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DevelopmentAid is the world’s premier information service provider for international development aid and economic and humanitarian assistance stakeholders. Our mission is to provide up-to-date and critically relevant information for donors, agencies, consultancies, non-government agencies, and individuals working the international development sector. DevelopmentAid is aligned with the work of the Global South Perspectives Network (GSPN) by promoting development coordination between and within Think tanks in the Global South. It also emphasises the importance of inclusive dialogue and representation in global governance, advocating for the voices of marginalized communities to be heard and considered in decision-making processes.

The Centre for International Policy – Africa is an independent, non-partisan, not-for-profit organization which aims at broadening the knowledge of international policy and affairs on the continent. The Centre aims to act as a resource for African governments and regional policy-makers to make informed and better foreign and public policy decisions for the betterment of Africa and the welfare of their people. Secondarily, the Centre also aims to promote the participation of academia, business executives, civil society, religious leaders, media and other key stakeholders in the process of decision making. The Centre is a succinct regional think-tank that analyses pressing regional and global challenges and contributes to actionable steps that leaders and citizens can adapt to address them. The centre consists of and is staffed by current and former national and international public policy practitioners, academia and experts who provide in-depth knowledge and skills in specialized areas such as diplomacy, regional integration, security, economics, media and the Sustainable Development Goals. In terms of methodology, CIP-Africa aims to stir up debate of international issues through research and publications, dialogues, media shows, build capacity and contribute actionably to the international development and global governance agenda through strategic projects, partnerships and trainings on the organizations focus areas. CIP-Africa is aligned with the work of the Global South Perspectives Network (GSPN) by promoting development coordination between and within Think tanks in the Global South. It also emphasises the importance of inclusive dialogue and representation in global governance, advocating for the voices of marginalized communities to be heard and considered in decision-making processes.

Mashariki Research and Policy Centre (MRPC) is a non-profit, interdisciplinary, and independent think tank headquartered in Nairobi, Kenya. MRPC is a security foresight-oriented institution that informs policy and action through tailored evidence-based analysis in the Greater Eastern Africa region. It provides insights derived from forecasting, trends analysis, simulations and scenario development to anticipate threats in the evolving geostrategic landscape in the fields of conflict trends, geopolitical shifts and environmental security. Since its inception, MRPC has produced research on key regional issues, including the security implications of the EU-Kenya Economic Partnership Agreement (EPA), the ongoing conflicts in Sudan and the Democratic Republic of Congo, and the impact of Trump-era tariffs on East Africa’s trade resilience. MRPC has also provided training on Preventing and Counter Violent extremism (PCVE) to strengthen counterterrorism efforts within the Eastern Africa region and supported governments with evidence-based forecasts and strategic analysis, solidifying its role as a leader in anticipatory governance in the region. MRPC is aligned with the work of the Global South Perspectives Network (GSPN) by promoting development coordination between and within Think tanks in the Global South. It also emphasises the importance of inclusive dialogue and representation in global governance, advocating for the voices of marginalized communities to be heard and considered in decision-making processes.

The Africa Policy Institute (API) is dedicated to policy-relevant research and analysis to inform policy-making, contribute practical ideas and solutions to Africa’s problems and to define the continent’s future. Founded in 2007, the Institute leverages its board, centres, knowledge hubs, experts, networks and partners to deliver on its grand vision of a peaceful and prosperous Africa in a just and equitable world.   Through research and analysis, policy dialogue and advocacy, training and capacity development, technical and advisory services, API endeavours to bridge the gap between knowledge and policy-making and to inform policy action by governments, regional and global organisations and Africa’s international partners. Covering diverse issues in development, diplomacy, governance, security and geostrategy, the Institute has become a thought leader in China-Africa relations, the geopolitics of the Horn of Africa and climate Change.   API's mission is to promote good governance, sustainable development, peace, and prosperity in Africa through research, policy analysis, capacity building, advocacy, and fostering regional and global cooperation. Conducting research and analysis to inform evidence-based policies and decision-making processes in Africa, focusing on governance, development, and security issues. API is aligned with the work of the Global South Perspectives Network (GSPN) by promoting development coordination between and within Think tanks in the Global South. It also emphasises the importance of inclusive dialogue and representation in global governance, advocating for the voices of marginalized communities to be heard and considered in decision-making processes.

The Institute for Strategic and Policy Studies is a national Non-Governmental Organization registered by the Relief and Rehabilitation Commission (RCC) of Government of South Sudan under Chapter 3, Section 10 of NGOs Act, 2016. It was issued with Certificate of Registration by RRC.   The Institute for Strategic and Policy Studies (ISPS) aims to foster greater understanding of the current issues through non-partisan Research and policy analysis, educational services, humanitarian support for the needy population in South Sudan and promotion of arts, music and culture in South Sudan. It aims to assist in capacity building of relevant institutions and individuals in respect to developmental fields. ISPS aims to promote informed and accountable policy and practice that responds to the needs, and well-being of the people of South Sudan.   ISPS is aligned with the work of the Global South Perspectives Network (GSPN) by promoting development coordination between and within Think tanks in the Global South. It also emphasises the importance of inclusive dialogue and representation in global governance, advocating for the voices of marginalized communities to be heard and considered in decision-making processes.

The Transatlantic Institute for South-South Cooperation (TISSC) is a think tank that aims to strengthen South-South transatlantic cooperation, along the Cape Town, Dakar, and Rio de Janeiro axis. Three sub-regions, two continents, and enormous potential for South-South cooperation are at stake. Africa occupies a significant part of its discussions. Its relations with the South American continent and the Caribbean, with which it shares a common destiny, are a key element of its concerns. These regions have converging interests related to maritime geography, cultural history, and the geopolitics of the Global South, which are experiencing renewed interest. In short, it is a rich and unexpected area of regional, continental, transatlantic, and South-South reflection and activity. Its action plan is firmly aligned with the guidelines of the United Nations Office for South-South Cooperation (UNOCSS). Affiliated with the Inclusive Society Institute (ISI), the Africa Think Tank Dialogue (ATD), and the Global South Perspectives Network (GSPN), the TISSC shares their commitment to inclusive multilateralism, equity in addressing environmental challenges, and reforms in global financial governance. The TISSC is a progressive movement resolutely committed to structuring the Global South.

Occasional Paper 14/2025   Copyright © 2025   Inclusive Society Institute PO Box 12609, Mill Street Cape Town, 8010 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.   OCTOBER 2025   Dr Klaus Kotzé BA Social Dynamics, BSocSci Honours Political Communication, Master in Global Studies, PhD Rhetoric Studies Abstract   Thirty years into South Africa’s democratic project, the constitutional promise of participatory governance remains largely unrealised, because whilst the 1996 Constitution enshrines equality, accountability and public involvement, democratic practice has stagnated. Power has become concentrated within political elites and party structures, while citizens have retreated into passivity, thereby reducing democracy to episodic elections. This paper introduces republican constitutionalism as a normative and practical framework to revitalise South Africa’s democracy by re-centring authority in the country’s citizenry. Moreover, by building on transformative and participatory constitutionalism, republican constitutionalism insists that sovereignty should not be a static legal status, but rather, it should be an active, lived practice, which calls for a vigilant, engaged citizenry that demands justification for state action and participates in shaping public life.   This paper diagnoses the systemic failures, centralisation of executive power, weakened institutions and civic disengagement within the South African context. It situates these deficiencies within the historical patterns of exclusion and elite dominance and then goes on to explore how republican constitutionalism can operationalise constitutional ideals through concrete measures, such as the strengthening of local autonomy via subsidiarity, the reforming of the electoral system to introduce constituency-based representation and the institutionalising of public-private partnerships that serve to enhance governance capacity, but in a way that it does not undermine accountability within the governance system. By drawing on historical precedents from the Afrikaner and Black republican traditions, the paper argues for an inclusive and contemporary republicanism, which should be rooted in the country’s constitutional values and ubuntu, which it does by reframing democracy as a shared ethical and political responsibility, with the decentralising of power and the embedding of accountability at every level of governance.   Keywords:  Republican constitutionalism, Participatory democracy, Transformative constitutionalism, South African Constitution, Democratic renewal, Electoral reform, Local autonomy, Ubuntu, Citizen engagement, Decentralisation of power Introduction   After three decades of South African democracy, the citizenry has become detached and estranged from the active civic role the constitution anticipates. Elections have come to represent the only real channel of democratic engagement. The daily work of interrogating and shaping public life has largely been usurped, or left to, political elites. As a result, South African democracy has become unresponsive and unaccountable to the majority of citizens, who are left alienated and disempowered to influence the decisions that affect them.   This position paper proposes republican constitutionalism as a theoretical approach to recentre power to the citizen and revive democracy. As a contemporary expression of people’s power – directed not against  but through the state – it offers a corrective measure to overcentralised, party-centred politics. Given that the democratic order has tended to concentrate power within parties and the executive, a republican constitutionalist approach argues that citizens must practice and embody democracy in their daily lives. This approach reclaims political participation beyond the confines of episodic elections. It holds that power is not merely distributed but claimed and exercised collectively.   The Constitution is South Africa’s lodestar. Yet too little is being done to give expression to its ideals. Rather than waiting for state actors, citizens must employ the constitutional framework to assert their role in public life and demand openness, accountability and justification. Republican constitutionalism, as presented in this paper, proposes a pathway to embrace the Constitution as a living document. It promises to catalyse a people-centred politics that does not see citizens as rights takers, but as active players in reviving democratic energy.     