should, as far as practically possible, be the same for them as for the political parties. If an independent candidate gets a sufficient number of votes to qualify for a seat in the National Assembly or Provincial Legislature, the candidate will be regarded as a “type of party” for purposes of distributing seats. The independent candidate will therefore require an equal number of votes as would a party for gaining a seat in the legislature. The challenge for independent candidates will be to mobilise the minimum number of votes needed to gain a seat in the legislature. Campaign rules must therefore also make provision for independent candidates to share in the public resources made available for purposes of gaining exposure. The key point of PR is that the composition of the legislature must reflect, in a proportional manner, the preferences of the voters, as expressed in the number of votes cast in a particular election. Regardless of the electoral system proposed by the panel, there were several issues that needed to be considered. South Africa’s current electoral model, at the national level, results in the constitution of a National Assembly with 400 members. The National Assembly is one of the two houses of Parliament, the other being the National Council of Provinces (NCOP). When designing the new electoral system to give effect to the inclusion of independent candidates, the following will need to be considered: Some of the necessary considerations when implementing a PR electoral system, where the size of Parliament is fixed and incorporating independent candidates includes the following: The size of the legislature is fixed. Should individual independent candidates or lists of independent candidates be allowed in both houses? Should the system allow voters to cast their votes for one (or more) individual candidates (so-called personal or preferential votes) or shall it only be possible to vote for the list as such? What will the ballot paper access requirements be pertaining to: – Parties elected in previous parliaments and still represented in Parliament? For example, direct access, a deposit, or a certain number of seconding voters. – New parties: Payment of deposit or a certain number of seconding voters? – Independent candidates (or lists of independent candidates, if allowed): Payment of a deposit or a certain number of seconding voters? Will electoral thresholds be different or the same for parties and individual independent candidates, for example, based on a certain percentage of the vote, an absolute number of votes or some other criteria? Consideration to these key decisions were given by the panel, the outcome of which will unfold later in the report. And in addition to the procedures to elect representatives, the introduction of independent candidates may very well have consequential implications for a number of other pieces of legislation. For example, the argument has been made that if individual candidates are to be accommodated in the PR system, then apart from the Electoral Act having to change, the Political Party Funding Act has to be amended to also require independent candidates to disclose the funding and support they receive. So too, the national and provincial legislatures may, as a consequence of the judgement, have to re-think how they function now that independent candidates may take up seats. The rules and procedures of the legislature may require amendments, as may the constitutional provisions providing for minority party participation in the business of the legislatures, which will have to be expanded to include independent candidates. For example, section 57.2 of the Constitution, which provides for the rules and procedures of the National Assembly to be made with due regard to the participation of minority parties. It will have to be expanded to include independent members. Similarly, section 61, dealing with the allocation of delegates to the National Council of Provinces, may have to provide for a formula broader than just parties in order to accommodate independent candidates. To illustrate: the current rules of the National Assembly under section 57(2)(b) of the Constitution, indicate that the representation of political parties in the structures of the legislature, for example committees, must also accommodate minority parties. This is proving difficult in that it has not been possible to accommodate every political party represented in the legislature on every one of its committees. This will prove more difficult with the introduction of independent candidates. Moreover, the text on party representation as it now stands (minority parties), may in future not be adequate to provide for the participation of independent candidates. In discussing the desired preferences and guiding principles that a new electoral model would need to aspire to, the panel articulated a number of core essentials that they sensed needed to be included in the new system. It should provide a greater ability for voters to directly elect candidates, and to exercise an influence over how party candidates are elected. The current system is lacking in this regard. Likewise, the new electoral system should, in their view, continue to encourage diversity. Demographic, ethnic and religious diversity and inclusivity should be encouraged through promoting a diversity of candidates. Other features, the panel believed necessary, were that the system should be relatively simple to administer and easy for the voter to understand. And there had to be a meaningful balance between accountability, responsiveness and representativity. To achieve this, it will require bold and comprehensive reforms that are in the public interest, more so than in the interest of political parties or personalities. Therefore, the panel established the following principles that they considered necessary to guide the design of a new electoral system: Representation should be translated into legislative seats and needs to represent the expressed will of the voters. Representation can take the form of geographical representation, where the voters in each region, town, city, province or electoral district choose the candidates who will represent them, and to whom the candidates should ultimately be accountable. The national legislature should be a mirror of the nation and its ideological diversity. To achieve this, some form of link with a particular constituency needs to be established. Transparency should exist in both the process of electing the representatives as well as in the overall electoral system itself. Inclusiveness: The electoral system should enable as many voters as possible to participate in the voting process. Inclusion will be promoted through a system that is easy to understand and easily accessible to all voters. Accountability to the electorate is considered fundamental and needed to be improved. In the current system accountability to the voter was traded for party compliance. 1.3 Assessing and determining the degree of electoral reform that is required In order to determine the degree of electoral reform that is desired, and the options that can be explored in considering aforementioned constitutional boundaries and guiding principles, the panel analysed the strengths and weaknesses of the current electoral system. Strengths included the emphasis on promoting multi-party politics through the inclusion of as many political parties as possible. This provided wide-ranging diversity in terms of political ideology, demographics, ethnicity, religious beliefs, amongst others. This was important given the country’s history and need for healing, reconciliation, and nation-building. A further strength of the current system is that it provides the possibility for minority parties to secure seats, which is important to promote inclusion. Moreover, the system is relatively easy to administer and for voters to understand. And it is fair and just in that every vote carries equal power. One weakness, some argue, is that voters are represented by parties and not individuals. This reduces the ability of the voter to hold individual representatives accountable. Moreover, since the current electoral system operates through a closed party list system, voters are unable to express their personal preferences regarding the candidates standing for election. Neither can they effectively influence these appointments, nor recall ineffective, or rogue representatives. Whilst the current system does allow voters to raise their complaints and concerns with party structures, to date this has proved to rarely influence action against non-performers. Another weakness is that the voters do not have a direct influence over who will become their representatives in the legislatures. In fact, neither do they have a say as to the election of the president, as this is carried out by the National Assembly. The panel decided, however, that it would not explore the presidential aspects of electoral reform, since its focus was on giving effect to the Constitutional Court ruling. That said, since the voter votes for a party and not an individual, the reality is that the electorate has no influence over which individuals will be appointed to the legislature. It is the domain of the party leadership and party organs. It is the aforementioned, many argue, that has led to the ruling party appointing candidates in legislatures that rarely question the executive, lest they be removed or sanctioned by the party. As a consequence, the legislature risks becoming a lame-duck, which leads to a trust deficit and loss of public credibility. This compels extra-parliamentary politics, forcing, in a sense, civil society and the courts to become involved in what should rightfully be the domain of the legislature. These challenges have resulted in large numbers of voters becoming disillusioned, with many citizens feeling politically disenfranchised, choosing rather not to participate in formal politics, but to engage in extra-parliamentary activism. This is particularly worrisome amongst the youth who have become disinterested in party politics and participation in the formal multi-party electoral processes. In addition to the strengths and weaknesses analysis, the panel also considered some of the practical considerations that should guide their thinking regarding a new electoral system. Considering that the designing of a new electoral system takes time to devise, the 24-month time limit stipulated by the court suggests that immediate electoral reform should focus mainly on giving effect to the requirement of accommodating independent candidates in the election processes. Wider and more far-reaching reform would require more time and should therefore be considered only in the longer term. Another consideration must be cost. Far-reaching reform could potentially be complicated to administer, and difficult for the voter to understand. This will require greater budgetary resources to implement and to carry out voter education. Recognising that by limiting the extent of reform, problems with the overall system would remain, the panel nevertheless felt it prudent to limit the current reform to creating room for independent candidates to participate. However, where consequential improvements could be made as a result of system changes needed to include independent candidates, they should be taken on board. Thus, of the three reform options identified by the panel, the first two could be considered. Option 1: Make minimal technical adjustments to the current system only to allow for independent candidates to be added as candidates. This option would not address the weaknesses in the current system. Option 2: Make targeted design changes to the proportional representation system which will give effect to the court ruling and go some way in dealing with the weaknesses of the current system. Option 3: An entire overhaul of the electoral system. The panel was of the view that a minimalistic change allowing only for independent candidates to be added to the ballot papers under the current system, would not be practical. Imagine adding say 100 independent candidates to the current 48 parties. That would mean an unwieldly ballot paper containing 148 options to vote for. Accordingly, the panel opted for Option 2. 1.4 Conclusion In designing a new electoral system to give effect to the Constitutional Court judgement requiring the Electoral Amendment Act to be amended to allow for independent candidates to stand for election at national and provincial level, the panel concluded that the new system should: Give effect to the Constitutional Court judgement Fit within the current boundaries prescribed by the Constitution Be guided by the principles of representativity, transparency, inclusiveness and accountability Be relatively easy to administer, and easily understood by the electorate. The panel’s deliberations to this point provided them with the necessary background and information to enable them to proceed to the next step – that is the design of the system. But before they did so, they received several presentations on different electoral models from various jurisdictions, including Germany, Spain, Denmark, Ireland and Turkey. All of these models combine PR with the right of independent candidates to stand for election. They also received a presentation on the electoral models contained in the 2003 Van Zyl Slabbert Commission on Electoral Reform Report. A summary of these presentations are contained in Annexure A of this report. Chapter 2 that follows, interrogates options for a new electoral system for South Africa, whilst Chapter 3 provides the panel’s proposed model. Chapter 2: Interrogating options for a new South African electoral system 2.1 Introduction During the next phase of the expert panel’s deliberation, they started to conceptualise a unique South African electoral system that may give effect to the court judgement. Various panellists presented their initial thinking with regard to potential electoral models for South Africa. The merits and specifications of each of the proposed models were interrogated and discussed. This chapter offers a summary of the various electoral models presented by the panellists, as well as additional issues identified during the dialogue. 2.2 Minimalist approach A preliminary minimalist approach suggests that the current PR closed list system should be maintained, while independent candidates would be accommodated either individually or in a different form. Therefore, this model should remain within the current boundaries of the Constitution, not requiring any amendments. It therefore satisfies the ruling of the Constitutional Court which requires provisions to be made within the electoral system, on both national and provincial level, to accommodate independent candidates. This model therefore calls for the most basic amendments to only make provision for independent candidates, without changing the electoral system in any extensive manner. The electoral system can in time be further improved to mitigate against the limitations and weaknesses of the current system, including issues such as a lack of accountability, representativity, weak parliamentary oversight and the effects and consequences of the closed list system. The PR closed list system will be used to accommodate the independent candidates, simply by amending the Electoral Act to include a provision for the participation of independent candidates. These candidates would, in a sense, be considered in the same manner as smaller political parties, with the same rules and processes applying. Consequently, the question of how to maintain overall proportionality, would be resolved. It should be noted that there are, however, still a few issues relevant to this proposed model that will require attention. Firstly, due to the fractious nature of current South African politics, the possibility exists that an increased number of smaller parties and independent candidates resolve to contest elections. In order to manage this, a reasonable threshold for access to the ballot paper would have to be considered, and, in this regard, a 1% threshold of registered voters is the suggested approach. Parties and independent candidates would therefore have to demonstrate that they have this level of support by providing a required number of verified signatures from voters. The required number of seconders will depend on whether parties and independent candidates are running in provincial or national elections, respectively. This, however, would place an additional administrative burden on the Electoral Commission of South Africa (IEC), who would be responsible for verifying seconding signatures and ensuring that there is no abuse of the system. An assessment will have to be made as to the capacity of the IEC to undertake this task and whether they would be able to adapt their systems accordingly. Concomitant additional resources may have to be allocated by Treasury. On the downside, the introduction of a threshold requirement may be interpreted as a way of undermining the constitutional value of inclusivity. Secondly, the minimalist approach may be considered a more viable and implementable system over shorter a period. The danger of this approach is, however, that it could allow for too many parties and independent candidates and it may become too difficult and unwieldly a system to manage and control. With this in mind, a few minimal requirements should be set in order to limit the number of candidates on the ballot paper. Reaching agreement on these requirements could be complicated and time-consuming. On the upside is that the model suggests that it could be relatively easy to enforce gender parity by requiring parties to effect a quota within their lists. The same does however not hold true for independent candidates, as each candidate will only represent him- or herself. 2.3 Multiple modelling approaches regarding multi-member constituencies and PR balancing lists During the panel’s discussions, the multi-member constituency and PR compensatory/balancing list appeared to be a preferred model suggested by most individual panellists. The Van Zyl Slabbert Commission on Electoral Reform (the Electoral Task Team [ETT]) reviewed the PR closed list system after the 1999 national and provincial elections. The report was published in January 2003 and proposed a number of electoral reforms and electoral models. This model is based on the ETT majority recommendations for a preferred electoral system for South Africa, with some adjustments made. This model proposes that an electoral system should guard against excessive fragmentation as it could lead to difficulty in the composition of government and the functioning of Parliament. This model promotes accountability to the electorate as it pertains to the representation in national and provincial legislatures. Oversight will be improved, since MP’s carry constituency mandates. And this model will not require significant constitutional amendments. In designing the model, consideration was also given to, amongst others, political party and independent candidate’s threshold, registration qualification, distortion of proportionality, and prevention of candidates being elected without real support. The electoral model proposes that the National Assembly consist of 300 representatives elected from multi-member constituencies (MMCs). A further 100 compensatory seats at national level will be used to ensure overall proportionality. The constituency or PR split can be adjusted slightly, nevertheless the overall number of seats should not exceed 400. The constituencies will need to coincide with metropolitan and district municipal borders. Small districts can be combined with neighbouring districts to ensure workable units. And metropolitan areas could be subdivided along sub-council or regional lines for similar purpose. The aim would be to have approximately 70 MMCs with three to seven seats in each MMC. To ensure that parties or independent candidates with significant numbers of votes have a chance of winning a seat, each MMC must have at least three seats, but not more than seven. The number of seats will be based on the quota of registered voters in the particular MMC. The quota will be calculated according to the number of registered voters in the country, divided by 300 (the number of MMC seats nationally). As it stands, the number of current registered voters is 26 756 649, which divided by 300 seats, suggests the current quota to be 89 189. Therefore, an MMC will have approximately 270 000 to 624 000 voters, that is an MP to voter ratio of around 90 000. Under this MMC system, the voter votes for either a candidate, through an open list, or the party as such. Consequently, voters only vote in the multi-member constituency. The political parties’ overall share of all 400 seats will be calculated based on the total sum of votes received for all parties’ candidates across all MMCs. Proportionality will be restored through the use of the PR lists. Both independent candidates and candidates representing political parties can stand in constituencies. The IEC will be responsible for the preparation of ballot papers, which will be based on the list of names of candidates received for each MMC. To fill the political party’s compensatory or national seats, a national list with up to 100 candidate names is required. Political parties may also nominate more than one candidate per constituency, provided that the number of candidates does not exceed the number of seats in that constituency plus one. This will allow for sufficient reserves, should vacancies need to be filled from the list. With regard to the allocation of seats under this system, it is suggested that as an alternative to the quota system for allocation of the MMC seats, the Sainte-Laguë divisor system be considered. Under this divisor system, the sum of votes for each party and the votes for independent candidates is divided first by 1, then 3, and finally 5 in a 3-seat MMC. The three highest quotients (in declining order) are allocated a seat each. In a 7-seat MMC, the divisors are again 1, 3, and 5 – and then 7, 9, 11, and 13. The Sainte-Laguë system is generally considered a very fair system, securing a high level of mathematical fairness as good quota systems also do. But the Sainte-Laguë system is less dependent on the comparison of decimals in determining the eventual allocation of seats. In the MMC, a “natural” threshold is at play. In a 7-seat MMC, a party or a candidate with more than 7.15% of the vote is guaranteed a seat. In the 3-seat constituencies the natural threshold guaranteeing a seat is 16.67% (see explanation in Chapter 3). The actual thresholds might be lower than the percentages prearranged, depending on the actual vote distribution among parties and independent candidates, nonetheless the values mentioned will guarantee a seat. If an independent candidate obtains more votes than required for election, the surplus of votes is, however, discarded. With regard to independent candidates accessing the ballot under an MMC system, candidates will be required to demonstrate that they have voter support in the chosen MMCs. This they do by submitting signatures and voter registration numbers of seconding individuals that are registered in the specific MMC. A threshold of 1% can be considered as a reasonable number. For example: in a 3-seat MMC the number of signatures might amount to between 2 500 and 3 000 signatures and in a 7-seat MMC the number will be between 5 000 and 6 000 signatures. It should be mentioned though that it may be much easier for independent candidates to qualify to participate in the election, than to actually win a seat. Political parties elected in the previous election and which are still represented in the National Assembly, are automatically eligible to participate in the election. These parties may submit lists of names in a few or all MMCs and have their share of the 100 compensatory seats. Other (new) political parties may become eligible by submitting names and voter registration numbers of a substantial number of voters. Parties who are not able to collect substantial voter support (and thus demonstrate that they actually have support on the ground), should not be allowed to participate. The verified number of supporting voters should be equivalent to the valid votes in the previous election divided by the number of seats (400). That can be said to be the price of one seat, which is currently 43 591 signatures. Voters can only second one party (or one independent candidate) prior to each election. The IEC will have to verify the number of voters’ support. A monetary fee should not be levied to qualify for electoral participation. The use of only two ballot sheets is proposed. The first ballot sheet will be allocated for the constituency (MMC) list for the National Assembly, with the names of the political parties fielding candidates in the MMC as well as the independent candidates marked as such. The second ballot sheet will consist of the constituency (MMC) list of names for the Provincial Legislature. Consequently, if this model is implemented, the following needs to be considered: All advantages and disadvantages of an open or closed list need to be measured. The question to be answered is whether the country is ready for an open list system. The possibility to continue with a closed list system for national and provincial elections and only move to an open list system at a later stage should also be considered. Should candidates be allowed to stand for election both in an MMC and be on the proportional list? What needs to be done if vacancies cannot be filled from the political party’s candidates list? Should the quota system or Sainte-Laguë divisor system be used? The number of seconding signatures required for both political parties and independent candidates must be determined. If floor crossing is allowed, should it only be from a political party to independent candidate? And if so, what impact will it have on the composition of the National Assembly in terms of party proportionality? If yes, this may break the stranglehold that political parties have over the MPs, but it should eliminate opportunism. Similarly, an independent candidate may come to the conclusion that his or her views can best be promoted through joining one of the parties, but, again, this may promote opportunism. 2. 4 Hybrid parallel electoral model combining majority ‘first past the post’ with closed list proportional representation This proposal is made bearing in mind the need to overhaul South Africa’s election system to improve representativity, oversight, accountability and responsiveness in the governance architecture. The proposal recognises that each electoral system has distinct advantages and disadvantages. For instance, pure proportional representation systems account for every single vote in determining the outcome of an election, but do not embed the potential for closer constituency responsiveness and accountability. In addition, pure proportional systems often provide inordinate power to political party elites to determine policy. Pure First-Past-the-Post systems (winner takes all), on the other hand, bear the potential for greater accountability to constituencies, allow ordinary members of political parties and back-bench legislators greater influence in policy by virtue of the constituencies they command, but are only rarely a fair reflection of the choices made by an electorate. In this system winners of an election by very slim margins take all the power, with all the other votes for candidates who might lose by small margins, being discarded. Mixed systems may minimise disadvantages and maximise advantages, but depending on the mix used, can potentially create such overwhelming systemic complexities that they are rendered indecipherable to citizens. In addition, they create serious complications in the management and administration of elections as well as the tabulation of results. This can cast a pall of doubt on the credibility of electoral processes and consequently serve to delegitimise the electoral outcomes, as oversight over and transparency of the calculation and counting of outcomes are rendered ever more complicated. Simplicity of the electoral system should not be under-estimated as a great virtue. A hybridised parallel system envisages a simple First-Past-the-Post system requiring a 50% +1 majority to have won the seat for 350 or 400 seats in a 600-member Assembly. Alongside it, would be 250 or 200, closed party list PR seats. This would combine the benefits of Proportional Representation with single-member constituency representation. This proposal is made, bearing in mind the principles of: Accountability, responsiveness and openness – Act 108 of 1996, 1(d) Human dignity, equality and freedom – Act 108 of 1996, 7(1) Effective Choices – Act 108 of 1996, 19(1), 19(1)(c), 19(3)(b) Maximising Representation. Preferably at its most basic and decentralised level – Act 108 of 1996, 42(3) Responsibility and Responsiveness Inclusivity, diversity and representativity Proportionality Oversight and Accountability (in executive) – legislative relations, between party representatives, party organs, leaders and members, and finally between elected public representatives and the voting public/communities/constituencies. Simplicity and Transparency for voters, parties, candidates, and election management and administration. The model would necessitate that section 46(1) of the Constitution be amended to read “National Assembly consists of no fewer than 525 and no more than 600 women and men…” and there be an amendment to section 46(1)(d) to read: “reflects an element of proportional representation in its result”. It also envisages a unicameral Parliament with a single National Assembly and no second chamber. The NCOP would then disappear and all constitutional references to it, including in the legislative process, would be amended accordingly. If it is to be retained, its size would need to be reduced dramatically to at least half. The model envisages retaining the Provincial Legislatures in their current form, with reduced size and with the oversight powers maintained. Their legislative powers would largely remain intact, except to expand their scope with respect to the legislative process. In orientation, the model seeks to harness the benefits of proportional representation without making it the primary feature of the system, and privileges would increase responsiveness, accountability and a closer fit between constituencies and elected representatives, while simultaneously sublimating the overweening and inordinate influence, extra ordinary power of political party elites and party bosses. While parties will no doubt remain hugely influential, as will party elites, this mode does provide greater leverage – even if only in theory – to voters in communities and constituencies. In this hybrid parallel system proposed, of the 600 MPs, 400 would be elected from 400 single-member constituencies in a majoritarian First-Past-the-Post (FPTP) system, with a 50%+1 majority. Constituencies would correspond to the current, approximately 234 municipalities and their municipal boundaries (excluded are the 44 district municipalities that don’t exist as constituencies but as coordinating structures of two or three individual municipalities). These current municipal boundaries would then be reduced further, to enable the creation and delimitation of constituencies of a reasonable, meaningful and manageable size for effective representation. This delimitation and demarcation exercise would best be left to the Demarcation Board, using the Demarcation Act’s current provisions to determine and delimit constituency sizes according to a balance between land mass, population density and concentration of services. This can be augmented if necessary. Of course, gerrymandering of boundaries may be an issue, but the oversight and transparency safeguards in the current act and in electoral administration with regard to inspection, and objections and remediation of delimitations are sufficiently robust. This approach is premised on the idea that multi-member constituencies may still be too large and might fail to adequately address the element of responsiveness and to some extent accountability, since the constituencies would not only remain too large, but responsibility may be shirked, from among the multiple members in the multi-member constituencies. The remaining 200 seats in the National Assembly would be elected from a Proportional List, with an appropriate number of PR seats to be allocated for election in each province, based on population size, as is the current practice. This would be implemented to establish a modest degree of proportionality, by electing 200 MPs from the existing PR list without it resulting “in general”, in a proportional outcome for the whole election result. For greater proportionality in the overall outcome, the system could be changed for a more balanced distribution, such as 350 MPs from constituencies and 250 from a PR list, to have greater proportional representation, bearing in mind that this then increases constituency sizes and therefore may affect responsiveness adversely. It is also proposed that the model be replicated at Provincial Legislatures. It is recommended that the size of each Provincial Legislature be reduced by between 20% and 25%. That means each Provincial Legislature will be faced with a reduction of between three seats at the smallest and 16 at the largest, and it is estimated that on a combined 20% reduction across Provincial Legislature sizes, there will be at the least 80 seats reduced, available for absorption nationally. The total seats to be elected in the Provincial Legislatures will be on the basis of 2/3rd of seats elected directly in constituencies, and 1/3rd off PR lists. The size of constituencies in the provinces combine two national constituencies into one, for Provincial Representation purposes in the Provincial Legislature. Consequently, consideration would have to be given with respect to costs. First, with no NCOP or second chamber, or at least drastically reduced second chamber, those costs would be allocated and absorbed in additional NA seats. Second, the Provincial Legislatures will be reduced by at least 80 seats nationally (based on a 20% reduction), which will also be absorbed nationally. Third, there is a definite need to moderate the remuneration, benefits and perks accruing to public representatives at national and provincial levels. Adjustments here should not be hard to deal with and should not prove unpopular with the public. In this system, each voter would be given four ballots: One for the National Constituency Representative One for the National PR Representative One for the Provincial Constituency Representative One for the Provincial PR Representative While this may prove administratively and logistically burdensome for Election Administration, it is not insurmountable with proper planning, supervision and management. Its greatest advantage is that it retains the elements of simplicity and trust in the system for voters and in the process of voter registration, voting, counting, tabulation, audit and verification processes. This model consequently seeks to address the issue of inclusivity, by allowing independent candidates and to be elected from a mixed system, while addressing issues of accountability and responsiveness through maintaining the majority of political parties. 2.5 Additional points to be considered in developing a new electoral model As mentioned previously, additional points for consideration were raised through individual contributions by members of the panel during the discussions on the initial proposals for electoral reform. The following are worth recording: Some panellists emphasised that caution should be taken not to create new electoral challenges through amendments to the current system. Any new electoral model should be simple to administer and the principles of inclusion should be the central aim. It was also stressed that threshold changes should be considered attentively. Political parties play a crucial role in fostering accountability and accessibility for voters, therefore mechanisms to enhance internal democracy and the representative composition of parties should be addressed. These mechanisms should include opening the list process and requiring gender representation. Furthermore, improved access to the system could be established by introducing automatic registration when identity documents are applied for. Reference was given to a report by Steven Friedman entitled: “The system’s not to blame? Electoral systems, power and accountability”. It deliberates the subject of the deficit of accountability in South Africa’s electoral systems, which has been a significant point of discussion for the panel. The issue of accountability through geographical representation has been demonstrated at municipal level, where the electorate votes for a specific ward candidate. It has, in Friedman’s view, not improved accountability. It is therefore questionable to assume that accountability will automatically prove more efficient at the provincial or national level when it fails at municipal level. Nevertheless, the inadequate accountability of elected representatives is a widespread concern. Many attribute this to the current electoral system. But electoral reform on its own may not be sufficient to address the problem as it is embedded in other root causes as well. The suggestion that accountability could be enhanced purely by increasing the voters’ capacity to choose and rank candidates is thus debatable. To the contrary, it may also serve to weaken political parties and legislatures, as well as to contribute to the fragmenting of the political system, which may open possibilities for more political corruption. This view was also held by Rosenbluth and Shapiro (2018) in their book: “Responsible Parties: Saving democracy from itself”. Consequently, whilst provision could be made for electing individual party candidates (from an open list), the extent to which they are accountable to the electorate versus their nominating parties will need to be considered. This will include the extent to which parties may sanction their members and the right for elected representatives to change party affiliation. However, this discussion is not new in South Africa. A constant theme throughout the panel’s deliberations has been the desirability to allow all political parties, including smaller parties, the possibility of having representatives elected to the national and provincial legislature. This despite the concern that a growing number of parties, and now including independent candidates, contesting the elections can present a logistical challenge for the IEC. It may also be frustrating for the voters. Nevertheless, in the panel’s mind, smaller parties, in the South African context, cannot be excluded, as they have offered a political home to diverse segments of the electorate that do not feel accommodated within the bigger political parties. To address the divided society, South Africans should be offered a choice to vote for these smaller parties. In light of the aforementioned, it is recommended that the call for the introduction of a reasonable threshold be considered, that balances the aforementioned with the need to eliminate opportunistic parties and individuals that do not enjoy real support on the ground. There was also a view that democracy works best with strong, disciplined and programmatic political parties, who are able to offer large groups of voters clear choices and incentives to coalesce. Political parties are essential vehicles for collective action and democratic accountability. Thus, the system should guard against over- fragmentation which undermines this. That said, mechanisms should be introduced to promote greater levels of democracy within the parties, as representatives should be empowered to exercise their conscience and be responsive to the electorate. For this, transparency is key. And the closed list system inhibits transparency. Therefore, the candidate list should, ideally, be opened. Should the closed list system be adopted, however, the names of candidates must be well publicised so that the electorate know who will be representing them. And it empowers them to exercise sanction over non-performing or disreputable candidates. This is especially important in the MMCs and quite practical given the small number of candidates being put forward in each MMC. It is also suggested that political parties reveal their presidential and provincial premier candidates to the voters before the election, as opposed to announcing their decisions after the fact. Additional proposals emanating from the discussions included the following: The Van Zyl Slabbert Commission on Electoral Reform (the Electoral Task Team [ETT]) report should be used as a baseline for developing a new electoral model. Specific affirmative proposals should be made to ensure gender representation, as the introduction of multi-member constituencies could potentially have an adverse effect on gender representation. The current closed list system does not necessarily have to be immediately abolished as political parties could in the interim choose to introduce a system of primaries for their own candidates. Once the electorate has become accustomed to the new system, further reform could allow for the opening up of the lists. 2.6 Conclusion This chapter represents the collection of ideas for reforming the electoral system in South Africa, as introduced by the panellists. Whilst the main objective is to design a system that gives effect to the Constitutional Court’s ruling to allow independent candidates to stand for election at national and provincial level, they recognised that such a step will require a new model. A minor tweaking of the current system will in all probability be too unwieldly; and may not give effect to the court’s underlying intention for the system to provide a reasonable and fair chance for independent candidates to be elected. In developing the new model, panellists considered it prudent to also use the opportunity to address some of the flaws in the current system, insufficient accountability, representativity, and transparency being key, amongst others. In the next chapter, the panellists’ combined thinking culminates in a proposed new electoral model for South Africa. Chapter 3: A proposed new electoral system for South Africa 3.1. Introduction This chapter contains the culmination of the panel’s thinking as informed by the discourse between the members of its expert panel and the presentations of the international contributors. The criteria set for the system’s design included that it: accommodates independent candidates adheres to the constitutional prescript requiring the composition of the legislature to reflect, in general, proportional representation requires no or minimalistic amendments to the constitution be simple for the Independent Electoral Commission to implement and for the voters to understand promotes gender parity within the legislature promotes demographic and geographic inclusiveness promotes representativity promotes, to a certain extent, accountability. In essence, the panel needed to decide between three broad approaches: A winner take all, pure constituency approach A simplistic proportional representation model A hybrid model that accommodated constituencies together with a compensatory proportional list allowing for overall proportionality to be established The pure constituency approach was rejected out of hand as its design would not make it possible to meet the constitutional prescript of the outcome to reflect, in general, proportionality. It would also not accommodate sufficient diversity within the legislature. The simplistic proportional representation model – a single proportional list at the national level and nine proportional lists at the provincial level – would be impractical to administer. Imagine the length of a ballot paper should, say 100 independent candidates wish to stand in addition to the 48 existing political parties. It would also not necessarily advance geographic representation and will do little to improve voter representativity and accountability to the voters. Thus, the model being proposed in this report is a 400-seat National Assembly of which 75% (300) of the seats are allocated to multi-member constituencies (MMC) comprised of three to seven members per MMC. The constituencies will be supplemented by a proportional list of 25% (100 seats), which will be used to ensure overall proportionality, in general, in terms of the total number of votes cast for parties in the election. The key tenets of the system are set out hereunder. For purposes of explanation, only the election to compose the National Assembly is described, although in reality nine provincial legislatures will be simultaneously composed. The elections for each of the provincial legislatures will, however, follow the same methodology. Furthermore, the panel did not consider detailed structuring of the NCOP, suffice to agree that it should be retained and, in the main, retain its existing construct. It should be borne in mind that delegations in the NCOP represent provinces, not individual constituencies. Accordingly, independent candidates will not be able to be elected to a permanent seat in the NCOP, as these representatives are appointed by parties based on their relative strength in each of the provinces. Rules can, however, be provided for within the provincial legislatures to allow for some flexibility for independent members to be nominated as one of the special delegates deployed by the legislature in terms of Section 60 of the Constitution to deal with matters before the NCOP affecting the province. 3.2 Specifics of the proposed electoral system 3.2.1 Structure There would be two components to the establishment of the legislature. The first would be representatives elected via MMCs to the legislature (with 66 MMCs of three to seven members each). The second component would comprise representatives elected via a compensatory PR list (which ensures that the political parties will be represented proportional to their share of the overall national vote). 3.2.2 Number of seats There will be 400 seats, with 300 seats allocated to 66 MMCs and 100 compensatory seats, which will be used to ensure overall proportionality based on votes cast for each of the parties. It is necessary to have at least three members per MMC to promote diversity within each of the MMCs. Too large a number would be counterproductive in terms of promoting geographic representativity, or for bringing the representatives closer to the electorate. Accountability is strengthened when the representatives are closer to the electorate. It should be borne in mind, however, that given the closed list system being proposed, the electorate will to a lesser extent be able to hold the candidates accountable than would be the case under an open list system. Nevertheless, knowing one’s representative and thereby having accessibility to him or her, strengthens the voter/representative nexus. Thus, the maximum number of seats per MMC is suggested as seven. MMCs are demarcated along the current district and metropolitan municipal lines. Where the number of voters within a district council border is too few to warrant at least three representatives, two or more district councils can be added together. Where the number of voters within a metropolitan council are too many, MMCs can be allocated along sub-council or metropolitan regional lines. Each vote cast should carry, more or less, equal weight. Therefore, in determining the borders of the MMCs, the total number of registered voters will be divided by 300 (the number of MMC seats), which results in a quota per seat. In the 2019 general election, there were 26 756 649 registered voters, which, if divided by 300 seats would equate to a seat-quota of 89 189. Therefore, an MMC will have approximately 270 000 to 624 000 voters. 