Failures: Centralisation and citizen inaction   Democratic Stagnation South African democracy faces myriad challenges. Instead of strengthening and expanding, South Africa’s democratic gains have plateaued following the transition. Though formally established and functioning in many respects, South Africa’s democracy has not given expression to the Constitutional goals. It has not escaped the deep-seated legacies of the past.   Professor Steven Friedman explores the causes for and nature of South Africa’s democratic stagnation. South Africa’s political and economic institutions are deeply influenced by the past (Friedman, 2021). There is a path dependence in that patterns of exclusion, inequality, power relations and social structure persist from apartheid and colonialism. The negotiated settlement which brought equal rights has not led to the major economic and cultural reforms needed to give effect to democratic ideals. It has not sufficiently challenged existing hierarchies. Persisting structural inequality severely limits the extent to which society can transform. Furthermore, due to economic exclusion and spatial inequality, many South Africans remain outsiders in their own country. They do not have the influence, nor the voice, to effectively participate in the political process and thereby contribute to democratisation (ibid).   The Constitution established democracy. It put in place the ideas and ideals to which to strive. But while procedural democracy established the rule of law and civil liberties, it has not substantively addressed the myriad disparities. To do so would require substantial political as well as societal will.   The elite power, social norms and values formed under apartheid remain dominant. Democracy did not sufficiently change the institutional structure in South Africa. Many of the old institutions remain with minimal transformation. This continues to serve the privileged. The lack of substantive democratisation - adding real layers, meaning and culture to the democratic spirit and giving it substance and character - has resulted in formal but not practical democratic freedoms. The result is that in practice most people cannot exercise their rights; they cannot participate meaningfully or have their voices heard. To Friedman, South Africa has not developed the mechanisms to attend to the inherent tensions between the demands for social justice and existing hierarchies. When these tensions accumulate, they do not get addressed; rather the old patterns are reinforced (ibid).   South Africa remains a bifurcated society. Rather than expanding the meaning of democratic citizenship, pre-existing structures of power and economy endure. Some see this as a constitutional failure. Instead, it is the failure of the state and its citizens to implement what is needed. Democratic stagnation has set in. To escape this impasse, a new debate is needed to rekindle democracy and empower citizens.        State failures South Africa’s democracy has been dominated by political elites and mediated through party structures, with little space for citizen participation. Weak political parties and fragile institutions have undermined state capacity and fostered inertia. The politicisation has become an instrument of party power, creating dependency.   Ivor Chipkin notes that weak capacity is systemic and often results from the politicisation of the bureaucracy. Inconsistent standards in hiring and performance, as well as poor service delivery and oversight, reveal both a suspicion of competence and a lack of accountability. Weak institutional capacity and inadequate institutional machinery explain why so much of the state functions as a box-ticking exercise. Why so few take responsibility beyond procedure (Chipkin, 2023).   There is a clear gap between what policies and laws demand and the state’s capacity to deliver. Much like the Constitutional aims, laws and policies prescribe lofty tasks where the state simply does not have sufficient technical ability. Formal democratic institutions have become detached from the lived realities of citizens.   The government’s response to failures has typically been to consolidate power. The crises at State Owned Enterprises (SOEs) and the state capture scandal clearly illustrate excessive power centralisation. Roger Southall, in Liberation Movements in Power: Party & State in Southern Africa  (2013), examines how liberation movements in Southern Africa have typically seen themselves as the legitimate embodiment of the state. This leads to the centralised authority within the party, conflating party and state. Once in power, parties marginalise grassroots democratic movements and privilege loyalty over accountability. According to Southall, the ANC’s claim to authority as the liberation movement has been used to resist criticism and narrow the democratic space (Southall, 2013.)   Under the Zuma presidency, executive authority was concentrated in the presidency. The president controlled the appointment of ministers and SOE boards. By bringing the State Security Agency and Hawks under his direct control, it meant that investigations into corruption were selectively pursued or blocked.   The cabinet offered little check on presidential power, while Parliament functioned largely as a party loyalist body rather than a watchdog. The Nkandla scandal, in which state funds were illicitly used to unduly benefit Zuma’s homestead, exemplifies Parliament’s failure to hold the president accountable. It refused to act on the Public Protector’s findings. The extensive failures of MPs to investigate irregularities at SOEs such as ESKOM and SAA, now part of the State Capture saga, shows how executive excess went unchecked.   Centralisation of power is not unique to Zuma. Apart from President Mandela, who diffused power, ANC presidents have moved to consolidate power. The ANC’s cadre deployment committee has long run a parallel process for filling senior positions (Matiwane, 2022). The party has also taken de facto control of other state appointments. This undermines the principle of a professional, impartial civil service (Section 195 of the Constitution), hollowing out of state capacity.   While presenting himself as a reformer, President Ramaphosa has continued this trend, centralising power beyond the post-1994 settlement’s vision. He has amplified and expanded his presidential powers by involving the presidency in nearly every policy area; effectively creating a super presidency by establishing parallel structures, such as the Presidential Climate Commission. These structures often bypass his own ministries. Justified as a means to address state capacity, this consolidates power without adequate accountability.   Rather than practicing cooperative governance, the ANC has entrenched a top-down power command structure. Citizen participation is largely symbolic, not decisive. This elevates politicians above citizens, limiting transparency and accountability. In times of crises or incapacity, the response is to close ranks rather than open governance.   The concentration of power at the top has led to local government failures. Though municipalities are supposed to be autonomous, they are very often dominated by provincial and national party structures. Local decision-making is stifled, and accountability is weakened.   State failure goes beyond corruption and incompetence. It is actively reinforced by excessive concentration of political power in the executive and ruling party. A weakened Parliament, hollowed state institutions, and an incapacitated public service have contributed to democratic stagnation. Citizen acquiescence It is insufficient to blame South Africa’s democratic shortcomings solely on politicians. The citizenry has failed to maintain and to deepen democracy. The post-transition period has seen broad civic passivity, apart from protests largely driven by lower-income groups. Whereas the anti-apartheid struggle was largely powered by people’s power (unions, churches, youth movements), the post-apartheid South Africa has seen civic engagement decline. This is partly due to the ANC’s initial legitimacy following liberation and weakening of civic structures, leaving few channels for participatory, bottom-up democracy.   The Chapter 9 institutions, established as democracy-supporting institutions or a fourth arm of the state to empower citizens, have not been sufficiently engaged. Voter loyalty has maintained the ANC in power despite poor governance and poor service delivery.   While South Africans possess an many mechanisms for participatory power, very few use them in practice. Awareness, knowledge, and skills to engage meaningfully remain marginal. Instead, dependency on the state has become the norm. The Constitution provides for spaces like ward committees and public hearings, yet these are often seen as symbolic; with political parties seen as the real the domains of influence.   The influential community organisations of the 1980s and 1990s have declined or disappeared. Some have migrated into the NGO sector without strong foundations. Citizens continue to struggle to achieve political ends outside formal party structures. Rather than organising collectively, many withdraw from political engagements. Or they rely on the courts. While judicial action is important, legal dependency neglects the power of citizen movements. Courts are slow, costly, and reactive     Solutions: Recentring power to the citizen   If the democratic order’s systemic breakdown lies in concentrated power among political elites, then its renewal lies in power’s diffusion.    Direct citizen participation, the bottom-up democracy of the UDF’s approach, must find renewed expression today. Whereas apartheid’s illegitimacy was a clear target, contemporary grievances are more diffuse. Corruption, inequality, and unaccountability are all single vectors, not a systemic whole. Strategically, the focus should shift from opposition to affirmation. The legitimacy of the democratic state, its founding, institutions and ideals must be actively pursued. Actively lobbied. The constitution is the lodestar.    South Africa is not merely a state. It is a Republic, from the Latin meaning “concern of the people” or “belonging to the people.” As the term “citizen” implies belonging to the city, so too the Republic belongs to the people, and the people to the Republic. This citizen-centred order gives republicanism contemporary relevance as an expression of people’s power.  Republicanism is about enacting freedom. It demands an active and vigilant citizenry to enact legitimacy, to pursue accountability. It rejects passive dependence on political elites.   Drawing from the grassroots democracy of the anti-apartheid movement, republicanism envisages people claiming power, not opposing the state. It calls for a bottom-up democratic order where institutions are solicited, checks and balances prevent power concentration, and politicians held accountable. Republicanism rejects the government as the sole locus of power. Instead, power is dispersed across legislative bodies, the judiciary, civic institutions and local communities. The focus only on political offices is itself an aberration of the constitutional state.   These republican ideals are found in South Africa’s constitutional design. For several reasons (party dominance, party ideology, political centralisation) republicanism remains unrealised. Here the constitution must find expression.     Previous republicanisms   A strategic turn to republicanism promises to activate South Africa’s constitutional principles. To chart a path forward, it is useful to reflect on earlier republican iterations in South Africa. Doing so offers a rare opportunity to reconcile disparate historical experiences. Building a united, contemporary approach. Afrikaner republicanism and Black republicanism were both responses to existing power structures, were pursuant of principles, and were determined towards civil empowerment. Both were also reactions to changes in power relations in a new political reality. Both offer relevant insights for today.     Afrikaner republicanism   (White) Afrikaner republicanism emerged in the 19 th century. Fusing European republican and self-rule ideas in a distinct settler colonial context.  Developed as a reaction to British colonial rule, Afrikaner republicanism sought civic empowerment from British rule; they actively pursued their own interests.   Loyal to a collective identity and in pursuit of Calvinist theology and mythology, Afrikaner republicanism was conceptualised as a religious duty to protect and advance their own. It expressed itself in the desire for self-determination; independence from imperial interference (Giliomee, 2003).   This vision found concrete expression in the independent Boer republics, the Transvaal and Orange Free State, where interests were consolidated into a coherent state ideology, an active expression of independence.     Black republicanism Black republicanism sought a political order grounded in black self-determination. Similar to Afrikaner republicanism, it started as a response to misgovernance and exclusion. Earlier expressions of black republicanism can be traced to African intellectuals hailing from mission-educated circles. Politically mobilising in a principled pursuit for self-expression, it resisted race-based exclusion and persecution. Leaders such as John Tengo Jabuva and Pixley ka Isaka Seme articulated Pan-Africanist views. Positing that Africans both have the right and the capacity to govern themselves. (Lodge, 1983).   Freedom as non-domination, true popular sovereignty, was their central goal. The approach later became guided by the black consciousness movement, which emphasised psychological liberation as a precondition for civil freedom. Whereas Afrikaners had the means and liberties to build civic institutions, black republicanism, which was morphed into a broader democratic republicanism pursuing inclusive terms under the Freedom Charter, was driven by mass democratic movements such as civic associations and trade unions. While its realisation remains lacking, black republicanism found concrete expression in the new constitutional order which recognised the people as sovereign.      Towards a contemporary republicanism   Republicanism today exists in a space. Some opinions focus on the legal constitutional dimensions, others stress autonomy, while still others rally around grassroots organisations. The different views do not preclude a unified approach.   The debate has largely moved on. Equality, inclusivity and representation have been enshrined in the Constitution. The challenge is to turn form into function. To move beyond procedural democracy and make constitutional ideals real. To enact true, experienced transformation.     Transformative constitutionalism remains one of the most influential concepts in South African legal scholarship. Former Chief Justice Pius Langa championed this teleological framework for a just and equitable future. He explained how the constitution should serve as a tool for ongoing economic, social and legal transformation (Langa, 2006). Broad-based transformation, through reconciliation and access to justice should be made real. Not only procedural. This approach, as guided by the injunction of the constitution’s preamble to “recognise the injustices of the past…heal the divisions of the past” (South African Government, 1996) establishes transformation as a permanent, ongoing ideal.   Langa held that constitutional culture cannot simply be about obedience to the law – passive and unengaged. With a sovereign citizenry, state authority cannot summarily be imposed. Power must be justified, with reference to constitutional values. The work of Etienne Mureinik on the power of justification is at the heart of Langa’s framing of transformative constitutionalism. To Mureinik, every law and every act must substantively serve the citizenry. All power must be explained, must be justified. In South Africa, the power of justification is transformative (Mureinik, 1994). It establishes an ongoing relationship between the citizenry and the state.   Not only must power be justified, but it also requires an interrogating citizenry. If the government is to justify its decisions and actions, the citizen must have a meaningful opportunity to participated and deliberate. This is the participative democracy that the constitution makes requirements for under Sections 59, 72 and 118 (South African Government, 1996).   Participation is essential. Landmark judgments such as Doctors for Life International v Speaker of the National Assembly  (2006) and Matatiele Municipality v President  (2006) confirm that public participation must be substantive. Participatory constitutionalism animates the culture of justification.   Substantive engagements between citizens and their representatives promise to shift democracy from episodic elections to an everyday practice where people participate on an ongoing basis. Justification promises accountability.       Republican constitutionalism   Republican constitutionalism builds upon the transformative and participatory frameworks. Mamphela Ramphele writes that too many South Africans treat democracy as if it were delivered by the state. Citizens wait for the state and consider episodic voting as their sole democratic duty (Ramphele, 2012). Yet, citizenship is not about entitlements. Citizens are not the clients of the state but co-rulers. They must actively exercise their responsibility and participate in shaping society (Ramphele, 2012).   Republican constitutionalism extends beyond liberal rights, which define citizenship merely as a legal status. It envisions a model where a republican ethos of vigilance, insistence on justification, and active involvement in governance prevails. At its core, a people-centred approach that stresses popular sovereignty.    The capture of the democratic project by party politics is a betrayal of the Constitution’s vision. The republican approach, whereby citizens reclaim their political subjectivity, is an assertion of autonomy from party-political or governmental control.   Republican constitutionalism offers a response to the failures of the democratic project. It provides a credible way to give expression to the Constitution’s aspirations. A contemporary, inclusive republicanism need not pursue only negative freedoms, as seen in Afrikaner and Black republicanism. Its pursuit should not only be limited to constraining executive dominance but should focus on broadening democratic life. With the Constitution as lodestar, republicanism can be reframed as an active process, one that pursues positive freedoms in everyday life.   Such an approach extends beyond formal institutions. It draws from Afrikaner republicanism's insistence on independence and unites it with Black republicanism’s emphasis on universal suffrage to establish an inclusive sovereignty. In so doing, it decentralises power: each citizen becomes a node of accountability, collectively opposing the arbitrary exercise of authority.   Pursuant of principles, constitutional republicanism moves the debate from form to function, focusing on governance, participation and accountability. Whereas earlier republicanisms opposed the system and viewed democracy as something to be won, democratic culture today must be practised in the present through shared leadership. It must be built through justification and oriented toward the common good. Instead of a single Volk, the republican identity is rooted in the constitutional values such as equality and dignity.   Republicanism insists that no one rules alone. The devolution of power, understood as relational between individuals, is a true expression of ubuntu. Ubuntu is grounded in mutual recognition, care and solidarity. It affirms the individual’s inalienable connection to the community. Ubuntu sees participation not as a duty imposed from the outside, but as an ethical response to belonging to a community. Shared life is the basis of political legitimacy.   South African democracy needs revitalisation through ubuntu, not only through elite bargains. While many fora and community initiatives are establishing laudable civic-driven solutions, such as fixing potholes or supporting local clinics, these should be driven by ubuntu, not captured by private or business interests. Initiatives that respond to state failure by serving private interests alone (e.g. private security) do not offer equitable or sustainable solutions to democratic stagnation. They fail to address the consolidation of power and public disillusionment. Such examples of elite capture avoid the root causes of democratic decay and risk precipitating systemic socio-political collapse.   Walking away from the state is not an option. Nor is it outsourcing agency and responsibility to private actors. The state will be empowered when the citizenry is collectively empowered.      Active citizenry: Giving expression to constitution   Active citizenry is more than symbolic. It is the most direct way to make the Constitution come alive in everyday life. From reporting issues to standing for public office, there are many ways to substantiate public life.  The Constitution provides for involvement in Parliament, provincial legislatures, and municipal councils. Community-based organisations such as school governing bodies and ward committees are spaces where citizens co-govern.   Citizens should not wait for the government to enact public participation processes. They must actively engage political process, including by pursuing:       Greater local autonomy Subsidiarity is the principle that demands decisions to be taken closest to the people. While not explicitly mentioned in the Constitution, subsidiarity is an important concept in the constitutional design. Read together, Sections 151(3) and 151(4) of the Constitution entrench municipalities right to govern their own affairs, subject to national and provincial oversight only where necessary (South African Government, 1996).   Too often, municipal authority is undermined and usurped by higher spheres of power. Local decisions are overridden or stalled by provincial departments. Party politics lead to local interference, and capacity issues are used to justify top-down control. These actions erode accountability and obscure responsibility, leaving citizens in the dark.   Local authority can function better by reinforcing municipal self-government. Clearer limits on provincial oversight will create the conditions for genuine autonomy. An autonomy that depends on the requisite local skills and resources. It is critical to invest in local government training and retain professional skills locally. Communities can also develop frameworks where national government, universities and the private sector second professionals into the municipal systems.   When local governments are empowered, public participation becomes more practicable. When the chain of contact is shortened, when citizens see their inputs driving local decision-making, trust and cooperative relationships can grow.   Citizens should become directly involved in the business of politics. They must seek active involvement in ward committees, ratepayers’ associations and other fora to strengthen local oversight. Municipal budgets and service-delivery plans can then be monitored, and integrated development plans influenced to reflect community priorities. Such actions drive accountability from the lowest point possible.    A third, hybrid approach combining public and private participation is already developing in South Africa. This approach emerges where citizens step into vacuums left by the state. Filling potholes, forming community policing forums, or drilling boreholes where taps have run dry. These initiatives show civic energy and innovation.   However, at the risk of deepening inequality and establishing unaccountable structures, it is critical that these initiatives work with the state, not against it. Every effort must be made to institutionalise public-private partnerships with municipalities. The example of Business for South Africa (B4SA) offers a successful example for municipalities to emulate. B4SA has raised private sector funds for targeted initiatives, supporting technical experts and helping to solve acute problems.   When citizens commit to and invest in local public-private initiatives – beyond private services benefitting only themselves - they give effect to local autonomy and strengthen local governance capacity. For example, citizens can help municipalities improved procurement and service-tracking systems, thereby enhancing transparency and reducing undue provincial interference.     Electoral reform Appropriate reform of the electoral system stands to significantly move authority closer to the citizenry. The Electoral Reform Consultation Panel (ERCP) was established by Parliament in 2023 to study possible reforms, consult the public, and make recommendations for a more legitimate and accountable electoral system. Established in accordance with the Electoral Amendment Act of 2023, the ERCP is the most authoritative electoral reform panel to date.   