3.2.3 Ballot papers, candidates and seat allocation For the national election, there will be one ballot paper in each MMC, comprising only the names of the parties (not the parties’ individual candidates), followed by the names of the independent candidates. Parties are permitted to nominate a number of candidates equal to the quota size of each MMC plus one. Therefore, parties will be able to nominate four candidates to a three-seat MMC, or eight candidates to a seven-seat MMC. The additional candidate is to provide for filling any vacancies that may occur over time. The voter will cast a single vote for either the party or the independent candidate of his/her preference and seats will be allocated proportionally based on the number of votes received for each party or independent candidate. Should an independent candidate receive enough votes to be elected, he or she will be appointed to the legislature. Party candidates are allocated in order of their appearance on the closed list for the party in the particular MMC. For example, should a party receive enough votes for two candidates to qualify, the two candidates at the top of the party’s MMC list will qualify. This is the so-called closed list system. The electorate will know who the various party candidates are through voter education and information sessions organised in the run-up and during the course of the election campaign. This would include information on IEC-posters at the voting station and would also be available by means of media campaigns, party adverts, pamphlets, town hall meetings, etcetera. The panel did consider the open list system, that is where voters select their specific candidate of choice, and the individual candidates (party or independent) who then receive the most votes qualify. However, this was an option the panel felt best be left until later when voters have become more accustomed to the new system. In the first instance, the closed list system would ensure procedural simplicity, and in the second instance, gender parity could be promoted by requiring parties to alternate their candidates based on gender, that is man followed by woman, or woman followed by man, on the MMC candidate list. It must be mentioned, however, that it will be difficult to promote gender parity through the ballot paper amongst independent candidates, as each candidate represents only him- or herself. The table below lists the pro and cons of the closed and open list systems: In allocating the candidates to seats, either the quota system or Sainte-Laguë divisor system can be used. Whilst the panel prefers the Sainte-Laguë divisor system, it may be prudent to retain the quota system purely on the basis that it is known and trusted by the current political establishment. For academic purposes, an explanation of the two systems are outlined below. No threshold for a party to qualify to take up seats in the legislature is being proposed. This is because, as explained earlier, in the MMC a “natural” threshold is at play (as is also now the case in the election of the 400 members of the National Assembly). In a 7-seat MMC, a party or a candidate with more than 7.15% of the vote is guaranteed a seat. In the 3-seat constituencies the natural threshold guaranteeing a seat is 16.67%. The idea is that a small party (or independent candidate) cannot lose the last seat in the MMC to a big party winning all votes other than what the small party (independent candidate) wins, as long as the votes for the small party (v) is more than what the big party wins, divided by five (the divisor for the three seats). So, the small party’s vote share (v) must be bigger than (100 – v)/5 (which is 100/6 or 16,666%). The actual thresholds might in some cases actually be lower than the percentages prearranged, depending on the actual vote distribution among parties and independent candidates. Nonetheless, the values mentioned will guarantee a seat. Therefore, if independent candidates obtain more votes than required for election, the surplus of votes is discarded, in that a single (independent) individual cannot be more than a single individual. Thus, only parties will compete for seats on the compensatory proportional lists. The combined number of votes received by a party, across all MMCs, determine its proportional share of the 400 seats in Parliament. This implies that parties receive an additional proportion of the excess votes forfeited by the independent candidates. For purposes of explanation, a hypothetical scenario is sketched below: Using a 40-seat legislature as an example, 30 seats will be elected from say 10 MMCs of three seats each, with the remaining ten seats coming from the compensatory PR list. What happens in a situation where in a few MMC constituencies seats are won by independents, whilst the remaining constituency seats are won by two dominant parties from amongst four participating parties? The hypothetical seat calculation is set out below The scenario shows that Party A, although it received only 45% of the total votes cast – suggesting 18 of the parliamentary seats – they would in fact receive one additional seat, that is 19 seats, because seats won by independent candidates are not included in the proportional allocation of seats to parties. In this example, Parties A-D have 37 seats to distribute among the four of them, and the quota method gives 19 to Party A, 14 to Party B and 4 to Party C. In this way, the relative strengths between the competing parties is maintained and the end result is – as required – in general, proportional. This is justified, in that the Constitutional Court must have foreseen that absolute proportionality is not possible with the introduction of independent candidates, and thus a higher reliance would by necessity have to be placed on the notion general proportionality. The aforementioned example shows that the proposed system does marginally advantage political parties. It does, however, not come at the expense of the independent candidates, in that, whilst the parties are advantaged, it does not diminish the legitimate claim that any one independent candidate may have, that is, him- or herself represented in Parliament. Furthermore, alternative remedies are available to independent candidates, as highlighted in the next paragraph, should they so choose. Should the independent candidates wish to lay claim to the additional votes cast over and above that required to secure a single seat in the legislature, they should arrange themselves as a group, i.e., in reality a party, and register at the IEC as such. In such instance the same rules would apply to the group as it would to a party. An independent candidate cannot by definition choose to be a lone representative in Parliament but at the same time claim the benefits and rights of a party. 3.2.4 How do parties/independent candidates get ballot paper access? The panel proposes that parties already in Parliament (and still represented when the election is called), automatically qualify with no further requirements. For new parties, the panel considered a monetary fee or a certain number of seconding voters. It rejected the notion of a monetary fee, in that the system should not be weighted in favour of the well-resourced. Instead, it proposes a certain number of seconding voters, for example, votes in the previous election divided by 400, for automatic access to register candidates in all MMCs (with specific candidate lists for each MMC) and to have access to a share of the proportional seats, if eligible. The figure as it stands now, would be 43 591. In MMCs, a local party should have access to register for running candidates in a particular MMC, if it has seconding voters equal to 1% of the registered voters in the MMC. For example, based on current registered voter numbers, in a three-seat MMC the number of signatures might be around 2 500 to 3 000 signatures, and in a seven-seat MMC the number will be between 5 000 and 6 000 signatures. For individual candidates, the same rules apply as for new parties at the MMC level, given that independent candidates can only stand within a single MMC. The requirement for independent candidates and new parties to obtain seconding voters will inevitably require additional procedures and resources for the IEC to administer. They will have to, for example, check that seconding voters are legitimate, registered in the MMC, and that they have personally agreed to the secondment. Nevertheless, the seconding route is preferred over a financial fee for the reason mentioned. The IEC is well-acquainted with the procedures, albeit currently at much lower intensity. 3.2.5 Threshold to qualify for representation in Parliament As already alluded to, for tier one, no formal threshold is proposed, as is the current position. Also, for tier two, no formal threshold is proposed, in that the low number of seats in the MMCs (three to seven) provide for a high natural threshold at the MMC level. 3.3 Illustration of the outcome of proposed electoral model based on the 2019 national election To understand the system being proposed, the panel modelled its proposal based on the results of the 2019 national election. The summary is shown below, with the available calculations accessible by using the link: https://www.dropbox.com/s/sqq0y547qyxxlfe/Electoral%20Reform%20Findings%20%28002%29.xlsx?dl=0 Allocation of Multi-Member Constituencies Note: SL = Sainte-Lague What the illustration highlights is that the proposed system does not negatively (or positively) impact any party. It shows that the existing power ratios between parties would be maintained in the new system. This is not at all surprising, as the overall distribution of the 400 seats is done according to the same procedures as are described in the Electoral Act. It also shows the geographic spread of seats, indicating that allocated seats continue to reflect, in an undistorted manner, the strongholds of the individual parties. For example, the DA’s stronghold is clearly reflected in the Western Cape, as is the IFP’s in KwaZulu-Natal. 3.4 Ancillary matters to consider A number of further technical issues were considered: 3.4.1 What happens if a vacancy arises and the names on the MMC lists (and indeed compensatory PR lists) are exhausted? It is proposed that the IEC, in such instance, allow parties to supplement their lists. The solution for filling vacant independent candidate seats is, however, somewhat more complex. The seat could either remain vacant, or some other mechanism and/or system of by-election will have to be considered. 3.4.2 Can a candidate stand in both an MMC and on the compensatory PR list? It is argued that this is a matter for parties themselves to determine. Of course, independent candidates can only compete in the MMC, where they register for participation. 3.4.3 What about progressively advancing racial, ethnic, sexual orientation, etc, representation through the ballot? This matter is an overly complex one and no precedence exists. It may also be too prescriptive. It is a matter best left for parties to decide. That said, in that independent candidates can stand for election, it opens the door for any orientation to make him/herself available to represent a specific cause in the legislature. 3.4.4 Should voter registration be compulsory and what role can the Department of Home Affairs play therein? The panel flags this issue without making a recommendation thereon. It does however recognise that some 30% of potential voters remain outside of the electoral system and a concerted effort is required to motivate them to participate in future elections. In the age of digitisation, there could be some synergy between the Department of Home Affairs and the IEC, where Home Affairs automatically funnels data to the IEC for inclusion into the IEC’s voter register. 3.4.5 Can a candidate stand at both national and provincial level? Party candidates, yes. Individual parties will however set their own internal rules as to how they wish to approach the matter. Although, whilst they can stand for election at both the national and provincial level, if elected to both positions, they will have to choose in which level they wish to serve. They can only take up one seat. Independent candidates, no. An independent candidate will have to select whether he or she wishes to run for a seat at either provincial or national level. This is because no person may receive two salaries from the state, and it will not be in the voters best interest since he or she will not be able to devote sufficient attention to both positions. 3.5 Testing the new system against the guiding principles and criteria This section aims to test the outcome of the new proposed system against the initial criteria accepted as the departure point. The table below illustrates the extent to which success has been achieved: 3.6 Question and answer guide to understand the proposed system Question 1: What are the changes being proposed? The country will introduce 66 multi-member constituencies (MMC) based on district and metropolitan boundaries. In each MMC there would be between three and seven members, with a compensatory PR list used to ensure that general proportionality between the parties is maintained. 300 representatives will be elected via the MMCs and 100 via the compensatory PR list. Question 2: Why is the change being proposed? The change is being proposed to accommodate the Constitutional Court’s ruling that independent candidates ought to be able to stand for election. The Constitution also prescribes that the composition of the legislature should be generally proportional in terms of party representation. A pure PR list would, in the first instance, be too unwieldy to manage, and would most probably also make it more difficult for independent candidates to get elected. At the same time, the system being proposed by the panel improves the accountability of representatives towards their constituents in that they represent their local communities. And since the electorate now know who represents them, they are able to access a “local MP”. The distance between the voter and MP is shortened. The system also ensures greater geographic representativity, in that there are MMCs spread across the length and breadth of the country. Question 3: What would stay the same? There would still be a maximum of 400 members of Parliament, and general proportionality will be maintained. The voter will still only have one ballot paper at the national level to complete and will still only vote for the party (or independent candidate) of choice. Question 4: What would be the benefit of the proposed change? It fulfils the requirement of the Constitutional Court judgement that compels the electoral system to enable independent candidates to stand for election in the national and provincial spheres of government. The system is simple to understand, easy to administer, promotes representativity and, to a certain extent, accountability towards the voter. Question 5: How would the change work at the provincial level? The same system is applied at provincial level. Here too the voting procedure will remain unchanged. Question 6: What are the differences for the voter as they enter the ballot box? Basically, there will be no change. The only difference will be that when voting, the voter will also be presented with the parties’ list of candidates (or the list of independent candidates) which will represent his or her specific geographical area. The voter will thus, unlike in the current scenario, in future know who his or her local MPs will be. References Çarkoglu, A. 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Responsible Parties: Saving Democracy from Itself. New Haven: Yale University Press. Annexure A Exploring alternative electoral systems that combine proportionality with the rights of independent candidates to contest in election 1. Introduction The electoral reform expert panel’s 3rd meeting on 25 August 2020 formed part of the process of developing new electoral models for South Africa. The preceding meetings aimed at garnering a clear understanding as the prescripts of the Constitutional Court’s judgement; the electoral boundaries set by the Constitution; the extent that electoral reform should take; as well as how reform of the Electoral Act could possibly assist in improving oversight, accountability and representativity. During this meeting of the panel, presentations were made by experts on electoral models in several jurisdictions that employ proportional representation electoral systems which also provide for the participation of independent candidates. Presentations were made by: Professor emeritus Jørgen Elklit, Aarhus University, Denmark, on the findings of the Van Zyl Slabbert Commission on Electoral Reform in South Africa and the Danish model. Professor Elklit is also a member of the Inclusive Society Institute’s expert panel on electoral reform Professor Michael Krennerich, University of Erlangen-Nürnberg, on the German electoral system Professor David Farrell, University College Dublin, on the Irish PR/STV system Professor Ignacio Lago, Universitat Pompeu Fabra, Barcelona, on the Spanish electoral system Professor Ali Çarkoglu, Koç University, Istanbul, on the Turkish electoral system The main purpose of the meeting was to stimulate the panel’s thinking as to what electoral model will be best suited for the South African environment. The following sections serve to present a summary of each of the aforementioned models as presented by the guest speakers. 2. Findings of Van Zyl Slabbert Commission & presentation on the Danish electoral model: Presented by Prof Emeritus Jørgen Elklit, Aarhus University, Denmark 2.1 The Van Zyl Slabbert Commission The Constitution of the Republic of South Africa, 1996, outlined the electoral system which would be used for elections in 1999; however, the system was not automatically extended beyond 1999. The aforementioned led to the establishment of a task team, referred to as the Electoral Task Team (ETT), that would propose legislation for an electoral system to be used in future elections. Dr Frederik van Zyl Slabbert was selected to be the Chairperson of the ETT, which is why the ETT is also known as the Van Zyl Slabbert Commission. The core values of the ETT for judging an electoral system were fairness, inclusiveness, simplicity and accountability. Fairness stipulates that each vote should be equal, as well as that votes should be used to compound elected representatives, i.e., ensure proportional representation. Inclusiveness intended to ensure active participation for all demographics, hence, no legal/formal thresholds should be applied in South Africa. Taking into consideration the use of two ballot papers, simplicity refers to the comprehensive understanding a voter should have of how the system functions, that despite having several ballot papers, voters should be able to use them without difficulty. As an example, in Kenya voters are able to distinguish between six ballot papers. Lastly, accountability was also a main concern for the ETT, as the current system does not allow voters to hold individual politicians accountable, as they can only do that by voting for another party, which may be too much to ask from a voter. As it is now, it is the political parties that have to account collectively to the electorate for their performance as a party. The opportunity to reject a disliked individual politician in an election very seldom materialises. Panel members proceeded to discuss constituencies, specifically single-member constituencies and multi-member constituencies. The majority recommended a system with 65-70 multi-member constituencies, which will allow 300 members to be elected to the National Assembly. The nine current multi-member constituencies, which are the nine provinces, have 200 seats allocated proportionately. The number of constituencies is thus recommended to be expanded considerably. The number of seats allocated in each new MMC should be at least three and not more than seven, to ensure that voters can easily recognise and evaluate their representatives in the National Assembly. Furthermore, the proposal envisages two sets of closed lists of party candidates, as now, one for national (but prepared for and issued separately in each MMC) and one for provincial. The candidate lists can become open at a later stage, which will further increase the level of accountability. In light of the abovementioned, several concerns were noted for reflection: A large number of political parties that do not necessarily have political support to contest in elections confuses and aggravates voters, which motivates the introduction of stringent ballot paper access requirements for parties intending to contest elections. The number of seconding voters should be used instead of a monetary fee for participating. Provisions for independent candidates are lesser; therefore, have an improved prospect of contesting in the proposed 3- to 7-member multi-member constituencies in provinces or nationally, where between 50 000 and 95 000 votes are required. Whether independent candidates and political parties should appear on the same ballot paper. If independent candidates would only stand in one multi-member constituency, while (national) parties contest on a national level and also have access to 100 compensatory seats. Requirement for an independent candidate to introduce a number of voters to second him or her as an independent candidate in that specific multi-member constituency. The number should not be less than 1% of registered voters and the validity of signatures is to be verified by the IEC. If a multi-member constituency seat allocation system, more or less identical to the current quota system, is implemented, one would like to see the long strings of decimals removed from the computations. A divisor system would be simpler to handle and is therefore to be preferred. The Sainte-Laguë system delivers a more proportional outcome than the D’Hondt system and is therefore suggested here. 2.2 Danish Electoral Model A comparison of the electoral systems in South Africa and Denmark outlines several key points that can be extracted to review whether a two-tier compensatory system is a category of its own. When comparing the two systems, several similarities and disparities were noted pertaining to voter registration, access to ballot papers, seat allocation system, formal threshold, party order on ballot papers, amongst others. With regards to voter registration, approximately 69% of citizens eligible to vote register in South Africa, while in Denmark citizens are registered automatically resulting in a 100% voter registration. In South Africa, political parties are required to pay a fee to contest in the elections, whereas in Denmark they submit a number of voter signatures. Currently, the value of one seat in the previous election is around 20 000 voter signatures. While the proportional representation consists of closed lists of party candidates, in Denmark, the parties decide for themselves if they want to run on open or semi-open (or semi-closed) lists. Although South Africa and Denmark both have two spheres, in South Africa with nine lower multi-member constituencies the voters are represented by 400 seats of which 200 seats are allocated to provinces, while in Denmark there are ten lower-level multi-member constituencies and voters are represented by 175 members in Parliament, of which 135 are allocated proportionally in the ten MMCs. The natural threshold in South Africa is a little bit less than 0.25%, while in Denmark the formal threshold is 2.0% of the votes. The party order on ballot papers is alphabetical in both South Africa and Denmark; however, in South Africa the first letter to appear on a ballot paper is determined by lot. Conversely, in Denmark the letter A (used by the Social Democrats) always appears first on the list. Refer to the below image as an example of a ballot paper in the 2019 parliamentary election. Please note that in this particular MMC five independent candidates are running. They are found at the bottom of the ballot paper as “Uden for partierne” (outside the parties). 3. German Mixed Member Proportional (MMP) system: Presented by Prof Michael Krennerich, University of Erlangen-Nurnberg The Bundestag is comprised of 598 members, in addition to surplus seats referred to as overhang mandates, as well as compensatory seats. The basic features of the Bundestag are stipulated as follows: There are currently two votes. The first vote is an individual vote provided to a candidate in one of the 299 single-member constituencies and the second vote is a party list vote, which is given to a closed regional party list in one of the 16 states the candidate resides in. The candidates who achieve a plurality in the single-member constituencies are elected as direct mandates. The second vote determines the seat allocated for each party in the Bundestag. Parties that obtain more than 5% of the second vote at the national level, or that have three members elected in the single-member constituencies are considered in the national allocation of seats, as stipulated by the legal threshold. The aforementioned is referred to as the legal threshold. In the Bundestag, the seats are allocated proportionately according to the party lists on the regional level of the states, which is determined by the second vote. The proportional seat share of each party is calculated according to a PR formula at the national level. In the event that a party wins more constituency seats (direct mandates) in a state, above what is allocated to it by the second votes in that state, the votes remain that of the party. These votes are referred to as overhang seats. It should be noted that since 2013, all parties that have passed the legal threshold receive additional seats to compensate for any disproportionality by the overhang mandates in the respective 16 states. (However, there will be another electoral reform in two steps before the elections of 2021 and 2025). The German electoral system produces highly proportional results for those political parties that have passed the legal threshold. When reviewing the inclusiveness of the German electoral system, it can be said that only very small parties are excluded from parliamentary representation. However, this legal threshold is not a necessary element of an MMP system. With regards to simplicity, German voters are familiar with the current voting system and the management of an MMP system is well known by German authorities. However, there is some difficulty in understanding the calculation process of the MMP system, especially following the reform in 2013. When the reform took place during 2013, there was no pre-calculation of the seats in the Bundestag. However, following the reform, 598 seats are distributed to 16 states according to the population. The seats are distributed among parties according to second votes won by each party in that respective state. If the number of seats won by a party exceeds the number of allocated seats for the state, the higher number of constituency seats is taken as a basis for further calculation, which is referred to as “hidden” overhang seats. Although the MMP system enjoys legitimacy in Germany, it should be noted that due to the number of seats of the Bundestag, the size is considered problematic. A half-hearted electoral reform (in two steps) before the 2021 and 2025 election aims at reducing the seats in Parliament, making the seat calculation, however, even more difficult to understand. With regards to political parties, their role is supported through using closed party lists while also allowing candidates to compete in single-member and regional party lists simultaneously. Floor-crossing of MPs is also allowed, regardless of whether they have been elected through party lists or single-member constituencies. In terms of individual accountability, single-member constituencies aim to secure a close constituency-based voter-representative relationship. Moreover, no independent candidate has thus far obtained a parliamentary seat in a single-member constituency in Germany since 1949. Candidates in single-member constituencies are mainly elected on the basis of party preferences rather than the personality of the candidates. In addition, women have generally been more successful in the nomination and election of the party lists than in single-member constituency. However, the proportion of women elected to the Bundestag is significantly lower in constituencies than on the party lists. Against the backdrop of the basic features of the German MMP system, the following would be the possible effects on the system in South Africa: Fairness: The multi-member proportional system would produce equally proportionate results if no electoral threshold was applied. Legitimacy: The increase in the number of seats in the National Assembly may contradict the Constitution. Accountability: Party and independent candidates would be more accountable to their electorate if elected in constituencies. Compared to single-member constituencies, however, small multi-member constituencies (e.g. 3 to 5 seats) may have the same effects but would additionally allow candidates of different parties to gain constituency seats. Simplicity: Voters would need to adjust to the features of an MMP system. With constituencies, a careful elucidation of electoral boundaries would be required. Possible weakening of parties: With an MMP system, political parties still select both party list candidates and constituency candidates. Some politicians may be inclined to stand as independent candidates, however, whether independent candidacies would be successful is an unanswered question. 4. The Irish system - Proportional reprepresentation by the Single Transferable Vote: Presented by Prof David Farrell, University College Dublin The limitations presented by the South African electoral system differ from those of Ireland in many aspects. Ireland uses a proportional representation electoral system with a single transferable vote. The system consists of multi-seat districts, and as in the Irish case, they have small districts or constituencies. There is a maximum of five members of Parliament per district. Ireland makes use of an electoral formula, namely the “Droop quota”. Since the electoral formula and the multi-seat districts are used together, the result is a proportional outcome. The “Droop quota” is a standard electoral formula. To obtain one seat in a district, a candidate needs a sufficient number of the votes in that district, which is determined by the size of the Droop quota: the more seats in the district, the lower the quota. The country’s proportional system is often referred to as a semi-proportional system, due to the small size of the districts. Ireland has many political parties, approximately 13, for a country of just under five million people. The Parliament consists of 166 members and is evenly spread out between the three major parties, Fianna Fáil, Fine Gael and Sinn Féin. However, the electorate votes for a candidate instead of a political party. Within the single transferable vote system, voters rank the order of their preferred candidates on the ballot paper. Additionally, no specific requirements exist regarding the number of candidates that a voter should rank, as they can choose to only rank a few candidates, or all the candidates listed on the ballot. The Irish electoral system is a candidate-based system. It was developed in the 1850s independently, in both Britain and Denmark. The system is often also referred to as British proportional representation. Formerly it was useful for the British to test this new electoral system on colonies, which is why Ireland makes use of the system and upheld it when the country became an independent nation in 1922. Furthermore, political party names did not appear on the Irish electoral ballot paper until 1965. There seems to be some anti-party bias built into the logic behind the system in its original or traditional way. Another feature is that the candidates are listed alphabetically. Moreover, along with candidates’ names being listed alphabetically, the names of the political parties and their logos are given next to full-colour photographs of each of the candidates. Provision for independent candidates Since 1922, independent candidates have been a permanent fixture in Ireland’s Parliament. In 2016, 15% of the seats in Parliament were won by independent members. According to data gathered by a colleague from University College Cork, the number of independent members in the Irish Parliament tends to be greater than the number of independent candidates from all other European Parliaments, combined. The Irish electoral system assists independent candidates in many ways, including through the usage of liberal ballot access rules. Candidates are only required to obtain 30 supporting signatures to appear on the ballot paper. Previously, only political parties had special recognition as parties in Parliament. Prior to 2016 it was possible for independent candidates to form a single technical group providing they had at least seven members. A change of the parliamentary rules in 2016 allowed Ireland to have as many technical groups in the Parliament as they might need, provided there are at least five MPs. These technical groups have access to similar resources as political parties in terms of funds, parliamentary speaking time and committee membership. Funding Most political parties are funded generously, with two-thirds of party income stemming from the State. This is a high figure and above the average in Europe. It is also extended to independent candi-dates, who are granted an annual party leader’s allowance. Accountability and representativeness In terms of accountability and representativeness, Ireland is not fully proportional. For example, the Irish Parliament has an unstable history in terms of the representation of women. In 2011, electoral quotas were introduced for the first time, however, despite these quotas the Irish Parliament still has fewer women than in the British House of Commons. Some level of accountability in the Irish electoral system can be seen in the way candidates prefer door-to-door campaigning during electoral campaigning. Candidates are known for persevering until they are certain that they will have secured substantial voter support, despite being ranked lower on a ballot paper. Additionally, every MP has a well-resourced constituency office located within the con-stituency, which provides greater opportunity for contact between the public and representatives. Moreover, research among voters indicated that in elections, voters have tended to have between 12% and 16% contact with MPs. Therefore, this indicates that there is regular contact between MPs and their constituencies. Accountability is a key principle in Irish politics, however, some shortcom-ings in this practice have been noted as many MPs spend more time on constituency contact than on legislation, which can result in a weakened Parliament. Positive and negative features of the system A positive feature of this system is that it offers an abundance of choice and accountability to voters, as well as being accommodating towards independent candidates. However, against this, representa-tiveness can be considered weak and the system is not as proportional as it could be. Another perturb-ing factor is the impact these types of shortcomings would have if a similar system were to be ap-plied in a larger country, such as South Africa. 5. Spanish electoral model: Presented by Prof Ignacio Lago, Universitat Pompeu Fabra, Barcelona There are three key issues when considering electoral models. The first is two crucial trade-offs that must be considered when deciding on an electoral system. Secondly, consideration should also be given to how the Spanish electoral system is dealing with these two trade-offs. Finally, one would have to look at what to do within the South African context. The first trade-off when deciding on an electoral system is the option between the inclusive representation of citizens’ preferences and the accountability of government. If the goal is to have a system in which all views of the society are to some extent reflected in Parliament, the best option is to have a proportional representation (PR) electoral system with large districts. This is the model of Portugal, Finland, Spain and South Africa. On the other hand, if the goal is to emphasise individual accountability, the best option is to have a first-past-the-post (FPP) system with single-member districts. A midway between these two options is to have mixed-member systems. How these mixed-member systems administer this trade-off depends on whether they are dependent or independent. Lower House elections in Spain are conducted according to the D’Hondt formula, where representatives are elected using a PR system in 52 districts ranging from 1 to 37 seats. Moreover, there is a 3% threshold at the district level. Therefore, in this first trade-off, Spain prefers the representation of the different opinions in society instead of having majority governments or giving more influence to individual candidates. Consequently, following the November 2019 elections, Spain has a minority coalition government, with 16 political parties obtaining seats in Parliament. Additionally, Spain uses the limited vote method for the Senate election operating on a simple majority vote. The principle rule is that four seats are allocated to each province, where each voter then has three votes. Once a PR system has been adopted, the second trade-off is whether the electoral system will provide priority to parties or to individual candidates. In Spain it has been found that most voters cast their votes in the same direction in Congress and Senate elections, which are held simultaneously. In the 2000 Senate elections, for instance, only 3% of the respondents in a survey said that they voted for candidates from different parties in both elections. Thus, the focus will be on the lower house electoral system used in Spain, which has a closed list system. In contrast to this, there is also the option of having a PR system with an open list such as in the case of Switzerland. Moreover, a third possibility exists, whereby voters have the option to display their preference on the ballot paper. Independent candidates in Spain In Spanish elections, officially registered parties, coalitions, and independents can contest elections. In each district, the number of candidates presented by each party must be equal to the number of seats to be filled. An example of this is Madrid, which is a 37-seat district and, therefore, parties must present 37 candidates. Furthermore, there are two possible options for independent candidates in Spain. Firstly, candidates in the party list who are not members of a political party can be identified as independents on the ballot. Secondly, a group of candidates not belonging to a specific party can decide to run in the election together, however, they do not constitute a formal political party, but are referred to as “voter groups”. Moreover, in order to participate in the Lower or Upper House election, a “voter group” must obtain the support (signatures) of 1% of the individuals included in the district electoral census. Consequences of the Spanish electoral system One of the most relevant consequences of the Spanish electoral system is that voters view individual candidates as less relevant than parties. This was revealed by a survey that was conducted after the 2000 elections, where 74% of the respondents said they could not recall the name of the first candidate of the party for which they voted. In the Senate elections of the same year, only 3% of the votes went to candidates from different parties. Voter preference is therefore not in the forefront of Spanish elections. Should Spain’s electoral system and process be used as a reference to make minor changes in the South African electoral system, these changes can be categorised in three different ways: Citizens should be allowed to run in elections, even if they do not belong to political parties. Candidates should also obtain the minimum support for their candidacy before they contest the elections. There should be a ballot paper per candidacy running in the election including the names of all candidates. Candidates in a party list who are members of a political party, should be identified as independent candidates on the ballot paper. 6. Turkish electoral model: Presented by Prof Ali Çarkoglu, Koc University, Istanbul, Turkey Within the Turkish electoral system, seats in the representative assembly are translated from the population figures, as they are divided based on provinces’ geographical boundaries. Each province has a provincial governor, “vali”, appointed by the central government in Ankara. Each province is also sub-divided into districts with district governors, “kaymakam”, and then into villages and neighbourhoods, each having a headman or “muhtar”. While the central government appoints valis and kaymakams, the muhtars are elected by their local constituencies. In addition, provinces and districts also have an elected executive mayor working with provincial assemblies. At the national level, the Turkish Grand National Assembly (Türkiye Büyük Millet Meclisi [TBMM]) is the representative legislative assembly, with a total of 600 seats. Each one of the 81 provinces is first allocated one seat irrespective of its population, thereafter the remaining 519 seats are distributed in accordance with provincial population figures. Such distribution necessarily creates seat allocations with fractions. The integer part of these seat allocations are made, and the fractions of seats are ordered and ranked from the largest to the smallest for all provinces. The integer seat allocation will always leave a certain number of undistributed seats due to the fractions. Consequently, the undistributed seats are then allocated from the largest seat fraction for the corresponding provinces down in the list until all remaining seats are allocated. The list system of proportional representation (PR) As seats are allocated to provinces, each province is comprised of a large electoral district, with a PR system and multiple seats, as determined by the D’Hondt formula, which translates party votes to seats in the TBMM. Furthermore, each political party formulates a list of candidates to occupy the number of available seats in each province or electoral district. For example, if a given district is allocated 10 available seats, then each political party typically forms a list of 10 candidates. According to the system formula, each party sends the top candidates from their list who win, in proportion to their share of the vote. In an attempt to avoid the formation of coalition parties within the TBMM, the 1980’s military regime in Turkey imposed a threshold of a minimum 10% nationwide electoral support to obtain any seats in the national legislature. Therefore, should a regional party win a substantial majority in several provinces, the party’s total votes must constitute 10% of the valid votes nationwide. If this threshold is not achieved, the party will not gain any seats from those provinces. Thus, this practice served to circumvent the fragmentation of seat distribution in Parliament through small parties voting in coalitions and has also worked to exclude regional minority ethnic parties from Parliament. Moreover, the arrangement also made it increasingly difficult for minority groups to form new political parties that would realistically be able to obtain this threshold. Consequently, these smaller constituencies grouped along specific issues of ideologies, assembled under larger umbrella parties, effectively introducing coalitions into party organisations. From this, party politics were played out in the shaping of party lists put forth for elections in sizeable multi-member district PR elections. Independent candidates As the nationwide electoral threshold is only applicable to parties contesting national elections, independent candidates who run at a district level are only constrained by the D’Hondt formula requirements to win a single seat. If each of these candidates receives a level of support that qualifies for a seat, they can all get elected as independents from a multimember district. However, if an independent candidate receives more votes than necessary to win a seat, those excess votes are, in a sense, “wasted”. Furthermore, parties may support multiple independent candidates. Administering such a system where many independent candidates from a party do not necessarily pass the national threshold, each running separately in different provinces, requires a great deal of coordination and voter mobilisation. Political parties have been known to support independent candidates as a means to bypass the 10% national threshold limitations, as seen during the 2007 and 2011 elections when Kurdish parties used this strategy. This has helped the Kurdish parties to grow and nationalise the previously regional bases of support. Additionally, there have also been a few independent candidates who have contested elections in their hometowns based on their name recognition, family, or tribal ties, which renders their election easier. The importance of district magnitudes A 2011 decision by the Supreme Election Council (Yüksek Seçim Kurulu, YSK) effectively reduced the district sizes in large metropolitan provinces, which had serious electoral consequences, particularly impacting smaller parties and independent candidates. The decision stated that single provincial election districts will be used for provinces with 1-18 available seats; two election districts will be used for provinces with 19-35 available seats; and three election districts will be used for provinces with 36 or more available seats.Consequently, cities like Istanbul and Ankara would have three election districts. To illustrate the importance of district magnitudes in the outcome of elections, Istanbul will be used as an example. As Istanbul has 98 seats available, the first election district has 35 seats, the second election district has 28 seats and the third district also has 35 seats. As the D’Hondt formula is applied for a total of 98 seats, the number of votes that would be required to win a seat is lowered considerably when compared to a district where only 35 total seats are available. Therefore, the larger district size increases smaller parties’ and independents’ chances of winning seats in an electoral district. In other words, in a province like Istanbul, where there are nearly 10.5 million voters, an independent candidate with slightly more than 100 000 votes could win a seat if all 98 seats are available in a single district. However, when the province is divided into three electoral districts with about 30 seats each, the minimum level of support for an independent candidate rises by nearly threefold. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town, 8001 South Africa Registration: 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in March 2021 Author: Mariaan Webb, Creamer Media Writer Edited by: Daryl Swanepoel Contents Abbreviations & acronyms Introduction Identifying weaknesses Policy uncertainty Broad-based black economic empowerment Education Fiscal crisis Incompetence and corruption limiting State capacity Institutional weakness Labour and skills Lack of competition Interventions for fostering growth Conclusion References Abbreviations & acronyms AfCFTA African Continental Free Trade Area BBBEE broad-based black economic empowerment ISI Inclusive Society Institute IMF International Monetary Fund IPP independent power producer MP Member of Parliament NDP National Development Plan OECD Organisation for Economic Cooperation and Development PGM platinum-group metals SABC South African Broadcasting Corporation SEZ special economic zone SoE State-owned enterprise Stats SA Statistics South Africa UN United Nations Introduction This report is a summary of themes from discussions held by the Inclusive Society Institute (ISI) with the financial sector on the reasons behind South Africa’s depressed growth performance, but more importantly to gather innovative thought and a new perspective for placing the country on a path of sustainable and inclusive growth. The dialogue forms part of the ISI’s comprehensive research to develop a new growth-centred economic blueprint for South Africa, assessing the current performance of the National Development Plan (NDP) and presenting fresh ideas. The first phase of the research involved studying previously distressed economies that have turned themselves around within a short space of time, with a focus on Japan, South Korea, and Germany. The second phase delves into South Africa’s policies, highlighting strengths, weaknesses, and interventions that could catapult the sluggish economy onto a higher growth path. Owing to the impact of the Covid-19 pandemic, South Africa’s economy contracted by 7% in 2020 (Stats SA, 2021a). This severe contraction is estimated to have pushed about two-million people into poverty, as defined by those living below the poverty line for upper-middle income countries of $5.50 a day (World Bank, 2021). It is projected that the economy’s annual growth will be 3.10% in 2021 and 2% in 2022 (IMF, 2021). The ISI believes South Africa requires at least 4% to 5% economic growth to effectively begin to reduce the country’s entrenched high levels of unemployment, inequality, and poverty. Participants, both local and international contributors, were asked to identify the weaknesses in South Africa’s economic policies and to offer ideas about where the country’s focus and priorities should be. Identifying weaknesses South Africa has severe and deep-seated structural weaknesses. The unemployment rate has risen to 32.50% (narrow definition) in the fourth quarter of 2020 – the highest in at least 13 years (Stats SA, 2021b). Per capita growth has been declining since its peak of 2014 to a level last seen in 2005 (Stats SA, 2021c). South Africa is also one of the most unequal countries in the world, reporting a per capita expenditure Gini coefficient of 0.65 in 2015. The top 10% of the population spend nearly eight times more than the bottom 40% (Stats SA, 2020). The Covid-19 pandemic exacerbated existing shortcomings, exposing the economy’s major weaknesses, including, among others, stagnant growth, inequality, rising national debt and severe electricity challenges. Despite substantial social spending, government outcomes remain poor – whether that be in education, health, or social grants. Several participants mentioned South Africa’s unsustainable debt situation, which will require higher growth to address it. More foreign investment will be needed for economic growth and to restore fiscal soundness. Observations were made about policy formulation, implementation and communication across different sectors, such as improving education outcomes, dealing with land reform, and restructuring State-owned enterprises, including power utility Eskom. The country is also only just beginning to address a decade of State capture, run-down and repurposed State capacity, and related institutional weaknesses. Policy uncertainty Policy certainty is critical to driving investment in any economy. South Africa is ultimately competing for global investment, but uncertainty is undermining its drive to attract investors and thereby its prospects for growth. Concerns have been raised about policy certainty in energy, mining, and land reform. Investors are uncertain that laws will not change, and this makes the investment climate uncompetitive. Policy implementation paralysis, especially related to the NDP, policy communication and policy discord are hampering progress. The NDP, which serves as an overarching policy blueprint for the country and aims to eradicate poverty, inequality, and unemployment by 2030, was effectively shelved under the previous administration. While widely regarded as a well-written document, the NDP is considered too broad and the time in which reform is expected too long. Although strong in certain areas, particularly its broad economic plan, the NDP lacks specifics when it comes to certain sectors, for example financial services. It acknowledges the need for financial inclusion and refers to access to capital, but lacks substance on how this should be implemented. Targets are also no longer attainable and need to be recalibrated. Some other emerging economies have had substantial success with development plans that have a shorter timeframe than the long-term planning period of the NDP. Malaysia, for instance, practices a system of centralised economic development planning with five-yearly development plans (OECD, 2016). Policy plans should also be supported by effective participation of citizenship (OECD, 2017). The NDP has been ineffective in communicating its plans to the public and does not encourage a system of accountability. In the past ten years, various sector-focused policies have also been developed and launched with much fanfare, but a few years down the line, not much has happened. One example is Eskom – despite government hiring financial adviser Lazard in 2018 to draft a plan to shore up the struggling utility’s balance sheet, it remains a real risk to the sovereign (Reuters, 2018). This begs the question: Why should an investor, without an emotional attachment to South Africa, believe what the South African government is saying about implementing what they set out to do? A failure to conduct economic-impact studies when a new policy is drafted or considered for implementation is seen as a negative. For example, the National Health Insurance Bill, which proposes a fund to achieve universal health care coverage, has been published without an accompanying financing paper (ISI, 2020). On the other hand, where policies have succeeded, they are not necessarily deployed more widely or scaled up. Broad-based black economic empowerment The broad-based black economic-empowerment (BBBEE) policy, which aims to increase the participation of black people in the management, ownership, and control of South Africa’s economy, is seen by many as a disincentive to foreign investors. Although investors express support for the BBBEE objectives, there is frustration with the way the policy has been implemented and with the codes through which compliance is measured. A study, funded by the European Union, has found that the policy, primarily effected through the BBBEE Codes of Good Practice, has become “convoluted and complex, often frustrating businesses rather than encouraging transformative practices”. The frustrations experienced in implementing BBBEE range from “too many ambiguous and often-changing rules (making reference to the Codes that have undergone multiple changes in recent years), to trying to stay focused on business imperatives while attending to the intricacies of BBBEE compliance” (Samaai-Abader, 2020). In its current form, the policy has become an additional cost to industry and has also resulted in rent-seeking rather than productive business activity. There is a view that black economic empowerment has made a few politically connected people exceptionally wealthy while failing to improve income distribution for the majority of South Africans. Education Education is one of the biggest problems in South Africa. Beset by infrastructure shortcomings, overcrowded classrooms, a lack of teacher capacity and relatively poor learning outcomes, which are exacerbated by systemic inequalities, the education system does not equip young people with the right skills to enter the labour market. After initial improvements in learning outcomes – notably between 2003 and 2011 – gains have plateaued, as evidenced by the country’s performance in international assessments (Spaull, 2019). South Africa, for instance, underperforms in the Progress in International Reading Literacy Study and the Trends in International Mathematics and Science Study. Failure to deal decisively with education challenges will consign future generations to poverty and perpetuate the legacy of Apartheid (Spaull, 2019). A more skilled workforce will require improvements in the education system. Fiscal crisis At the heart of South Africa’s economic woes is a fiscal crisis, with the country on the edge of a proverbial fiscal cliff. South Africa’s fiscal cliff is the point where government expenditure on social grants, compensation to civil servants and interest on government debt exceeds total government revenue (Rossouw & Joubert, 2020). Having increased too rapidly in recent years, these items now practically account for almost all government revenue. Public-service compensation absorbed 47% of revenue in 2020/21, while debt-service costs – the fastest-rising item of government spending – consumed 19.20% of tax revenue. (National Treasury, 2021). Reducing the proportion of the Budget spent on salaries and debt-servicing will enable government to focus on priorities such as healthcare, education, and service delivery. With a diminishing base of 7.10-million individual taxpayers, of which less than 307 912 earn more than R1-million a year (National Treasury, 2020), personal income tax is only enough to fund about 80% of the civil servant bill and debt serving. Incompetence and corruption limiting State capacity The political environment is not conducive to growing the economy. Political leadership in a number of government positions lacks competency. This is highlighted by the use of consultants and outsourcing rather than the building of capable and competent State machinery. If there were a conducive political environment, incompetent government employees would leave their positions to make way for those who can do the job. Evidence emerging from the Zondo Commission of Inquiry into Allegations of State Capture points to a serious lack of competence and a high incidence of corruption at State institutions and State-owned enterprises (SoEs), including at Transnet, Eskom, Denel, the South African Broadcasting Corporation (SABC) and law enforcement agencies (Zondo Commission, 2021a). Institutional weakness Political risk is rising globally, particularly since the onset of the Covid-19 pandemic. Dealing with political risk in an emerging market requires strong institutions, many of which have been significantly eroded in South Africa in the past decade. For example, failure to insulate the SABC from vested political interests has left the public broadcaster in a crippled state, hobbled by financial bankruptcy and dependent on government bailouts (Ndlovu, M, 2019). Institutional weakness and cadre deployment enabled State capture to flourish. Had certain checks and balances been in place, many problems related to State capture may have been avoided (Zondo Commission, 2021b). There is also concern that Parliament acts as nothing more than a rubberstamp for what comes from the executive – another example of how institutional weakness affects the country’s ability to perform. Parliament’s oversight failures have been laid bare at the Zondo Commission of Inquiry, with testimonies of how administrative proceedings were used to sidestep oversight. Former African National Congress Member of Parliament (MP) Zukiswa Rantho testified in early 2021 about MPs being more loyal to the ruling party than doing what is right (TimesLive, 2021). Labour and skills South Africa has a fairly sophisticated formal sector, but suffers from extensive unemployment. Only 16. 40-million out of a labour force of 23.10-million have managed to find employment. The 6.70-million-strong cohort of unemployed people is compounded by a further 2.90-million who have given up looking for a job and 12.70-million who are not economically active (Stats SA, 2021). Exacerbating unemployment is a mismatch between labour demand and supply, with the labour force retaining a large number of low and unskilled people. A nonalignment between the skills that graduates are being equipped with and those which are required by the economy is contributing to the unemployment crisis. South Africa has been suffering from a chronic shortage of skills for many years, notably in the engineering and information and communication technology fields, but government has only recently moved to plug the skills gap through importing skilled labour. Although the move to assist foreign workers with critical skills to gain work permits is welcomed, concerns have been raised about how long it took government to reach this point. Lack of competition The economy is bedevilled by high concentration, little competition, and anticompetitive behaviour. One participant mentioned that South Africa is a country of fives: Five big banks, five big retailers and five big construction companies. Big players have been accused of questionable collaboration. Collusion, for instance, has occurred in the construction, banking and telecommunication industries. The Competition Commission in 2013 fined 15 construction firms a collective R1. 46-billion for collusive tendering (Engineering News, 2013) and in 2017 referred cases of collusion against several international banks for alleged price fixing and market allocation (Engineering News, 2017). A lack of competition holds back innovation, keeps prices high, and denies many people access to services and opportunities to start businesses. Interventions for fostering growth Several sectors were identified as ripe for potential policy improvements, ranging from power utility Eskom and independent power producers, to SoEs, skills development and beneficiation of platinum-group metals (PGMs) and other minerals. Alleviating small business regulatory compliance, improving the ease of doing business, rethinking BBBEE and acknowledging the cost of crime were also mentioned. Conclusion South Africa needs to celebrate its successes and seek to replicate these in other areas. Some of its successes include a vibrant democracy, a free media and free expression, an independent judiciary, a constitutionally protected South African Reserve Bank and the way inflation is contained with sound monetary policy. The turnaround of the South African Revenue Service since the State capture period is also worth nothing, allowing for improved tax collections efforts. Another positive is the country’s demographic dividend, although opportunities may be somewhat limited by South Africa’s already having had its urban transition. Projected to 2030, South Africa could benefit from a major demographic dividend, as the proportion of working people in the total population increases. Although it should also be noted that too sharp a population growth rate without the necessary concomitant growth in GDP can result in too many people looking for jobs, which can be a risk to the economy and fiscus. The bigger pool of possible employment seekers could, however, create opportunities for new businesses. There is also potential for increased trade with the rest of the continent through the African Continental Free Trade Area (AfCFTA), which creates a single continental market for goods and services in Africa. AfCFTA is the world’s biggest free trade area, measured by the number of countries participating. The pact connects 1.30-billion people across 55 countries (World Bank, 2020). AfCFTA is considered a game-changer for the continent. It will help reduce trading challenges, such as different regulations from one African country to another. By facilitating the movement of goods and services among African countries, AfCFTA will create opportunities to accelerate intra-Africa trade, grow local businesses, create jobs, and increase infrastructure development on the continent (Williams, 2019). It has been noted that, although the Ramaphosa administration is taking measures to redress policy implementation paralysis, progress is slow. To get the economy on a sustainable growth trajectory, policy uncertainty and implementation paralysis must be addressed. Strengthening institutions is also critical going forward. Linking the NDP to an active citizenship will also be of benefit to the country. Getting people involved in every level of society – from rural area to towns and cities, nationwide – will assist in addressing accountability failures and set the stage for sustained and inclusive economic growth. Although South Africa is facing serious challenges there are opportunities to rejuvenate the economy and hope prevails. References Engineering News. 2013. Construction companies fined R1.46bn for collusion, June 24, 2013. [Online]. Available at: https://www.engineeringnews.co.za/article/construction-majors-fined-r146bn-for-collusion-2013-06-24 [accessed April 23, 2021]. 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Available at: http://www.treasury.gov.za/documents/national%20budget/2021/review/FullBR.pdf [accessed April 23, 2021]. Ndlovu, M. 2019. Why the SABC should not be tossed to the wolves, The Conversation, September 29, 2019. [Online]. Available at: https://techcentral.co.za/why-the-sabc-should- not-be-tossed-to-the-wolves/92902/ [accessed April 23, 2021]. Organisation for Economic Cooperation and Development (OECD), 2016. OECD economic surveys: Malaysia economic assessment, November 2016. [Online]. Available at https://www.oecd.org/economy/surveys/Malaysia-2016-OECD-economic-survey-overview.pdf [accessed April 23, 2021]. Organisation for Economic Cooperation and Development (OECD), 2017. Citizen participation in policy making, Government at a glance, 2017. [Online]. Available at: https://doi.org/10.1787/gov_glance-2017-67-en [accessed April 23, 2021]. Reuters, 2018. Lazard report on Eskom asset sale options due within days – Eskom chairman, 2018. [Online]. Available at: https://www.reuters.com/article/safrica-eksom- lazard-idUSL8N1WO3MT [accessed April 23, 2021]. Rossouw, J. & Joubert, F. 2020. Warnings about SA’s push towards the fiscal cliff went unheeded for years, Business Day, September 6, 2020. [Online]. Available at: https://www.businesslive.co.za/bd/opinion/2020-09-06-warnings-about-sas-push-towards- the-fiscal-cliff-went-unheeded-for-years/ [accessed April 23, 2021]. Samaai-Abader, F. 2020. EU investors’ responses to broad-based black economic- empowerment: A skills enhancement model, October 2020. [Online]. Available at: https://www.euchamber.co.za/wp-content/uploads/2020/11/EU-Investors-Response-to- BBBEE-Final-Oct-2020.pdf [accessed April 23, 2021]. South African Revenue Service (SARS). 2020. 2020 Tax Statistics, December 2020. [Online]. Available at: https://www.sars.gov.za/wp-content/uploads/Docs/TaxStats/2020/Tax-Statistics-2020.pdf [accessed April 23, 2021]. Spaull, N. 2019. Priorities for education reform – background note for Minister of Finance, January 19, 2019. [Online]. Available at: https://nicspaull.com/2019/01/19/priorities- for-education-reform-background-note-for-minister-of-finance-19-01-2019/ [accessed April 23, 2021]. Statistics South Africa (Stats SA). 2020. How unequal is South Africa? February 4, 2020. [Online]. Available at: http://www.statssa.gov.za/?p=12930 [accessed April 23, 2021]. Statistics South Africa (Stats SA). 2021a. Gross domestic product, fourth quarter 2020, March 30, 2021. [Online]. Available at http://www.statssa.gov.za/publications/P0441/P04414thQuarter2020.pdf [accessed April 23, 2021]. Statistics South Africa (Stats SA). 2021b. Quarterly Labour Force Survey, Quarter 4:2020, February 23, 2021. [Online]. Available at http://www.statssa.gov.za/publications/P0211/P02114thQuarter2020.pdf [accessed April 23, 2021]. Statistics South Africa (Stats SA). 2021c. GDP: Quantifying SA’s economic performance in 2020, March 9, 2021. [Online]. Available at: http://www.statssa.gov.za/?p=14074 [accessed April 23, 2021]. TimesLive. 2021. Former Eskom inquiry chair throws the ANC under the bus at Zondo commission, February 2, 2021. [Online]. Available at: https://www.timeslive.co.za/politics/ 2021-02-02-former-eskom-inquiry-chair-throws-the-anc-under-the-bus-at-zondo-commission/ [accessed April 23, 2021]. United Nations (UN). 2018. World Urbanisation Prospects, 2018. [Online]. Available at: https://population.un.org/wup/Country-Profiles/ [accessed April 23, 2021]. Williams, P. 2019. African Continental Free Trade Area (AfCFTA): The dream of our founding fathers coming to life, South African Government, July 19, 2019. [Online]. Available at: https://www.gov.za/blog/afcfta-dream-our-founding-fathers-coming-life# [accessed April23, 2021]. World Bank. 2020. The African Continental Free Trade Area (AfCTFA), July 27, 2020. [Online]. Available at: https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area [accessed April 23, 2021]. World Bank. 2021. The World Bank in South Africa, 2021. [Online]. Available at https://www.worldbank.org/en/country/southafrica/overview [accessed April 23, 2021]. Zondo Commission. 2021a. Transcript from Commission of Inquiry into State Capture Corruption and Fraud in the Public Sector including Organs of State, February 18, 2021. [Online]. Available at: https://www.statecapture.org.za/site/files/transcript/359/Day_345_-_2021-02-18.pdf [accessed April 23, 2021]. Zondo Commission. 2021b. Transcript from Commission of Inquiry into State Capture Corruption and Fraud in the Public Sector including Organs of State, February 5, 2021. [Online]. Available at: https://www.statecapture.org.za/site/files/transcript/359/Day_345_-_2021-02-18.pdf [accessed April 23, 2021]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 May 2021 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in May 2021 Author: Mariaan Webb, Creamer Media Writer Edited by: Daryl Swanepoel - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Content Abbreviations & acronyms Introduction Key considerations Economic recovery Deindustrialisation and productivity Environmental challenges Infrastructure bottlenecks Job losses and employment Macroeconomic stability Social spending Suggested interventions for South Africa Conclusion Annexure A – South Africa’s Economic Outlook, Wolfgang Fengler, lead economist southern Africa, World Bank Annexure B – Reinvigorating South Africa’s Economy, Dr Arthur Minsat, head of unit for Africa and Middle East Development Centre, OECD References Abbreviations and acronyms GDP gross domestic product ICT information and communications technology ISI Inclusive Society Institute OECD Organisation for Economic Cooperation and Development Ters Temporary Employer-Employee Relief Scheme WCY World Competitiveness Yearbook Introduction This report is a summary of discussions held between the Inclusive Society Institute (ISI) and representatives of multinational funding institutions to gain a better understanding of what policies South Africa should be pursuing to encourage welfare-enhancing growth. Economists from the World Bank and Organisation for Economic Cooperation and Development (OECD) participated in the April 2021 webinar, providing their insights on policy interventions. The discussion forms part of the ISI’s comprehensive research to develop a new growth-centred economic blueprint for South Africa. This report highlights that: South Africa is at a critical juncture, with a combination of challenges on the economic, social, environmental and fiscal fronts emerging simultaneously. These issues must be responded to at the same time, presenting development challenges. South Africa’s short-term economic recovery is fragile, and the country is underperforming against other emerging nations. For the first time in democratic South Africa, macroeconomic stability has been flagged as one of the country’s top three concerns. The public-sector wage bill is high by international standards and wage levels of employees in the public sector are high, compared with private-sector employees in South Africa. A demographic dividend is big opportunity, although there is concern about population growth that is not supported by economic growth. The report concludes with recommendations for policy interventions in green energy, digital transformation, skills, infrastructure investment and employment to help place South Africa on a path to sustained growth and inclusive development. Participants included World Bank country director for Southern Africa, Marie Francoise Marie-Nelly; World Bank lead economist for Southern Africa, Wolfgang Fengler; and OECD Development Centre’s unit for Africa, Europe and Middle East head, Arthur Minsat. Key considerations Economic recovery Against the backdrop of a deep recession in 2020, South Africa is experiencing only a mild recovery, measured against other emerging nations. Growth is forecast to resume at 3% in 2021, lower than the OECD average of 3.30% and the Brics group – Brazil, Russia, India and South Africa – average of 6.70%. Economic expansion will plateau at about 2% in 2022 – well below what is needed to aid job creation (Minsat, 2021). Owing to the combined effect of the 7% contraction in 2020 and lingering structural constraints to growth, South Africa’s real gross domestic product (GDP) is not expected to return to prepandemic levels before the latter part of 2023 (National Treasury, 2021). A global economic rebound of 5.60% in 2021 and 4% in 2022 presents an opportunity for South Africa to “ride the global wave” of recovery (OECD, 2021). However, as a relatively small economy with a pre-Covid GDP of $351.40-billion, global integration will be key to taking advantage of opportunities that may emerge. Thus far, South Africa’s exports have failed to follow the ‘V-shape’ recovery of foreign demand, which highlights a potential issue with their competitiveness. There is, however, an opportunity to capitalise on intra-African exports. Further, South Africa is among a few economies that have not achieved much in terms of economic prosperity in the past ten years and has been urged not to repeat the failures of the “lost decade”. Originally coined to refer to Japan between 1991 and 2000 – a time when the economy collapsed, stock markets crashed, and unemployment and debt soared – the term has come to be applied to a wider range of economies that experienced sustained periods of low, or negative, growth rates owing to political and economic policy failures. For example, warnings were issued by US President Barack Obama that the US risked a lost decade in the wake of the Great Recession of 2007-2009 (Meckler, 2009). In the South African context, President Cyril Ramaphosa in January 2019, spoke about South Africa’s “nine lost years” resulting from the State capture and related corrupt practices that gripped the country from 2009 to 2018. While the per-capita GDP of many other developing nations accelerated, South Africa’s stagnated and now reflects the same level as 2006. Had the country managed to replicate its pre-global financial crisis growth over the past ten years, its per-capita GDP would have been R65 000, compared with the current R50 000 (Fengler, 2021). Deindustrialisation and productivity South Africa has suffered a major deindustrialisation pattern in the past three decades. Manufacturing as a percentage of GDP has declined from 21.60% of GDP in 1990, to less than 12% in 2019 (World Bank, 2021). Although certain sectors are performing well, most notably automotive, the overall industry has been underperforming by global standards. This analysis is buttressed by the fact that total factor productivity – a crucial measure of efficiency in manufacturing – has declined in the past decade (Minsat, 2021). The automotive industry is South Africa’s lead manufacturing sector. Its growth and success can be ascribed to the constructive cooperation that exists between industry and government. Government has adopted industrial polices to support the industry. The Motor Industry Development Plan started in 1995 and was replaced by the Automotive Production and Development Programme (APDP) in 2013. The South African Automotive Masterplan 2021 to 2035, alongside amendments to the APDP, take effect in mid-2021. The APDP is a trade-related investment measure that uses import tariffs, rebate mechanisms, including a vehicle assembly allowance, a production incentive, as well as a cash grant in the form of the Automotive Investment Scheme to incentivise investment (Lamprecht, 2021). Environmental challenges South Africa faces many environmental challenges, the cost of which is directly affecting the country’s coffers. The welfare cost of premature death resulting from ambient particulate matter pollution is estimated to be about 5% of South Africa’s GDP. This is deemed excessively high, when compared with China’s 10%, given the disparity in levels of industrialisation. Infrastructure bottlenecks Infrastructure weaknesses in energy, rail and ports, are chokepoints for growth and productivity. The quality of South Africa’s infrastructure is relatively low, compared with other countries. This is underscored by the nation’s performance in the latest World Competitiveness Yearbook (WCY), which rates the ability of 63 industrialised and emerging economies to create and maintain an environment that empowers enterprises to generate value. South Africa’s ranking in 2020 fell three notches to 59 out of 63 countries rated. Of the four groups of criteria evaluated, South Africa’s weakest performance was in infrastructure, with its rating having dropped to 61 in 2020, from 60 in 2019 (Department of Employment and Labour, 2020). Job losses and employment South Africa’s economy lost 2.20-million jobs in the second quarter of 2020, a period marked by a hard lockdown to combat the spread of Covid-19 (Stats SA, 2020). Only about 40% of the jobs lost had been recovered by the end of the year. The job losses were most severe for those living in lower income households before the Covid-19 pandemic, with a heavy burden among low skilled and less educated workers. At the end of 2020, South Africa had a labour force of 22.30-million, of which 15-million are employed and 7.20-million are unemployed. There are another 17-million who are not economically active, 2.90-million of whom are discouraged work-seekers (Stats SA, 2021). South Africa’s working-age population is forecast to expand in the next decade, exceeding the dependent population (below 15 and above 64 years of age). This could yield a demographic dividend, although a growing workforce will need a growing economy. In the absence of economic expansion, the dividend could well convert to a liability. Macroeconomic instability For the first time since the advent of democracy in 1994, the World Bank has identified macroeconomic stability as one of South Africa’s top three challenges – the other being inequality and a lack of jobs. Although not considered to be at a “dangerous level”, the World Bank has flagged the issue as a worry (Fengler, 2021), echoing concerns raised by local economists. The country’s fiscal position is weak, because of low growth and rising expenditures, which have not translated into better economic prospects. The budget deficit, at 14% of GDP in 2020/21, is at its highest ever and gross debt reached 80.30% of GDP in 2020/21 (National Treasury, 2021). South Africa is not in a more vulnerable position owing largely to the strength of the country’s financial sector, which allows for a large degree of domestic borrowing. External borrowing remains at prudent levels, limiting the degree of currency risk. The National Treasury presented two debt scenarios in the June 2020 Supplementary Budget. In the passive scenario, which is not deemed a viable option for South Africa and was presented for illustrative purposes only, debt will spiral upwards, exceeding 100% of GDP from 2022. The possibility that government will not be able to repay its debt leads to higher debt-service costs. This essentially redirects money that could be spent on health, education, and other policy priorities to local and overseas bondholders (National Treasury, 2020). In the active scenario, government stabilises debt through a combination of reforms to boost economic growth and measures to increase revenue collection and lower expenditure. The deficit would be reduced strongly starting in 2021 and the debt level would start decreasing from a peak of 87% of GDP in 2023 (National Treasury, 2020). The OECD has presented a third, progressive consolidation scenario where government fails to implement bold economic and fiscal reforms and the reduction of the deficit is only progressive. In this scenario, the debt level will stabilise by 2028. The progressive consolidation scenario is based on a deficit reduction of 1% a year of GDP and 2% GDP growth from 2025 (Minsat, 2021). The National Treasury, in its 2021 Budget Review, announced a fiscal strategy to stabilise debt at 88.90% of GDP in 2025/26. Over time, this will reduce borrowing costs and the cost of capital (National Treasury, 2021). Besides high debt-service costs, public-service compensation has also risen sharply. The average renumeration of public servants is high by international standards and compared with private-sector employees in South Africa. Government’s payroll costs have become increasingly unsustainable, driven largely by average increases of more than 3% a year above inflation for more than a decade (Intellidex, 2020). To safeguard public finances, Finance Minister Tito Mboweni has taken a hard stance with a proposed freeze on wage increases for 1.20-million public servants. Indexing public-sector wages below inflation for three years (at inflation minus two percentage points) could generate about R30-billion in savings over three years. This measure, the OECD says, will have a limited real cost to civil servants as inflation has receded and given that they would still benefit from annual progression in the pay scale. Wage indexation should also be linked to productivity developments (Minsat, 2021). Social spending South Africa allocates substantial amounts each year to roll out its social welfare programme. The social grants programme, which is the main government instrument to reduce poverty and inequality, reaches more than 17-million beneficiaries and about half of all South African households (OECD, 2020). The World Bank, however, warns that the social protection system cannot be a substitute for growth and jobs. The World Bank also argues that the social protection system is becoming unsustainable, owing to shrinking fiscal space (Fengler, 2021). Meanwhile, high social spending must also be converted into better results. South Africa’s investment in health and education, as a percentage of GDP, is higher than that of Turkey, but its outcomes are worse (Fengler, 2021). Suggested interventions for South Africa Conclusion South Africa will ultimately have to undertake its economic planning within the confines of the global economic architecture. By providing insight on best practice, sharing comparative data, and offering recommendations, multinational funding organisations help to shape the debate around policy interventions. Further engagement among civil society, think tanks, African universities and policymakers is needed to deliver a framework for a strategy to accelerate inclusive economic growth. It is recommended that policymakers take heed of the international thinking contained in this report and that planning is measured against it. This does not mean a wholesale copying of what international funding institutions dictate, but finding unique South African solutions capable of responding to what are universal concerns. Annexure A Annexure B References Department of Employment and Labour. 2020. 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Available at https://www.oecd-ilibrary.org/sites/ d6bc2d63-en/index.html?itemId=/content/component/d6bc2d63-en [accessed May 10, 2021]. Organisation for Economic Cooperation and Development (OECD). 2021. OECD Economic Outlook, Strengthening the recovery: The need for speed, March 2021. [Online]. Available at https://www.oecd.org/economic-outlook/ [accessed May 10, 2021]. Statistics South Africa (Stats SA). 2020. Quarterly Labour Force Survey, Quarter 2:2020, September 29, 2020. [Online]. Available at http://www.statssa.gov.za/publications/P0211/ P02114thQuarter2020.pdf [accessed April 23, 2021]. Statistics South Africa (Stats SA). 2021. Quarterly Labour Force Survey, Quarter 4:2020, February 23, 2021. [Online]. Available at http://www.statssa.gov.za/publications/P0211/ P02114thQuarter2020.pdf [accessed April 23, 2021]. World Bank. 2021. World Bank, Data. Manufacturing, value added (percentage of GDP) – South Africa. [Online]. Available at: https://data.worldbank.org/indicator/NV.IND.MANF.ZS?locations=ZA [accessed May 10, 2021]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members. Authors: Percept Actuaries and Consultants Edited: Daryl Swanepoel 17 June 2021 Foreword South Africans deserve access to quality and affordable healthcare. This notion is indeed entrenched in the Constitution’s Bill of Rights that grants everyone the right thereto. It furthermore obliges the state to take reasonable measures to progressively achieve the right. To this end, the National Department of Health has embarked on a process to establish a National Health Insurance (NHI) Scheme for South Africa. It is a health financing system that is designed to pool funds to provide access to quality, affordable personal health ser­vices for all South Africans based on their health needs, irrespective of their socio-economic status. These ideals cannot be faulted. Of concern to the Inclusive Society Institute (ISI), given South Africa’s current economic realities, is the affordability of NHI and whether it will be implemented incrementally, as funds become available. On the one hand, one would not want to disrupt the status quo without a clear understanding of the costs attached to the ultimate goals of the NHI, and on the other, the existence of the current world class health infrastructure needs to be assured for future generations. As the former German Federal Minister for Health, who oversaw the implementation of the national health system in Germany, Hon. Ulla Schmidt, puts it: Do not break down what you have until you have an alternative in place that works. There is a dearth of studies into the costing of the proposed NHI. To this end, the ISI has ventured such a costing. The process has involved extensive consultation with a wide spectrum of health sector stakeholders, the discussions of which have culminated into a presentation of four alternative models to secure universal and affordable quality healthcare for all in South Africa. And, in an attempt to give direction, each alternative, together with the Department’s NHI proposal, has been costed. It is this costing that is contained in this report. The report is not a criticism of the Department’s NHI proposals, neither does it profess to be accurate in all respects. What it is, is an attempt to ensure feasibility and sustainability, a fresh look at the approach to implementing universal healthcare, and an assess­ment as to how best to ensure the progressive realisation of the basic right to quality and affordable healthcare for all. As regards the costing: undoubtedly there is room for improvement. The public debate in this regard is bound to identify gaps that could improve the modelling. That said, the Institute is confident that the report is a sound starting point on which dialogue can build. The Institute chooses not to be descriptive as to the final path that legislators need to take. It however hopes that the policymakers will accept this contribution as a further evaluation tool to ensure that the finally chosen funding model delivers for future genera­tions, a legacy that is indeed capable of delivering on its goals. Executive summary This document sets out the costs of the four alternative universal health coverage (UHC) scenarios that were presented in the previous paper released by the ISI, entitled ‘Reimagined Pathways for UHC in South Africa: A critical policy assessment of NHI choices’ (2020). The scenarios we’ve analysed are described in Table 1. The four scenarios are alternatives for the fifth scenario, NHI as De­scribed in the Bill. The proposed reforms as they stand in the Draft NHI Bill represent a combination of policy building blocks sequenced in a particular way. This paper aims to unpack how and where these policy blocks could be reshuffled or re-envisioned to better achieve UHC, given the current South African health and economic outlook. There are several reasons why it’s important to consider the costs of alternative scenarios relative to the likely costs of NHI as it’s currently envisioned. Firstly, it will allow policymakers, citizens and civil society to be cognisant of the trade-offs between cost, quality and access. Without transparency in trade-offs, it’s impossible to fully grasp the long-term consequences of a particular policy choice relative to others. Secondly, once the trade-offs and considerations related to a particular UHC path are transparent, policy choices can be reconsidered, if needed. Understanding what drives the costs and outcomes of each scenario allows for the adjust­ment of policy options, which will help South Africa reach UHC as efficiently and effectively as possible. The alternative UHC scenarios presented in the previous report are shared below. Table 1: Alternative UHC scenarios explored in ISI (2020) How the model was constructed The cost model presented here uses the current health system structure and the combined total health expenditure in the public and private sectors (including out-of-pocket spending) as a starting point. We believe it’s a pragmatic approach to work with what we have, rather than with what we wish we did. As a reminder, we include a summary table to tell the story of what is likely to happen to the South African health financing sector as we currently know it under each scenario. Table 2: Summary of how different components of SA health financing and delivery system are affected in different scenarios We make assumptions about the main demographic and structural cost drivers to arrive at different costings for the five healthcare scenarios, while also considering macro-level indicators such as the consumer price index (CPI), healthcare cost inflation, population growth and GDP growth over the 2021-2040 period. Given that there are many uncertainties about how these variables will play out over time, we’ve provided our best estimates given the available information. Changes in total health expenditure (THE) can be understood in terms of three main categories of expenditure: Publicly funded: centralised public expenditure (a form of risk pooling, even if not explicitly managed as a risk pool); Private risk pooling: the vast majority of this is located in medical schemes; and OOP (out-of-pocket expenditure) and (non-medical scheme) private insurance by households for private and public servic­es not covered by either medical scheme funding or public-sector expenditure. This includes, for example, private pharmacy expenditure by those who consult the public sector, or private GP visits for those who don’t have medical scheme cover. Collectively, these three categories form the total funds currently available for health expenditure, unless other funding sources – such as a mandatory payroll tax, income tax, health taxes or value-added tax – are enacted to increase the available amount for spending on health services. The cost model creates a framework that makes the trade-offs between different policy choices evident, and this is the real value of the model. It shows how total health expenditure, and its various components are likely to play out over time if we do or don’t take certain actions now. It makes the long-term costs of inaction evident, and in doing so, provides valuable information that can be used for NHI policy development. Detailed assumptions about the overall financing structure and cost drivers for each scenario are shared later in this report. What the model says about the costs of the various scenarios By 2030, Status Quo Gold Standard is the most expensive model in terms of total healthcare expenditure. In 2040, NHI as Described in the Bill is the most expensive model. In contrast, Power to the People is the least expensive model in 2030 by a slight margin, while Reorienting Towards Value is the least expensive scenario by 2040. We also see that Reorientating Towards Value starts off relatively expensive due to the investments needed to reorientate a health system. However, by 2035, this scenario is the most affordable and sustains this position in 2040. Why does NHI as Described in the Bill emerge as the most expensive scenario? UHC implemented through a single-risk fund is not necessarily expensive. However, the current description in the Bill, with its lack of detailed and clear information on accountability structures, creates uncertainty about whether it will be implemented with the necessary attention and rigour. The NHI Rejigged scenario shows the potential for NHI to achieve its goals, if it’s implemented with the current reality and context in mind, which would make the milestones more achievable and realistic. NHI Rejigged is less expensive than NHI as Described in the Bill over the longer term as the greater accountability and information and data systems with which it is implemented will greatly reduce administration costs and wastage (through corruption). Because NHI Rejigged has a longer preparation phase during which the quality of public health facilities will be improved, there will be more buy-in from system users and lower out-of-pocket expenditure later on. In calculating the relative costs of estimated total healthcare expenditure, three different growth scenarios are used: mid-growth (1% real growth), low-growth (0% real growth) and high-growth (3% real growth). We only share the results of the mid-growth scenario here. In the mid-growth scenario, the most expensive health financing scenario, NHI as described in the Bill constitute 13.2% of the GDP by 2040. Such a large percentage of GDP being allocated to total health expenditure relative to current expenditure levels (around 8.7% of GDP) is unlikely to be affordable relative to other social priorities, but this must be viewed considering low to modest economic growth and a system that would have pushed many people to increase their OOP expenditure (and therefore total healthcare expenditure) by that time. The least expensive scenario costs R638 billion (real 2020 Rands), with the costs of the other four scenar­ios ranging from R720 to R885 billion (also real 2020 Rands). What the costs and scenarios mean for policy choices? The model’s results help to illustrate what is gained and lost through different policy choices, relative to the objectives being pursued by moving to UHC: equity, access to quality care and quality outcomes, efficiency, stewardship and governance. These gains and losses are not just about the financial costs of system change, but ultimately also about healthcare outcomes and overall system resilience. Equity The goal of equity should take into account both where funds come from (with contributions based on the ability to pay), and where funds are going (with more funds directed to those with the greatest need). The option that fares worst in terms of equity is Status Quo Gold Standard, where it’s assumed that the public and private sectors mostly continue operating as they are, albeit with improved quality and efficiency. NHI as Described in the Bill doesn’t fare well either due to the high OOP expenditure dependency. Those who can pay out-of-pocket will likely be able to access better care, resulting in a highly inequitable outcome. Access to quality care and quality outcomes Comparing policy options based on cost can mask what really matters – namely