On 18 September, the ERCP reports were tabled before Parliament. The panel submitted both an original as well as an alternative report. The key difference lies in their recommendations. Whereas the original report explicitly recommends reform that will give expression to greater political accountability, the alternative found that the current system, with minor tweaks, could be maintained. Parliament should now be lobbied to reject the latter.   The original report aligns with the arguments made in this paper. It makes a compelling case for reviving citizen-centred democracy in South Africa. It “strongly recommends that Parliament consider electoral reform to strengthen the relationship between voters and their representatives” (Home Affairs, 2025). It proposes that South Africa adopt a hybrid electoral model that retains proportional representation but introduces constituencies -  either with smaller multi-member or single-member constituencies (ibid). The recommendations are proposed “in light of the findings and concerns emerging from public consultations … we heard the same concerns over and over again. Across provinces, languages, stakeholder groups, rural and urban locations – the lack of accountability was the common theme” (ibid, 120 and 112).   The report presents a foundation for a republican-constitutionalist future. Not only is it influenced by public participation, but it also seeks to address democratic weaknesses by moving the political power closer to the citizen.  Constituency-based reform would not merely tweak representation but could help revive democracy along republican lines.   Under the current purely proportional representation system, voters do not directly elect Parliamentarians. Representatives are accountable upward to their parties, not downward to the voters. This arrangement fuels alienation. Parliament, controlled by parties, is distant and unresponsive to local concerns. Citizens thus become passive participants in episodic elections. Party centralism leads to power accumulation at the top, to party structures and to the government’s executive.   Constituency-based electoral systems promise to decentralise power. Giving effect to greater citizen involvement in public life. When Parliamentarians are directly elected by and therefore held accountable by citizens, power flows to (and from) the citizen, not to the party. A candidate’s electability will be determined by their reputation among voters. Party bosses will rely on local candidates, rather than the other way around.   The bottom-up power structure creates arenas in which citizens can substantiate public life. While municipal elections already function in this model, South Africa’s politics is dominated by the national level. Constituency offices and town-hall meetings, where Parliamentarians provide a direct link to national decision-making, could re-energise civic engagement at the municipal level.    When Parliamentarians derive their legitimacy from voters, they will be required to constantly justify and defend their decisions. Stronger deliberation will help revive and mobilise community-based politics. Disillusioned citizens, those who have withdrawn from politics due to corruption or unresponsiveness, may once again see politics as a shared public space. Skilled potential leaders, currently deterred by party dominance, could be drawn back into public life. Beyond leadership renewal, citizens themselves may feel empowered to organise and engage when representation is directly tied to where they live. Constituencies, therefore, not only promote pluralism but promise to breathe life into a new era of active citizenry.     Conclusion   This paper has proposed republican constitutionalism as a pathway to revive South African democracy. Thirty years after 1994, the promises of the Constitution remain largely formal. The substance of the constitutional project, its accountability and participatory spirit, has been undermined by weak institutions, political centralisation and the withdrawal of citizens from public life. As an effect, democracy has been hollowed out, reduced to a procedural politics revolving around elections and dominant parties. The top-down power structure treats citizens as bystanders rather than active participants.    Reviving democracy and giving real expression to the Constitution will empower citizens as sovereign. They must once again become the active subjects of political power, demanding openness, justification and accountability. Republican constitutionalism seeks to decentralise authority through greater local autonomy, reforms that empower citizens, and public-private partnerships that strengthen, rather than counter the state. Republican constitutionalism expands upon the participatory and transformative constitutionalist approaches to reactive civic culture and to restore the constitution as the lodestar of public life.   Republican constitutionalism responds directly democratic stagnation. It recognises that democracy cannot simply be left to the elites. It must be enacted, defended and lived by citizens themselves. Only through this active, shared engagement can South Africa reclaim the spirit of the Constitution and renew its democratic life.   References   Chipkin, I. (2023) South Africa: An Agenda for Reform . Policy Brief, 1(1). Johannesburg: New South Institute.   Friedman, S. (2021) Prisoners of the Past: South African Democracy and the Legacy of Minority Rule . Johannesburg: Wits University Press.   Giliomee, H. (2003) The Afrikaners: A Biography of a People . Cape Town: Tafelberg.   Home Affairs (2025) Electoral Reform Consultation Panel: Original Report . Department of Home Affairs. Available at: https://www.dha.gov.za  (Accessed: 7 October 2025).   Langa, P. (2006) ‘Transformative Constitutionalism’, Stellenbosch Law Review , 17(3), pp. 351–360.   Lodge, T. (1983) Black Politics in South Africa since 1945 . Johannesburg: Ravan Press.   Matiwane, Z. (2022) ‘Minutes show ANC ran “parallel process” to fill top government jobs: DA’, Sowetan Live , 5 January. Available at: https://www.sowetanlive.co.za/news/south-africa/2022-01-05-minutes-show-anc-ran-parallel-process-to-fill-top-government-jobs-da  (Accessed: 7 October 2025).   Mureinik, E. (1994) ‘A Bridge to Where? Introducing the Interim Bill of Rights’, South African Journal on Human Rights , 10(1), pp. 31–48.   Ramphele, M. (2012) Conversations with My Sons and Daughters . Johannesburg: Penguin Books.   South African Government (1996) Constitution of the Republic of South Africa, 1996 . Available at: https://www.gov.za/documents/constitution/constitution-republic-south-africa-04-feb-1997  (Accessed: 7 October 2025).   Southall, R. (2013) Liberation Movements in Power: Party and State in Southern Africa . Cambridge: Boydell & Brewer. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 Inclusive Society Institute participated in a high-level panel discussion titled “Türkiye’s Humanitarian Diplomacy and Assistance in the Peaceful Resolution of Conflicts”, organised by the Communication Directorate of the Türkiye Presidency and held in Johannesburg on 21 November 2025 on the margins of the G20 Leaders’ Summit. The event formed part of South Africa’s G20 Presidency programme, which is anchored in the theme “Solidarity, Equality, Sustainability.” The panel explored Türkiye’s growing role in humanitarian diplomacy, its experience in mediation, and the emerging opportunities for deeper South–South cooperation in addressing global crises.   The session brought together leading academics, policy practitioners and civil society voices. The panel was moderated by Prof. Dr. Kılıç Buğra Kanat (Penn State University), with contributions from Prof. William Gumede, Prof. Dr. Erman Akıllı, Dr. Liaqat Alli Azam, Dr. Tunç Demirtaş and Mr. Daryl Swanepoel, Chief Executive Officer of the Inclusive Society Institute. The discussion examined Türkiye’s evolving humanitarian diplomacy model, which in recent years has become a central pillar of its foreign policy. The panel contextualised Türkiye’s increasing international footprint, from its role in peace facilitation in regions such as Karabakh, Libya, Syria and Ukraine, to its leadership in humanitarian operations through institutions like AFAD, TİKA and the Turkish Red Crescent. The Black Sea Grain Initiative was highlighted as an example of how results-oriented diplomacy can generate practical, confidence-building outcomes.   The panellists also reflected on the shrinking humanitarian capacity of the United Nations system, with global need expanding faster than the resources available to the multilateral system. This widening gap has created space, and necessity, for middle-income countries (MICs) to assume more proactive roles in humanitarian action and crisis mediation.   Contribution by the Inclusive Society Institute   ISI CEO Daryl Swanepoel delivered substantive remarks focusing on the opportunities emerging for greater middle-income country leadership in humanitarian diplomacy. Drawing on the South African and Turkish experiences, he emphasised that as the UN system comes under increasing fiscal and operational strain, middle-income countries must show greater solidarity with one another and step forward to help fill the vacuum in global humanitarian leadership. Mr. Swanepoel described Türkiye’s humanitarian diplomacy model as practical, agile and impactful, noting its visible interventions during crises such as the Syrian refugee emergency and its rapid mobilisation capacity in humanitarian response. He placed this within the broader African context as South Africa hosts the G20 for the first time on the continent.   Importantly, he underscored that humanitarian action serves both moral and national-interest objectives. While the primary beneficiaries are people in crisis, countries that step up gain durable diplomatic relationships, soft power, regional stability and opportunities for cooperation in peacebuilding and post-conflict reconstruction.   A proposal for Middle-Income leadership   In his remarks, Mr. Swanepoel tabled a concrete proposal for elevating MIC cooperation through a Türkiye-South Africa Humanitarian Solidarity Initiative, open to participation by other willing middle-income partners. The proposal comprises three pillars:   A joint humanitarian and mediation platform, combining diplomatic networks, analytical capacity and mediation experience to support peace efforts and humanitarian corridors in regions where MICs countries have longstanding ties. A South–South humanitarian facility, co-sponsored by Türkiye and South Africa and other interested MICs, focused on “forgotten crises” that receive limited attention from major donors. Contributions may include funding, logistics, medical teams, engineering support and training. A capacity-building partnership among think tanks, universities and civil society to train young diplomats and humanitarian professionals in mediation, negotiation and crisis response. He emphasised that such a platform would not replace the UN but complement it, providing agility and regional insight that traditional institutions sometimes lack.

The Shaanxi (China) - Western Cape (South Africa) Economic and Trade Cooperation Negotiation Conference, held on 19 September 2024, at the Rockefeller Hotel in Cape Town, brought together key stakeholders to foster economic collaboration. Organized by the CCPIT Shaanxi Sub-Council and the Inclusive Society Institute (ISI), with support from the China-Africa Silk Road Industry Cooperation Promotion Center, the event was a platform for discussions and the signing of agreements.   The conference began with opening remarks by Mr Li Jun, Vice Governor of Shaanxi Province, and Alderman James Vos, City of Cape Town’s Mayoral Committee Member for Economic Growth. This was followed by the signing of trade agreements between New Airline Group and VALUE Group, as well as between Shaanxi Tourism Group and Ridgemorvilla Estate, showcasing the potential for tourism and transportation sector growth.   Mr Tang Changan from the Chinese Consulate-General and Ms Erica Joubert from Wesgro, delivered speeches emphasizing the mutual benefits of China-South Africa trade partnerships. Deputy Chairperson of the ISI, Ms Buyelwa Sonjica also shared her insights. The event concluded with a business matching and negotiation session, paving the way for future investments and strengthened economic ties between the Shaanxi Province and the Western Cape.

Occasional Paper 13/2025   Copyright © 2025   Inclusive Society Institute PO Box 12609, Mill Street Cape Town, 8010 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.   OCTOBER 2025   Daryl Swanepoel Abstract   China’s Global Governance Initiative (GGI), announced in 2025 by President Xi Jinping, has drawn extensive international scrutiny. Western commentators often frame it as an attempt to create a parallel system, a rival architecture to the UN-based, liberal order led by the United States and its allies. Yet this paper argues that such criticism, while not necessarily unfounded, is incomplete and at times misplaced.   China’s proposals stem from the manifest failure of the existing global governance framework to reform itself. The United Nations remains structurally frozen in 1945, the Bretton Woods institutions disproportionately represent Western economic power and the rhetoric of a “rules-based order” often masks selective adherence to those very rules by the West.   This paper contends that the West’s unwillingness to share institutional power and to genuinely reform multilateralism has created the vacuum that China now fills. Rather than dismissing the GGI as a threat, policymakers should recognise it as both a symptom of global governance stagnation and a test of whether an inclusive, pluralist order can still be built. The real challenge is not to condemn China’s initiatives per se, but to address the underlying legitimacy deficit of the current system. The West’s defensive rigidity, more than China’s assertiveness, is driving the fragmentation of multilateral governance.     1. Introduction   When President Xi Jinping announced the Global Governance Initiative  (GGI) in early 2025, the initiative was immediately labelled by many Western analysts as a bid by China to reshape the world order in its image (The Diplomat, 2025; Reuters, 2025). The GGI follows two earlier efforts, being the Global Development Initiative  (GDI, 2021) and the Global Security Initiative  (GSI, 2022), which together with the GGI outline China’s emerging normative vision of global governance. Critics argue that the GGI represents an attempt to construct a parallel system  that would displace, or at least undermine, the existing multilateral institutions created under US and European leadership after World War II (Schuman, Fulton & Gering, 2023), but this paper takes a different view. It argues that the conditions giving rise to the GGI lie not in Beijing’s ambitions alone, but in the stagnation, hypocrisy and exclusion that have paralysed existing global governance structures.   The question, therefore, is not whether China’s initiative is justified, but whether the failure of the United Nations and related bodies to reform leaves the world any real alternative.     2. China’s diagnosis of global governance failure   China’s critique of the post-war order is rooted in its perception that global governance remains dominated by Western power and ideology and in this regard president Xi Jinping has repeatedly stated that the architecture of global governance must reflect the realities of the new world balance. Beijing’s diagnosis can be summarised in three main points.   2.1 An unrepresentative institutional order   The United Nations Security Council (UNSC)  still enshrines the geopolitical structure of 1945, with Africa, Latin America and much of Asia still remaining without permanent representation, but on the contrary, however, the permanent five (P5) veto system remains firmly in place, where it continues to entrench inequality between the member states by allowing the powerful ones to block reforms that might dilute their influence (CFR, 2025).     2.2 Economic governance skewed toward the West   Voting shares at the International Monetary Fund (IMF)  and World Bank  continues to remain weighted in favour of the US and Europe, despite decades of growth in emerging economies, such as in China and India, who together now account for nearly 20% of global GDP (nominal 2023) (Worldometer, N.d.); and yet these two countries hold less than 10% of IMF voting power (IMF, N.d.). Moreover, attempts at reforming the quota regime have stalled repeatedly due to the political resistance of Washington and Brussels against it.     2.3 Normative and ideological bias   China also criticises what it considers value monopolies, being the imposition of liberal democratic norms through conditional aid, sanctions or interventionism, which Beijing argues is a Western-led governance structure that equates legitimacy with liberal democracy and human rights, which dictate serves to marginalise alternative governance models (Dams & Van der Putten, 2015).   This diagnosis, whilst it can be argued self-serving in part, resonates widely in the Global South , where many states view the post-1945 order as inequitable and morally inconsistent.     3. The case for reform: Why China has a point   3.1 Reform paralysis and structural inertia   Calls for reform of global institutions are not new. The 2005 World Summit Outcome Document committed to making the Security Council more “representative, legitimate and effective” (UN, 2005). Two decades later, little has changed. The G4 proposal  (Brazil, Germany, India, Japan) and the African Union’s Ezulwini Consensus,  both languish in procedural limbo. The failure to even agree on criteria for membership expansion demonstrates institutional sclerosis.     3.2 Double standards and the erosion of normative authority   Western states, and in particular the United States, have often undermined their own claims to uphold a rules-based order, for example, the 2003 invasion of Iraq without UN authorisation (MacAskill & Borger, 2004), the 2011 intervention in Libya that exceeded the UN mandate (Miller, 2022), and the selective recognition of international court rulings, and the US rejection of the ICJ’s Nicaragua judgment in 1986. This has eroded confidence in Western stewardship of international law.     3.3 A system in crisis   The failures of the UN and Bretton Woods institutions during COVID-19, the climate crisis and global debt distress further expose governance gaps, where, for example, the World Health Organization  was sidelined during the pandemic, while the Paris Agreement  remains underfunded and politically fragile. The West’s dominance in rule-making, combined with its paralysis in collective action, leaves space for alternative leadership.   In this sense, China’s argument that reform is overdue is not revisionist, it is factual. The current system is both unrepresentative and ineffective.     4. The critics’ case: The “parallel system” concern   Despite this, Western and some Asian commentators argue that the GGI is not about reform, but about replacement and they identify several strands of evidence to support the “parallel system” thesis:     4.1 Institutional duplication   China’s creation of new bodies, such as the Asian Infrastructure Investment Bank (AIIB) , the New Development Bank  and now GGI-linked forums, they argue, appears to mirror existing Western-led institutions rather than integrate with them (The Diplomat, 2025). Their concern is that these structures will operate under Chinese normative and financial leadership.     4.2 Normative divergence   Whereas the liberal order prioritises individual rights, transparency and intervention for humanitarian purposes, China’s GGI stresses sovereignty , non-interference and developmental pragmatism , which the critics thereof argue, could serve to legitimise authoritarianism and to reduce global accountability (Schuman, Fulton & Gering, 2023).     4.3 Selective multilateralis   China participates vigorously in some global institutions, such as, for example, UN peacekeeping and the World Trade Organization, but it bypasses others through its own platforms such as the Belt and Road Forum  and/or the Shanghai Cooperation Organisation . This selective engagement suggests a dual-track strategy.     4.4 Strategic influence   Some fear that the GGI provides a normative shield for Chinese geopolitical expansion, enabling Beijing to align states through debt dependency, technology standards and diplomatic patronage and therefore they argue the GGI’s purpose is not inclusivity, but hegemony under a different banner (Schuman, Fulton & Gering, 2023).   These critiques cannot, one supposes, be dismissed out of hand, even though sound and logical counter-arguments can be readily made by antagonists. But at its core, critics overlook the most fundamental and basic question. If the existing system refuses to reform, is the emergence of alternatives not inevitable?     4.5 Moral double standards and selective legitimacy   Critics of China’s global initiatives often imply that Beijing’s pursuit of its own national interests is somehow illegitimate or destabilising, as though the promotion of national interest were a prerogative reserved for Western powers and yet, if leadership in global governance is deemed acceptable for the United States or Europe, on what ethical or moral grounds is it denied to China? The notion that a multipolar distribution of influence is inherently problematic betrays a deeper attachment to hierarchy rather than principle, because what is being defended is not an objective standard of governance, but a particular configuration of power that privileges one set of actors over others.   Equally striking is the inconsistency in how the West evaluates the political systems of its adversaries, because whereas China’s non-liberal governance model is routinely cast as incompatible with global leadership, Western states have long maintained strategic partnerships with even more authoritarian regimes in the Middle East, where they often overlook grave human rights violations in favour of energy security and regional influence. This selective tolerance undermines the moral authority of the liberal order itself, because, if democracy and human rights are invoked only when geopolitically convenient, then the critique of China’s model becomes less a defence of universal values and more an instrument of strategic containment. These contradictions expose the moral and structural double standards at the heart of Western criticism and therefore the question is not why China seeks to shape global governance, but why others resist change that would make it genuinely representative.     5. Who really blocks reform? The West’s defensive rigidity   The paralysis of global governance is not primarily due to Chinese obstruction, but to Western defensiveness. The evidence lies in three domains:     5.1 Security Council reform   Despite rhetorical support for “African representation” and “greater legitimacy,” the United States, the United Kingdom and France have consistently avoided endorsing concrete reform models that would dilute their veto power (Muruthi, 2024). Europe has also resisted consolidation of its two permanent seats (UK and France) into a single one, preserving overrepresentation.     5.2 IMF and World Bank quotas   The United States Congress has repeatedly delayed or diluted quota realignments that would increase China’s and other emerging economies’ voting shares and as a result, the IMF remains structurally anchored in the 1980s global economy (Truman, 2014). The message to the Global South is clear - reform is promised, never delivered.     5.3 Selective multilateralism by the West   Western actors have increasingly relied on minilateral  clubs, such as the G7, G20, Quad and AUKUS, that privilege likeminded members over universal representation. Critics in the Global South see this as precisely the fragmentation they accuse China of promoting.   Thus, the West condemns China’s parallelism while practicing its own.     6. Understanding China’s strategy: Pragmatic or revisionist?   6.1 Institutional experimentation, not replacement   China’s behaviour often reflects pragmatic experimentation rather than outright revisionism. For example, the AIIB  works in partnership with the World Bank and adheres to many of its safeguards. The New Development Bank  co-finances projects with existing institutions (NDB, 2022). These  are not acts aimed at destroying the existing order, but rather, appear to be strategic diversification.     6.2 Normative innovation   By emphasising sovereignty and “development before democracy,” China offers an alternative development logic that resonates with many non-Western states (Qasem, Van Dongen & De Ridder, 2011) and so whilst this challenges liberal orthodoxy, it also highlights the pluralism of governance models in a post-Western world.   6.3 Self-interest and systemic correction   Of course, Beijing’s motives are not altruistic, they serve to expand its influence and China’s strategic interests. But is it not so that all great powers, including the US, have historically shaped global rules in their image and so the key question should rather focus on whether China’s initiatives remain open to multilateral participation or whether it is bound to evolve into hierarchical patronage systems.     7. The way forward: Towards co-reform, not containment   The choice for policymakers is not between defending a decaying order and submitting to a Chinese one. It is whether to co-reform global governance before fragmentation becomes irreversible.     7.1 Recognising the legitimacy of Chinese concerns   China’s call for reform aligns with long-standing demands from Africa, Latin America and South Asia. Engaging Beijing as a stakeholder, rather than as a rival, could revitalise multilateral institutions.     