whether we can expect the future system to help the population thrive. But which clear signs indicate that the system is performing? System performance is visible in overall outcome metrics (such as life expectancy and maternal mortality rates), disease-specific outcomes metrics (which our system currently lacks) and through secondary measures (such as the extent of medical malpractice claims). Apart from considering how many units of care a system can afford, there is a range of dynamics that impact a system’s ability to deliver high-quality care. They include: Investment in the service delivery platform – including infrastructure and IT systems. Financing reforms have limited scope to strengthen the quality of care if the service delivery platform is compromised. This is illustrated in the cost comparison of NHI as Described in the Bill and Status Quo Gold Standard. The balance between primary and hospital care. A weak system will have too many resources directed towards relatively ex­pensive hospital care due to a bypassing of referral pathways, weak preventative care, and late intervention. This is illustrat­ed in the cost comparison of NHI as Described in the Bill, Power to the People and Reorienting Towards Value. Systems that are patient-oriented, that have greater bottom-up accountability and that measure and incentivise quality care tend to produce better health outcomes – and ultimately deliver greater value for the money invested in the system. This is illustrated in the cost comparison of NHI as Described in the Bill, Power to the People and Reorienting Towards Value. Strong systems that support health outcomes. From a patient perspective, this means strong linkages between care, better continuity of care and strong care coordination. System performance is supported by system stability (i.e. the absence of system shocks), a balance between centralised support and ground-level responsiveness, and ongoing investment in the ser­vice-delivery platform. Big-bang reform (NHI as Described in the Bill) is likely to weaken system resilience in an already fragile system. Policy options that support ongoing quality improvement and system strengthening are likely to outperform over the long term. This was clearly illustrated by the global impact of Covid-19, where countries with resilient and unified health systems have outperformed countries with weak ones. Healthcare worker capacity and satisfaction. Healthcare outcomes rely on having healthcare workers who deliver quality care. A large monopsony creates the risk of a system that isn’t sufficiently oriented towards supporting healthcare workers and enabling supply-side innovation. Efficiency: Accountability to users (bottom-up) and societal buy-in as levers Much of the rationale for NHI as Described in the Bill is the creation of a single purchaser to achieve efficiency through strategic pur­chasing. There’s no doubt that the current system is weak from a strategic purchasing perspective. This is likely to continue in Status Quo Gold Standard, and care needs be taken in NHI Rejigged to improve the structural impediments to strategic purchasing in both the public and private sectors. The Health Market Inquiry (HMI) recommendations are very relevant in realising this goal. Strategic purchasing is necessary, but not sufficient for improving system efficiency. Efficiency can also be supported in the following ways: Offering those who use the system a choice of funder and the ability to move. Having multiple funds can create competitive pressure based on strategic purchasing (if, for example, funders have to publish value metrics). The risk of a single fund is complacency and a lack of customer-centricity. This is illustrated in the comparison of NHI as Described in the Bill and Power to the People, where individuals can choose between joining different UHC funds. Value-based approaches shift the responsibility for both quality and cost to healthcare providers – who happen to be best placed in the system to innovate the ways in which care is delivered. This removes layers of administration centred on man­aging providers of care – with the emphasis shifting to empowering providers. Value-based systems are most likely to have supply-side innovation, which allows for a move towards more efficient models of care over time. Minimising the cost of corruption, waste, and abuse. Central control of a system seems attractive from an efficiency per­spective. However, large institutions increase the risk of large-scale corruption. A system with strong bottom-up accountabil­ity and empowered healthcare providers may be more efficient in the long term than a single fund system that’s susceptible to bureaucracy and governance failure. Stewardship and governance Table 3 and Table 4 show the additional cost burden for public healthcare and for total healthcare, respectively. These are shown per scenario and are considered relative to various sized potential payer groups, ranging from the total population (referred to as per capita) to only those who are active taxpayers. We present the additional cost burden in 2040, relative to the baseline cost(a) burden in 2040. We do not, however, aim to determine the optimal financing source for additional health expenditure. The additional cost burden can be spread across groups of many sizes. Considering just the public health expenditure then the largest group (the total population) would have a financing implication of R461 (2020 real Rands) per month per capita by 2040 for the most expensive scenario. For the smallest group (active income taxpayers), there would be an additional financing implication of R4,267 per month per taxpayer. If we consider the total health expenditure (as opposed to just public) then we get a different picture. For the most expensive scenario, there would then be a financing implication of R229 per month per capita (the total population), or R2,121 per month per active taxpayer (smallest group). The most expensive option for public health expenditure is NHI Rejigged, while for total health expenditure it is NHI in the Bill. The differences are driven by OOP and private risk pools where appropriate. Table 3: Additional PUBLIC health expenditure burden of different scenarios relative to potential payer groups *(a) Baseline cost in 2040 is calculated by growing the 2020 expenditure by the population, i.e. it is how much we would spend in 2040 if each we continue to spend the same amount per capita. Table 4: Additional TOTAL health expenditure burden of different scenarios relative to potential payer groups The imperative for economic and employment growth is evident when we take a long-term perspective and consider how best to achieve health-system objectives within fiscal constraints. An expansion of the economy will permit much-needed investment in the health system, whilst employment growth will allow for a more robust tax base to enable income cross-subsidies and sustainable social solidarity. Any changes to the health financing system cannot be consider without understanding the strong need for economic and employment growth. Without this growth, far more gradual choices will have to be made. Content Foreword Executive summary List of figures List of tables Acronyms and abbreviations 1. Introduction 2. What are we trying to achieve? First principles 3. What do we have to spend on health services? Recent trends in healthcare expenditure 4. Previous NHI costings 5. NHI and the four UHC alternatives 6. Assumptions informing cost-modelling for each scenario - Status Quo Gold Standard: No purchaser-provider split and strengthening the public sector - NHI Rejigged: NHI, but sequenced differently - Power to the People: Purchaser provider split but with multiple purchasers - Reorienting Towards Value: a value-based approach to UHC - NHI as Described in the Bill: the policy proposal currently on the table 7. Approach to cost modelling and key cross-scenario assumptions 8. Results of cost modelling for the scenarios 9. What do the model results mean for policy? The trade-offs between NHI and other UHC options - Why does NHI as Described in the Bill cost so much more than the other models? - Considerations in weighing the different policy options 10. Conclusion References Appendix A: Out-of-pocket health expenditure in South Africa Catastrophic health expenditure Expenditure in absolute terms Appendix B: Additional detailed model results Appendix C: Model assumptions by scenario List of figures Figure 1: Annual public health expenditure per capita uninsured (Real) Figure 2: Public health expenditure per capita uninsured, by province (Real) Figure 3: PHC utilisation rate by province Figure 4: Professional nurses per 10k population uninsured Figure 5: Total healthcare expenditure by scenario (Rands, standardised so NHI Bill scenario is R100 each year) Figure 6: Real total healthcare expenditure (2020 Rand billions) by scenario for 2030 vs. 2040 Figure 7: Breakdown of public sector costs by scenario for 2030 and 2040 Figure 8: Total real expenditure (2020 Rand values) per capita per year over time Figure 9: Real total health expenditure growth over time vs. population and medical inflation growth combined Figure 10: Total health expenditure as % of GDP (1% growth, mid-growth scenario) by scenario over time Figure 11: Total health expenditure as % of GDP (3% growth, high growth) by scenario over time Figure 12: Total health expenditure as % of GDP (0% growth, low growth) by scenario over time Figure 13: Real total costs (2020 Rand billions) by scenario over time Figure 14: Real expenditure over time (Rand billions) List of tables Table 1: Alternative UHC scenarios explored in ISI (2020) Table 2: Summary of how different components of SA health financing and delivery system are affected in different scenarios Table 3: Additional PUBLIC health expenditure burden of different scenarios relative to potential payer groups Table 4: Additional TOTAL health expenditure burden of different scenarios relative to potential payer groups Table 5: Costs and implications of various NHI costing models Table 6: Alternative UHC scenarios explored in this document Table 7: Assumptions driving costs for Status Quo Gold Standard in model framework Table 8: Assumptions driving costs for NHI Rejigged in model framework Table 9: Assumptions driving costs for Power to the People in model framework Table 10: Assumptions driving costs for Reorienting Towards Value in model framework Table 11: Assumptions driving costs for NHI as Described in the Bill in model framework Table 12: Model variables Table 13: Equity Table 14: Access to quality care and quality outcomes Table 15: Efficiency: Accountability to users (bottom-up) and societal buy-in as levers Table 16: Stewardship and governance Table 17: Potential payer groups Table 18: Additional PUBLIC health expenditure burden of different scenarios relative to potential payer groups Table 19: Additional TOTAL health expenditure burden of different scenarios relative to potential payer groups Table 20: Concepts and indicators used in OOP health expenditure studies Table 21: OOP health expenditure in South Africa Table 22: 2030 detailed model results Table 23: 2040 detailed model results Table 24: Model assumptions by scenario Acronyms and abbreviations 1. Introduction South Africa currently has a draft NHI Bill before Parliament1. The period for submissions on the Bill has ended, with a record number being received2. The significant number of submissions indicate the concern among civil society, funding bodies, health sector stake­holders and citizens about the massive step-changes that have been proposed for the health sector3. The Covid-19 pandemic continues to highlight the extent of inequities between the public and private sectors – as well as between provinces and districts4–6. Furthermore, the pandemic-related impact on health system resilience provides an impetus to deepen universal health coverage (UHC). The set of reforms in the draft NHI Bill is only one way to achieve the policy goals that would put South Africa’s health system in a stronger position to handle the impact of Covid-19, as well as other challenges and stressors. However, there are also other ways of conceptualising and implementing a move to UHC. In a previous report7, four alternative scenarios for achieving UHC for South Africa were shared. They are: · Status Quo Gold Standard; · NHI Rejigged; · Power to the People; and · Reorienting Towards Value. At their core, each scenario addresses the five UHC policy objectives embedded within them (see Section 2) and present a reimagin­ing of the ‘how’ for UHC. This report aims to stimulate debate and discussion about alternative policy pathways. Investigation the potential long-term costs of policy change is a useful way to bring the implications of both action and inaction to light. We’ve modelled the potential costs of the four scenarios and NHI as Described in the Bill and provided high-level costings for the five scenarios from 2021-2040, with 2030 as a key midway point. Most scenarios improve equity and resource-sharing in healthcare between the private and public sectors. It is also demonstrated that while some scenarios may perform better over the medium term, their real success in terms of cost, quality, efficiency, stewardship and governance can only be assessed over the longer term (2040). Long-term costings are by nature highly uncertain. The costings presented here are illustrative and intended to highlight the underlying factors driving costs, and the trade-offs between policy decisions. What the model offers: The cost model presented here uses the current health system structure and combined health expenditure in the public and private sectors (including OOP) as a starting point. We believe it’s a pragmatic approach to work with what we have, rather than with what we wish we did. We make assumptions about the main demographic and structural cost drivers to arrive at estimated costs for the five healthcare scenarios, while also considering macro-level indicators such as the consumer price index (CPI), healthcare cost inflation, population growth and GDP growth from 2021-2040. More details on these cross-cutting variables (not specific to any one model) are provided later in the report. The assumptions informing the variables are based on available evidence and aim to illustrate the differences be­tween the policy choices. They should be seen as point estimates in a wide range of possible outcomes. By nature, they’re subjective, and useful to stimulate discussion and debate. Considering the likely costs of each scenario, we looked at the total cost of the health system, which is consistent with the idea of a unified system. It’s also helpful in terms of considering the total envelope of funding directed towards healthcare, regardless of the source of the funding. Total healthcare expenditure encompasses three main categories: 1) Publicly funded: centralised public expenditure (a form of risk pooling, even if not explicitly managed as a risk pool given that resource allocation is decentralised, as well as the absence of a fully articulated basic benefit package); 2) Private risk pooling: the vast majority of this is located in medical schemes; and 3) OOP expenditure and (non-medical scheme) private insurance by households for private and public services not covered by either medical scheme funding or public-sector expenditure. For example, the private pharmacy expenses of those consulting the public sector, or the GP visits of those who don’t have medical scheme cover. Collectively, the three categories represent a ceiling on funds currently available for health expenditure, unless other ways are found to increase the available amount – such as an earmarked health tax or increases to payroll tax, income tax or VAT. A large proportion of this current funding envelope is discretionary, with households and employers making voluntary contributions to medical schemes or paying for care on an out-of-pocket basis. The cost model allows for compelling storytelling that clearly highlights the trade-offs between the different policy choices. This is the real value of the model: to show how the total healthcare costs and their various components are likely to play out over time if we do, or don’t, take certain actions now; or, if certain much-needed steps aren’t taken in future. It highlights the long-term costs of inaction, and therefore, helps to inform both policy and implementation. Previous costings of the NHI proposals have compared costs to the current system (doing nothing to change the system) – we hope to make it clear that there are other possible counterfactuals. There are several reasons why it is important to consider the costs of alternative scenario relative to the likely costs of NHI. Firstly, it will allow policymakers, citizens and civil society to be aware of the trade-offs between equity, cost, quality and access. With­out transparency in trade-offs, it’s impossible to know the long-term consequences of a particular policy choice relative to others. Secondly, once the trade-offs and various considerations of the various UHC options are clear, it will be possible to reconsider policy choices, if necessary. Once it’s clear what is driving the costs and outcomes of a policy direction, the policy can be adjusted to im­prove costs and outcomes. This could entail tweaking the overall financial structure and approach of a UHC policy option, or opting for a completely different approach altogether. What the model is not: While offering projections for the five scenarios, this is not a detailed bottom-up costing model. We have not evaluated the finer points of a basic benefit package that are needed for a bottom-up costing, since no such package for NHI was set out in the draft NHI Bill – or in any other official government document. It is useful to keep the intention of the model in mind while reading the results of the five scenarios, while also paying attention to its limitations. The hypothetical nature of the UHC scenarios, as well as the NHI Bill, also constrained our ability to accurately estimate the as­sociated costs. For example, the NHI Bill provides scant information on the single-purchaser model, which is needed for a detailed bottom-up costing. We therefore often had to make bold assumptions about both NHI as Described in the Bill as well as the other scenarios to determine ultimate costs and illustrate the differences between policy choices. The results are normative as they’ve been informed by a large set of hypothetical assumptions. They can’t be viewed as objective cost assessments of the policy options given the multi-layered and interconnected nature of the cost assumptions. While the model is potentially subjective, it does provide a much-needed framework informed by logic. In the absence of real policy alternatives that have been clearly articulated in terms of service and funding design, the estimat­ed future costs for the different scenarios provide a starting point for us to collectively imagine alternative ways to achieve our UHC objectives. Report structure: Section 2 of this report provides a summary of the five objectives of UHC (as identified in the previous ISI report, ‘Reimagined Path­ways for UHC in South Africa: A critical policy assessment of NHI choices’ (2020). Section 3 sets out the current total healthcare expenditure in South Africa. Section 4 offers a review of previous NHI cost models in the public domain. Section 5 provides high-level descriptions of each of the five scenarios. Section 6 details the assumptions that underpin the cost modelling for each scenario. Sec­tion 7 sets out the structure of the model and the nature of the cross-cutting variables. Section 8 presents the results of the model and in Section 9, the implications of the results for policy are articulated. Section 10 provides a conclusion. 2. What are we trying to achieve? First principles South Africa has been struggling to find its path to UHC for more than two decades. Despite differences in policy, rhetoric and plans, the intention has always been the same: to improve equity between the provinces and health sectors, to ensure quality care is pro­vided at the lowest possible cost, and to ensure that the health system is governed optimally and with sound leadership. To support this report, we conducted a comprehensive literature and stakeholder review of NHI in South Africa8. Based on the review, five policy objectives were identified that have been consistently present across policy documentation as South Africa has been trying to move closer and closer to UHC. These policy objectives are: To improve equity in the health system, including the sharing of resources (human and other) across the public and private health systems. To address escalating costs in the private health sector and contain future escalations in costs across the health sectors. To provide universal access to quality healthcare. To ensure efficiency in service provision and administration. To ensure good governance and stewardship. These key objectives of the health reform process will be used as benchmarks to assess the feasibility of various policy choices and pathways that were put forward during the UHC debate. This report may also assist in guiding the sequencing of current reform proposals. Throughout this document, we propose that the combination of cost, quality and efficiency could collectively be reconcep­tualised as orienting the South African healthcare system towards value. 3. What do we have to spend on health services? Recent trends in healthcare expenditure Since 2012, the public health budget in South Africa has become severely constrained as a result of the deepening austerity after the 2008 global recession9. Prior to 2012, the National Treasury was able to shield the social sectors from the declining fiscal en­vironment, but from 2012 onwards, health, education and other social service sectors also bore the brunt of South Africa’s ongoing fiscal austerity measures. Figure 1 shows the real expenditure per capita uninsured from 2010/11 to 2019/20 in South Africa10. The dip in health spending in 2012/13 is evident, as is the erratic nature of the public health allocation over the 10-year period. Figure 1: Annual public health expenditure per capita uninsured (Real) Our analysis shows little predictability in the health budget year-on-year, which impacts the sector’s ability to plan appropriately. The analysis also shows that in the decade between 2010/11 and 2019/20, the overall per capita spend for the uninsured popula­tion has only grown by 15%. This growth is worrisome given that medical inflation constantly supersedes average general inflation (CPI) and we would anticipate at least a CPI-linked increase for each year, which would result in a growth rate well above the 15% shown. Once the above-CPI price increases have been taken into account, it has not left much additional growth to account for a growing disease burden and greater health needs. This has no doubt contributed to the dire conditions in the public health sector in terms of its dilapidated infrastructure, limited human resources for health and rising quality concerns – the Eastern Cape being an example of this decline11. Figure 2 shows the average expenditure per capita uninsured by province. The erratic nature of budget availability is clear over the period, highlighting the difficulties that an uncertain budget creates for health sector planning. The impact of this on a long-term plan to rollout NHI is immediately evident; there is no way to be certain that next year’s budget will be able to include new, major health reform costs. Figure 2: Public health expenditure per capita uninsured, by province (Real) Figure 3 provides a clear picture of the impact of this declining budget on service delivery. All the provinces show a substantial de­cline in primary healthcare (PHC) utilisation rates between 2010/11 and 2019/20. Accessible and quality PHC is a critical part of keeping a population healthy – with the reduction in utilisation of these services, one can expect the population to become sicker as the system is unable to perform key prevention and health promotion activities. Figure 3: PHC utilisation rate by province Another casualty of the declining budget has been the sector’s inability to hire more human resources. Professional nurses are the backbone of any health system and they’re particularly integral to a well-functioning PHC system. Figure 4 shows the professional nurses per 10k population uninsured per South African province. Almost every province shows a declining trend. Figure 4: Professional nurses per 10k population uninsured The public health budget has been declining since 2012/13. This has placed severe pressure on the sector as it attempts to main­tain service delivery and respond to new crises of non-communicable diseases. Expenditure has increased by only 15% over the past decade, pointing to a severely constrained fiscal climate. The effect of this is evident in both utilisations, the overall health status of the population and rising medical negligence claims as facilities are unable to render effective and quality care with the resources at hand. 4. Previous NHI costings There have been several NHI costing models in South Africa, only some of which are in the public domain. For those in the public domain, this report provides an overview of the costing approach used, as well as a high-level summary of both the absolute and relative costs. Econex(12) used a demand-based approach (in 2010) to estimate the utilisation (demand) for different sub-groups of the population, and for different cost components, and then aggregated it. Based on a comprehensive package that incorporated all the essential features of NHI at the timeb, utilisation patterns of the uninsured population, unchanged unit costs and a conservative addition of R8 billion for NHI public health administration costs, Econex estimated the cost of a full NHI to be R287 billion (in 2008 Rand values). This upper threshold of their costing estimate (base case) was more than four times the total amount spent by the state on health­care at the time (R62.8 billion in 2008 Rands), and almost double what was spent on total healthcare at the time ((R144.5 billion in 2008 Rands). In addition to the base case, Econex estimated five alternative costing scenarios that made varying assumptions about the degree of savings and rationing. At the lowest costing thresholdc, the total NHI cost was estimated to be R174 billion (in 2008 Rand values). If the costing scenarios were extended to account for the impact of HIV/AIDS, the authors added R6 billion (in 2008 Rand values) to their cost estimates. McLeod, Grobler and Van der Berg(13) used an actuarial costing method in 2009 to estimate the cost of NHI. The model accounted for both the prevalence of various conditions and the cost of treating each, taking into account the age and sex distribution for a reference population. The reference population was drawn from the ASSA2003 provincial model14, as recommended by McLeod d 15. McLeod, Grobler and Van der Berg’s model estimated NHI costs for five different packages across four levels of delivery efficiency. Their findings showed that a fully comprehensive package (with all healthcare benefits) delivered at the medical scheme efficiency level (100% of cost) would amount to R334 billion (in 2009 Rand values). This was the upper-most limit of their NHI costing range. At the lowest threshold of the range, a package of Prescribed Minimum Benefitse delivered at the staff model efficiency level (50% of cost) was estimated at R78 billion (in 2009 Rand values) for the same year. These costings excluded NHI administrative and managed-care costs, and didn’t fully account for the impact of HIV/AIDS. For these reasons, the authors regard their NHI costing as preliminary. The McIntyre NHI costing approach of 201016 could be described as demand-based, as cost estimates were derived from the product of population, utilisation rates and unit costs. For the universal coverage scenario, the model estimated the cost of public healthcare if the population were to be covered by the public sector. The benefit package used by McIntyre leaned more towards the public sector framework of service delivery than the private sector framework, so the services covered were limited and explicit. However, the unit costs in this model were higher than public sector unit costs at the time – to account for the required improvements in public sector resourcing or the option to purchase services from the private sector. McIntyre also assumed a substantial increase in health services utilisation, particularly at the primary healthcare level. NHI administrative costs as well as the cost of HIV/AIDS were accounted for f in the modelling. Costing estimates for the universal coverage scenario g ranged from R193 billion to R200 billion (in 2010 Rand values). It’s clear from all three models that the estimated cost of NHI (in GDP terms) was for the most part incredibly close to estimated total health expenditure (THE), except for a small margin that was allowed for OOP and other private risk pooling schemes. Given uncertainties about the elements that would constitute the basic benefit package, some of the relative upper-cost thresholds were more than total healthcare expenditure, going as high as 14.1% of the GDP. Such a high allocation of total GDP towards healthcare expenditure means that resources would have to be directed from other types of expenditure – possibly education, social development or even housing. *(b) Universal coverage of the population (irrespective of contribution), comprehensive cover, service to be sought from the provider of choice, no co-payment. *(c) After accounting for severe rationing and savings. *(d) This policy brief strongly recommended that all NHI costing work use the ASSA2003 provincial model (or updated versions thereof). *(e) These are the benefits that medical schemes are required to delivery by law. *(f) Used the ASSA2003 AIDS and Demographic model 43. *(g) Inclusive of those who chose to remain on scheme cover over in addition to their universal cover. In addition, there are several NHI costing models not in the public domain that have been commissioned and produced by different organisations: The PWC model produced for the Ministerial Advisory Committee; The 2016 model by the Clinton Health Access Initiative (CHAI) and Insight Actuaries & Consultants; The Government Technical Advisory Centre (GTAC) 2018 model; The GTAC 2019 model; and The 2018 Actuarial Society of South Africa model. Table 5: Costs and implications of various NHI costing models *(1) Own calculations: numerator sourced from respective NHI costing model; denominator sourced from relevant National Treasury Budget Reviews *(2) Own calculations: numerator sourced from respective NHI costing model; denominator sourced from relevant National Treasury Budget Review 5. NHI and the four UHC alternatives In the earlier report 7, the four scenarios that were presented (Status Quo Gold Standard, NHI Rejigged, Power to the People, and Reor­ienting Towards Value) allowed the reader to reimagine UHC implementation in South Africa. We conducted a comprehensive literature review before the report and also used interviews and documentation to differentiate the scenarios. Each scenario has the five policy objectives embedded into its core, and therefore represent a reimagining of the ‘how’ for NHI (see Table 6). The scenarios may help the South African government and various UHC stakeholders to continue furthering the important UHC agenda, without risking the public purse or service continuity. Table 6: Alternative UHC scenarios explored in this document 6. Assumptions informing cost-modelling for each scenario The assumptions driving the cost model structure for each scenario are set out below. Each discussion starts with a narrative sum­mary of the overall structure and anticipated changes. Status quo gold standard: no purchaser-provider split and strengthening the public sector Summary The public sector is improved while the private sector is left to continue as is. Medical schemes remain operational in their current form and OOP expenditure from private sector users follows current trends, while reducing for public sector users. The state contin­ues its role as funder for the dependent population, with provinces as purchasers. Public facilities are improved and regularly as­sessed against a set of standards to monitor quality. If facilities fail to meet the standards, there is an intervention to swiftly address issues. The public sector budgeting process is done in a transparent manner, contributing to a reduction in corruption. What drives costs in this scenario? Under this scenario (Table 7), costs relative to the current health expenditure will initially increase due to expenditure on health information systems (DHIS2 and PERSAL, as examples), while focused quality improvement approaches in the public sector will also lead to initial cost increases. Over time, however, these investments pay off and quality improves dramatically. A lack of competition in the purchaser space may result in sluggishness and sub-optimal performance and total health expenditure costs may not be as low as possible. Table 7: Assumptions driving costs for Status Quo Gold Standard in model framework NHI rejigged: NHI, but sequenced differently Summary NHI is eventually implemented as envisaged in the NHI Bill, but it occurs more gradually. Medical schemes are phased out and the pub­lic sector serves the entire population through the NHI Fund. While still relevant, the private sector is regulated, largely in line with the main recommendations of the Competition Commission’s Health Market Inquiry 17. The public sector is improved as outlined in Status Quo Gold Standard and develops the capacity to contract from private providers. The process to achieve NHI is incremental and by the time it is implemented, there will be a greater capacity to do so successfully and efficiently. OOP expenditure decreases over time as the state covers a greater proportion of needs. The incremental implementation of the fund provides time to establish governance structures that lead to a reduction in corruption. What drives costs in this scenario? Similar to the previous scenario, many of the initial costs for NHI Rejigged (Table 8) will be driven by data system investments as well as concerted efforts to improve quality in the public sector through certification and a broader quality improvement process. The implementation of the Health Market Inquiry’s recommendations will over time lead to relative cost reductions in the private sector. Relative to the two multi-payer scenarios (Power to the People and Reorienting Towards Value) the eventual monopsony payer (NHI Fund) may lead to a loss of efficiency due to the absence of competition. Table 8: Assumptions driving costs for NHI Rejigged in model framework Power to the people: purchaser provider split but with multiple purchasers Summary NHI end results are largely achieved as set out in NHI Rejigged, with the primary difference being the multi-purchaser environment. A purchaser-provider split is still maintained. Provincial Departments of Health (PDoHs), local municipalities and private providers are providers of care. There is a process to apply to be a purchaser, but the envisaged purchasers are the government body (through a fund such as the NHI) and medical schemes (that would be appointed by the relevant body to act as purchasers for UHC) as they have experience in performing the purchaser role. Users can select their preferred purchaser, who is then allocated funds accordingly. There is a clearly defined benefit package in place and these are used in the contracting between purchasers and providers. As with NHI Re­jigged, the public sector is improved, medical schemes in their current form are closed and OOP expenditure and corruption decrease over time. What drives costs in this scenario? This scenario (Table 9) has many of the same cost drivers as the NHI Rejigged scenario (e.g. information systems and quality improve­ment costs), with some additional cost drivers. The big potential cost saving factor associated with this scenario the choice given to citizens between multiple purchasers. This potentially allows for better bottom-up accountability, compelling purchasers to move to greater efficiencies, which could lead to lower administrative costs and lower health expenditure over time. Table 9: Assumptions driving costs for Power to the People in model framework Reorienting towards value: a value-based approach to UHC Summary A value-based approach to UHC is implemented on the financing structure of the Power to the People scenario. Medical schemes as known in the private sector are eventually closed off, but may apply to become UHC funds that serve the public through a multi-payer approach to UHC. It’s assumed that at least a few schemes (most likely the largest ones) continue to exist in the form of UHC funds. Health facilities are continually improved as needed and are not necessarily accredited. Accountability is built and maintained using strong data systems and strengthened by the multi-purchaser environment which provides user choice. Purchasers compete on value. The measurement systems are crucial and require tracking of cost and outcome information per user. Measurements are the same across providers, which consist of public facilities and private providers. There is a strong emphasis on primary care, which eventually leads to a decrease in the need for hospitalisations. As with the Power to the People scenario, the public sector is improved, medical schemes in their current form are closed and OOP expenditure and corruption drop over time. Overall health costs are herded in over time as there’s a shift away from expensive hospital treatments towards cheaper preventative care. What drives costs in this scenario? In the conceptualisation of access to quality care for all, it front-ends the notion of quality and forces deeper thinking about what we mean by quality, how to measure quality and how to incentivise quality. Historical approaches to UHC, which focus on the access component of the conceptualisation, run the risk of orienting health care systems to volume, instead of value. This creates a long-term sustainability risk because the cost of the system increases as volumes rise. The implicit assumption is that a higher volume of service delivery leads to improved outcomes, but global research indicates that this is not true. The role of volume orientation in the South African private sector is illustrative of the risks associated with this paradigm. Research from the Lancet Global Commission on High Quality Health Systems indicates that “of the mortality amenable to healthcare, 60% is due to poor quality of care, compared to 40% due to lack of access” 18. Value-based approaches have a continuous improvement mindset built in – something that is lacking in the current articulation of the NHI reforms. With a value-based approach, it is less about accrediting facilities, and more about working with facilities to improve the quality of care that is delivered. This scenario (Table 10) allows for, similar to Power to the People, a multi-payer approach to UHC. This potentially creates better bottom-up accountability, compelling purchasers to achieve greater efficiencies, which could lead to lower administrative costs and lower health expenditure over time. Table 10: Assumptions driving costs for Reorienting Towards Value in model framework NHI as described in the bill: the policy proposal currently on the table Summary NHI is rolled out as proposed in the Bill. The Bill is silent on many details, such as the basic benefit package and how hospital services, for example, will be funded. This lack of detail in the implementation plan is assumed and built on in the financing model. The process is swift, medical schemes are closed as proposed in the Bill (quicker than in other scenarios) and the population is served by the new NHI Fund. Medical schemes are only allowed to fund health services not covered by the NHI Fund. The NHI Fund is the single purchaser. The Fund purchases from provincial and local departments as well as private providers. The quick implementation without a slow and gradual reform process to prepare the system for the changes that will follow leads to a less robust system and lower levels of trust. Accountability is limited and corruption initially increases in the early years of the Fund, given the ease of implementing large-scale corruption in a centralised fund as seen with other centralised public funds, e.g. the Road Accident Fund 19 20 and the Covid-19 Relief Fund 21. The public sector attempts to improve facility standards to levels acceptable to the new population now serviced by the Fund (formerly covered by medical schemes), but struggles to offer quality care to the population. OOP expend­iture and private insurance (non-medical schemes, but hospital cash plans) grow exponentially as those who can afford to, seek to access services outside the public finance scheme. What drives costs in this scenario? NHI as Described in the Bill (Table 11) currently proposes large health system shifts over a short period. These pose substantial risks to the system which are likely to manifest as increased costs over the longer term. Corruption is likely to increase with a centralised fund, as seen with other central government funds, especially given the clear lack of accountability mechanisms in the Bill. The lack of choice between payers means that a strong accountability mechanism (bottom-up accountability) will be removed. This is likely to manifest in poor quality healthcare, especially given the absence of a long NHI preparation phase, leading to private sector clients choosing to pay on an OOP basis for their healthcare. Table 11: Assumptions driving costs for NHI as Described in the Bill in model framework 7. Approach to cost modelling and key cross-scenario assumptions An Excel-based model was used to estimate the costs of the proposed scenarios. The model allows the user to enter assumptions for each of the 20 forecast years (2020 to 2040), for each scenario. The key variables/assumptions per scenario are outlined below. These assumptions, along with a series of base costs (2019 costs) are used to model all future expenditure. The expenditure is split between private risk pools (medical schemes), public healthcare and out-of-pocket and private insurance. The model further breaks down private risk pool expenditure into administration, primary healthcare and other levels of healthcare. It also breaks down public expenditure into administration, primary healthcare, hospital care, infrastructure, medico-legal claims and savings from IT systems and reduced corruption. The assumptions and outputs are used to calculate and compare final output values from the various scenarios. As a reminder: this is not a detailed bottom-up costing model working from the basis of a defined benefit package. Rather, we use a top-down approach and use the available financial resources spent on health services as our starting point. We believe this is a more pragmatic approach in the absence of the detailed basic benefit package that is missing from the current NHI Bill. Table 12 outlines the key variables that went into our scenario assumptions and provides a brief explanation for the range of assump­tions used. Table 12: Model variables 8. Results of cost modelling for the scenarios This section highlights the estimated costs of each scenario in 2030 (interim costs) and the estimated costs in 2040 (final costs) to distinguish between shorter-term investments and a longer-term steady state. The costs of the models are presented in standardised terms (relative to the NHI Bill scenario at a cost of R100) to rank the different scenarios. Absolute amounts are shown and expressed in 2020 terms (in real terms). However, they should be interpreted with caution due to various inherent uncertainties and assumptions. Three elements of expenditure are distinguished: publicly funded, private risk pooling, and OOP & private insurance expenditure. Private insurance, as opposed to medical schemes, is similar to OOP due to the limited nature of risk and income cross-subsidies, as well as the absence of a strategic purchaser. Risk-pooled private expenditure refers to medical schemes. In most scenarios, this sector no longer exists in its current form. The total estimated cost of the five scenarios: By 2030, Status Quo Gold Standard and NHI as Described in the Bill are the most expensive scenarios in terms of total health expend­iture (Figure 5). By 2040, NHI as Described in the Bill is the most expensive scenario. By contrast, Power to the People is the least expensive scenario by 2030 by a slight margin, while Reorienting Towards Value is the least expensive scenario by 2040. We also see that Reorientating Towards Value starts off relatively expensive due to the investments needed to measure the quality of care and the longitudinal costs of care. However, by 2035, this scenario is the most affordable. It sustains this position in 2040. Figure 5: Total healthcare expenditure by scenario (Rands, standardised so NHI Bill scenario is R100 each year) The breakdown of total health expenditure into the three main categories (publicly funded, private risk-pooling OOP) provides some insight into what is driving total health expenditure (Figure 6). OOP provides an essential third factor in understanding how the overall financing structure drives total healthcare expenditure. Under conditions of low-quality healthcare and limited choices to users within the chosen UHC system, OOP increases. Conversely, when users are satisfied with the quality of healthcare and have some choice in who provides their care, OOP reduces. South Africa currently has one of the lowest OOP levels for a low- and middle-income country 33 34. In 2030, NHI as Described in the Bill will have resulted in the closure of all private risk pooling (medical schemes). It is envisioned to have the highest OOP of all scenarios by 2030. By 2040, OOP has increased even further and constitutes a very large share (R210 billion of almost R900 billion) of total health expenditure, which is multiples greater than all other scenarios. By contrast, Status Quo Gold Standard has the highest share of private risk pooling in 2030 as it assumes the medical scheme sector will continue to operate. By 2040, this is the only scenario with a substantial remaining proportion of private risk pooling. For NHI Rejigged, Power to the People and Reorienting Towards Value, private risk pooling has disappeared by 2040 although some medical schemes are likely to continue to exist in the form of the multi-fund UHC structure. Most of total health expenditure goes towards the UHC structure, with relatively small amounts spent as OOP. Figure 6: Real total healthcare expenditure (2020 Rand billions) by scenario for 2030 vs. 2040 It is also useful to look at what money is spent on in the various scenarios to get a sense of what drives the overall costs. The various components that drive total health expenditure are illustrated in relative terms (Figure 7). NHI as Described in the Bill has the highest proportion of expenditure on administration and medico-legal claims by 2040. Power to the People and Reorienting Towards Value have the lowest administration expenditure by 2040. Reorienting Towards Value has the lowest relative expenditure on hospital care, as the system is oriented towards primary and preventative care. Figure 7: Breakdown of public sector costs by scenario for 2030 and 2040 The role of population growth and medical inflation in driving real costs Expressing total real expenditure in per capita terms per year (Figure 8) clearly shows the differences in expenditure between the scenarios, while taking population size into account. By 2040, there are sizeable differences in per capita terms between the lowest cost scenario (Power to the People) and the two highest-cost scenarios (NHI as Described in the Bill and Status Quo Gold Standard). Figure 8: Total real expenditure (2020 Rand values) per capita per year over time It’s not only growth in the population and medical inflation that drives growth in total healthcare expenditure. The burden of disease and demographic changes (changes in sex and age) can also lead to variation in costs over time. These were not explicitly included in the model and they are not considered as sources of growth in the analysis. This would increase the total healthcare expenditure even more than what is presented in this report. Figure 9 shows the difference between the growth in total health expenditure of the highest-cost scenario (NHI as Described in the Bill) relative to population growth and medical inflation. There is a clear gap in growth between the two lines at certain periods. This indicates that even with large increases in real expenditure, funding for this scenario is not able to keep up with the demands that will be posed by medical inflation and population growth. Figure 9: Real total health expenditure growth over time vs. population and medical inflation growth combined Health’s share of the total economy In calculating total health expenditure relative to the GDP, three different growth scenarios are used. The results of the mid-growth scenario – the most likely growth scenario at this stage – is presented first. Mid-growth assumes real economic growth of 1%. The high growth scenario assumes real growth of 3% per year, while the low-growth scenario assumes no real growth. The different growth scenarios highlight that our capacity to invest in healthcare is very closely related to the overall economic wellbeing of South Africa. These figures are calculated by taking the total health expenditure and dividing it by the size of the economy (its GDP). When the economy grows, it is easier to accommodate growth in healthcare expenditure. Figures 10-12 show the percentage of GDP (for the different growth scenarios) constituted by total health expenditure under each of the policy scenarios for four periods: 2025, 2030, 2035 and 2040. In the mid-growth scenario (Figure 10), the most expensive policy scenario, NHI as Described in the Bill, constitutes 13.2% of the GDP by 2040. Such a large percentage of GDP being allocated to total health expenditure relative to current expenditure levels (around 8.7% of GDP) is startling, but it needs to be viewed in the context of low-to-modest economic growth and a system that would have encouraged many people to increase their OOP by that time. Figure 10: Total health expenditure as % of GDP (1% growth, mid-growth scenario) by scenario over time Total health expenditure as a percentage of GDP for all scenarios seems much more reasonable against sustained real economic growth of 3% per annum (Figure 11). The proportion of GDP spent on healthcare is even lower than current levels for all scenarios. Using the high growth scenario, the highest cost policy scenario (NHI as Described in the Bill) only totals 8.6% of GDP by 2040. Figure 11: Total health expenditure as % of GDP (3% growth, high growth) by scenario over time Lastly, in the highly unlikely no-growth scenario (Figure 12), NHI as Described in the Bill reaches a relative cost of 16.5% of the GDP by 2040 – from 10.8% in 2025. Figure 12: Total health expenditure as % of GDP (0% growth, low growth) by scenario over time By viewing total health expenditure by year (Figure 13) – or summarised over two periods (2021-2030 and 2030-2040 – Figure 14), certain patterns emerge. In Figure 13, the steep increases in expenditure in NHI as Described in the Bill, Power to the People and NHI Rejigged in the later periods are evident. The relatively stable costs in the earlier years are mostly due to the closing of the private risk pools. In Status Quo Gold Standard, where private risk pools are not affected, total health expenditure rises steadily over the 20-year period. Figure 13: Real total costs (2020 Rand billions) by scenario over time Figure 14 provides a better view of health expenditure over larger time frames. Considering the two time periods presented, it is clear that Status Quo Gold Standard is quite expensive for the first ten years. Reorientating Towards Value requires similar total expendi­ture to NHI as Described in the Bill in the first ten years. But in the next ten years, it requires much less than the NHI as described in the Bill scenario. Figure 14: Real expenditure over time (2020 Rand billions) Figure 14 highlights the long-term cost of under-investment in the quality of care, and mechanisms to support a human-centred health system. 