7.2 Reforming Western leadership   The West must abandon its zero-sum instinct to guard institutional privileges and concede that representation, especially in the Security Council and IMF, is not weakness, but strategic adaptation to reality. A truly rules-based order requires rules that evolve.     7.3 Integrating parallel mechanisms   Instead of treating Chinese initiatives as external threats, Western and other actors could integrate them into a layered system of global governance. For instance, aligning AIIB and World Bank standards or linking the GGI’s development principles with the UN’s Sustainable Development Goals (SDGs), could yield complementarity rather than competition.     7.4 Promoting transparency and standards   The key challenge for China is to make its initiatives transparent, inclusive and rules-based. Without institutionalised accountability, the GGI risks becoming another rhetorical framework and therefore constructive engagement from other powers could encourage higher standards rather than isolation.     8. Conclusion   The Global Governance Initiative should be understood as both a critique and a consequence of Western dominance and institutional stagnation. While critics warn of a parallel system, it is the failure of the existing system  that opens the door for and renders such parallelism inevitable.   Critics of “parallelism” would do well to ask whether their own resistance to reform has not, in fact, produced the very conditions that now empower China to lead in shaping alternative multilateral models. The paralysis of UN reform, perpetuated by those who benefit from the status quo, has created both the need and the space for innovation elsewhere. Had the United Nations and Bretton Woods institutions evolved to reflect 21st-century realities, there would have been little justification or opportunity for Beijing to advance the Global Governance Initiative as a rival framework and so in that sense, the emergence of parallel structures is not merely a Chinese project, but a by-product of Western obstruction. The failure to democratise global governance has not preserved legitimacy, instead it has forfeited it and in doing so, ceded moral and institutional leadership to those willing to fill the vacuum.   Condemning China’s initiatives without addressing the deeper governance crisis is both hypocritical and self-defeating. Reform is overdue, not because China demands it, or out of fear for Chinese parallelism, but because global legitimacy depends on it.   The challenge for policymakers is to move beyond moral grandstanding and embrace shared reform: to rebuild a multilateral order that reflects not only Western ideals, but global realities. References   Council on Foreign Relations (CFR). 2025. The UN Security Council.  [Online] Available at: https://www.cfr.org/backgrounder/un-security-council [Accessed 13 October 2025].   Dams, T. & Van der Putten, F. 2015. China and Liberal Values in International Relations. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://www.clingendael.org/sites/default/files/2016-02/China_and_Liberal_Values_in_International_Relations.pdf [accessed: 14 October 2025]   International Monetary Fund (IMF). N.d.  [Online] Available at: https://www.imf.org/en/About/executive-board/members-quotas [accessed: 14 October 2025]   MacAskill, E. & Borger, J. 2004. Iraq war was illegal and breached UN charter, says Annan. [Online] Available at: https://www.theguardian.com/world/2004/sep/16/iraq.iraq [accessed: 14 October 2025]   Miller P. 2022. Nato bombing of Libya ‘exceeded UN mandate’ . [Online] Available at:  https://www.declassifieduk.org/nato-bombing-of-libya-exceeded-un-mandate/ [accessed: 14 October 2024]   Muruthi, T. 2024. Africa and the US “Non-Proposal” on UN Security Council Reform . [Online] Available at: https://www.wilsoncenter.org/blog-post/africa-and-us-non-proposal-un-security-council-reform?utm_source=chatgpt.com [accessed: 14 October 2024]   New Development Bank (NDB). 2022. New Development Bank General Strategy for 2022–2026 . [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://www.ndb.int/wp-content/uploads/2022/07/NDB_StrategyDocument_Eversion-1.pdf?utm_source=chatgpt.com [accessed: 14 October 2025]   Qasem, I., Van Dongen, T. & De Ridder, M. 2022. World Foresight Forum . [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://hcss.nl/wp-content/uploads/2011/04/WFF02_Issue_Brief_The_Beijing_Consensus02.pdf?utm_source=chatgpt.com [accessed: 14 October 2025]   Reuters. 2025. China’s Xi Pushes New Global Order Flanked by Leaders from Russia and India. [Online] Available at: https://www.reuters.com/world/china/chinas-xi-pushes-new-global-order-flanked-by-leaders-russia-india-2025-09-01/  [accessed: 13 October 2025   Schuman, M., Fulton, J. & Gering, T. 2023. How Beijing’s newest global initiatives seek to remake the world order . [Online] Available at: https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/how-beijings-newest-global-initiatives-seek-to-remake-the-world-order/?utm_source=chatgpt.com [accessed: 14 October 2025]   The Diplomat. 2025. What China Wants with Global Governance.  [Online] Available at: https://thediplomat.com/2025/09/what-china-wants-with-global-governance/  [accessed: 13 October 2025]   Truman, M. 2014. IMF reform is Waiting  on the United States. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://www.piie.com/sites/default/files/publications/pb/pb14-9.pdf?utm_source=chatgpt.com [accessed: 14 October 2025]   United Nations (UN). 2005. 2005 World Summit Outcome. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://www.un.org/en/development/desa/population/migration/generalassembly/docs/globalcompact/A_RES_60_1.pdf [accessed: 14 October 2025]   Worldometer. N.d. GDP by country. [Online] Available at: https://www.worldometers.info/gdp/gdp-by-country/ [accessed: 14 October 2025] - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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

Occasional Paper 12/2025   Copyright © 2025   Inclusive Society Institute PO Box 12609, Mill Street Cape Town, 8010 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.   OCTOBER 2025   Daryl Swanepoel Abstract   This analysis examines South Africa’s 2025 G20 presidency as a pivotal moment of moral and strategic redefinition in global governance. Guided by the theme “Solidarity, Equality, Sustainability,” the presidency seeks to humanise multilateralism by placing values ahead of metrics. The report interprets the presidency’s agenda, which ranges from inclusive industrialisation and AI governance to financial reform, as a deliberate attempt to infuse justice into the economic discourse. It identifies both enthusiasm and resistance among G20 members, where the Global South views the presidency as emancipatory, whilst the advanced economies, particularly the United States, appear to react warily to its moral framing. The analysis anticipates a likely “19 + 1” outcome that will reflect partial consensus which suggests a new norm for diversity within unity. China’s constructive neutrality and Europe’s mediating role is predicted to sustain the dialogue amid philosophical divergence. Ultimately, the report concludes that South Africa’s leadership reorients the G20 toward a more equitable and humane multilateral order, which, if successfully concluded, will establish a precedent where solidarity and sovereignty may coexist within global cooperation Introduction   As the world moves toward the 2025 G20 Summit under South Africa’s presidency, the tone of global governance feels both unsettled and newly alive, and it is in this context that the forum, once regarded as an engine of macroeconomic coordination, now finds itself a stage for moral and strategic realignment. The South African presidency, framed under the theme “Solidarity, Equality, Sustainability,”  arrives not merely as a logistical rotation, but as a philosophical intervention, one that asks whether a multilateral system forged in crisis can evolve toward equity, justice and shared accountability.   This report offers an interpretive and anticipatory reading of that presidency, a forward-looking analysis that does not claim privileged insight, but derives its conclusions from observation, inquiry and expert inference . It synthesises the official G20 Concept Note, the tone and substance of preparatory dialogues and the broader geopolitical mood. Rather than predicting events as foregone conclusions, it reads the atmosphere, the patterns of behaviour, the calibrated silences and the language of diplomacy to anticipate how this presidency may unfold and what its eventual declaration might signify.   South Africa’s leadership emerges at a moment when the G20’s cohesion is strained by geopolitical rivalries, competing economic ideologies and divergent visions of justice. Yet, precisely in this turbulence lies its significance. The presidency has introduced a vocabulary of values  into a forum that has long preferred the neutrality of metrics . It has brought back words such as solidarity  and equality , words that unsettle the technocratic rhythm of G20 deliberation, but resonate deeply with the developmental aspirations of the Global South.   The analysis that follows explores the aspirations, expectations and challenges of this presidency; the dynamics among major actors, including the United States, China, Europe and the broader Global South; and the probable contours of the final declaration. The report approaches these developments not as closed outcomes, but as evolving signals, to be read, interpreted and weighed.   Ultimately, the question this assessment seeks to illuminate is not whether the South African presidency will succeed in a conventional sense, but whether it can redefine what success means: whether moral conviction, strategic inclusivity and institutional endurance can coexist within a single multilateral frame. 1. Reading the room   Few presidencies in the G20’s two-decade history have carried the emotional and intellectual weight of South Africa’s. From the moment the theme “Solidarity, Equality, Sustainability”  was announced, it was clear that this would not be an ordinary turn at the helm. It is a presidency animated not only by policy ambition, but by moral architecture, a determination to make the G20 mean something more than the sum of its communiqués.   In reading the room, one senses that this presidency is less about technocratic coordination and more about a quiet philosophical insurgency. It asks whether multilateralism, hollowed by transactionalism, can still feel humane. It asks whether a forum born in crisis can evolve into one capable of conscience. And it asks whether the world, fractured by mistrust, can rediscover solidarity, not as sentiment, but as practice.   These are not rhetorical questions. They are the animating logic behind every sentence of the South African concept note and the tone that underlies the diplomatic choreography captured in the year’s preparatory dialogues. 2. Aspirations: A rehumanised Global Agenda   The presidency’s concept note, both a manifesto and an agenda, lays out a triadic ethos: Solidarity, Equality, Sustainability.   Each term carries both historical weight and contemporary provocation:   Solidarity  recalls the moral economies of the liberation era, that no nation can prosper in isolation from others’ suffering. Equality  confronts the hierarchy implicit in the global financial and technological systems. Sustainability  refuses the notion that ecological balance can be divorced from social justice.   The note proposes to translate these into six concrete deliverables: inclusive industrialisation, food security, AI and data governance, a “Cost of Capital Commission,” a renewed Compact with Africa, and a twenty-year institutional reflection on the G20 itself. These are not random themes. Each theme connects a moral claim to a policy lever. Food security is recast as global stability. AI governance becomes a question of sovereignty. Cost of capital turns from a technical ratio into a justice issue.   From a reading of the note, one infers a conscious inversion of the usual order: values first, economics later. It is this inversion, humane rather than transactional multilateralism, that sets the stage for both inspiration and contestation. 3. The early signals: Promise meets resistance   Observers who have followed the preparatory meetings note two simultaneous currents: genuine curiosity and cautious resistance. The Global South delegations, particularly those long frustrated by slow reforms of financial architecture, find the presidency’s framing liberating. For them, it gives language to a frustration that has simmered for years.   Advanced economies, however, appear wary. The source of tension is not the policy content, since many of the deliverables overlap with ongoing G20 priorities, but rather the lexicon . To some, solidarity sounds like obligation and equality  like redistribution. The presidency’s moral language, though drawn from its own history of social negotiation, unsettles those who prefer the technocratic neutrality of “growth,” “resilience” and “innovation.”   From the pattern of reactions described in the transcript, one can infer that this is less a dispute over substance than semantics. Yet semantics in diplomacy are never trivial. Words determine ownership. To accept solidarity  is to admit interdependence; to accept equality is to acknowledge hierarchy; to accept sustainability  as justice is to concede moral responsibility. It is at that level — the symbolic rather than the structural — that the battle lines have been drawn. 4. Negotiating around philosophy: The US factor   The United States’ engagement with this presidency has been deliberate, but defensive.   Its representatives have participated in the working groups, but often with the stated concern that the thematic framing risks “ideologizing” the G20. In practice, this has translated into consistent efforts to reshape phrasing - “resilience”  instead of “solidarity” , “inclusion”  instead of “equality” .   The reasoning for predicting a non-unanimous outcome arises from several converging signs:   Repeated textual interventions aimed at diluting the moral vocabulary. Lower-level participation in key tracks, signalling reduced political investment. Public statements that challenge the very framing of the presidency’s theme.   Put together, these signals suggest a posture of participation without endorsement, what analysts often call “engaged abstention.” The United States will almost certainly attend the summit, but is expected to disassociate from the final declaration on principle.   This inference does not stem from conjecture, but from the pattern: a year-long choreography of distance. If consensus holds among all others, the most likely outcome will be a “19 + 1” scenario, a formula already anticipated within the presidency’s own contingency planning. It is a prediction drawn not from drama, but from diplomatic arithmetic.     5. The quiet centre: China’s constructive ambiguity   If Washington defines the opposition, Beijing defines the equilibrium.   Throughout the process, China’s behaviour has been marked by strategic neutrality, neither opposing the presidency’s themes, nor championing them. Yet this neutrality is not indifference, it is calculus.   China’s interests align naturally with several of South Africa’s priorities: reform of financial institutions, cost of capital fairness and digital sovereignty. However, overt alignment would risk deepening perceptions of bloc politics. Thus, Beijing has chosen the middle ground, an enabling silence.   In negotiation terms, this posture functions as lubrication. It prevents polarisation, allowing the Global South’s agenda to mature without triggering Western defensiveness. The reasoning for this inference lies in the recurring note of “China being neutral” and in the absence of recorded disputes in tracks where its positions would ordinarily provoke. In other words, neutrality becomes a form of quiet endorsement, a subtle diplomacy of presence without posture.     6. Europe between worlds   The European members, ever the custodians of consensus, have taken on the role of textual mediators.   They are sympathetic to the sustainability and climate aspects of the presidency’s agenda, but cautious about its justice rhetoric. Their behaviour, frequent proposals to “balance” language, encourage “shared ownership” and avoid “politicisation,” suggests a genuine effort to prevent a rift within the G20.   From these actions one can infer two motives:   A pragmatic desire to keep the G20 intact as one of the few surviving global forums. A self-perceived responsibility to bridge moral ambition and institutional realism.   Europe thus functions as the hinge by restraining US rigidity while moderating Global South assertiveness. It is precisely this middle-space diplomacy that has kept negotiations alive despite profound philosophical divergence.   7. Attendance as political semiotics   As the summit approaches, attendance itself has become a form of expression.   Every level of representation signals intent.   From available evidence and diplomatic briefings, it appears that all G20 members will participate, but not all equally.   The Global South  will attend in full force, at head-of-state level, projecting ownership of an agenda that speaks their vocabulary. The United States , by contrast, is expected to send a high-ranking representative, most probably Vice President Vance, rather than the head of state, a gesture that signifies both acknowledgement and disapproval. European leaders  will likely attend personally, underscoring their commitment to keeping the G20 functional.   This configuration, full attendance, but unequal enthusiasm, is telling. It implies that even in dissent, no member can afford absence. The G20, for all its ideological tension, remains the only round table where the G7 and BRICS sit together.   Thus, the presidency will measure its success not only by who signs the declaration, but by who shows up. In a divided world, presence itself is a form of legitimacy.     8. Consensus without unanimity   How, then, might a declaration emerge in such an atmosphere?   Diplomatic precedent suggests that unanimity, though desirable, is not essential for legitimacy. What matters is whether the declaration reflects the shared work  of the year’s process.   The reasoning follows a clear line:   The presidency has invested heavily in institutional discipline, strong sherpa coordination, thematic task forces and inclusive engagement groups. The major deliverables are technically sound and enjoy broad (if uneven) support. The textual disagreements are philosophical, not procedural.   This combination points to a partial consensus, a declaration signed by nineteen members, with one formal disassociation. In practical terms, this is the “efficient frontier” of agreement: maximal inclusion without surrendering principle. It allows progress while acknowledging plurality.   Such an outcome, rather than undermining the G20, may redefine its modern purpose, that is to reflect not unanimity, but honest diversity. The G20 becomes less a choir and more an orchestra, dissonant, but still capable of harmony.     9. Patterns beneath the process: What the presidency reveals   Through this presidency, several larger trends become visible:   The moralisation of multilateralism: The return of words like solidarity  and equality  to the diplomatic vocabulary marks a shift from managerial to moral leadership. The decentralisation of influence: With the Global South commanding both agenda and attention, the gravitational pull of global decision-making continues to move away from the North Atlantic axis. The normalisation of partial consensus: The “19 + 1” outcome, once unthinkable, may become a precedent, an institutional mechanism for managing irreconcilable difference without collapse. The rise of inclusive diplomacy: The expanded engagement groups and the planned Social Summit broaden legitimacy beyond states, anchoring global governance in civil participation.   Each of these conclusions emerges from triangulating the presidency’s written concept, its procedural innovations and the tone of deliberations recorded through the year.     10. Looking forward: The US presidency in 2026   The next rotation, the United States in 2026, looms large in every conversation.   Observers expect a retrenchment presidency, one that will seek to “return the G20 to basics.”   This forecast rests on observable precedents:   US interventions during the South African year consistently narrowed scope to macroeconomic stability, competitiveness and innovation. Early planning documents indicate a likely thematic pivot toward “Resilience, Growth and Opportunity.” Domestic political climate favours an agenda that is pro-market, sovereignty-oriented and sceptical of redistributive narratives.   From these elements, one can reason that the US presidency will likely re-centre the G20 around traditional economic coordination, pruning the moral and developmental expansion introduced by South Africa.   It may:   Replace the Cost of Capital Commission with a more technocratic financial transparency review. Replace the AI-for-development agenda to frameworks on AI safety and innovation. Reframe sustainability as a market opportunity rather than a justice imperative.   However, institutional inertia ensures that not everything can be rolled back. Once a concept is anchored in G20 working structures, as South Africa’s task forces already are, it tends to persist in some form. Thus, many of the presidency’s innovations will likely survive as diluted continuities rather than reversals. 11. The structural implications: A Tale of two G20s   By late 2025, one can discern the outlines of two G20s coexisting within a single architecture:   A Northern G20 , which is driven by economic orthodoxy and institutional preservation. A Southern G20 , which is animated by equity, reform and moral legitimacy.   The South African presidency serves as the hinge between them. Its experiment tests whether these two identities can coexist without rupture, whether solidarity and sovereignty can be spoken in the same forum.   If it succeeds in securing a declaration endorsed by nineteen, the precedent will be profound, that the G20 can tolerate principled dissent without losing cohesion. If it fails, the risk is not collapse, but trivialisation, a return to communiqués devoid of conviction. 12. Reading the road ahead   To “read the room” at this moment is to sense both fatigue and possibility.   The fatigue is palpable, years of crisis management have turned cooperation into routine. Yet the possibility lies in the presidency’s quiet insistence that meaning still matters .   The signals are everywhere:   Delegates debate words as though they were moral propositions. Smaller nations speak with a confidence born of shared grievance. Even the sceptics seem aware that the vocabulary of equality, once reintroduced, cannot easily be erased.   From these atmospherics, the prediction emerges organically, not as prophecy, but as deduction. A declaration will likely be achieved, bearing the triad Solidarity, Equality, Sustainability , endorsed by all but one. The dissent will be loud, but the message louder: that global governance no longer belongs exclusively to its architects, but increasingly to its participants. 13. Conclusion: The experiment in motion   The South African G20 presidency is not merely an event in diplomacy, it is a mirror held up to the world.   It reflects a longing for moral coherence amid geopolitical entropy and it reclaims the words solidarity, equality and sustainability that had become uncomfortable in the vocabulary of power.   Its success will not be measured by unanimity, but by endurance. By how long those words continue to echo in the communiqués and corridors of what comes next.   As the presidency nears its summit and the United States prepares to inherit the mantle, one suspects that the most lasting outcome will be intangible: a shift in tone, a change in expectation, a sense that the G20, for all its imperfections, might still be capable of conscience.     References   G20. 2025 . Conce pt note and calendar. G20 South Africa 2025 Presidency . [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://g20.org/wp-content/uploads/2025/02/20241205v-FINAL-G20-CONCEPT-NOTE-SOUTH-AFRICA.pdf [accessed: 15 October 2025]   Diplomatic and policy experts. 2025. A series of interviews was conducted by the author with authoritative diplomats and policy experts.   T20. 2025. The author is a Co-Lead of the Solidarity for the Achievement of the SDGs Task Force - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 Global South Media and Think Tank Forum China-Africa Partnership conference opened on the Thursday 14 th November 2025. The conference was held to explore ways to strengthen cooperation, to further promote common ways for shared global governance and to impart exchanges of knowledge by amplifying the Global South’s collective voice. The forum brought together diplomats, academics, journalists and policymakers from across Africa and China to discuss the evolving partnership and its role in reshaping international institutions under the theme: "Reforming Global Governance: New Roles and Visions for China-Africa Cooperation." The event was attended by key panelists, including Ambassador of the People’s Republic of China to South Africa, Wu Peng; the Chairman of Independent Media and co-chair of the BRICS Media Forum, Dr Iqbal Survé; Executive Mayor of the City of Johannesburg, Dada Morero; Consul General of China in Johannesburg, Pan Qingjiang; Lu Yansong, Editor-in-Chief of Xinhua News Agency and African Union Director of Information and Communication, Leslie Richer.The two-day conference, co-hosted by Xinhua News Agency, the African Union (AU) and South Africa's Independent Media, among other partners, gathered more than 200 representatives from over 160 media outlets, think tanks, government organizations and other institutions from China and 41 African countries, as well as the AU. Inclusive Society Institute, Advisory Council Member Ms. Nondumiso Alice Sithole was requested to be a panelist member and represented the Institute at the forum. The institute has become a key strategic partner in the South Africa and is African think-tank community. Ms. Sithole’s speech highlighted aspects on “the core pathways for China and Africa to jointly advance modernization, their global contributions and worldwide impact”. She delivered a speech which commended the intergovernmental relations between the two sides, the initiatives by China in supporting the African countries as a whole, specifically when it comes to the continent progressing towards better development goals. However she also drew attention to the trade deficit and proposed some solutions as to how it can be addressed by both sides, one being commodity beneficiation to occur on the African continent before export. Lastly, she emphasized the importance of the two sides continuing to explore appropriate partnership models that are fit for purpose in so far as it concerns the respective partner-countries individually.