9. What do the model results mean for policy? The trade-offs between NHI and other UHC options In this section, we interpret the model results to understand their implications for sensible policy choices. The results help to illustrate both what is gained and what is lost through specific policy choices; these gains and losses are not just about the finan­cial costs of system change, but ultimately also about healthcare outcomes and overall system resilience. Healthcare systems can become fragile when they’re put under undue stress, as the Covid-19 experience demonstrated in many low- and middle-income countries around the world. We have divided the key emerging insights associated with the different policy options into themes and presented them in summary style throughout this section. Why does NHI as described in the bill cost so much more than the other models? Before focusing on the themes and policy choices raised by the cost modelling, it is important to understand why NHI as Described in the Bill emerges as the most expensive UHC option of the scenarios considered. UHC implemented through a single risk fund is not necessarily a problem. Rather, the current description in the Bill and its lack of detail and clear information on accountability struc­tures creates uncertainty about whether it will be implemented with the necessary attention and rigour. A lack of attention to critical structural aspects will generate various inefficiencies and the NHI Rejigged scenario illustrates the potential for NHI to achieve its goals when implemented more thoughtfully than currently suggested by the Bill’s proposals. Financing as the focus, rather than health delivery A focus on finance in the delivery of health services, as in the NHI Bill, introduces the risk that the quality of care in the public sector will not be sufficient to satisfy the population’s needs – particularly those who previously had medical scheme-mediated access. We foresee an increase in OOP expenditure along two pathways: an opting out of UHC structure usage by the middle class, and a crowd­ing out of the public sector as more people rely on the system than it is able to serve. OOP expenditure is the most inefficient and inequitable way of financing care. South Africa currently has very low OOP expenditure because of the role medical schemes play in risk pooling private expenditure and the free services offered in the public sector. The ongoing weakening of the public sector delivery platform has broader economic costs arising from long waiting times and reduced productivity, and there are also costs associated with malpractice claims. These costs don’t only reflect low-quality care. A weak health delivery system is also fertile ground for increased claims. Preferencing private providers over the public system The NHI Bill allows for the Fund to purchase from providers based on whether they meet accreditation criteria. A lack of investment in strengthening the public sector delivery platform will result in increased reliance on private providers. In theory, this should result in competition between providers and improve the overall quality of care. However, international experience has shown that there are not enough providers in underserved areas for competition dynamics to have an effect. Increased reliance on private providers increases the risk of state reliance on large market players. The upward pressure on costs can be curtailed through effective contracting, but there is a risk that costs will not be capped in the same way as public sector global budgets. Insufficient attention to capacitating the primary healthcare system Over the last decade, we have seen a disconnect between health policy and healthcare expenditure in terms of the split between primary healthcare and hospital care. Policy has been, and continues to be, primary-care focused – but each year, relatively more resources are directed towards the hospital sector. In our view, the NHI Bill is insufficiently clear on the mechanisms to support and capacitate the primary care system. We anticipate a weakening of linkages between primary and hospital care as the provincial role is weakened – and a healthcare system with insufficient attention to preventative and primary care is a more expensive system, especially in the longer run. Increased risk of corruption The large institutional nature of the NHI Fund increases the risk of large-scale corruption and governance failure. This is accentuated by the lack of bottom-up accountability articulated in the NHI Bill, and we considered it in our cost modelling. What about fiscal constraints? The illustrated rising costs of implementing the NHI Bill may appear unrealistic in the context of fiscal constraints. The public health budget has been declining since 2012/13, and expenditure has increased by only 13% over the past decade, pointing to a severely constrained fiscal climate. However, healthcare service delivery occurs within a constitutional framework of the progressive realisa­tion of rights. At a minimum, the system would need to continue to deliver the current level of services – albeit to a larger population. It is important to recognise the true costs of delivering a desired set of quality services, and in doing so, the impact of fiscal con­straints that limit access to quality care. Considerations in weighing the different policy options Table 13: Equity The goal of equity should take into account where funds come from (with contributions based on the ability to pay) as well as where funds are going (with more funds directed to those with the greatest need). The option that fares worst in terms of equity is Status Quo Gold Standard, where it is assumed that the public and private sectors continue operating mostly as they are, albeit with improved quality and efficiency. NHI as Described in the Bill fares poorly too, due to the high OOP expenditure dependency. Those who can pay out-of-pocket will likely be able to access better care, resulting in a highly inequitable outcome. Public sector equity. There are currently considerable differences between provinces and districts in the allocation of funds, access to services and the quality of those services. Focused effort to strengthen the public sector delivery platform will serve to improve eq­uity. Quality improvement efforts could be directed towards addressing areas of weakness. It is also possible to improve the equity of financing within the public sector by refining the ways in which resources are allocated – the healthcare component of the Provincial Equitable Share, and an equivalent sub-provincial equivalent. All the policy options bring about an improvement in the current public sector equity situation. Private sector equity. While there are some mechanisms to support social solidarity in medical schemes, there is scope to further strengthen this through income cross-subsidies, mandatory contributions, and risk equalisation. Private sector equity is strongest in the NHI Rejigged, Power to the People and Reorienting Towards Value options. Equity across the system. A key difference between Status Quo Gold Standard and NHI Rejigged is the introduction of a risk equal­isation fund to improve equity between the public and private sectors. Risk can be shared between the public and private sectors, thereby ensuring equity across sectors within the health system. NHI Rejigged, Power to the People and Reorienting Towards Value all fare well in terms of equity across the system (as a whole), as they all have some form of shared risk pooling across the public and private sectors. This highlights that it is possible to achieve equi­ty without necessarily having a single risk pool. This is a very important consideration when selecting an appropriate UHC structure for South Africa. The inequity of out-of-pocket funding. There is a risk of out-of-pocket expenditure increasing over time due to weaknesses in the public sector service delivery platform and an absence of private pooling mechanisms in the NHI as Described in the Bill scenario. This outcome would have adverse implications for equity, because there is no risk pooling for OOP expenditure and therefore no way to engineer cross-subsidies and ensure that funds are directed to those most in need. Income cross-subsidies and access to funding. Equity is strengthened in any option where funds flow through the fiscus because it allows for income cross-subsidies. This does not require a single fund, and the extent of equity will depend on the tax collection mechanism chosen. Table 14: Access to quality care and quality outcomes When policy options are compared based on cost, the most important question tends to be overlooked – whether the future system will ensure a thriving population. Signs of a system that is performing include visible overall outcome metrics (such as life expectancy and maternal mortality rates), disease-specific outcomes metrics (which our system currently lacks) and secondary measures (such as the extent of medical malpractice claims). Up to a point, there is a relationship between utilisation and quality. People need to have access to the system to have a chance of improving their health outcomes. An inefficient health system with a high level of fraud, waste and abuse has fewer resources direct­ed towards delivering care. Apart from considering how many units of care a system can afford, there is a range of dynamics that impact a system’s ability to deliver high-quality care. They include: Investment in the service delivery platform, including infrastructure and IT systems. Financing reforms have limited scope to strengthen the quality of care if the service delivery platform is compromised. This is illustrated in the comparison of NHI as Described in the Bill and Status Quo Gold Standard. The balance between primary and hospital care. A weak system will have too many resources directed towards relatively ex­pensive hospital care due to a bypassing of referral pathways, weak preventative care, and late intervention. This is illustrat­ed in the comparison of NHI as Described in the Bill and Power to the People and Reorienting Towards Value. Systems that are patient-oriented, that have greater bottom-up accountability and that measure and incentivise quality care tend to produce better health outcomes – ultimately delivering greater value for the money invested in the system. This is illustrated in the comparison of NHI as Described in the Bill, Power to the People and Reorienting Towards Value. Having a strong system supports health outcomes. From a patient perspective, this means strong linkages between care, better continuity of care and strong care coordination. System performance is supported by system stability (i.e., the ab­sence of system shocks), a balance between centralised support and ground-level responsiveness, and ongoing investment in the service-delivery platform. Big-bang reform (NHI as Described in the Bill) is likely to weaken system resilience in an already fragile system. Policy options that support ongoing quality improvement and system strengthening are likely to outperform over the long term. This was illustrated by the global impact of Covid-19, where countries with resilient and unified health systems have outperformed countries with weak ones 35. Healthcare worker capacity and satisfaction. Healthcare outcomes rely on having healthcare workers who deliver quality care. A large monopsony creates the risk of a system that is insufficiently oriented towards supporting healthcare workers and enabling supply-side innovation. Table 15: Efficiency: Accountability to users (bottom-up) and societal buy-in as levers Much of the rationale for NHI as Described in the Bill is the creation of a single purchaser to achieve efficiency through strategic purchasing. There is no doubt that the current system is weak from a strategic purchasing perspective. This is likely to continue in Status Quo Gold Standard, and care needs to be taken in NHI Rejigged to improve the structural impediments to strategic purchasing in both the public and private sectors. The HMI recommendations are very relevant. Strategic purchasing is necessary but not sufficient for improving system efficiency. Efficiency can also be supported in the following ways: Giving users of the system some choice of funder and the ability to move. Having multiple funds can create competitive pressure based on strategic purchasing (if, for example, funders have to publish value metrics). The risks of a single fund are complacency and a lack of customer-centricity. This is illustrated in the comparison of NHI as Described in the Bill and Power to the People, where individuals are given the choice between joining different UHC funds. Value-based approaches shift the responsibility for both quality and cost to healthcare providers – who happen to be best placed in the system to innovate the ways in which care is delivered. This removes layers of administration centred on man­aging providers of care – with the emphasis shifting to empowering providers. Value-based systems are most likely to have supply-side innovation, which allows for a move towards more efficient models of care over time. Table 16: Stewardship and governance Minimising the cost of corruption, waste and abuse. Central control of a system seems attractive from an efficiency perspective. Howev­er, large institutions increase the risk of large-scale corruption. A system with strong bottom-up accountability and empowered health­care providers may be more efficient in the long term than a single-fund system that’s susceptible to bureaucracy and governance failure. Additional cost burden to be covered Given uncertainties about the elements that would constitute the basic benefit package, our estimates of the cost of NHI have put it as high as 14.1% of the GDP. The ultimate relative cost of NHI as Described in the Bill, or of any other UHC scenario, is dependent on the size of the economy. If South Africa experiences low growth in the next twenty years, together with undertaking an uncertain reform, it’s possible that costs could spiral to much higher levels than currently experienced. Table 18 and Table 19 show the additional cost burden for public healthcare and for total healthcare, respectively. These are shown per scenario and are considered relative to various sized potential payer groups (outlined in Table 17), ranging from the total popula­tion to only those who are active taxpayers. We present the additional cost burden in 2040, relative to the baseline cost burdenh (if we were to continue on our current health system trajectory) in 2040. We do not, however, aim to determine the optimal financing source for additional health expenditure. First, we consider just total public health expenditure. The additional cost burden can be spread across groups of many sizes. For the largest group (all individuals), there would be a financing implication of R461 per month (2020 Rands) per capita by 2040 for the most expensive scenario, NHI Rejigged, for total public health expenditure. For the smallest group (active income taxpayers)i, there would be an additional financing implication of R4,267 per month (over and above what’s already contributed to the financing of the public health sector). In any scenario, the effect of this additional tax burden would be gradual. If we assume the tax burden increases each year, then the most expensive scenario would lead to a R213 increase in monthly tax for each year over the 20-year period until 2040. *(h) Baseline cost in 2040 is calculated by growing the 2020 expenditure by the population. I.e. it is how much we would spend in 2040 if each we continue to spend the same amount per capita. *(i) Active tax payers are those counted by SARS as “expected to submit”. SARS states “expected submission counts for each tax year include all taxpayers who have been assessed for a tax year as well as taxpayers with an “active” status who were assessed in any of the two previous years.” These are effectively the individuals paying income tax in a given year. The monthly figure for the active payer group may appear concerningly high, considering the average medical scheme contribution for 2020 was R2,817 per month 22. However, the active taxpayer grouping makes up a small proportion of the population, less than 11% in 2020. The R4,267 per month may be paid by one individual but would support eight other South Africans. Such a system relies on social solidarity with those better able afford it taking the financial hit. It is also important to better contextualise these amounts by considering how much would be spent on other healthcare services outside financing for the public UHC structure. We now consider the total health expenditure. The story looks markedly different when also accounting for OOP and private risk pools. In Table 19, we can see that the alternative scenarios could reduce overall health expenditure in South Africa. Reorienting Towards Value presents overall healthcare savings, leading to a saving of R476 per month per taxpayer. NHI as described in the Bill is the most expensive scenario for total health expenditure and could lead to additional health expenditure of R229 per month per capita, or R2,121 per month per active taxpayer. The tax burden values presented here could change significantly if our economic prospects change. In particular, the small proportion of active taxpayers have the potential to grow to a much larger base if the economy performs well. This would lessen the burden on the typical taxpayer. We can consider the registered taxpayer grouping as a proxy group for how much lighter the burden could become if costs were spread over a larger personal income tax paying base. Additionally, the values presented are averages. So, in the case of NHI Rejigged’s public health burden of R4,267 per taxpayer, the higher income taxpayers may pay multiples more that this value while the low-income end of taxpayers pay much less than the value presented. Table 17: Potential payer groups Table 18: Additional PUBLIC health expenditure burden of different scenarios relative to potential payer groups Table 19: Additional TOTAL health expenditure burden of different scenarios relative to potential payer groups 10. Conclusion Covid-19 and its associated interruptions to normal political processes decelerated parliamentary processes around the NHI Bill. The pandemic has also shown the importance of a high-quality, accessible health system that provides care to everyone who needs it. For the foreseeable future, South Africa’s public funding for health is likely to be constrained by a tough fiscal environment. The political pause, together with a dramatically changed context, provides an opportunity to reconsider the UHC policy pathway that would work best for South Africa. This cost modelling highlights that many of the policy objectives underpinning NHI as Described in the Bill can be achieved by other lower-cost and higher-quality (i.e., better value) UHC policy pathways. The selection of policy options should not only be about money, but also about service delivery design. Services and the way they are delivered drive both costs and patient outcomes over the longer term. The imperative for economic growth and employment growth is evident when we take a long-term perspective and consider how best to achieve health-system objectives within fiscal constraints. An expansion of the economy will permit much-needed investment in the health system, whilst employment growth will allow for a more robust tax base to enable income cross-subsidies and sustainable social solidarity. 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Exploring the expected, unexpected and everything in between. South African Heal J. Published online 2020:27-40. Actuarial Society of South Africa (ASSA). ASSA 2003 full AIDS and Demographic Model. Published online 2003 Appendix A: Out-of-pocket health expenditure in South Africa Various concepts and indicators are used to measure OOP health expenditure. We’ve drawn on the work of Wagstaff et al. 36 to sum­marise these concepts and indicators in the table below. Table 20: Concepts and indicators used in OOP health expenditure studies Source: Wagstaff et al. (36) For the purposes of this costing report, we extracted evidence on OOP health expenditure in South Africa from literature that uses the following concepts and their respective indicators: expenditure in absolute terms, budget share and catastrophic expenditures (highlighted in Table 20 above). We’ve limited this rapid literature review to these three concepts, since they’re intuitive and therefore more easily understood and used when making assumptions for the NHI costing models. Catastrophic health expenditure The most recent literature on OOP health expenditure in South Africa showed a limited incidence of it being catastrophic, irrespec­tive of the threshold or method used to determine it 33. More specifically, in 2010, less than one percent (0.07%) of the population faced catastrophic healthcare expenditures at the ≥40% threshold (see Table 21), a figure which was in keeping with previous studies 34,35. Based on the rare incidence of catastrophic expenditure, very few households in South Africa were impoverished due to healthcare costs. However, it was notable that in more recent years, larger shares of households’ capacity-to-pay were being allocated to healthcare 33. It must be emphasised that the above findings did not account for foregone earnings or travel costs. More than three-quarters of South Africans who report that public healthcare is unaffordable believe that it’s due to travel costs 39. It’s not hard to imagine that seeking healthcare would add the cost of lost income for many poor South Africans who work informally. Expenditure in absolute terms In absolute terms, OOP health expenditure per capita was $80 in South Africa in 2013 40. Compared to other BRICS countries, this level was relatively low, with OOP expenditure amounting to $762 per capita in Russia, $435 in Brazil, $219 in China and $125 in India in the same year. An earlier study reported that the average OOP payment per person per annum for outpatient care was R695.57 in 2008 41. When disaggregating this average by sector, OOP expenditure for outpatient care in the public sector was far lower than OOP expenditure in the private sector (see Table 21). This is mainly because of exemptions and subsidised care in the public health sector. Medically insured South Africans are not exempt from OOP health expenditure. Cairncross et al. 42 found that in 2019, insured South Africans paid an annual average of R3,914 per capita for OOP health expenditure (see Table 21). This amount roughly has an 80:20 split when disaggregated into out-of-hospital and in-hospital expenditure. Table 21: OOP health expenditure in South Africa *(j) Only included percentages for the most recent year reported in the study. *(k) Only included amount for the most recent year reported in the study. Appendix B: Additional detailed model results Table 22: 2030 detailed model results Table 23: 2040 detailed model results Appendix C: Model assumptions by scenario Table 24: Model assumptions by scenario Notes * Ranking provided in brackets (xth) is the ranking for each assumption in 2040 where the 1st is the least costly and 5th is the most costly. * Where referring to private risk pools, the rankings are based on the assumption at the time where private risk pools are closed. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in July 2021. The engagement with the manufacturing sector was enabled through the kind support of the National Employers Association of South Africa. Author: Mariaan Webb, Creamer Media Writer Edited by: Daryl Swanepoel Contents Abbreviations & acronyms Introduction Identifying weaknesses Bureaucracy and red tape Education, skills, and work ethic Impact of crime Misalignment in credit provision Municipal malaise Onerous labour legislation Overreliance on grants Steel protection measures Transformation policies Interventions for fostering growth Conclusion Reference list Abbreviations & acronyms AMSA ArcelorMittal South Africa BEE black economic empowerment GDP gross domestic product HRC hot-rolled coil ISI Inclusive Society Institute LRA Labour Relations Act Neasa National Employers Association of South Africa SMME small, medium-sized, and micro enterprise Introduction Although still a sizeable component of the South African economy, the manufacturing sector has been performing poorly over the years. The country is in effect deindustrialising, with manufacturing’s contribution to gross domestic product (GDP) having decreased to a low of 12.90% in 2020 (IDC, 2021). At this level, its contribution to GDP is less than half of what is appropriate for a country at South Africa’s stage of development (Manufacturing Circle, 2017). The decline in manufacturing over the past two decades has had detrimental impacts on the overall economy and on jobs. Manufacturing could generate significant employment, which is essential if South Africa is to tackle persistent inequality and high joblessness. The unemployment rate is currently 32.60% (narrow definition) and 46.30% (expanded definition) (Stats SA, 2021a). In the Covid-impacted year of 2020, total manufacturing production decreased by 11% – the worst performance since the 2009 global financial crisis – and all ten manufacturing divisions reported negative growth rates (Stats SA, 2021b). The Manufacturing Circle, an association of corporate manufacturers, estimates that if manufacturing were to expand to 30% of GDP, between 800 000 and 1.1 million direct jobs could be created, with five to eight times that number in indirect jobs (Manufacturing Circle, 2017). On a mission to craft a new growth-centred economic blueprint for South Africa, the Inclusive Society Institute (ISI) is engaging with different economic sectors to identify the reasons behind the country’s depressed growth performance and to provide a forum for innovative thought on forging a path of higher growth. The ISI has held discussions with the financial sector and sought input from multinational funding institutions to gain an understanding of what policies should be pursued. This report focuses on the discussions that were held with representatives of the manufacturing industry. The engagement showed that the automotive industry, which is the country’s biggest manufacturing sector, is generally content with its current state. The industry has for decades benefitted from consecutive industrial policy plans and detailed incentives programmes. South Africa’s automotive sector is a centre of strength and technical know-how, which is highly integrated into global supply chains. Through industry associations, original-equipment manufacturers and component producers have made great strides in their collaboration with government. However, the automotive industry, with its long history of substantial government support, is the exception and does not reflect the general mood among manufacturers. Acknowledging that the industry is diverse and that not all subsectors are as strong as the automotive sector, the report argues that there is a common thread that calls for a more a business-friendly environment, more flexible labour polices, improved education outcomes, more competitive inputs, and the fixing of municipalities, among others. Identifying weaknesses Bureaucracy and red tape The bureaucratic obstacles that businesses face have a direct impact on economic development and growth. A lot has been said about the need for reform to improve South Africa’s ranking on the World Bank’s yearly Doing Business index, which defines the extent to which the regulatory environment is conducive to the starting and operation of a firm. South Africa is aiming to be among the top 50 global performers by 2022 (Ramaphosa, 2019). That objective seems far off as South Africa fell from 82 to 84 out of 190 countries assessed in the ‘Doing Business 2020’ survey (World Bank, 2019). Participants in the webinar have raised concerns about bureaucracy and red tape, stating that it is particularly burdensome for smaller firms, and acts as a disincentive against new business start-ups. To comply with the onerous administrative legalities is time consuming and slays the entrepreneurial spirit so desperately needed in the country. It uses resources that could have been channelled towards growing rather than bureaucratic compliance issues. Education, skill and work ethic Education quality contributes considerably to a country’s economic growth and getting the basics of schooling right will be important to place South Africa on a sustainable growth path. However, the South African education system continues to fall behind when achievement is measured against international metrics. The result is an education system that does not adequately prepare young people for the workplace. In the most recent Trends in International Mathematics and Science Study – a project of the International Association for the Evaluation of Educational Achievement, measuring Grade 5 level mathematics and science accomplishment – South Africa scored among the five lowest performing countries of 64 nations that took part in the assessment. The top five countries were from East Asia and include Singapore, Hong Kong, South Korea, Chinese Taipei, and Japan. (Reddy et al, 2020). These countries have also been successful in achieving accelerated economic growth in recent decades. The ISI has studied South Korea and Japan to draw lessons for the South African economy. In both instances, education was a key factor in their success. South Africa’s education outcomes are inadequate despite substantial investment. Total public expenditure on education for primary, secondary, and post-secondary nontertiary education, as a percentage of total government expenditure, is relatively high when compared with Organisation for Economic Cooperation and Development countries (Education GPS, 2021). Educational failures filter through to the job market. The manufacturing industry experiences the impact of education challenges first-hand and believes it is an important weakness that must be addressed. A well-educated workforce is central to reviving the sector and ensuring that it is globally competitive. The education system must also cultivate skills that better prepare learners for the future workforce. Each year, too many matriculants are graduating into joblessness. Statistics show that although those with higher levels of education are more likely to find a job, the unemployment problem is so pervasive that as many as 37.70% of those who are unemployed have passed Grade 12 (Stats SA, 2021b). There is also a sense that work ethic and pride are lacking among the work force. A lack of a productivity mindset, culture and accountability damages the country’s potential. An attitude of entitlement must make way for a spirit of hard work and honesty. The values that a nation adopts influence actions and are thus key predictors of a country’s success (Steel, 2017). Impact of crime Businesses are finding it increasingly difficult to absorb the impact of crime. According to the Global Peace Index, the economic impact of violence on the South African economy in 2019 was R145-billion a year (Institute for Economics and Peace, 2020). With the July 2021 wave of looting and unrest in Kwa-Zulu Natal and Gauteng having exponentially increased these costs to society. An increasing lack of faith in the capabilities of the police has led to an increase in the use of private security, pushing up the cost to companies and the prices of end-products. Misalignment in credit provision Research for the South African Reserve Bank has indicated that access to finance is not a major concern for most manufacturing businesses, but it concedes that smaller firms do have a higher probability of facing financing constraints (Smith, 2019). A participant in the webinar representing a medium-sized industrial business has identified the misalignment in the provisioning of credit for industrial development as a concern. According to the participant, banks appear to finance the building of shopping centres or buying of new vehicles more easily than they do investment in new equipment to allow factories to modernise or expand. “Imagine if we built factories at the rate that we build shopping centres and if we then exported these products?” Municipal malaise The disintegration of municipalities, causing a lack of service delivery, is having a severely negative impact on business. Companies suffer large losses from unmaintained infrastructure, such as potholes and water and electricity disruptions. These concerns have been highlighted by poultry producer Astral’s High Court order against the Lekwa municipality for failing to deliver basic services to its factory in Standerton, Mpumalanga, and dairy group Clover, which is closing its cheese factory in Lichtenburg, in North-West, has blamed ongoing poor service delivery by the local municipality for its decision (News24, 2021). The demise of service delivery is linked to financial mismanagement at local government level. The auditor-general’s report on municipalities produces a grim picture, underlining the persistent underperformance as far as financial management and performance reporting is concerned. The report for the 2019/20 financial year shows that the financial position of more than a quarter of the 257 municipalities is so dire that there is significant doubt that they will be able to continue as going concerns, while almost half are exhibiting indicators of financial strain. Only 27 municipalities achieved a clean audit in 2019/20 (Business Day, 2021). To deal with a lack of basic service delivery in municipalities, many businesses are taking it upon themselves to clean up towns, fix roads and maintain other infrastructure. However, this duplicates the cost of municipal services, impacting on companies’ bottom lines. The ever-increasing cost of water and electricity are also negatively impacting on business. Between 2007 and 2020, electricity tariffs increased by more than 500% and average municipal water tariffs have increased four times faster than inflation since 1996 (IOL, 2021). Onerous labour legislation South Africa’s labour legislation mediates the relationship between employers, employees, and trade unions. Although aimed at ensuring fair practices, some issues have been raised about the inflexibility of current labour laws and their impact on small, medium-sized, and micro enterprises (SMMEs). Centralised collective bargaining provided for in the Labour Relations Act (LRA) elicits strong opinions on both sides. The National Employers Association of South Africa (Neasa) has been vocal in its opposition to the ‘one-size-fits-all’ wage approach of centralised collective bargaining, which culminates in bargaining councils extending agreements to non-parties. Neasa states that a statutory dispensation, as contained in the LRA, marginalises the voting power of SMMEs. An employer whose cost of labour as a percentage of turnover is less than 5%, can enforce a wage on another employer whose cost of labour as a percentage of turnover is more than 50% (Papenfus, 2018). Trade unions are generally powerful, which is a concern for business owners considering the threat they pose to economic stability when things do not go the unions’ way. The law on dismissals also makes it cumbersome for business owners to dismiss unproductive employees. Wary of the difficulty of dismissing staff, employers are reluctant to hire people, contributing to the high unemployment rate of the country. Labour legislation does not make provision for the different economic realities of a small employer in a rural area, compared with a big business situated in an economic hub. Those two types of employers, for instance, are judged by the same economic and operational measures when it comes to collective bargaining and the national minimum wage. The national minimum wage, if it is set too high, could have adverse impacts on employment. Critics of the national minimum wage, which is currently set at R21.69 an hour, argue that the requirement denies a work seeker the right to negotiate for a wage that he or she finds acceptable, and which would have offered an escape from unemployment. Proponents argue that it begins to address the problem of the millions of working poor, whose wages are kept low by the prevalence of high rates of unemployment. Overreliance on grants At 3.30% of GDP, South Africa is among the biggest spenders on social protection, through which it seeks to tackle poverty and inequality (World Bank, 2021). The social assistance programme provides direct income support to the elderly, children, war veterans and people with disabilities. The welfare system has expanded fast in the past 20 years and currently has about 18.2 million beneficiaries, with another 1.1 million expected to become beneficiaries over the next three years (National Treasury, 2021). Although social transfers do protect the most vulnerable members of society, it cannot be a substitute for growth and jobs (World Bank, 2021). There is concern that an overreliance on grants creates a culture of dependency. Steel protection measures There is growing frustration within the steel industry about ongoing tariff protection for primary steel producer ArcelorMittal South Africa (AMSA). Several downstream steel customers have expressed unhappiness with safeguard duties, as well as about steel backlogs and pricing developments. South African flat-steel prices are set using a government-approved ‘basket price’ methodology, whereby the price is arrived at following analysis of selling prices in a range of markets included in the basket. Flat and long steel product imports are subject to base tariff protection of 10%, but certain flat products are also subject to safeguard duties of a further 8%, resulting in overall protection of 18% on certain grades. The 8% safeguard on hot-rolled coil (HRC) was initially meant to expire in August 2020 but was extended following an AMSA application to the International Trade and Administration Commission of South Africa (Engineering News, 2021a). Safeguards were first introduced on a sliding scale in 2017 to level the playing field against unfair import competition. South Africa’s biggest steel merchant, Macsteel, took the Department of Trade, Industry and Competition to court over the extended implementation of safeguard duties on HRC imports. The case was settled in the High Court in June, following an agreement that, once the current 8% safeguard expires in August 2021, there would be a moratorium on the implementation of further safeguard duties on HRC for at least two years (Engineering News, 2021b). Steel industry players participating in the webinar have questioned the economic benefits of sustaining a primary steel producer in the form of AMSA. They say locally manufactured steel products have become uncompetitive, owing to expensive AMSA steel and that access to cost-effective, high-quality, duty-free input material is needed to revive the downstream industry. In June 2021, the ‘South African Steel and Metal Fabrication Master Plan 1.0’ was adopted by business, labour, and government. The document aims to create a platform for the revival of the embattled downstream steel fabricators. The plan has been developed on three pillars, namely: boosting demand for steel and steel products, primarily by reviving South Africa’s stalled public infrastructure roll-out; driving localisation, or import substitution; and by leveraging the market access being created through the implementation of the African Continental Free Trade Agreement; addressing supply-side constraints, including electricity disruptions and tariff hikes, logistics bottlenecks, uncompetitive inputs and inadequate skills and research and development; and a series of cross-cutting interventions, including the creation of a Steel Industry Development Fund, to be capitalised through the introduction of a levy of between R5/t and R10/t on all steel sold domestically, whether it be produced locally or imported (Engineering News, 2021c). Transformation policies The manufacturing industry is subject to the broad political environment in which it functions. To a large extent, that is informed by the policies of the African National Congress, the ideology of which aims to transform the country from an Apartheid State to a non-racial, non-sexist, united democratic society. The principal policies that seek to reverse inequality, poverty and exclusion are through stimulating inclusive growth and investment, bolstered by black economic empowerment (BEE) and employment equity, along with the safety-net of an expansive welfare system. Concerns have been raised that transformation policies, such as the Employment Equity Act and the Broad-Based Black Economic Empowerment Act, do not foster an environment in which entrepreneurs can flourish. Although there is an acceptance that transformation is needed, there is doubt over whether narrow BEE policies are the way to go. Instead of promoting true empowerment, critics say BEE has made it more difficult for many SMMEs to do business with government or big enterprises and that it has created a detrimental side-effect in the form or ‘tenderpreneurship’. In general, complying with employment equity and BEE policies has raised the cost of doing business. Interventions for fostering growth SUGGESTIONS FOR FOSTERING GROWTH Enhance export competitiveness Faster export growth will help propel economic growth, but to achieve this, manufacturing competitiveness must improve. South Africa’s score on the 2020 Competitive Industrial Performance index dropped four positions to 52 out of 152 countries assessed (Unido, 2020). Suggestions to enhance export competitiveness include: Implement export incentives. Reduce port tariffs and improve port efficiency. Consider re-instating rail subsidies for containers destined for export. Emulate the automotive support programme for key industries. Fix municipalities It is imperative that municipalities function properly. To achieve this, ethical leadership, service orientation and good governance are required. Local governments need to be properly capacitated and free from political interference and constant churn. Strong external controls must be in place to prevent financial loss and wastage. Given the central role that the manufacturing sector plays in creating jobs and national wealth, and the need for a well-functioning manufacturing sector to ensure the economic sustainability to ensure the wellbeing of the nation, the maintenance of municipal infrastructure and services within industrial areas needs to be prioritised by local authorities. Communities also need to be more involved in municipal matters and hold local government accountable. Flexible labour laws Labour legislation is viewed as onerous and hampers employment. Suggestions to modernise labour laws include: Revisiting the centralised collective bargaining model. Making it easier for employers to hire and fire workers. The current standard three-month probation period should be extended to at least one year to properly establish a person’s skills and attitude. Implement transport subsidies It is expensive for workers, who often live far from their places of employment, to commute to and from work. Implementing transport subsidies will assist manufacturers and help overcome spatial distortions. Improved access to financing Having access to sufficient financial resources is crucial to enable entrepreneurs and smaller businesses to grow. The current financing rules should be revisited to ensure that they actively promote economic development by mobilising and allocating resources efficiently – making it easier for entrepreneurs to access credit. Increase domestic demand Creating additional demand for local goods is key to a virtuous cycle that promotes economic growth. Demand for local goods can be stimulated by increasing the procurement of locally manufactured goods, provided their cost and quality are competitive. Local industries could be protected more through assertive trade policies, but this should be pursued based only on competitiveness. Keep costs down Allow business to catch its breath by keeping increases in rates and services below inflation for the next five years. Unions’ wage demands should also not exceed the inflationary rate. South Korea’s experience shows that a competitive agricultural sector with low food costs helped keep labour costs competitive. Reduce red tape Business owners are being inhibited by red tape. Making the business process simple to navigate will foster enthusiasm, investment and support entrepreneurial growth. Revitalise ‘old’ industrial parks Revitalising ‘old’ industrial parks located in former Apartheid-era homelands acts as a catalyst for economic and industrial development in lagging rural areas. These parks support job creation in manufacturing and arrest the migration of people to overpopulated urban areas. Government embarked on an initiative in 2016 to revitalise ten State-owned industrial parks located in underdeveloped former homeland areas. This initiative dovetails with the special economic zones programme, which is a major focus for attracting investment and promoting industrialisation. Scrap raw material protection mechanisms Steel protection measures have been severely criticised by domestic steel consumers, which argue that without a safeguard duty, fabricators will be able to compete on a level playing field and export steel products. Primary steel producers should not enjoy more protection than what the downstream sector is afforded. If such circumstances persist, then similar protection measures will also be required for downstream participants. Speed up technology commercialisation Centres must be developed at universities to transition technologies from the research lab to the marketplace faster. Technology commercialisation centres will require collaboration between tertiary institutions, the private sector, and entrepreneurs. Stimulate battery industry Batteries are at the core of a modern energy system and play an important role in the shift to electric mobility. South Africa is presented with an opportunity to carve out a niche for itself in what is a fast-growing and rapidly evolving market. South Africa already has some battery manufacturing capabilities and experience with beneficiating minerals. Besides lithium, the value chain for lithium-ion batteries includes a host of materials produced at scale in South Africa, such as manganese, iron-ore, nickel, and titanium. Conclusion Although the manufacturing sector has been in decline, it continues to be of great importance to South Africa and has pockets of excellence – such as in the automotive sector – that could be replicated elsewhere in the economy. The long-term strategic partnership between government and the automotive industry provides a clear illustration of the power of cooperation between government and business – local and global – as well as the importance of a shared vision and a common purpose among business managers, trade unions and surrounding communities. Faced with a global pandemic, South African manufacturers, business, and labour formed a united front, bringing together vision, ingenuity, and technical skills to accomplish two highly successful projects in 2020: the local manufacture of medical equipment and personal protective equipment, as well as the national ventilator project. These are both prime examples of what could be achieved through greater collaboration, and the lessons learnt from their successful execution should be reproduced across various industries. Through such a spirit of cooperation and common purpose it will be possible to move South African manufacturing forward into a new era of success; to blow life-giving breath onto the embers of the once-roaring furnaces of South African industry and to see the lights come on once again through the grimy windows of abandoned factories. Reviving the manufacturing sector can restore a much-needed engine for growth for the South African economy. References Business Day. 2021. Auditor-general appalled by the state of municipal finances, June 30, 2021. [Online]. Available at: https://www.businesslive.co.za/bd/national/2021-06-30-auditor-general-appalled-by-the-state-of-municipal-finances/ [accessed July 9, 2021]. Education GPS, Organisation for Economic Cooperation and Development. 2021. South Africa, overview of the education system (EAG 2020), July 9, 2021. [Online]. Available at: https://gpseducation.oecd.org/CountryProfile?primaryCountry=ZAF&treshold=10&topic=EO [accessed July 9, 2021]. Engineering News. 2021a. Steel backlog won’t be solved by eliminating safeguard duties, AMSA avers, May 31, 2021. [Online]. Available at: https://www.engineeringnews.co.za/article/steel-backlog-wont-be-solved-by-eliminating-safeguard-duties-amsa-avers-2021-05-31 [accessed July 9, 2021]. Engineering News.2021b. Macsteel settles safeguard-duty case with DTIC and secures two-year reprieve, June 23, 2021. [Online]. Available at: https://www.miningweekly.com/article/macsteel-settles-safeguard-duty-case-with-dtic-and-secures-two-year-reprieve-2021-06-23 [accessed July 9, 2021]. Engineering News. 2021c. Infrastructure and import substation at heart of new master plan’s vision for steel revival, June 11, 2021. [Online]. Available at: https://www.engineeringnews.co.za/article/infrastructure-and-import-substitution-at-heart-of-new-master-plans-vision-for-steel-revival-2021-06-11 [accessed July 9, 2021]. Fin24. 2021. Clover closes SA’s biggest cheese factory due to municipal woes in the North West, June 8, 2021. [Online]. Available at https://www.news24.com/fin24/companies/clover-closes-sas-biggest-cheese-factory-due-to-municipal-woes-in-the-north-west-20210608 [accessed July 9, 2021]. Independent Online. 2021. The price of water and electricity in South Africa: A tale of two tragedies, January 22, 2021. [Online]. Available at: https://www.iol.co.za/news/opinion/the-price-of-water-and-electricity-in-south-africa-a-tale-of-two-tragedies-6f98fc9a-7c67-4aeb-936c-1d9947428aa0 [accessed July 9, 2021]. Industrial Development Organisation (IDC). 2021. Key trends in the South African economy, March 31, 2021. [Online]. Available at: https://www.idc.co.za/wp-content/uploads/2021/04/IDC-RI-publication-Key-Trends-in-the-South-African-Economy-31-March-2021-FINAL.pdf [accessed July 9, 2021]. Institute for Economics and Peace. Global Peace Index 2020: Measuring peace in a complex world, June 2020. [Online]. Available at: http://visionofhumanity.org/reports [accessed July 13, 2021]. Manufacturing Circle. 2017. Manufacturing Circle unveils plan to create a million jobs in a decade, November 27, 2017. [Online]. Available at https://www.bizcommunity.com/Article/196/399/170617.html [accessed July 9, 2021]. Papenfus, G. 2018. Collective bargaining: The indefensibility of the ‘one-size-fits-all’ wage approach, June 19, 2018. [Online]. Available at: https://neasa.co.za/opinion-piece-collective-bargaining [accessed July 13, 2021]. Ramaphosa, C. 2019. 2019 State of the Nation Address, February 7, 2019. [Online]. Available at https://www.gov.za/speeches/president-cyril-ramaphosa-2019-state-nation-address-7-feb-2019-0000 [accessed July 9, 2021]. Reddy, V. et al. 2020. TIMSS 2019, Highlights of South African Gr 5 results in mathematics and science, 2020. [Online]. Available at: https://www.timss-sa.org/download/TIMSS-2019_Grade-5_HSRC_FinalReport.pdf [accessed July 9, 2021]. Smith, A. 2019. Credit market access and efficiency in South Africa, May 2019. [Online]. Available at: https://www.resbank.co.za/content/dam/sarb/publications/working-papers/2019/9256/WP1903.pdf [accessed July 9, 2021]. Statistics South Africa. 2021a. Quarterly Labour Force Survey – Q1:2021, June 1, 2021. [Online]. Available at: http://www.statssa.gov.za/publications/P0211/Media%20release%20QLFS%20Q1%202021.pdf [accessed July 9, 2021]. Statistics South Africa. 2021b. Manufacturing production and sales: December 2020, February 11, 2021. [Online]. Available at: http://www.statssa.gov.za/publications/P30412/P30412December2020.pdf [accessed July 9, 2021]. Steel, P. 2017. The Conversation: A recipe for a successful nation, November 2, 2017. [Online]. Available at: https://theconversation.com/a-recipe-for-a-successful-nation-86516 [accessed July 9, 2021]. United Nations Industrial Development Organisation. 2021. Competitive Industrial Performance Report 2020, April 28, 2021. [Online]. Available at: https://stat.unido.org/content/publications/competitive-industrial-performance-report-2020 [accessed July 9, 2021]. World Bank. 2019. Doing Business 2020, October 24, 2019. [Online]. Available at: https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf [accessed July 9, 2021]. World Bank. 2021. South Africa Economic Update Edition 13. Building back better from Covid-19, with a special focus on jobs, July 12, 2021. [Online]. Available at: http://worldbank.org/en/country/southafrica/publication/south-africa-economic-update-south-africa-s-labor-market-can-benefit-from-young-entrepreneurs-self-employment [accessed July 12, 2021]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Summary of the learnings from a joint workshop by the Inclusive Society Institute and the Swedish Institute of Future Studies Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members. Authors: Percept Actuaries and Consultants Edited: Daryl Swanepoel Graphic Design: Nini van der Walt AUGUST 2021 Content 1. Introduction and background 2. Some questions on poverty and inequality in South Africa 3. Measuring inequality in developing economies Issues with the Gini coefficient The many dimensions of inequality A systematic approach to understanding inequality 4. Broader discussion on inequality and inequality measures Rethinking the research questions Abundance of inequality literature in South Africa Wealth and inequality Which multidimensional approach? 5. Data limitations and alternative data sources Issues with pre-1994 data in South Africa Useful datasets Exploring additional data 6. Conclusion and way forward References List of figures Figure 1: Bourguignon triangle (2004) – the relationship between growth, inequality, and poverty Figure 2: Scheme of social stratification – a poverty dynamics approach to structured inequality Figure 3: The Multi-Dimensional Inequality Framework (LSE & Oxfam, 2018) Acronyms and abbreviations 1. Introduction and Background South Africa has the highest income inequality in the world as measured by the Gini coefficient. Twenty-seven years after the end of apartheid, despite multiple and deliberate policy attempts to grow the economy, increase income for all, and improve the welfare of South Africans, inequality remains stubbornly high. Income inequality matters because it is intrinsically linked to economic growth and absolute poverty: Initial equality and changes in inequality during growth heavily influence the poverty reducing impact of growth. Hence, even if poverty may be regarded as a more pressing problem than inequality (Fields, 2007), distributional issues remain critical for anti-poverty strategies (Ravallion, 2001) This conundrum has implications for South African policy debates and underscores the need to understand the drivers of income inequality. A recent review by Stats SA, the Southern Africa Labour and Development Research Unit (SALDRU) and the Agence Française de Dével­oppement (AFD) Group (Statistics South Africa, 2019) of inequality in South Africa from 1993/4 to 2018 found that South Africa con­sistently had a high Gini coefficient over the period, irrespective of the data source, with little decrease in inequality levels. However, the high Gini coefficient may obscure underlying positive redistribution dynamics. For this reason, the comprehensive review went beyond reporting the Gini coefficient and used multiple metrics and approaches to analyse the many dimensions of inequality including economic inequality, wealth and asset inequality, labour market inequality, gender inequality, inequality in the social domain and social mobility. Unfortunately, media reports of the review focused on the aggregate Gini coefficient, and this drowned out many of the positive findings in the broader analysis of inequality. The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI's work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa. This desire is pursued through a value system that embodies the social and national democratic principles associated with a developmental state. The Swedish Institute for Future Studies (IFFS) is an independent research foundation that promotes future perspectives in research and public debate. The research program that has set the IFFS’s framework for recent research activities is called “Which future? Challenges and choices for the 21st century”. The research programme focuses on five themes, of which one is Equality. It therefore has a strong interest and experience base in measuring inequality and how best practices in inequality measurement could be applied in South Africa. To promote knowledge sharing and mutual learning on inequality measurement and the inequality context in South Africa, ISI and IFFS hosted a workshop on 1 July 2021 to discuss best practices and alternative approaches in inequality and poverty measurement. The workshop was attended by representatives of the Inclusive Society Institute, representatives of IFFS and independent academics from South Africa, Sweden, and Germany. Percept Actuaries and Consultants and 71Point4 presented initial ideas and research ques­tions for an agenda on inequality research in South Africa which is being supported by the Frederich Ebert Stiftung. This report sets out the focus of ISI’s research on inequality and the themes and issues which were discussed at the workshop 2. Some questions on poverty and inequality in South Africa Before defining a research agenda on inequality, it is important to understand the contentious and sometimes controversial inter­relationship between inequality, poverty, and economic growth. While it is undisputed that economic growth leads to a decrease in absolute poverty, the extent of this decrease and how it is distributed depends on the level of inequality and changes in it. The interrelationships between growth, inequality and poverty are best captured in the Bourguignon triangle (Figure 1). The causal chain from income and wealth inequality to growth (also known as the ‘inequality–growth’ link) are underpinned by two conflicting schools of thought: the traditional (classical) perspective and the ‘new’ political economy of development theories (modern). Figure 1: Bourguignon triangle (2004) – the relationship between growth, inequality, and poverty The classical perspective highlights the growth-enhancing effects of income and wealth inequality through the saving-enhancing effects (the rich save proportionately more than the poor), as well as the existence of investment indivisibilities and incentive effects (Aghion & Bolton, 1997; Kaldor, 1955). In contrast, the modern perspective links greater inequality to reduced growth through condi­tions such as resultant political and social instability leading to greater uncertainty and lower investment, high transaction costs, unproductive rent-seeking activities, and increased insecurity of property rights (Thorbecke et al., 2002). The Kuznets hypothesis of the inverted U-shaped relationship between growth and inequality describes the opposite causal direction (i.e., the ‘growth–inequality’ link). The modern approach, however, suggests that growth patterns resulting in more inequality would lead to lower future growth paths, which negatively impact growth-induced poverty reduction. Ultimately, the poverty-reduction effects of growth depend on how the growth pattern affects income distribution, since inequality acts as the ‘filter’ between growth and poverty reduction (Thorbecke, 2013). Effective poverty reduction would therefore require some combination of higher growth and a more pro-poor distribution of the gains from growth. There are signs of movement towards a more equal South African society, with a small but growing black middle-class population. However, the COVID-19 pandemic has entrenched unemployment in South Africa, particularly among this group (Futshane, 2021). Although the decline in employment observed was similar for all age groups (and age and education subgroups), it was marked by substantial churning that far exceeded churning estimates during pre-COVID years. The aim of future ISI inequality reports is not to redo the StatsSA (2019) inequality report and its underlying analyses, but to add more nuance using the same and alternative data sources to explore different research questions and identify positive micro channels out of inequality and poverty, into prosperity. This is being done to obtain a deeper understanding of the impact of transformation initia­tives in post-apartheid South Africa which is not reflected in high-level metrics of income inequality. Our chosen approach will provide a more accurate description of the poverty alleviating strides that have been made, which would otherwise not be recognised. Metrics and approaches for measuring poverty and inequality: Are there other metrics that should be considered when designing policy interventions? To understand what lies beneath the average poverty and inequality measures, it is useful to build a poverty and inequality profile. This profile is derived by decomposing poverty and inequality metrics by socio-economic or demographic characteristics. To capture the dynamic aspects of poverty and structural inequality, Schotte et al. (2018) suggests a social stratification scheme that identifies the relationship between individual and household characteristics and patterns of economic mobility. This scheme has advantages over both purely money-metric and multidimensional approaches: it remains anchored in a money-metric threshold (the cost-of-basic-needs poverty line) to broadly determine who can and cannot afford to meet their basic needs (first column in Figure 2), but further distinction between the poor and non-poor is then determined based on propensities for poverty transitions (second column of Figure 2). These propensities are derived from a set of individual and household characteristics that allows inference of multidimensional determinants of economic empowerment. Figure 2: Scheme of social stratification – a poverty dynamics approach to structured inequality Source: Schotte, et al., 2018. Note: Solid lines denote absolute expenditure thresholds. Dashed lines denote probability thresholds. The research reports to be published by the ISI will not experiment with alternative inequality measures but will rather explore differ­ent lenses of analysis (e.g., gender, youth, employment) to existing measures to shed light on the main drivers of inequality and likely policy options to address them. Future phases of the research will consider a more multi-dimensional approach to inequality, pov­erty, and well-being because it provides a more comprehensive view of the changes in inequality that have occurred across multiple dimensions over time. It also allows for further interrogation of the persistent issues that prevent equality from being achieved, thus informing more progressive policy development. Structural unemployment and inequality: Is aggregate unemployment the biggest driver of inequality? Approximately two-thirds of overall inequality in South Africa is driven by inequality in earnings, and about half of this is due to the ex­tremely high levels of unemployment (Statistics South Africa, 2019). A key question for those who are employed and earning income, is how much of a difference does variation in income between individuals contribute to inequality? Second, what then, e.g., access to education and variation in quality of education, explains this variation? What are the gender dimensions to inequality? This overarching question will be explored through the gender dimensions of unemployment, income availability, gender and grants, and gender and post-school education. Gender intersects with many disadvantages and inequities, including income inequality. Even though women represent over half of the South African population, their share of household income and expenditure is significantly lower than that of men (Statistics South Africa, 2019). By exploring the gender dimensions of household formation, unemployment, income availability (including grants), and post-school education, we may gain a deeper understanding of how inequalities accentuate vulnerabilities, and which levers may contribute to achieving income equality for women. Household composition dynamics: To what extent is inequality in South Africa driven by generational wealth dynamics? It may also be useful to consider generational wealth dynamics and to what extent it drives inequality in South Africa. In higher-in­come groups, income and opportunities to access income (e.g., education) may be derived from existing wealth. There is robust evi­dence that wealth is more unequally distributed than income in South Africa (Orthofer, 2016). Lower rates of population growth among high-income groups, compared to low-income groups, further drive inequality through the concentration of inherited wealth (Peterson, 2017). Questions for research here include the specific nature of the inequality dynamics of certain age groups and cohorts. Working with 71point4, wealth dynamics can also be explored using alternative (non-survey) data on housing and credit markets. The contribution of global inequality dynamics: What components of South African inequality are not necessarily South Afri­can-specific but related to the way economies function globally? There is a growing consensus amongst scholars that a major contributor to increasing income inequality globally are the top 1% of individuals on the earnings distribution and this elite subgroup is where more attention should be paid (Alvaredo et al., 2013). Income generated from the wealth of the top 1%, in addition to their earned income, are important to consider when exploring income inequal­ity and how best to target interventions. This approach may be of relevance in the South African context where wealth has accumu­lated along racial lines for decades. If, for example, we exclude the top 1% of earners from inequality calculations, would it change the inequality measure and if so, how? There is, however, a strong social justice component to understanding the disparities in income between the top 1% and the rest of the population and this dimension should not be ignored. For the first workstream of ISI’s work on inequality, the more nuanced questions that need further appraisal and analysis using the Stats SA (2019) report but also other available inequality, wealth, and poverty analyses will be identified. We propose to primarily focus on literature that analyses the more recent household surveys and panel studies like GHS, QLFS, and NIDS as more recent data will provide a clear direction for change and required policy actions. We also propose looking at alternative sources of data relating to wealth, access to financial services, property ownership and other relevant dimensions. This piece of work is necessary to add depth and nuance to the current discourse. 3. Measuring inequality in developing economies The discussion in this part of the workshop was informed by short presentations and insights shared by researchers of the IFFS, as well as research-related questions of clarity posed by both the IFFS and the ISI’s participants. The discussion mostly focused on broad themes around the measurement and nature of inequality in South Africa. Issues with the Gini coefficient The Gini coefficient is often used as an inequality index due to its invariance properties and its ability to satisfy the transfer principle. However, it was considered useful only in cases where it is decomposed, which is often done in the current literature. Despite this, the Gini has several limitations that make it a poor indicator of progress and distribution. In the South Africa context, the Gini was further highlighted as a poor metric to target because it excludes income generated from the informal sector that may not always be accurately captured by surveys (this may speak to the shortcomings of survey data, rather than the Gini itself). By focusing on the Gini, a grim picture of inequality is painted in South Africa. This ignores the political reforms and improvements in access that have taken place. In order to present a more accurate depiction of inequality in South Africa, a broader approach, which focuses on overall welfare and progressive reform is necessary. A multidimensional approach, that still places economic indicators at its core, provides the granularity required to view inequality in a more holistic way and highlight the roots of the problem. The many dimensions of inequality Although income and wealth dimensions remain at the forefront of measuring inequality, the inclusion of dimensions such as education (Hoxby & Avery, 2013), health (Ataguba et al., 2011), crime (Sampson et al., 2005), and spatial inequality (Reardon & Bischoff, 2015) have been investigated to provide a more comprehensive view of the development progress that has taken place in South Africa. The post-apartheid development policy largely focused on addressing existing economic, social, and spatial inequalities along racial lines. This has led to several reforms that have improved the overall quality of life and living conditions of disadvantaged groups in South Africa. This progress is often under-reported in the media. Basic living conditions are at the forefront of progressive reforms. Housing, with the addition of water, sanitation, electricity, and telephone access, saw a 152% increase in the budget allocation following apartheid (Brook, 2017). To date, approximately 2-3 million government-subsidised homes have been built (Centre for Affordable Housing Finance Africa, 2021). The benefits of housing have been enhanced by the expansion of water and sanitation to 95% of the population 20 years after apartheid (Jacobs et al., 2014). Access to education and opportunities for employment have also improved over the last three decades. The once racially segregated schooling system has been dismantled to expand access to integrated schooling. Reforms have attempted to decolonise the school­ing system, particularly by allowing students to be taught in their mother tongue language. Approximately 20% of the overall budget has been allocated to education to ensure equitable access to free schooling for all South Africans (Brook, 2017). To ensure long-term economic shifts, affirmative action policies have been introduced to tackle the employment disparities among racial and gender groups. Twenty years after the end of the apartheid era, the racial gap in employment has been reduced, however, this gap still remains large, with a more than 50% difference in employment between the Caucasian and Black population (Fredericks & Yu, 2017). The gender gap has also remained, making African women highly vulnerable to unemployment (Fredericks & Yu, 2017). Healthcare access and supply was recognised as critical in the post-apartheid era. In an attempt to address health inequalities, approximately 3% of the budget was allocated to healthcare sector reforms (Brook, 2017). This has led to the expansion of primary healthcare clinics nationwide and free access to primary healthcare services for all, along with free access to higher levels of care for impoverished individuals. Similar to the education sector where access has increased, policy discussions in the health sector are now moving towards addressing the quality of the services provided so that real changes can be seen in outcomes. Multidimensional approaches to measuring inequality, such as the Level of Living approach (Kaldaru et al., 2009), have the advantage of tracking progress over time at an individual (including children) and household level. This approach seeks to determine whether indi­viduals have the resources needed to govern their own lives. Overall progress can be evaluated by reviewing the average level of each dimension and the proportion of individuals without important resources. Inequality can be evaluated by reviewing dispersion of the population and differences between groups. This creates a shift in thinking from wealth creation to establishing overall welfare. The multidimensional approach was considered more comprehensive and indicative of how inequality manifests in the lived experi­ences of South Africans when compared to the aggregate Gini coefficient. The StatsSA 2019 report provides a more comprehensive approach to capturing the gradual reforms made in post-apartheid South Africa (Statistics South Africa, 2019). It was hypothesised that combining economic indicators with other dimensions such as life expectancy may denote the state of inequality more clearly. A systematic approach to understanding inequality Another proposed framework was a systemic approach to understanding inequality. This approach provides a holistic multidimension­al view of inequality and the power relations of influence. It includes seven domains, four of which are linked to financial security, with several indicators under each domain Figure 3. Figure 3: The Multi-Dimensional Inequality Framework (LSE & Oxfam, 2018) By taking this broader perspective, multiple domains can be evaluated. In addition to inputs, processes can also be reviewed, and the various types of inequality can be more accurately identified (Bucelli & Mcknight, 2021) This framework attempts to empower communities (International Civil Society Centre, n.d.). It emphasises the need for agenda setting, policy reform and indicators to be driven by the input of marginalised communities. Despite the benefits that may be derived from community participation, these approaches can be challenging to apply as they often require additional tax and property data. 4. Broader discussion on inequality and inequality measures In this part of the workshop, the discussion shifted towards how the initial research questions presented earlier could be reframed and how best to think about the measurement of inequality in South Africa. Rethinking the research questions A theme that emerged during the discussion was the need to consider the research question(s) more carefully. The suggested research question of excluding the top 1% of the income distribution from inequality measurements was viewed as bypassing a fun­damental cause of inequality. It was also viewed as signaling the wrong political measure if a structure of privilege is excluded from measurement. Instead, it was suggested that it would be more helpful to focus on the top 1% of the income distribution to better understand how fiscal instruments could be best used for income redistribution, most notably of the wealth tax base. At a broader level, it was suggested that researchers take a step back and ask the following questions: Which types of inequality matters the most? Which type of inequality do we want to understand more and why? Is this study only useful for policymakers, or for community participants too? How should the lived experience be incorporated into the measurement of inequality? The discussion also emphasised the need to veer away from measuring the level of inequality, to why inequality continues to remain high and what can be done to address this. This is of particular importance when reviewing the high levels of income inequality that persist despite improvements in absolute poverty and access to social and essential services. There was some speculation that is may be due to current policies being unable to identify and address the root causes of inequality. The abundant literature on poverty and inequality in post-apartheid South Africa make the root causes clear, which suggests that the issues may lie in policy design and implementation. The limitations of quantitative data in capturing the full picture of inequality were acknowledged, and there was agreement that gaps in qualitative data need to be filled. Abundance of inequality literature in South Africa The literature on income inequality in South Africa is vast and the quantitative measurements of inequality presented in this literature show little variation over time. This literature is useful to establish best practices for policy design in South Africa (Leibbrandt et al., 2021). Most of the academic literature on income inequality is often misinterpreted or misrepresented by the media. Media attention needs to shift away from a sole focus on income inequality towards a multidimensional approach of reporting on inequality that pre­sents the state of the country in a more nuanced way. To delve further into the structural and demographic factors associated with inequality, disaggregation of indicators with a focus on gender and the young may lead to more meaningful results. The capacity to investigate these measures are apparent in the Stats SA 2019 report which includes multiple dimensions of inequality (Statistics South Africa, 2019). Wealth and inequality Wealth inequality has largely been excluded when investigating indicators of inequality, with more emphasis being placed on pover­ty and marginalisation related to income inequality. The multidimensional approach goes beyond income inequality and has the advantage of allowing wealth disparities to be included as an additional factor rather than an alternative one. By adding wealth inequality to the debate, power inequality, mentioned in the systemic approach, becomes increasingly relevant. The inclusion of mul­tiple economic indicators, including wealth, presents a more comprehensive picture and allows us to answer questions related to the lack of distributional progress following the end of the Apartheid era. Which multidimensional approach? The inclusion of several dimensions of wealth and well-being provides a more accurate representation of the current economic state of South Africa with respect to equality. Various metrics have been studied to date, and are already available as a means of evaluating South Africa in a multidimensional way. However, the outcomes of these are often similar regardless of the metric used. Although the need to interpret inequality through a multidimensional lens is evident, the ideal method of doing this has not been made clear. Various weightings can be used to determine the final measure of inequality, and the relevance of each contributing domain needs to be explored. The inclusion and weighting of indicators needs to be carefully considered and critiqued in the South Afri­can context. 5. Data limitations and alternative data sources In the last part of the workshop, participants focused on the nature and shortcomings of the datasets typically used for inequality analyses. Issues with pre-1994 data in South Africa The benefits of reviewing longitudinal data were expressed in the workshop, particularly when following multidimensional progress over time. The comprehensive collection of data, related to several important dimensions of inequality, is currently reported in the Stats SA report. However, progress over longer periods of time is challenging to see due to the limitations of pre-1994 data. Histor­ical datasets do not provide information on all population groups. Census data collected during the Apartheid era often excluded black South Africans who were severely impoverished and often unemployed. This has heavily affected the ability to review all dimensions of inequality over time as data cannot accurately be collected retrospectively. The Stats SA reports and various household surveys therefore provide a starting point for the collection of multidimensional data (Statistics South Africa, 2019). Useful datasets Several relevant and useful datasets were identified for studying multidimensional inequality. NiDS and GHS were highlighted as key sources of data on various indicators of the multidimensional poverty index between 2008 and 2017. The lack of wealth data in household surveys can be overcome through the use of property market, pension, credit and anonymised tax data. The inclusion of these data sources often results in variations in the findings obtained by income inequality data, highlighting the need to include wealth indicators. Additionally, HEMIS may be useful for tracking individuals through higher education and the tax system. Despite the availability of a wide array of data sources, collecting longitudinal data in multiple dimensions, including wealth, may be difficult to access due to tedious application processes and restricted access. The new implementation of the POPI act has also created difficulty in accessing data due to the uncertainty surrounding how data is distributed and the fear of prosecution if the act is breached. Due to these limitations, it is important for existing literature to be considered and used to improve efficiency. Exploring additional data The discussion highlighted the need to explore inequality in various population sub-groups. This may improve the quality of data and supplement the already available literature. Focus groups were proposed as a source of qualitative data which can be used to em­power communities and emphasize the indicators that are considered valuable to the population. The inclusion of vulnerable groups, such as youth and children, during national surveys can also be considered a goal for South Africa. This has the ability to improve the quality of data that is currently available and provide a longitudinal view of progress made in the country. It is important to note that progress may appear to be slower when including youth. 6. Conclusion and way forward After a robust debate on inequality and inequality measures, there was consensus that aggregate measures of inequality are not as useful as measures that lend itself to more nuance and granularity, especially in the South African context. Based on the current inequality literature, it is evident that strides have been made in South Africa post-1994 (Statistics South Africa 2019). However, structural issues remain a binding constraint for further growth and development. All participants agreed that more could be done to rectify this position. An important outcome regarding the way forward was the need for a second workshop that focuses on policy options for reducing inequality. References Aghion, P., & Bolton, P. (1997). A Theory of Trickle-Down Growth and Development. Review of Economic Studies, 64(2), 151–172. https://doi.org/10.2307/2971707 Alvaredo, F., Atkinson, A. B., Piketty, T., & Saez, E. (2013). The Top 1 Percent in International and Historical Perspective. Journal of Economic Perspectives, 27(3), 3–20. https://doi.org/10.1257/JEP.27.3.3 Ataguba, J. E., Akazili, J., & McIntyre, D. (2011). Socioeconomic-related health inequality in South Africa: evidence from General Household Surveys. International Journal for Equity in Health 2011 10:1, 10(1), 1–10. https://doi.org/10.1186/1475-9276-10-48 Bucelli, I., & Mcknight, A. (2021). Mapping systemic approaches to understanding inequality and their potential for designing and implementing interventions to reduce inequality. https://www.lse.ac.uk/International-Inequalities/Publications/All-LSE-III-Working-Papers Centre for Affordable Housing Finance Africa. (2021). RDP Assets in South Africa. https://housingfinanceafrica.org/projects/rdp-assets-study/ Diane Brook. (2017). South Africa After Apartheid: Recent Events and Future Prospects. http://www.socialstudies.org/sites/default/files/publications/se/6107/610705.html Fields, G. S. (2007). How much should we care about changing income inequality in the course of economic growth? Journal of Policy Modeling, 29(4), 577–585. https://doi.org/10.1016/j.jpolmod.2007.05.007 Fredericks, F., & Yu, D. (2017). The effect of Affirmative Action on the reduction of employment discrimination, 1997-2015. Futshane, V. (2021). Recovering from COVID-19 and inequality: the experience of South Africa. Prepared for the United Nations Virtual Inter-agency Expert Group Meeting on Implementation of the Third United Nations Decade for the Eradication of Pover­ty (2018-2027). Hoxby, C., & Avery, C. (2013). The Missing “One-Offs”: The Hidden Supply of High-Achieving, Low-Income Students. https://www.brookings.edu/wp-content/uploads/2016/07/2013a_hoxby.pdf Inga Jacobs, Mitzi du Plessis, Kim Trollip, & Lani van Vuuren. (2014). South Africa’s 20-year journey in water and sanitation research. http://www.wrc.org.za/wp-content/uploads/mdocs/WRC20-FINAL.pdf International Civil Society Centre. (n.d.). Making Voices Heard and Count. Retrieved July 26, 2021, from https://voicescount.org/about/ Kaldaru, H., Kaasa, A., & Tamm, K. (2009). Level of Living and Well-being as Measures of Welfare: Evidence from European Coun­tries. Estonian Discussions on Economic Policy, 17(0). https://doi.org/10.15157/TPEP.V17I0.908 Kaldor, N. (1955). Alternative Theories of Distribution. Source: The Review of Economic Studies, 23(2), 83–100. Leibbrandt, M., Andrés, F., & Pabón, D. (2021). Reinstating the importance of categorical inequities in South Africa. http://open­saldru.uct.ac.za LSE, & Oxfam. (2018). Multidimensional Inequality Framework Final draft. OPHI. (2020). Global MPI 2020. University of Oxford, Oxford Poverty & Human Development Initiative. https://ophi.org.uk/multidi­mensional-poverty-index/global-mpi-2020/ Orthofer, A. (2016). Wealth Inequality in South Africa: Insights from Survey and Tax Data. www.REDI3x3.org Peterson, E. W. F. (2017). The Role of Population in Economic Growth: Https://Doi.Org/10.1177/2158244017736094, 7(4). https://doi.org/10.1177/2158244017736094 Ravallion, M. (2001). Growth, inequality and poverty: Looking beyond averages. World Development, 29(11), 1803–1815. https://doi.org/10.1016/S0305-750X(01)00072-9 Reardon, S. F., & Bischoff, K. (2015). Income Inequality and Income Segregation1. Https://Doi.Org/10.1086/657114, 116(4), 1092–1153. https://doi.org/10.1086/657114 Sampson, R. J., Morenoff, J. D., & Raudenbush, S. (2005). Social Anatomy of Racial and Ethnic Disparities in Violence. American Journal of Public Health, 95(2). https://doi.org/10.2105/AJPH.2004.037705 Schotte, S., Zizzamia, R., & Leibbrandt, M. (2018). A poverty dynamics approach to social stratification: The South African case. World Development, 110, 88–103. https://doi.org/10.1016/J.WORLDDEV.2018.05.024 Shifa, M., & Ranchhod, V. (2019). Handbook on inequality measurement for country studies. University of Cape Town. Statistics South Africa. (2019). Inequality trends in South Africa: A multidimensional diagnostic of inequality. StatsSA. www.statssa.gov.za Thorbecke, E. (2013). The interrelationship linking growth, Inequality and poverty in Sub-Saharan Africa. Journal of African Econo­mies, 22(SUPPL. 1). https://doi.org/10.1093/JAE/EJS028 Thorbecke, E., Charumilind, C., Thorbecke, E., & Charumilind, C. (2002). Economic Inequality and Its Socioeconomic Impact. World Development, 30(9), 1477–1495. https://EconPapers.repec.org/RePEc:eee:wdevel:v:30:y:2002:i:9:p:1477-1495 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

A report by the Inclusive Society Institute and the In Transformation Initiative Copyright © 2020 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO In Transformation Initiative PO Box 11071 Silver Lakes, 0054 South Africa All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or the In Transformation Initiative or those of their respective Board or Council members. Author: Daryl Swanepoel Language editor: Olivia Main Content Introduction Assessing the status quo Why is SAPS crime intelligence not yielding adequate results? Assessment Way forward References Introduction The Inclusive Society Institute and In Transformation Institute (ISI & ITI) have registered their serious concern with the high levels of crime in South Africa, the fact that a vast majority of the arrests do not result in court action, and the poor prosecution rates through the judicial system. They identified, as a serious concern, their impression that crime intelligence has broken down in the country and that it had become dysfunctional. The institutes’ intuition was confirmed by the riots and looting, triggered by former President Jacob Zuma’s incarceration at Estcourt Prison for contempt of court charges, which, in mid-July 2021, ran wild in KwaZulu-Natal and Gauteng. This resulted in more than 300 deaths, over R20 billion worth of infrastructure damage, and the loss of thousands of jobs (Aljazeera, 2021), setting back South Africa’s economic recovery from already strained levels as it battles to recover from the aftermath of the COVID-19 pandemic. “The state’s inability to foresee or forestall this frightening and destructive series of events that occurred on such a mammoth scale was a monumental failure [of the State Security Council (SSA) and Crime Intelligence] that defies explanation” (Araie, 2021). The breakdown was confirmed by South African President, Cyril Ramaphosa, who confirmed that “the government had failed to meet the riots and violence with an adequate response, and [that] intelligence had failed them on the ground” (BusinessTech, 2021). With this as background, the ISI and ITI held a workshop with experts from the security research fraternity to assess the state of crime intelligence in South Africa; and to consider interventions needed to restore effectiveness in South Africa’s crime intelligence capabilities. The workshop considered whether the ISI and ITI’s intuition with regard to a breakdown in crime intelligence was indeed justified, the problems that were being experienced in the field, and what initiatives the institute could consider in assisting and giving advice and direction to improve the situation (Swanepoel, 2021; Meyer, 2021). Assessing the status quo There are two components to Crime Intelligence (CI), namely, operations and intelligence information management. The strategic objective is to: prevent, combat and investigate crime. evaluate, analyse and collate data. submit intelligence to the National Intelligence Coordinating Committee (NICOC); and institute counter-intelligence measures within the South African Police Services (SAPS). In addition, they often work on police corruption, and they support international cooperation in the field of crime intelligence (Newham, 2021). In terms of the availability of financial resources to carry out its mandate, the police budget has over the last decade (2011/12 to 2019/20), increased by 81 per cent, rising from R53,5 billion to R96,8 billion. And although CI forms only a small component of that budget (R4 billion), its proportional share has, over the same period, risen at a much higher rate (113 per cent) (Newham, 2021). In terms of personnel, there are around 8,300 people working in the division. They are allocated across the country, mostly at station and provincial level, as well as a strong component at the national level (Newham, 2021). This would indicate that, given the budget and capacity, potentially, there should be substantial intelligence gathered. But analyses of the SAPS annual reports show an alarming decline in performance. An assessment of network operations – which normally lasts between three to six months, and which is aimed at organised crime or criminal networks – shows a drop from 49,019 such operations in 2011/12 to a mere 859 in 2015/2016. It dropped even further to 311 in 2018/2019, whilst recovering slightly to around 700 last year in 2019/2020. Since 2016/17, CI has repeatedly changed their annual performance indicators so that it is not possible to obtain a clear understanding of performance trends since then. This in itself is of concern, as are the types of indicators used. They are output indicators, so it is not possible to assess the impact of the resources and work undertaken (Newham, 2021). This points to a serious problem, as the work of crime intelligence, regardless of the performance indicators they choose to use, is supposed to guide policing in terms of visible and proactive policing, such as by identifying emerging trends, patterns, geographical hotspots and modus operandi. In addition, it is meant to aid reactive policing, like detective work, by providing insights as to how criminal networks operate to store, transport and distribute stolen and illicit goods or services, how money is laundered and where particular criminal suspects might be found (Newham, 2021). In terms of proactive reports, about 4,500 were generated at national level in 2019/2020, most of which were operationalised, that is, contributing to some kind of policing operation. At provincial level there were around 14,000 such proactive reports of which some 11,000 were operationalised. And at cluster level there were 44,476 of which almost 39,554 were operationalised. In terms of reactive reports, 253,538 were generated in 2019/2020 of which 195,727 were operationalised (Newham, 2021). The SAPS annual reports provide no additional information about what these statistics mean but given the deterioration in the police’s ability to reduce organised and violent crime, raises the question as to what value society is deriving from these reports. Certainly, there has been no improvement in the crime and public safety situation in the country. For example, last year, just under 20 per cent of the reported murder cases were solved – a drop of 38 per cent since 2011/12 and just under 17% of aggravated robberies were solved – a drop of 24 per cent since 2011/12. And over the same period murder increased by 37 per cent, and aggravated robberies increased by 43 per cent (Newham, 2021). Why is SAPS crime intelligence not yielding adequate results? Firstly, it is not only Crime Intelligence that is not performing well. Overall, most SAPS policing functions have deteriorated since 2012. The key reason was identified already in the National Development Plan, which spoke of a “serial crises of top management in the police”. Essentially, too many people were appointed to the top ranks of General or Brigadier for political rather than policing reasons. A former senior manager, who investigated the phenomena, suggested four categories of people that constitute CI, namely: those who were appointed for political reasons primarily to act in the interests of the dominant faction of the governing party the ANC. those whom they appoint to support their interests and control in CI (they could be family members, friends or those in their networks). professional operatives that have gone rogue or just lost interest; and a minority of highly motivated professionals who were trying to move the organisation to one in which their position became the dominant position in CI. (Newham, 2021) The difficulties with regard to the political interference started with the appointment of Richard Mdluli as SAPS National Head of Crime Intelligence by Jacob Zuma two months after he was sworn in as President in 2009. Mdluli himself was responsible for well over 200 appointments, many reportedly including family, friends and loyalists. Despite his history in the apartheid Security Branch, he expressed his loyalty to former President Zuma allegedly by playing a role in providing the so-called ‘spy tapes’ that were used to illegally withdraw corruption charges against Zuma, enabling him to rise to the presidency. In addition to interference in the work of SAPS Crime Intelligence, Zuma made a number of appointments to the State Security Agency (SSA) also with the view of supporting his control of the ANC and the country. To understand the extent of the deterioration, the Mufamadi Committee of Inquiry into the State Security Agency, was appointed at the beginning of the Ramaphosa Presidency in 2018. This committee found: That there had been a serious politicisation and factionalising of the intelligence community over the past decade or more. These factions were largely based on factions within the ruling party, resulting in an almost complete disregard for the Constitution, policy, legislation and other prescripts. It turned what should be a civilian intelligence community into a private resource to serve the political and personal interests of particular individuals. A doctrinal shift away from the prescripts of the Constitution, the White Paper on Intelligence, and from the ‘human security’ philosophy, towards a much narrower, ‘state security’ orientation. That the cumulative effect was the deliberate re-purposing of the SSA. Excessive secrecy stifled effective accountability. Abuse of resources. Involvement of Ministers in operational matters. (Anon., 2021) Based on the findings, the committee recommended: That a comprehensive review of the architecture of the South African security community (community-wide architecture) and legislation be done, which should include a review of intelligence coordination and the NICOC. That the mandates of the intelligence departments, including crime intelligence, be refined, and that clearer and more focused definitions of mandates be developed. That the national intelligence training and education capacity for the intelligence community be reviewed. That South Africa’s intelligence doctrine, policies and prescripts, which should be oriented towards the Constitution, and based on the revised White Paper, be confirmed. That options for and consequences of repealing the Security Services Special Account Act No. 81 of 1969, and the Secret Services Act, No. 56 of 1978, be explored. (Anon., 2021) Disappointingly, implementation of the recommendations has not progressed. A further confusing dynamic developed around the question as to who heads CI. Indeed, the situation remains confusing, to the point that it is unclear, given the ongoing legal proceedings in which Peter Jacobs, who was appointed shortly after Cyril Ramphosa’s rise to the presidency to ‘fix’ this division, has successfully halted the irregular disciplinary proceedings against him that resulted in his re-deployment to another component in the SAPS. To outsiders it is unclear as to who is actually currently in charge of CI, nor who will be permanently appointed as the head of SAPS Crime Intelligence. All of which creates accountability issues (Anon., 2021). Moreover, since the political dimensions within the intelligence community seem to run deep, it has become a complicated chess game, with serious consequences as a result. There are worrying suggestions that elements from outside the police may well be able to activate and deactivate elements of the intelligence community (Anon., 2021). The leadership instability at CI is aptly demonstrated in the graphic below, which was published in the Daily Maverick on 13 July 2021 (Dolley, 2021). The central question is why people would want to disable or manipulate crime intelligence, which has been going on for some time? It is suggested that one purpose of making crime intelligence dysfunctional would be to undermine any attempt or likelihood of having successful investigations into high level corruption committed by senior politicians and officials in the state and their partners in the private sector. These have been clearly exposed by the Zondo Commission, but further evidence is required if successful prosecutions are to follow. The second reason could be certain factions are motivated by attempts to gain control of the substantial resources, as alluded to earlier in this report, including for purposes of channelling monies from the Secret Service Account in Crime Intelligence for example, for political purposes. A third reason could be to hollow out CI’s ability to predict, report or investigate political machinations and instigations behind, for example, the looting and unrest experiences in mid-July (Marais, 2021). Apropos the intelligence failure of the looting and unrest: Whether it be attributable to the factional politics within the ruling party or not, whether it is simply the socio-economic needs that led to the opportunistic exploitation of the situation, or whether there was an element of organised crime involvement in the looting and vandalism, CI had a responsibility to know a lot more, and to analyse with much more clarity, than they did. As such, it was a spectacular failure, and no amount of blame-seeking can excuse it (Marais, 2021). The failure also has to do with mandate interpretation of the various intelligence agencies and the propensity of people from the various agencies not wanting to work in multi-structure teams. The SSA would have been engaged, given the strong political motivation behind the unrest, and as well as CI, given the criminal motivation. Until the intelligence structures find a way to efficiently coordinate amongst themselves, crime intelligence will remain weak and dysfunctional. They need to find a way to form joint teams to work together, and to jointly investigate specific threats, in order to mitigate risk (Marais, 2021). Assessment An analysis of the panel discussion leads the institutes to conclude that: Financial and other resources appear not to be the inhibiting factor for the delivery of the timeous, accurate and effective intelligence information required to combat crime and civil unrest threats in the country. Actually, when considering the resources versus output, as has been illustrated in this report, performance of the period prior to 2011/12, CI should, in theory, be able to perform at higher levels than then. Fixing the crime intelligence dysfunctionality lies in matters other than finances. One area of concern is what appears to be the widescale appointment of political associates, and nepotism. Not only has this neutralised operational efficacy, but it has also led to a force that lacks the requisite skills capacity to perform optimally. There appears not to be a cohesive and strategic understanding at the executive level as how to fix the current dysfunction within the intelligence community. The spat between the police and intelligence ministers as to the timely provision of intelligence related to the July unrest is a prime example. In fact, the whole political dynamic within the intelligence community remains problematic, and the provision of timely and efficient intelligence will continue to deteriorate until such time that political leadership is given at the highest level. The two-year timelapse in implementing the recommendations of the Mufamadi Committee’s report is, for example, indefensible, since failure to act has proved to hold a serious real national security threat for the country. The broader intelligence community, and CI in particular, is in dire need of reform. Key changes need to be made to ensure an increase in the functionality of the intelligence community. The National Security Advisor to the President, which post is currently vacant, could play a key role in driving such reform[1]. This position should be filled on an urgent basis with a person who he fully trusts and who has the ability to work over the boundaries of current factions and departments. In similar vein, the National Security Council’s role needs to be properly defined and its relevance as a key instrument in the crime intelligence arsenal settled. There seems to be inadequate accountability, even at ministerial level. The squabbling within and between agencies and their inability to have timeously assessed the situation in the wake of former President Zuma’s incarceration, and to have advised the president, accordingly, is a manifestation thereof. In the main the problem is not technical, it is political (Anon., 2021). The underperformance and dysfunctionality within the intelligence services raises a number of questions that need answering: To what extent do the findings of the Mufamadi Committee of Inquiry into the SSA remain relevant, with particular emphasis on those findings related to CI and its nexus with the SSA? To what extent has the politicisation of CI undermined its capabilities and effectiveness, how deep has the contamination been and what steps are being taken to remedy the situation? In tandem, such an analysis should include an assessment as to the skills set of the unit and the extent to which the qualification requirements of CI were circumvented through the politicisation; and what should be done to remedy the situation. Linked to the aforementioned, to what extent is the doctrine, policies and prescripts of the various intelligence agencies aligned to the Constitution, and where not, what amendments are needed to bring them in line? Likewise, is the skills set and capabilities within CI sufficient for the task at hand; and are there indeed intelligence capacity shortages? Are the mandates of the various intelligence agencies still fit for purpose, what cooperation mechanisms are in place, to what extent does information sharing between CI and the SSA take place, and how effective is such information sharing? And once again, how should this be remedied? In the context of a top-heavy organisational structure, the organigram of CI needs to be assessed. The South African Police Service has around 200 Generals and 600 Brigadiers. The proliferation of chiefs leads to unnecessary duplication of functions and resultant turf battles. To what extent are the internal mêlées impacting the CI and the ability of SAPS operational components to process and act on intelligence received? Way forward The deep-rooted factional divisions within the crime intelligence environment and its politicisation, probably rules out any meaningful prospect of finding internal solutions and remedies to overcome the current dysfunctionality within CI; and to establish in its place a professionalised, capable, efficient, constitutionally inspired, human-orientated service. Such solutions and remedies will have to emanate from an external intervention, which presents its own challenges. Given the security setting within which CI is located, and which by its very nature is wrapped in a veil of secrecy, it will be difficult for external advocates to, without sufficient executive mandate, penetrate the CI establishment. To this end, it is recommended that an independent review panel, comprised of security and intelligence experts from both within and outside of the public service, similar to the then Ministerial Defence Review Committee, be established by the President. Said panel should be mandated to seek answers and solutions to the questions posed in this report, together with others identified whilst engaging the broader security establishment during the process of developing the panel’s mandate. It will assess the continued relevance of the now three-year-old High-Level Review Panel on the State Security Agency report, whether progress has been made with its implementation and broader questions as identified during the dialogue. In order to take the discussion forward, and to give further content to the recommendations contained in this report, the Inclusive Society Institute and In Transformation Institute will co-host a second, more broadly representative dialogue, which will have as its objective a deeper and more nuanced analysis of the status quo, from which: The parameters and rules can be established within which the intelligence services of the country need to confine itself in order to be conducive to the behaviour expected within a constitutional and democratic state. A draft comprehensive mandate for the proposed review panel can be expounded. The process of reviewing the composition, structure and mandate of the intelligence establishment in South Africa can be defined. Recommendations for the structuring and composition of the review panel can be developed; and A proposed mandate for the review panel can be fleshed out. The sobering events sparked by the recent imprisonment of former President Zuma has served as a timely reminder of the crucial role that the intelligence services of a nation play. It illustrated the devastating impact that a broken and dysfunctional intelligence service can have on the economy and general well-being of the nation. We live in a fragile society. Time is of the essence. The necessary thing to do, is act now. References Aljazeera. 2021. South Africa unrest death toll jumps to more than 300. [Online] Available at: https://www.aljazeera.com/news/2021/7/22/south-africa-unrest-death-toll-jumps-to-more-than-300 [accessed: 2 August 2021]. Anon. 2021. An independent consultant with extensive experience in policy and advocacy on policing, community safety and post-conflict reconstruction that participated in the Inclusive Society Institute / In Transformation Institute dialogue called to assess crime intelligence in South Africa, which was held on 19 July 2021. Araie, F. 2021. Intelligence failure on co-ordinated insurrection will cost South Africa billions. [Online] Available at: https://mg.co.za/opinion/2021-07-13-intelligence-failure-on-co-ordinated-insurrection-will-cost-south-africa-billions/ [accessed: 2 August 2021]. BusinessTech. 2021. Government moves to stop ‘next phase’ of insurrection in South Africa: report. [Online] Available at: https://businesstech.co.za/news/government/506884/government-moves-to-stop-next-phase-of-insurrection-in-south-africa-report/ [accessed: 2 August 2021]. Dolley, C. 2021. Zuma’s legacy: The build-up to breaking down Crime Intelligence. [Online] Available at: https://www.dailymaverick.co.za/article/2021-07-13-zumas-legacy-the-build-up-to-breaking-down-crime-intelligence/ [accessed: 13 July 2021]. Marais, N. 2021. Panellist at the Inclusive Society Institute / In Transformation Institute dialogue called to assess crime intelligence in South Africa held on 19 July 2021. Nel Marais is the founder of Thabiti, a specialised risk consultancy in South Africa. Meyer, R. 2021. Convenor of the Inclusive Society Institute / In Transformation Institute dialogue called to assess crime intelligence in South Africa held on 19 July 2021. Roelf Meyer is a Director at In Transformation and a member of the Inclusive Society Institute’s Advisory Council. Newham, G. 2021. Panellist at the Inclusive Society Institute / In Transformation Institute dialogue called to assess crime intelligence in South Africa held on 19 July 2021. Gareth Newham is the Head of the Justice and Violence Prevention Programme at the Institute for Security Studies. Swanepoel, D.W. 2021. Panellist at the Inclusive Society Institute dialogue called to assess crime intelligence in South Africa held on 19 July 2021. Daryl Swanepoel is the Chief Executive Officer of the Inclusive Society Institute [1] Subsequent to the drafting of this report, Dr Sydney Mufamadi was appointed on 5 August 2021 as the National Security Advisor. [2] The proposed panel’s mandate will be broader than that of the panel announced by President Ramaphosa on 5 August 2021, who were appointed to focus on a thorough and critical review of the preparedness and the shortcomings in its response to the recent lootings and riots in KwaZulu-Natal and Gauteng Provinces. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2021 Inclusive Society Institute 50 Long Street Cape Town South Africa 8000 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members. Author: Daryl Swanepoel Content Introduction US-Africa relations US-China relations The US-China-Africa nexus Conclusions References - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Introduction When President Joe Biden assumed office in January 2021, analysts attempted to predict how the relationship between the United States of America (US) and Africa would unfold under his administration. The relationship needed some healing given the decline in rapport between the two sides under the previous Trump administration, where the US’s “relations with the continent flitted between perfunctory and hostile” (Thomas, 2021). The US foreign relations decline under the previous administration, was not restricted to Africa. Across the globe this held true. It was, however, especially severe between the US and China, where it turned into a direct trade-war confrontation between them (BBC, 2020). All the while, the US has suggested that China’s growing influence in Africa poses a growing threat (Associated Press, 2021), leaving African leaders with the quandary: How to respond to the US-China nexus as it plays out on the African continent? Analyses directly after the Biden administration’s assumption of office was that, broadly speaking, there would be a normalisation of diplomatic relations between the US, China and Africa. In this regard, general consensus was that the Biden administration would build on and deepen the pre-Trump initiatives as they relate to Africa, and that they would take a keener interest in Africa. Similarly, the contestation with China would remain, especially as it relates to trade and human rights; but the narrative will be more civil and competitive as opposed to the combative approach taken by the previous administration. To date there have been mixed signals. Whilst the Biden administration has “reaffirmed the desire for collaboration and cooperation with China in areas that serve American interests, in sharp contrast to the ‘all-encompassing decoupling’ policy toward China in the final year of the Trump administration” (Cheng, 2021), US Secretary of State, Anthony Blinken, as late as May 2021, accused China of acting more aggressively (BBC, 2021), and some analysts are now suggesting that the US is even opening up new fronts in the trade war with China (Miller, 2021). What to expect going forward? Questions remain: How is US policy on Africa shaping up? And likewise, how is their approach to China being moulded? How should African countries, who wish to retain good relationships with both sides, respond to the dynamics as they play out on the African continent and how should they position themselves to achieve mutually beneficial outcomes? This paper, in an attempt to find answers to the questions posed, summarises the dialogue on the theme of this paper. The dialogue between a range of academics and policy analysts, drawn from both the United States and Africa, took place in late June 2021. US-Africa relations Through the lens of African analysts In a sense, the jury is still out as to what the Biden administration is going to do with regard to its foreign policy towards Africa. It is fair to say that despite the commitments made during the presidential campaign and what has happened subsequently, Africa remains anxious as to what the Biden policies will hold for the continent. It is also fair to say that following the benign disinterest of the previous administration, African leaders are keen to understand what the new approach to Africa will hold (Grobler, 2021). Obviously, following the lows of the Trump era, a unique opportunity presents itself for the United States to improve the relationship visibly and concretely between the US and Africa. The negative dispersions of the previous US president towards Africa, the fact that he did not visit the continent and his failure to support the former Nigerian Finance Minister for the post of Secretary General of the World Trade Organisation, are all examples that served to strain US-Africa relations. The Biden administration can correct and rectify this (DIRCO, 2021; Grobler, 2021). Echoing this is the assertion that at this time in 2017, four years lay ahead under a Trump administration, which saw US-Africa relations reach its lowest ebb. There is a definite sense that the US could have done more during those years. However, what we are now going through is a normalisation of relations between the two sides (Weseka, 2021). The South African Department of International Relations and Cooperation (DIRCO) seem to agree. It is of the view that the inauguration of President Biden has not only set the stage for a reset of the South Africa-United States (US) bilateral relationship, but also for a fresh approach by the US in its relationship with the African continent. They say that President Biden has since his inauguration taken decisive steps to move the US away from the nationalist, confrontationist and unilateralist “America First” policies of the Trump Administration. It has sent strong signals that Africa will be accorded greater priority in US foreign policy (DIRCO, 2021). So, in a sense, there has been a quiet return to normality, and business as usual – the period under the previous administration was an anomaly. It is now a continuation and a return to the policies under the Obama and Bush administrations. The continent has generally appreciated these efforts (Weseka, 2021). It remains to be seen as to whether there will be concrete US economic interest, strongly focussing on trade and investment with the continent, or whether it will be business as usual. Six, seven months into the new administration, there are some green shoots. The fact that Biden has appointed a few very experienced officials that know Africa, such as Ambassador Linda Thomas-Greenfield as the US representative to the United Nations, bodes well for US-Africa relations. Moreover, a well-regarded University of the Witwatersrand academic and US analyst said that Thomas-Greenfield worked with China on joint projects on the ground when she was stationed on the continent. Hopefully, she will serve as an advocate for Africa and possibly for a more sensible US policy towards China. And Mary Catherine Phee – an old hand as it relates to Africa – who has been nominated as Assistant Secretary of State for African Affairs, engenders hope, in that they would be strong advocates for a more strategic relationship with Africa (Grobler, 2021; Weseka, 2021). The fact that a number of Nigerian-Americans have also now been appointed to senior positions in the Biden administration bodes well for a fresh approach, as does the codification of Juneteenth as a public holiday in the US, as this will bring new insights into the political discourse (Weseka, 2021). There have been many statements on Africa: President Biden’s virtual address to the African Union (AU) Summit, positive decisions on US’s re-joining of the World Health Organisation and COVAX, all of which were well received and welcomed by Africa (Grobler, 2021; Weseka, 2021). What Africa would now want to see is a US that is pursuing a calculated high level dialogue strategy and to develop a clear comprehensive bi-partisan long-term vision for its US-Africa policy (Grobler, 2021). DIRCO also views Biden’s address to the 34th Summit of the African Union on 4 February 2021 as an indication of the US’s willingness to re-engage with the Continent. In his address, for example, Biden made it clear that the United States stands ready to be a partner of Africa in solidarity, support and mutual respect (DIRCO, 2021). The department also points to discussions between the leaders of South Africa and the United States, where President Biden, once again, expressed the need to engage on matters such as the strengthening of US-South Africa and US-Africa relations, as well as the importance of international solidarity to overcome the Covid-19 pandemic (DIRCO, 2021). The recent indication of support from the Biden Administration for the TRIPS Waiver initiative that is being championed by South Africa and India at the WTO is a further indication of a changed posture towards Africa, especially given the Administration’s willingness to now alter its stance, as it was initially opposed to the request for a temporary waiver (DIRCO, 2021). Although details of the Biden Administration’s Africa policy will only become clearer over time, the Chair of the US House of Representative’s Subcommittee on Africa, Global Health and Human Rights, Congresswoman Karen Bass, has underlined three key issues: (a) US support for the Africa Continental Free Trade Area (AfCFTA), (b) the undertaking by the Biden administration to extend AGOA beyond 2025, and (c) the proposed convening of a US-Africa Summit (DIRCO, 2021). This will help immensely with the challenges confronting the continent, including issues such as industrialisation, infrastructure and human resource development (Grobler, 2021). In terms of this proposed strategy, Africa would hope for the US to constructively support the AU Agenda 2063, which is a commendable attempt by African leaders to get Africa to speak with one voice (Sonjica, 2021). The Biden administration inherits important mechanisms and initiatives, such as the President’s Emergency Plan for Aids Relief (PEPFAR), Prosper Africa, which aims to link US and African business in terms of trade and investment, and AGOA, the African Growth and Opportunity Act (which expires in 2025), which was established to encourage and support trade between the US and Africa (Grobler, 2021). DIRCO concurs. They argue that a common understanding and alignment is developing between the US and Africa pertaining to trade and investment, and indeed other areas such as the environment, science and technology, education, the fight against climate change and cybercrime, and public health. In this regard, an important recent development has been the US’s joining of other countries in offering support to help South Africa strengthen its capacity for the local manufacturing of vaccines (DIRCO, 2021). These matters are going to be key elements for the Biden administration, who will now have to chart a new way forward. They may have to go beyond AGOA, and also rethink their strategy for US-Africa relations, which will have to be much broader and much more strategic (Grobler, 2021). For the US to be regarded as a valued partner, it will be important for it to consult African countries on the continent’s developmental needs when designing its Africa policy, particularly in the current context of the US-China strategic competition for political influence and economic dominance, and the current status quo, where China is significantly investing in the African continent through its bilateral partnerships and through the Forum for China-Africa Cooperation (FOCAC) (DIRCO, 2021). Early evidence would suggest that there is hope that the US will move in such a direction (Grobler, 2021). Through the lens of American analysts There has been a shift in US-Africa relations, away from the fairly combative approach taken by the Trump administration (Sheehy, 2021). In the interim national security strategy, for example, when referring to Africa, the previous administration’s paradigms have been taken out and replaced with the bi-partisan themes as ensconced during the Bush and Clinton administrations (Snyder, 2021). It says that the US will continue to build partnerships in Africa, invest in civil society and strengthen long-standing political, economic, and cultural connections. It will partner with dynamic and fast-growing African economies, provide assistance to countries suffering from poor governance, economic distress, health, and food insecurity, especially as exacerbated by the Covid-19 pandemic. The US, it says, will work to bring an end to the continent’s deadliest conflicts and prevent the onset of new ones, while strengthening their commitment to development, health, security, environmental sustainability, democratic progress, and the rule of law. It will help African nations combat the threats posed by climate change and violent extremism and support their economic and political independence in the face of undue foreign influence (Snyder, 2021). Indeed, continuity, even expansion, of the policies of US agencies for development should be expected. For many years, the US has done a lot to help Africa in improving its health environment, and to empower women. This has saved many lives and should be appreciated. Now development agencies have submitted higher budget requests, so there will most probably be more resources available for these activities in Africa (Sheehy, 2021). Also, programmes, such as Prosper Africa (Sheehy, 2021) – which aims to double two-way trade and investment between the US and Africa, attract capital and create millions of jobs (Snyder, 2021) – is expected to continue, although they most probably need more meat on the bones (Sheehy, 2021). One can expect the deployment of resources made available by the Development Finance Corporation (DFC) to increase, since it has doubled its capacity and can therefore do more lending. The DFC has strong bi-partisan support, which is bound to see it become more engaged in Africa with support for investment by the US, and even other foreign companies (Sheehy, 2021). There are clear indications that the US wants to get more involved with the combatting of climate change in Africa, which is a positive development given the severity of its impact on the continent. But at the same time, one of the critical issues facing the Biden administration is with respect to green issues. In this regard there are suggestions that the DFC should not support fossil fuel activity and thus some trimming of the DFC’s energy finance activities in Africa should be expected (Sheehy, 2021). The DFC has, for example, approved more than USD2 billion in environmental and energy projects in Africa, including a natural gas pipeline in Egypt, marine conservation in Kenya, and natural gas extraction in the Capo del Gado region of Mozambique (Snyder, 2021). An assessment will need to be made as to how such withdrawal will impact African economies; to which end, Africans will need to have their voices heard as to how they feel about it (Sheehy, 2021). Another area that will require Africans to lobby the US, is the extension of the Africa Growth and Opportunity Act (AGOA), which expires in 2025. Whilst there are contrary views, there are a number of policymakers and analysts that have a sense that it should be extended, and even go beyond the current provisions. Their view is that the US should be very careful about taking away unilateral trade benefits from the poorest economies, and poorest countries. In fact, AGOA should be built on, they suggest, by, for example, extending the benefits to duty free and quota free access to US markets for agricultural products from Africa, such as peanuts, nuts and even cotton. Consideration as to AGOA’s future will require careful thought and deliberation, especially in the wake of the Covid-19 pandemic, which has had a devastating effect on African economies (Sheehy, 2021). Truth be told, however, is that the Biden administration is battling somewhat with figuring out its trade policy with Africa. Whilst the Trump administration preferred a bilateral approach, such as that which he sought with Kenya, this seems to have paused as the Biden administration figures it out. On this point, there has been some discussion at the US State Department about creating deal teams at US embassies across Africa to push the US’s commercial interests (Sheehy, 2021). To this end, the US will undoubtedly be grappling with how to take advantage of the recently implemented African Continental Free Trade Area (AfCFTA), the largest free trade area to be established since the founding of the World Trade Organisation (WTO), and in which Africa intends to integrate its fragmented markets into a single market home to 1,2 billion people. By eliminating restrictions on the free movement of goods, capital and people, it will create an attractive opportunity for US companies to sell and invest in a combined consumer and business base of USD6,7 trillion by 2030. This is not a market that the US will ignore (Snyder, 2021). Fortunate for US-Africa policy and relations, is that there are a number of strong pro-Africa appointees to the Biden administration. The USAID Director, Samantha Power, is, for example, quite powerful and well-regarded in Washington (Sheehy, 2021). She will henceforth also have an expanded role since she will also sit on the National Security Council. Power’s diplomatic career includes significant African experience and she has worked as a journalist reporting from a number of African countries including Rwanda, Sudan, and Zimbabwe. The nomination of Power could very well see a revitalisation of USAID’s mandate in Africa following repeated cuts to the organisation’s budget under President Donald Trump (Thomas, 2021). Similarly, Linda Thomas-Greenfield has been appointed as Ambassador to the United Nations. She has previously served as Ambassador to Liberia, and as the Assistant Secretary for the Bureau of African Affairs since 2013. And whilst the Assistant Secretary for Africa, Molly Phee, has a stronger Middle East background, it is known that she has strong links with Thomas-Greenfield (Snyder, 2021). Equally important are the pro-Africanists in Congress and the Senate. The Chairman of the House Committee for Foreign Affairs, Gregory Meeks, has called for a new Africa policy, which he has made his top priority. His Africa subcommittee chair, Karen Bass, has long been a supporter of Africa. And in the Senate, Senator Chris Coons did not hesitate in answering the call to travel to Ethiopia to mediate the recent and currently ongoing Tigray conflict (Snyder, 2021). These allies will be powerful voices to convey the African message. African diplomats should liaise regularly with these US counterparts, with a unique opportunity existing at the United Nations, as all African countries have diplomatic missions there (Snyder, 2021). Another channel that the Biden administration will undoubtedly tap into in order to advance US-Africa relations, is the extensive African diaspora in the United States. As of 2015, there were 2,1 million African immigrants living in the US. One can envisage them partnering with the International Career Advancement Programme and the Congressional Black Caucus Foundation (Snyder, 2021). But having pro-African appointees and allies does not mean that the US will be uncritical towards Africa. The Biden administration will definitely continue to promote a rules-based democratic and human rights world order (Sheehy, 2021). For Africa, the goal would be to advance democracy and governance, peace and security, trade and investment, and development (Snyder, 2021). On this matter, truthfully, it needs to be recognised that much of Africa is struggling, in that a number of African countries are not moving in the right direction. There is a real sense in the US that it has not been tremendously successful in realising democracy, human rights and good governance across Africa. Thought needs to be given as to how the US could be more successful on that front (Sheehy, 2021). Where there is inequality and poverty, democracy will suffer. One has often heard African leaders despair: Don’t tell me about democracy when my people are hungry (Sonjica, 2021). One tactic which may be expected, is for the US to be more supportive of civil society organisations that promote democracy and human rights (Sheehy, 2021). The Biden administration will also place great emphasis on combatting corruption in Africa. There is, for example, growing interest in promoting transparency in the fight against corruption. In January 2021, the administration deployed the Magnitsky Act, by freezing the assets and placing travel restrictions on several Ugandan government officials and businesspersons, who were considered to have undermined free and fair elections in that country (Sheehy, 2021). Then too, there is a security deficit in Africa. The US would want to coordinate more closely with the African Union, as they do, for example, with Europe. However, up until now that pull from Africa has not been there. This is an area worth considering given that both sides would benefit from such cooperation (Snyder, 2021). US-China relations Through the lens of African analysts It was predicted that China would remain a political football in terms of US domestic politics. Americans expect President Biden, and indeed all their politicians, to be tough on China. It would therefore not be realistic to expect the Biden administration to change US-China policy dramatically. And this has now become evident. They are, more or less, pursuing the policy of the previous administration (Grobler, 2021). The first post-Trump US-China engagement did not start on a good footing. Their first engagement in Alaska was confrontational. It seems the Chinese side was taken aback, and surprised by this. They had hoped that a more constructive approach, based on mutual respect, would have been adopted. That did not happen and the Chinese delegation, determined to safeguard its legitimate interests, promptly retaliated in a comprehensive and hard-hitting manner (Grobler, 2021). The sense in China is that the US should realize that they do not represent the world and that they are no longer the undisputed global leader. And since they also anticipate to soon become the largest economy on earth, it is, in their view, only right for them to be approached with the necessary respect, in good faith and integrity. That said, China does not see itself as being in a long-term ideological struggle with the US. To the contrary, they have repeatedly stated that they are ready to engage the US on the basis of mutual respect and on the basis of good faith (Grobler, 2021). But, in their view, this is not the case. President Biden laments the stiff competition with China, inferring that its ambition is to be the leading, wealthiest and most powerful country in the world. It seems, given President Biden’s retort that this would not happen on his watch, that the US’s view is that it is not noble for China to overtake the US (Grobler, 2021). This notion is affirmed by the US Secretary of State, Anthony Blinken, who says that, whilst it is not the US’s purpose to contain China, or to hold it back, or to keep it down, it is necessary for them to ensure that China upholds the US-led rules-based order, to which China is, according to him, posing a challenge (Grobler, 2021). Needless to say, this does not sit well with China. In their view, they are a strong multilateral country, committed to multilateralism under the banner of the United Nations. Their commitment, China argues, is to multilateralism and not to the US-led rules-based order that represents a minority of the world’s people. The US’s approach, China senses, is unfortunately motivated by a sort of Cold War mentality (Grobler, 2021). China is uncomfortable with the Biden administration’s push for a strong democratic alliance against them. The notion that the Western nations must present a more united front against China is not acceptable to them. China objects to bloc politics and small cliques targeting a certain country and playing up the ‘China threat’ narrative. They find solace in the fact that these nations are not unanimous on the issue. Countries such as France and Germany take the view that they need to continue to consult and cooperate with China, by working together on issues where they can agree, but also understanding that they will need to constructively oppose those issues that they cannot agree on (Grobler, 2021). It is also unfortunate, some posit, that the US administration’s approach is exacerbated by the US Senate’s continued churning out of sanctions against China, since this is leading to a tit-for-tat as China responds with its own measures to combat the perceived onslaught (Grobler, 2021). It is held that any measures aimed at containing China’s economic or diplomatic progress is destined to fail. Many argue that it is counter-productive and not in the interest of global economic growth and development, for the two major world powers to be on a destructive path. Many countries from across Europe, Asia, the Middle East and Africa want to continue with a constructive engagement, relationship and economic cooperation with China. Whilst there may be obvious differences, for example developments in Hong Kong, evidence seems to suggest that the international community, in the interest of economic cooperation and peace, is eager to pursue the route of dialogue and cooperation as opposed to confrontation (Grobler, 2021). And the potential for such cooperation does not exclude the US. There are many areas that are ripe for enhanced collaboration as well as harnessing their economic competitiveness in a manner that advances the interests of humanity (Grobler, 2021). Yet, despite the current uncomfortable disposition between the US and China, hope remains that cool heads will prevail, and that as the dust settles, and as the US starts to engage China on multinational issues such as climate change and global economics, so too, good sense will prevail. That officials will again start talking to each other and that the bilateral mechanisms that fell by the wayside under the Trump administration will eventually be reactivated. As one analyst puts it: The US and China will never be beer buddies, but there is ample reason for the two sides to work together on the basis of mutual respect, non-interference in each other’s domestic affairs and in the interest of global security and development (Grobler, 2021). Through the lens of American analysts The US position on China is informed by its interpretation of the historical developments within China. According to them, China, over the period 1949-1989, that is up until the events of Tiananmen Square, broadly speaking, sought to redefine its national identity, industrialise, and secure the Communist Party of China (CCP) as the legitimate governing regime capable of filling the political, ideological and security vacuum left by the overthrowing of the Kuomintang (KMT), which thrust the country into turmoil (Stone, 2021). After 1989, China made a strategic shift in which it committed itself to comply with international norms. President Deng Xiaoping was of the view that the country should hide its capabilities, rise peacefully and conform with international norms (Stone, 2021). Then, in 2013, the US argue, there was a divergence from Deng’s policy, when President Xi Jinping assumed office. China would, under President Xi, no longer hide its capabilities from the international community, it would advance nationalism, restore its prestige and rise (Stone, 2021). All the while, the US, together with its allies, were building a liberal international order, which would consist of international institutions, with rules that would guide relations among nation states and contend with non-state actors. These institutions include, amongst others, the United Nations (UN), the North Atlantic Treaty Organisation (NATO), the International Monetary Fund (IMF), and World Bank. In their view the rules of these institutions were necessary to enhance predictability. States should follow these rules in that they offer outlets to conflict, and enforce principles of conduct. The US, together with its partners, accepted liberal democracy as a necessary dispensation to ensure a uniform liberal order. They work in tandem to ensure the spread of democracy around the world, promotion of capitalism and to integrate all states into this world order (Stone, 2021). China’s military and economic rise, in the US’s view, challenge this international order, since the Chinese system is not compatible with the liberal order that America has embraced. The two systems of governance, and their respective national ambitions, both equipped with significant economic and military might, pretend a return to a type of Cold War once had between the Soviet Union and United States. Whether this is desirable, or inevitable, remains to be seen (Stone, 2021). Against this background, the Biden administration are now also contending with a China that aims to reform the status quo in favour of their own interests, by replacing the US as the hegemon in the immediate sphere of China, that is East Asia and South-East Asia. The US also charge China of attempting to change the nature of the debate with regard to the liberal international order, because liberal values do not, the US protests, reinforce the Chinese priorities, both at home and abroad. State repression, mass detention, border conflicts with India, aggressive actions against Taiwan, cyber espionage, alignment with autocratic regimes – such as Iran, Russia, North Korea, Pakistan – a domestic social credit system, an absence of legal rights, inhibiting freedom of movement internally in China, are all, in the US’s view, antithetical of liberal ideals that are meant to manifest freedom of speech, justice, pluralism, and economic and security cooperation. Collectively, China’s military, economical, and political influence, and contrasting foreign and domestic priorities, the US contend, challenge the very nature of the liberal international order (Stone, 2021). The US charge China of pursuing an integration doctrine, aimed at filling the vacuum left by the US since 2001 as a result of its campaign to combat international terrorism around the world, particular in the Middle East. Nation states can achieve such integration through three different means: compliance, coercion, conflict. This period, the US fears, is one of coercion, which could potentially lead to conflict (Stone, 2021). The aforementioned, sketches the relationship that the Biden administration needs to manage. In doing so, the US and its international partners actively pursue a dual policy of compensation and cooperation aimed at sustaining the liberal international order (Stone, 2021). This it will do by: Firstly, cooperating on issues of mutual concern, such as climate change, cyber security, and nuclear proliferation; and Secondly, reaffirming the rules of the road, and insisting that access to international institutions and their benefits are given only to those that meet the prescribed standards of conduct, which at minimum prohibits genocide, nuclear proliferation, military aggression (unless in self-defence), and oppression in domestic affairs (Stone, 2021). The Biden administration’s China policy is designed within the context of Americans being more concerned with domestic issues that are affecting their daily lives in the now. Moreover, the liberal international order, has, in the wake of the Cold War, borne out the good, bad and ugly results, that is the limitations of foreign interventions, open borders and disparity in collective security. The US and others sold to the world the idea that they would guard against these evils, and that capitalism would reduce inequality, yet it persists. In their wake, it has left a cry for nationalism (Stone, 2021). Therefore, a third objective of the Biden administration is to, within the US, restore faith in the efficacy of the American model. Its focus is on investment in infrastructure and education, and a redefinition of ‘open system’ to include respect for borders and trade with dignity, and the raising of liveable standards to meet the cost of living (Stone, 2021). This forms the foundation of the US’s trade confrontation with China. The US-China-Africa nexus Through the lens of African analysts Even though China considers itself a friend and partner of Africa, the current post-Covid era requires a less emotional and a more critical action-based approach and strategy. This practical and results-orientated policy approach has been institutionalised within the Forum for China-Africa Cooperation (FOCAC), which has embedded a close policy-based working relationship between the two sides. Indeed, it is expected that when FOCAC convenes in Senegal later this year, the relationship will most probably be taken to higher levels. It is not foreseen that this bond is about to change any time soon (Grobler, 2021). Africa does not share the perspective that doing business with China is to its detriment. At the same time, it wants to continue building its relationship with the US. It wants to work with China and the US without having to take sides and again be caught up in a new Cold War situation. As such, Africa, in its own pragmatic interest, would like to see a process unfolding that would lead to the normalisation of relations between China and the US. Such a situation would be in the interest of Africa, but also for a stable world order, development and security (Grobler, 2021). In fact, at the recent G7 meeting in the United Kingdom, President Ramaphosa, with reference to China, the US and Africa, made the constructive comment during the media conference, to the effect that Africa welcomes those who come on good terms and that the continent does not want to see the one pushing the other out (Grobler, 2021). But one must also expect different approaches. For the US-Africa relations it is normal to anticipate change and continuity; whereas this would not be so in China-Africa relations. This is because of the different political systems that are at play. In the US, administrations frequently change after regular elections, where leadership priorities and policies are bound to vary. This it not so under the Chinese system which by its very nature ensures greater continuity. Hence, China-Africa relations are likely to display greater continuity than would be the case with US-Africa relations (Weseka, 2021). Another point of distinction is the fact that Africa looks to the US and China for cooperation in different fields. For the US it would be for issues such as democracy, human rights, governance, etcetera. Much of this flows from their British and French colonial roots and its entrenched traditions, which civil society and political entities, whilst there could be some variances here and there, have embraced (Weseka, 2021). This also holds true for issues of media and culture. African television viewers tend to watch CNN and/or BBC; very few watch CGTN. Same with newspapers. It is the New York Times, Washington Post, etcetera, not so much the People’s Daily. Many Africans grew up on Hollywood movies. Thus, in the fields of politics and culture, Africans are persuaded to go the American way (Weseka, 2021). When it comes to the economy, the story changes quite dramatically. China overtook the US in 2009 to be Africa’s largest trading partner. This is aptly illustrated in the ICT and tech industries, where despite the Trump administration’s attempts to dissuade African countries away from Chinese 5G telecoms, African countries chose and are committed to Chinese-built telecom infrastructure and fibre optics. Chinese companies such as Huawei and ZTE, dominate the telecom infrastructure in Africa (Weseka, 2021). As a side note, there is a real fear that the US-China tensions have the potential to impact the achievement of its economic and development targets, especially as this relates to investment in the communications and digital sectors, such as the roll-out of 5G technologies. In this regard, the US targeting of the Chinese telecommunications company, Huawei, which is accused by the US of violating IP protections, could hamper South Africa and Africa’s effective engagement with – and leveraging of – the benefits of the 4th Industrial Revolution, which it is relying on to propel their economies forward and to lessen the widening equality gap (DIRCO, 2021). This sentiment is exacerbated by many in the West who push the narrative that African countries ought to be cautious with regard to the conditions that are attached to Chinese investment, and the toxicity and so-called debt traps that, according to them, comes with their funding (Weseka, 2021). But African countries have not been dissuaded. They continue to look to China for such assistance, countering that the West cautions against Chinese funding, but is not forthcoming with the finance needed to build the roads, ports, and other economic infrastructure (Weseka, 2021). To navigate the dual relationship, Africa will have to contemplate a more considered and coherent framework for its international approach. This will be necessary for it to maximise the opportunities presented by the US, China and others. It needs to be optimally positioned to exploit to its own and mutual benefit, the increasing number of opportunities being made available by the US and China, and indeed others as well. In developing concrete specific objectives, it would have to pursue its own homegrown solutions, ideally developed in concert with both China and the US (and others), who should ideally also align their policies with that of the AU’s Agenda 2063. The launch of the African Continental Free Trade Area could, for example, serve as a powerful catalyst for trade and investment opportunities (DIRCO, 2021; Grobler, 2021). In so doing, Africa will have to encourage both sides to engage in dialogue with a view of resolving the impasse. This will be necessary to effectively address Africa’s socio-economic deficits and for ensuring sustainable growth, development, and the eradication of poverty. The support of reliable international partners is required – in this case both the US and China (DIRCO, 2021). Both countries are considered strategic partners, and hence, both can play an important role in supporting the achievement of Africa’s domestic imperatives. Consequently, both countries should be encouraged to resolve their differences through dialogue (DIRCO, 2021). Mutual cooperation would not only have benefits for both of them, but indeed for the international community. And although US-China interests may diverge in many areas, there is scope for cooperation between the two countries, particularly in areas where their interests coincide. This includes the multilateral arena of climate change, and where the promotion of peace, security and development are concerned, issues that are also crucially important for Africans (DIRCO, 2021), to which end, it may be the opportune time to start triangular consultation and cooperation between Africa, the US and China (Grobler, 2021). Through the lens of American analysts In the early days of the Biden administration, Secretary of State, Anthony Blinken made it clear that African countries would not be forced to choose between China or the US. There was a broad realisation that the Trump style of demanding that countries work with the US against China could not be followed. Such an approach is not popular with African leaders (Sheehy, 2021), who do not want to take sides, as was the case during the Cold War (Stone, 2021). They want the freedom to choose their own international cooperation partners. Also, given the depth and width of Chinese involvement and investment in Africa, it would not be a realistic path to pursue (Sheehy, 2021). Nonetheless, the US will, in large measure, continue with US-China policies as inherited from the previous administration. As to the nexus in Africa, demand will be replaced with an element of persuasion, for example, with regard to information technology, where Chinese enterprises such as TEL are deeply engrained. Another approach could be a shift from diplomatic pressure to the offering of subsidies to countries that opt for Western technology – this approach was discussed at the G7 summit in the United Kingdom in June 2021. It is argued that from an African perspective this should be embraced, in that it presents to them a broader range of options. This, it is reasoned, is also in the interest of African development (Sheeny, 2021). Stepping up US-Africa relations as a countering to China-Africa relations, the US accepts is no easy feat. There is a strong realisation that they are far behind China in Africa (Sheehy, 2021; Snyder, 2021) and that personal relationships matter. If one simply considers the sheer number of personal and diplomatic visits between the heads of states of Africa and China, China is putting the US foreign policy to shame. Then US Assistant Secretary of State for African Affairs, Tibor Nagy, commented in an op-ed that the US is being outcompeted in Africa. It is hoped and anticipated that the Biden administration will invest in building personal relationships across the African continent (Sheehy, 2021). To counter, whilst President Biden has already addressed the 34th African Union Summit via video-conferencing in February 2021 (Grobler, 2021), it is anticipated that, at some point, he will visit the continent in person. During 2021 there will also be another US-Africa Leaders’ Summit. It is also expected that senior US government officials will increase their visits to the continent. They will undoubtedly use these opportunities to build and strengthen personal relationships between US and African leaders (Snyder, 2021). The US has also fallen behind China in trade with Africa. As previously mentioned, China overtook the US in 2009 to become Africa’s largest trading partner (Weseka, 2021). Bilateral trade between the US and Africa during the period 2017-2018 rose from USD55 billion to USD61 billion, dwarfed by China whose bilateral trade with Africa rose from USD155 billion to USD185 billion over the same period. The US will deploy various strategies, including those cited in this article, to play catch-up. This it believes it can do, if focussed, as trade is something that the US does well (Snyder, 2021). It should also be recognised that China has taken a march forward with its Belt and Road Initiative (BRI) (Snyder, 2021). Research conducted on the BRI in various places, shows that political acceptance levels for Chinese investments are high. But how those resources are spent, allocated, implemented, will stress-test socio-political relationships. This will happen in Africa too (Stone, 2021). Nevertheless, through this initiative, China has made a considerable contribution to infrastructure development, also in Africa. The US, on the other hand, does not do infrastructure investment well, neither does it have a history of participating therein (Snyder, 2021). To counter and carve for itself its niche position, the Biden administration could very well continue with the previous administrations’ provision of technical assistance to African governments. For example, in the field of fiscal governance and the countering of debt trap diplomacy, the US government could assist African finance ministries and budget officials, to give them the tools to better assess potential loans. Frankly, some African loans are good, but many are not, and don’t make sense. The capacity needs to be developed in order to determine whether the loan makes economic sense, what the environmental implications are, what the employment implications are, and whether they employ local folk or provide opportunities for expat employment. In so doing, the US could play an important role in Africa’s development, which role, they anticipate, should be well received by African leaders (Sheehy, 2021). So, who is best positioned to compete in Africa? Is it China or the US? Actually, it will be Africa. They will be able to benefit from both US and Chinese opportunities, which offerings, in essence complement each other (Stone, 2021). But China’s goal in Africa, caution the Americans, is to integrate. It is not benevolent or malevolent, its agnostic to Africa’s situation lest disruptions occur that will harm China’s reputation. This is why China’s largest push into Africa is not economic or political, but symbolic. A public relations campaign that is fed by economic inducements (Stone, 2021). Conclusion As alluded to in the introductory part of this paper, in the days following President Biden’s assent to office, analysts attempted to predict what the US’s policy would be towards Africa, and China, and how these dynamics would play out on the African continent. There seemed, at the time, to be a general consensus that the US would take a keener interest in Africa, and, although it would in large measure continue with the previous administration’s China policy, the tone would shift from combative to being competitive. Since then, there have been mixed signals as it relates to US-Chinese foreign policy. On the one hand, the Biden administration has reaffirmed the desire to collaborate and cooperate with China in areas that serve American interests, in sharp contrast to the Trump era of an all-encompassing decoupling policy towards China. However, on the other hand, it is accusing China of acting more aggressively, especially as it relates to the abuse of human rights. Some analysts are even suggesting that the US is opening up new fronts in the trade war with China and mobilising a concerted international opposition to China’s alleged disregard for the US-led rules-based democratic and human rights order. However, predictions, as they relate to US-Africa foreign policy, on the other hand, seem to be, in large measure, playing out as expected. There is a definite sense that the US’s policy toward Africa is normalising from the Trump-era interruption. Indeed, continuity of Bush and Obama administration policies, and even an expansion of US development agencies activity in Africa, could comfortably be anticipated. This expectation is given further impetus with the range of pro-African appointees in the new Biden administration. That said, Africa should not expect a free pass as the US will remain critical where African countries and leaders do not follow the rules-based democratic and human rights world order. Then too, it was predicted that in terms of US domestic policy, China would remain a political football. This also appears to hold true. China, of course, had hoped for a more constructive approach based on mutual respect and non-interference in each other’s domestic affairs. This did not happen. Thus, on the global stage the relationship between the US and China remains strained, which unfortunately spills over to Africa (Sonjica, 2021), leaving it in a quandary: How do they respond to these dynamics? In an effort to ease the discomfort, the Biden administration has, to their credit, sought to calm the waters. They have made it clear that they do not expect African leaders to take sides between them and China. There is a realisation that the Trump-era style of demanding that African countries work with the US against China was not popular with African leaders and could not be followed. Also, the US’s approach towards Africa’s China relationship is shifting from combative to persuasive. It is recognised that during the last four to five years under Trump, China leapfrogged the US in Africa in terms of infrastructure, technology, and financing, posing a formidable challenge for Biden to overcome. Much of the future African economic development is going to be built on Chinese investment. China has also surpassed the US as the largest trading partner of Africa (Gumede, 2021). That said, the US and China, in their African strategies, seem to, in many respects, be focussing on different priorities. For the Chinese it is infrastructure and technology. Whereas for the US alternative opportunities exist in the provision of technical assistance and the promotion of rules-based democracy and human rights through the strengthening of civil society and the media (Gumede, 2021). Areas of competition between the two global giants will be in the field of renewable energy, trade and financing, with development financing being the key issue (Gumede, 2021). As for the way forward in terms of rebuilding US-Africa relations: Africa should strongly lobby their American counterparts, with, given the range of pro-African appointees to the new US administration, unique opportunities being presented for securing face-time and warm body engagements with them (Gumede, 2021). Crucially, Africa needs to learn to speak with one voice (Sonjica, 2021). To take advantage of the opportunities Africans need to get better organised in the US to engage the policymakers in a more coordinated way, with a clear strategy aimed at taking advantage of identified key priorities, which could include, amongst others, the extension and further expansion of AGOA, technical assistance with regard to matters of governance, security issues, and the advancement of democracy and human rights (Gumede, 2021). Africans must accept that there is always going to be an element of competition between the US and China (Snyder, 2021). The US will follow a rules-based approach to international relations as it had before, whereas China will continue to promote its mutually beneficial approach to trade and investment and to expand its influence through its Belt and Road Initiative. African countries need to figure out, from an African point of view, and by defending its own interests, how to position themselves between these two approaches for maximum benefit (Gumede, 2021). They need to come up with a plan that appreciates the uniqueness of these two powers (Sonjica, 2021). Moreover, in order to navigate the not-by-choice tricky dynamics imposed on them, Africa should seek a mechanism for triangular engagement between themselves, the US and China. Enticing former African leaders that excelled in multilateralism to help facilitate this notion may be advisable (Weseka, 2021). Who knows, such a continental solution may even serve to alter the global discourse for the good. References Associated Press. 2021. China's Africa Outreach Poses Growing Threat, US General Warns. [Online] Available at: https://www.voanews.com/east-asia-pacific/chinas-africa-outreach-poses-growing-threat-us-general-warns [accessed: 28 June 2021]. BBC. 2021. US-China relations: Blinken accuses China of acting more aggressively. [Online] Available at: https://www.bbc.com/news/world-us-canada-56967211 [accessed: 28 June 2021]. BBC. 2020. A quick guide to the US-China trade war. [Online] Available at: https://www.bbc.com/news/business-45899310 [accessed: 28 June 2021]. Cheng, L. 2021. Biden’s China strategy: Coalition-driven competition or Cold War-style confrontation? [Online] Available at: https://www.brookings.edu/research/bidens-china-strategy-coalition-driven-competition-or-cold-war-style-confrontation/ [accessed: 28 June 2021]. Department of International Relations and Cooperation (DIRCO). 2021. Written response to questions posed to the department pursuant to the issues raised during the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021. Grobler, G. 2021. Contribution as an expert-panellist in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Ambassador Gert Grobler is a former senior South Africa diplomat and currently a Senior Research Fellow at the Zheijiang Normal University. Gumede, W. 2021. Moderator of the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Professor Gumede is the Executive Chairperson of Democracy Works and Associate Professor at the School of Governance, University of the Witwatersrand. Miller, C. 2021. Biden Opens Sneaky New Front in Trade War Against China. [Online] Available at: https://foreignpolicy.com/2021/06/22/biden-semiconductors-south-korea-china-trade-war/ [accessed: 28 June 2021]. Sheehy, T. 2021. Contribution as an expert-panellist in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Professor Tom Sheehy is the Principal, Quinella Global, and former staff director of the House Foreign Affairs Committee. Snyder, C. 2021. Contribution as an expert-panellist in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Professor Charlie Snyder is Professor of African Studies at the Institute for World Politics, and a former National Intelligence Officer for Africa. Sonjica, B. 2021. Participant in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Ms Sonjica is a former South African Cabinet Minister and currently the Chairperson of the Inclusive Society Institute’s Advisory Council. Stone, J. 2021. Contribution as an expert-panellist in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Dr Joshua Stone is, inter alia, a former Professor of International Instruction, Beijing, China—DePaul University, and a former Congressional Aide to Congresswoman Barbara Lee. Thomas, D. 2021a. Biden bids to reverse US-Africa decline. [Online] Available at: https://african.business/2021/01/trade-investment/biden-bids-to-reverse-us-africa-decline/ [accessed: 28 June 2021]. Thomas, D. 2021b. Samantha Power to head USAID in boost to Africa projects. [Online] Available at: https://african.business/2021/01/trade-investment/samantha-power-to-head-usaid-in-boost-to-africa-projects/ [accessed: 30 June 2021]. Weseka, B. 2021. Contribution as an expert-panellist in the Inclusive Society Institute’s dialogue on “Rebuilding US-Africa relations under the Biden Administration and its nexus with China”, which was hosted on 22 June 2021 via Zoom. Dr Bob Weseka is the Coordinator of the African Centre for the Study of the US, University of the Witwatersrand. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

The CEO of the Inclusive Society Institute (ISI), Daryl Swanepoel, at the invitation of the Friedrich Ebert Stiftung, travelled to Germany from 14 – 18 October 2019, with a delegation led by ANC Treasurer General, Paul Mashatile. The visit presented an ideal opportunity for the introduction of the institute to the Friedrich Ebert Stiftung (FES) and the German Social Democratic Party (SDP). Both the FES and SDP were of the view that the politically aligned foundations of Germany played an important role in supporting and promoting multiparty democracy, the development of public policy and the engagement of civil society in the political discourse of the country. The idea of setting up such an institute in South Africa that would promote progressive, social and national democratic values was to be welcomed. To advance the aim of creating a progressive and just world, international cooperation between likeminded organisations was important. To this end, the FES, SDP and ISI agreed to further explore avenues and means of cooperation. Visit to Willie Brandt House, headquarters of the German Social Democratic Party. Konstantin Woinoff, SDP International Secretary (second from left) Visit to Friederich Ebert Stiftung. Dr. Ernst Kerbusch, representing the International Division at FES (third from left)

The CEO of the Inclusive Society Institute, Daryl Swanepoel, joined a South African delegation led by ANC Treasurer General, Paul Mashatile, who visited Germany during the week of 14 – 18 October 2019. In the course of the week, they met with several prominent leaders of the German Social Democratic Party (SDP), civil society and government. The objective of the visit was to build solidarity amongst the progressive social democratic forces in Germany. The ANC has a longstanding sister-party relationship with the SDP which dates back to long before South Africa’s democracy, which dawned in 1994. The delegation participated in wide-ranging series of meetings, which included, inter alia, engagements with Michelle Müntefering, Minister of State in the German Federal Foreign Office, Thomas Oppermann, Vice President of the German Federal Parliament, Dr Nils Schmid, Chairman of the Committee on Foreign Relations of the German Federal Parliament and Christoph Matschie, a member of the same committee. The delegation also met with MP’s Dagmar Freitag and Ulla Schmidt. The delegation also paid a visit to Willie Brandt House, the headquarters of the SDP. There they met with, amongst others, Konstantin Woinoff, the International Secretary of the party, Klaus Tovar, Director of the Party School and Andreas Schlotmann, SDP Treasurer General’s Office. The recurring theme of the week’s discussion was that the international progressive and social democratic forces needed to strengthen their cooperation through focused activities aimed at advancing the programme of social justice and equality. Michelle Müntefering, for example, argued that dialogue and better coordination was important to bolster progressive values internationally, including within the multi-lateral institutions such as the United Nations. There were a number of global tasks that required urgent attention. One such task was to break down the current tendency of dividing communities and the building of walls between groups in society. This could be done by fostering the multiracialism belief of the progressive forces at a global level. To achieve this, channels of communication between progressive governments and parties needed to be strengthened, and mechanisms needed to be designed to involve broader society. Meeting with Michelle Muntefering, Minister of State, German Federal Foreign Office Meeting with Thomas Opperman MP (third from left), Vice President of the German Federal Parliament Meeting with German SDP MP’s Dagmar Freitag (left, second from front) and Ulla Schmidt (front left)

The National Health Insurance (NHI) Bill was introduced to Parliament on 8 August 2019, with a subsequent call for public comment, which expired on 29 November 2019. With the deadline now past, the Inclusive Society Institute deemed it appropriate to host a roundtable dialogue with the critical organisations representing the workers, business and health sector fraternity. The objective of the exercise was to determine the areas of agreement, areas of disagreement, and where such disagreement existed, to seek pathways to reach consensus. Since all the participating organisations had already submitted their comments to parliament, the outcome of these deliberations form a holistic representation as to what can be expected in the parliamentary processes to follow. Participants in the roundtable included representatives form COSATU, BUSA, the ANC NEC subcommittee on Education and Health, government, private hospitals and medical aids, independent practitioner organisations, health accreditation services, the pharmaceutical and medical equipment supply industry, and the South African National Blood Service. The combined input of these participants, the institute is of the opinion, will fairly represent the views and issues to be raised in the public hearing processes to be scheduled by the parliamentary portfolio committee on health. As a general departure point, it can safely be expected that general support will be given to the goals and objectives of the NHI Bill, that is the financing of universal coverage of affordable and accessible quality health care. There was general recognition that the current healthcare system is defective, with inefficiencies in both a public and private sector; and that the introduction of legislation to address the problems was therefore to be welcomed. There was general consensus that the private sector needed to be crowded in, not pushed out, that government and the private sector needed to work together by combining their respective expertise in order to improve the overall healthcare system of the country, and that, in rolling out the NHI, communication between all role-players needed to be improved to ensure an inclusive consultation process. The main contentious issues that were identified and that required further deliberation during the public hearing process, included the role of medical schemes, the role of provinces, capabilities of the State to manage the NHI fund, and the accompanying governance structures, and how private hospitals will link into the public system. Concerns were also expressed as to the schemes financial sustainability, especially given the constrained economic environment the country finds itself in. It is section 33 of the Bill which will require the most urgent and comprehensive consultations, with delegates being of the opinion that compromise was required to avoid confrontation. It would, in their opinion, have severe consequences for not only the private medical aids, but so too the whole of the private healthcare system, the loss of cross-subsidisation benefitting the public healthcare system, and negative impact on investment sentiment. The rationality of its insertion was questioned, especially considering its radical departure from the 2018 policies. As presented, section 33, delegates suspected, could also give rise to questions of constitutionality. A comprehensive report on the roundtable is scheduled for publication towards the end of January 2020.

In concluding his week-long outreach programme to the Netherlands and France, the Chief Executive officer of the ISI, Daryl Swanepoel, signalled that the institute was to work with a number of organisations in the two countries to advance its values of democracy, good governance and inclusive public policy. The ISI met with a range of organisations in The Hague and Amsterdam and Paris. Netherlands In this leg of the visit the institute reached out to likeminded social democratic foundations, curators of social history archives and the former Dutch anti-apartheid activists. Significant synergies were discovered in the policy work of the ISI and that of the various organisations that were approached. The Netherlands Institute for Multi-Party Democracy, the Max van der Stoel Foundation and the Wiardi Beckman Foundation all share the ISI’s objective not only to strengthen democracy in a citizen-centred manner, but also to create a greater sense of inclusion in public policy. The ISI also agreed to work with the International Institute of Social History (ISH), which is based in Amsterdam. The ISH hosts extensive archival material on the anti-apartheid movement of the Netherlands (and other countries). It was agreed that access would be given to the ISI to link this material to the liberation archives portal of the ISI. Further areas of cooperation in archiving historic material of the broader liberation struggle will be explored. The CEO of the ISI also met with the African Studies Centre based at the University of Leiden. Here too, an enormous amount of synergy existed that could be tapped into. It was agreed that joint public policy research projects could be explored, and mechanisms would be developed to link the extensive library and archives of the African Studies Centre to the ISI’s ‘Liberation Archives’ portal. A discussion was also held with Bart Luirink, Kier Schuringa and Jan-Bart Gewald, prominent former anti-apartheid activists. There exists a sense that the linkages between the former Dutch anti-apartheid movement activists and South Africa has weakened over years, and that a concerted efforts was needed to revive and strengthen this South African conduit into Dutch society. This is a project that the ISI will take to heart. France In Paris the ISI met with both the Fondation Jean-Jaures, which is aligned with the Socialist Party of France, and the Institut Montaigne, a prominent independent public policy think tank. Given France’s heightened interest under President Emmanuel Macron in African public and developmental policy, there was an ardent interest to explore joint projects that the ISI could undertake with these foundations. Initial areas of interest included topics such as gender-based violence, gaining a deeper understanding of inequality in order to pursue greater inclusivity in the economy, and climate change. The CEO of the Inclusive Society Institute, Daryl Swanepoel, seen here with the Head of Knowledge and Innovation at the Netherlands Institute for Multiparty Democracy, Wouter Dol. The CEO of the Inclusive Society Institute, Daryl Swanepoel, handing over the ANC publication “Unity in Diversity: A 100 years of ANC leadership” to Prof. Jan-Bart Gewald, Director of the African Studies Centre, University of Leiden The CEO of the Inclusive Society Institute, Daryl Swanepoel, with Klara Boonstra, CEO of the Wiardi Beckman Foundation

In a social cohesion roundtable meeting on the role and place of the Afrikaans-speaking community in South Africa, held on Tuesday, 11 February 2020 at the Taj Hotel in Cape Town, it was agreed that the Inclusive Society Institute will implement a sustainable programme to keep social cohesion high on the agenda. This would include the design of an action plan aimed at marshalling the decisions taken in the programme onto the country’s policy-making agenda. The roundtable was attended by a good cross-section of Afrikaans speakers drawn from business, government, the NGO sector, community representatives and academia. The keynote speakers included the Treasurer General of the African National Congress, Mr Paul Mashatile, who elaborated on the ruling parties philosophy, policy and history aimed at building a non-racial South Africa; and Dr Ruben Richards, Chairman of the Ruben Richards Foundation, who are actively involved in community upliftment projects and the creation of sustainable communities. The discussion was facilitated by Roelf Meyer, a key architect in the drafting of the South African Constitution. Areas, amongst others, that need fleshing out include: Developing a political culture of tolerance, with particular emphasis on ensuring that the narrative is conducive to reconciliation. Reversing the inter-community trust deficit that has systematically developed post the Mandela-reconciliation era. Guarding against stereotyping individuals on the basis of their community affiliation. Developing activities that give greater inter-community exposure. Designing public policies that crowd in the talents, skills, expertise and goodwill within the minority communities so as to enable their practical contribution towards building the South African economy and society. This dialogue forms part of the Inclusive Society Institute’s broader programme aimed at fostering an inclusive progressive society Sue van der Merwe, Chairperson, Inclusive Society Institute Paul Mashatile, Treasurer General, African National Congress Daryl Swanepoel, CEO, Inclusive Society Institute Ruben Richards, Chairperson, Ruben Richards Foundation Roelf Meyer, Director, In Transformation Initiative

In a social cohesion roundtable meeting on the role and place of the Afrikaans-speaking community in South Africa, held on Tuesday, 18 February 2020 at the Capital Menlyn on Maine Hotel in Pretoria, the Inclusive Society Institute reconfirmed its commitment to implement a sustainable programme to keep social cohesion high on the agenda. As agreed at the Cape Town roundtable the previous week, this would include the design of an action plan aimed at marshalling the decisions taken in the programme onto the country’s policy-making agenda. This roundtable, as at the Cape Town roundtable, was attended by a good cross-section of Afrikaans speakers drawn from business, government, the NGO sector, community representatives and academia. The keynote speakers included the Treasurer General of the African National Congress, Mr Paul Mashatile, who elaborated on the ruling parties philosophy, policy and history aimed at building a non-racial South Africa; and the well-known economist, Theo Vorster, CEO of Galileo Capital, did a presentation on the economic context of South Africa. The discussion was facilitated by Roelf Meyer, a key architect in the drafting of the South African Constitution. The discussion revealed more or less the same concerns that were raised at the Cape Town meeting, albeit that there was a greater discussion on the economy and its potential contribution to fostering social cohesion. Concerns included: Developing a political culture of tolerance, with particular emphasis on ensuring that the narrative is conducive to reconciliation. Reversing the inter-community trust deficit that has systematically developed post the Mandela-reconciliation era. Guarding against stereotyping individuals on the basis of their community affiliation. Developing activities that give greater inter-community exposure. Designing public policies that crowd in the talents, skills, expertise and goodwill within the minority communities so as to enable their practical contribution towards building the South African economy and society. The need for more inter-community dialogue. The overriding message of the evening was ‘to get the economy right’. A growing economy would enable the government to deliver better services, create new jobs and economic opportunities that would expand the business base. Such an expansion would give natural momentum to the Black Economic Empowerment programmes of government. This dialogue forms part of the Inclusive Society Institute’s broader programme aimed at fostering an inclusive progressive society. Paul Mashatile, Treasurer General, ANC Keith Khoza, Board Member, Inclusive Society Institute Theo Vorster, CEO, Galileo Capital Daryl Swanepoel, CEO, Inclusive Society Institute Roelf Meyer, Director, In Transformation Initiative

The Inclusive Society Institute (ISI) is currently involved in an extensive research programme seeking alternative pathways to universal access and affordable healthcare in South Africa. It recently released a report on its NHI roundtable dialogue, which brought together the diverse range of healthcare stakeholders to interrogate the draft legislation which is now before the National Assembly’s Portfolio Committee on Health. One of the report’s recommendations is that the portfolio committee consider alternative international examples of universal healthcare models, the German healthcare system being one such model. In line with the aforementioned recommendation, the ISI, in cooperation with the Friedrich Ebert Stiftung, hosted a seminar on Wednesday afternoon, 19 February 2020, at the Taj Hotel in Cape Town. The seminar was attended by delegates from the healthcare industry, academics, Members of Parliament serving on the National Assembly’s Portfolio Committee for Health and Dr. Gwen Ramakgopa, a representative of the ANC’s National Executive Committee for Education and Health. The ranking Member of Parliament was Dr. Sibongiseni Dhlomo, Chairperson of the Parliamentary Portfolio Committee on Health. The key presenters included Germany’s former Minister of Health, Hon. Ulla Schmidt, who currently serves as a Member of the Bundestag, and Mr. Franz Knieps, who serves on the board of German Health Insurance BKK. Hon. Schmidt was Europe’s longest serving Minister of Health and oversee the implementation of the national health insurance system of Germany. Mr. Knieps, a former German Director General of Health, also made an extensive technical presentation during the seminar. ​The German healthcare system is based on solidarity, where the rich subsidise the poor, and the healthy the sick. It has a universal healthcare system where all citizens are compelled to have health insurance. All citizens belong to the national insurance scheme, but they may opt out if they take out private health insurance. The State funds the premiums of the unemployed and for certain categories of social beneficiaries. Whilst the proposed South African model suggests a single fund, in order to promote competition, there exists a number of funds in Germany. Standards are assured through an independent and autonomous healthcare standards authority. Another key feature of the German system is that healthcare specialists, providers and patients accept joint responsibility for the various funds’ governance.

Following the seminar on the NHI: Lessons from the German healthcare system, a technical meeting was held at the offices of the Inclusive Society Institute (ISI) to further interrogate the areas of compatibility of the German system within the South African environment. The objective of the meeting was to clarify issues raised in the previous seminar on the topic, to discuss its applicability within the current economic constraints, to consider aspects that could be incorporated into the legislation currently under discussion, and to assist the ISI research team in the drafting of its written report to policymakers. The meeting was attended by the ISI’s research team, which is being led by Dr. Shivani Ranchod, invited academics, Dr. Gwen Ramakgopa representing the ANC’s NEC sub-committee on Education and Health, and Mr. Franz Knieps, an expert on the German healthcare system and a board member of German Health Insurance BKK.

The Inclusive Society Institute, in conjunction with NCOP MP Mohammad Dangor, hosted visiting MPs from the German Bundestag for lunch in Parliament on Friday, 21 February 2020. Hon. Ulla Schmidt and Dagmar Freitag, both members of the Social Democratic Party of Germany, were joined by the ANC Chief Whip, Hon. Pemmy Majodina MP. Also in attendance was Ms Sue van der Merwe and Daryl Swanepoel, Chairperson and CEO of the Inclusive Society Foundation, as well as Ms Londiwe Mntambo, who represented the Friedrich Ebert Stiftung. Matthias Hansen, Consul General of Germany, also attended. Points of discussion were wide-ranging. The conversation included coalition politics, parliamentary ethics and conventions, as well as the political programmes of both South Africa and Germany. Given the shared social democratic ideology, much of the discussion also included the furtherance of the global dialogue on the advancing of the progressive agenda internationally. Photo: (from left) Daryl Swanepoel, Chief Executive Officer, Inclusive Society Institute Sue van der Merwe, Chairperson, Inclusive Society Institute Pemmy Majodina, MP, SA Parliament Ulla Schmidt, Member, German Bundestag Londiwe Mntambo, Project Manager, Friedrich Ebert Stiftung Mohammed Dangor, MP, SA Parliament Dagmar Freitag, Member, German Bundestag Matthias Hansen, Consul General, German Consulate General in Cape Town

Government has announced their intention to introduce a National Health Insurance Scheme for South Africa. The Minister of Health has published a bill in this regard, which is currently being discussed at the Parliamentary Portfolio Committee on Health. The introduction of the bill has met with mixed reaction, inter alia, trade unions who have expressed their support, and medical aid schemes and private hospitals raising concerns regarding the financial viability of the scheme. The bill has been published without an accompanying financing paper. The institute has commissioned research to inform a way forward that is cognisant of the shortcomings of the current system, both public and private, and the advantages and disadvantages of the proposed reforms. In questioning the way forward, it will be useful to conceptualize an inter-connected set of reforms – enabling thinking about a series of policy choices and the sequencing of the implementation of the various choices. In its research, the institute wishes to develop a framework against which reform pathway choices can be assessed by also providing a technical costing model which can be used to contextualize the fiscal implementation of alternatives. This research is currently ongoing. In December 2019 the institute hosted a highly successful roundtable on the NHI, in which organisations drawn from across the health sector, government, labour and business participated. One important aspect that was raised on a number of occasions during the discussion, was the concern that the bill would not pass constitutional muster. A further desktop study identified a number of constitutional arguments that were raised by various stakeholders in this regard. In order to test and assess the validity of the constitutional arguments being raised, a roundtable dialogue (via video-conferencing) was held on Tuesday, 19 May 2020 with representatives from the legal and academic fraternity. In the course of the discussion it became quite clear that the constitutional questions associated with the NHI Bill are complex and needful of intensive interrogation. The institute intends to obtain formal legal opinions to accurately inform its research and advocacy work with regard to the legislation.