The Inclusive Society Institute (ISI), together with the Institute of African Studies at Zhejiang Normal University (IAS ZJNU), hosted a landmark international symposium in Cape Town on Monday, 17 November 2025, to commemorate the 25th anniversary of the Forum on China-Africa Cooperation (FOCAC). The event brought together scholars, policy experts and representatives from think-tanks and academic institutions across more than a dozen countries, reaffirming the strategic depth, intellectual vibrancy and future trajectory of China-Africa partnership. Held at the Heritage Site of the First Nations, the symposium explored FOCAC’s historical evolution, its concrete development achievements across the continent and its emerging role within a rapidly shifting global governance landscape. Opening session: Reflecting on 25 years of cooperation   The opening ceremony, moderated by Prof. Liu Shu, set the tone for an intellectually rich programme. Keynote addresses were delivered by:   Mr Daryl Swanepoel, Chief Executive Officer of the Inclusive Society Institute Ambassador Gert Grobler, former senior South African diplomat Ms Wang Xiao, Acting Consul General of China in Cape Town Prof. Liu Hongwu, Dean of the Institute of African Studies, ZJNU  Speakers reflected on FOCAC’s evolution into a highly institutionalised platform that has shaped cooperation across infrastructure development, trade expansion, human capacity building, public health and digital connectivity. Panel discussions: Advancing knowledge partnerships   Discussion Part 1: The changing architecture of FOCAC Moderated by Dr Yu Guizheng, this session featured presentations by:   Ms Odile Bulten, ISI Coordinator of the Africa Think-Tank Dialogue Dr Zhan Mengshu, Assistant Researcher at IAS, ZJNU Speakers highlighted the growing centrality of think-tank diplomacy  in shaping the next phase of China-Africa cooperation. They emphasised that intellectual partnerships now constitute a vital component of FOCAC’s institutional ecosystem. Discussion Part 2: New voices and emerging research   The second discussion panel, chaired by Ms Buyelwa Sonjica (former Cabinet Minister and ISI Deputy Chairperson), included contributions from:   Mr Stephen Langtry, ISI Advisory Council member and Editor of the Journal for Inclusive Public Policy Mr Liu Yuankang, PhD Candidate, University of Cape Town  The dialogue reinforced the importance of cross-cultural research, youth scholarship and multidisciplinary collaboration in sustaining long-term China-Africa partnerships.   Closing reflections: Introducing a new research frontier   In his closing remarks, Mr Daryl Swanepoel offered a strategic reflection that extended beyond the day’s deliberations. While reaffirming the maturity and long-term significance of FOCAC, he introduced a proposal that IAS and ISI jointly explore a new frontier in China-Africa research: the alignment of FOCAC with China’s Four Global Initiatives (Global Development Initiative, Global Security Initiative, Global Civilization Initiative, Global Governance Initiative).   He noted that:   FOCAC provides the operational framework for cooperation; The Four Global Initiatives offer a conceptual narrative shaping China’s global engagement; The alignment of the two could open a fresh pathway for integrated, future-oriented cooperation.  Swanepoel suggested that ISI and IAS consider pioneering the first systematic study on this intersection, potentially through joint research, policy dialogues, and broader collaborative networks. He further praised the Institute of African Studies at ZJNU for its leading intellectual role in strengthening the policy foundations of FOCAC, noting its “policy rigour, scholarly leadership and strategic depth.”

The Inclusive Society Institute (ISI) proudly participated in the 2025 Think20 (T20) Summit, held in Sandton, Johannesburg, the first T20 Summit convened on African soil under South Africa’s G20 Presidency. Represented by CEO Daryl Swanepoel, the Institute contributed to deliberations aimed at shaping policy recommendations for G20 leaders on matters of global governance, digital transformation, sustainable development financing and multilateral reform.   Mr Swanepoel also participated in his official capacity as Co-Lead of T20 Task Force 4, which focused on Solidarity for the Achievement of the Sustainable Development Goals (SDGs). This task force’s mandate, as reflected in the T20 South Africa Communique, included strengthening global cooperation, addressing persistent inequalities and ensuring that SDG implementation reflects the developmental priorities of the Global South.   Overview of the Summit   The two-day summit gathered global experts, academics, think-tank leaders, policymakers and multilateral actors. The sessions, as outlined in the official programme, covered a broad spectrum of strategic issues including global governance reform, WTO modernisation, digital public infrastructure, MDB reform, food system resilience, climate transitions and post-2030 development frameworks.   Key themes emerging from Summit discussions included:   Revitalising Global Governance   Discussions emphasised the need to strengthen multilateral cooperation amid fragmentation and geopolitical rivalry. The opening plenaries explored how the G20 can reinforce institutional legitimacy and act as a bridge-builder across regions and sectors.   Digital public infrastructure, AI and digital sovereignty   Sessions highlighted that digital transformation must be human-centred and rights-based, with Africa’s perspectives integrated into global conversations on data governance, e-governance and artificial intelligence.   Trade system reform and inclusive growth   The summit reinforced the urgency of WTO reform to address modern trade realities, including digital trade regulations, subsidy regimes and the participation of developing economies in global value chains.   Financing for sustainable development Several plenaries positioned international financial architecture reform, including MDB capital expansion, debt restructuring innovations and fairer global tax rules, as essential components of a transition to a more equitable global economy. These themes strongly intersected with the policy areas covered by ISI’s ongoing research.   Climate action and energy transitions   The programme featured discussions on green industrialisation, green minerals, disaster resilience and whole-of-society transitions, an area of high relevance to South Africa’s just transition agenda.   ISI’s contribution through Task Force 4   As Co-Lead of T20 Task Force 4: Solidarity for the Achievement of the SDGs, Mr Swanepoel played a strategic role in shaping the task force's intellectual agenda and final recommendations to the G20.   Task Force 4’s focus areas included:   Advancing social protection systems Strengthening global solidarity and equity Addressing intersecting crises such as poverty, inequality and climate vulnerability Ensuring that SDG delivery frameworks remain responsive to Global South priorities The task force’s contributions were incorporated into the final 2025 T20 Communique presented at the Summit.   Strategic importance for South Africa and the Global South   ISI’s participation ensured that South African civil society and research voices were strongly represented in shaping the global agenda. The Summit highlighted:   Africa’s growing leadership within the G20 system The need for inclusive and just global policy frameworks The importance of South-South cooperation, reflected in contributions from India, Brazil and other emerging powers The G20’s unique opportunity to address systemic inequities affecting developing nations   Reflections and way forward   The Summit reinforced the urgency of building a more equitable and sustainable global development model. As ISI continues its work across governance, development and multilateral reform, insights from the T20 process will directly inform the Institute’s policy positions, research outputs and domestic and international engagements.   The ISI will remain an active contributor to:   Ongoing SDG implementation strategies National and regional dialogues on global governance reform South Africa’s broader contributions to the G20 Presidency’s legacy Strengthened collaboration with international think-tank networks   Conclusion   The Inclusive Society Institute’s participation in the T20 Summit reflects its expanding role as a thought leader in South Africa’s national policy discourse and its growing footprint in global policy networks. Through its leadership in Task Force 4 and engagement across summit platforms, the ISI has contributed meaningfully to shaping the G20’s development agenda during a historic African presidency.

At a time when faith in our democratic and government institutions is fading, The People’s Voice  offers a timely and powerful response. Authored by Daryl Swanepoel  and published by the Inclusive Society Institute , this book is a bold call to action for South Africa’s democracy. It reminds us that public participation is not a privilege, nor is it optional—it is a constitutional right and a democratic necessity. Through incisive legal analysis, compelling case studies, and a deep moral interrogation of post-apartheid governance, Swanepoel exposes the systemic failures that have turned public engagement from an inviolable constitutional mandate into a mere box-ticking exercise. But this is not a work of despair. It charts a path toward inclusive, accountable and effective participatory governance, drawing on insights from constitutional scholars, judicial rulings and grassroots voices. Whether you are a policymaker, academic, civil society activist, or simply an engaged citizen, this book will challenge your assumptions and deepen your understanding. From the Freedom Charter to the Constitutional Court, Swanepoel reminds us that “the people shall govern”  was not a slogan - it was a promise. The People’s Voice  is more than a book. It is a democratic wake-up call. It is about restoring legitimacy, empowering the public, and breathing life back into the soul of South African democracy. ✅ Price:  R200 + delivery 📖 Read it. Reflect on it. Act on it. Because democracy only works when the people are heard. 👉 To order your copy, contact us at info@inclusivesociety.org.za .

Occasional Paper 11/2025   Copyright © 2025   Inclusive Society Institute PO Box 12609, Mill Street Cape Town, 8010 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.   OCTOBER 2025   Daryl Swanepoel Research Fellow, School of Public Leadership, Stellenbosch University (ND Co Admin; BPAHons; MPA)      Abstract   The veto power of the five permanent members of the United Nations Security Council (P5) remains the most contested design feature of contemporary collective security. Abolition is a recurrent demand, yet the legal and political barriers to Charter amendment render it unattainable in practice. This article argues that meaningful reform must pivot from abolishing the veto to regulating its use. After tracing the veto’s historical development and surveying the literature and policy advocacy around abolition, the article examines restraint initiatives (France–Mexico declaration, ACT Code of Conduct, General Assembly resolution 76/262) and proposes a ‘Veto Use Integrity Framework” (VUIF)’. The framework extends conflict-of-interest (COI) abstention logic, creates carve-outs for mass atrocities and humanitarian access and mandates written justification and ex post oversight. While abolition remains a normative ideal, a regulation-first strategy offers the only feasible route to a more legitimate and effective Security Council. This article also advances a complementary amendment to the General Assembly’s Uniting for Peace (UFP) framework. Currently, UFP resolutions are non-binding recommendations. The proposed reform would make them binding when supported by a majority of the P5, thus enhancing the authority of the General Assembly in cases of Security Council paralysis. Draft language for these amendments is included in Annexure A. Introduction The United Nations Security Council (UNSC) is simultaneously indispensable and constrained. It is indispensable, because Chapter VII powers enable binding decisions on peace and security, but it also constrained, because Article 27(3) grants each permanent member, China, France, Russia, the United Kingdom and the United States, a veto over “all other matters,” a design choice born of the 1945 bargain to keep the great powers inside the tent (UN, N.d.). The result is an enduring paradox, that is that the veto made the UNSC possible, but it often impairs its ability to respond in the gravest crises. From Rwanda to Syria and Ukraine, the veto or its shadow has been implicated in high-stakes failures to protect civilians and uphold international law and therefore the moral appeal of abolition is obvious, but the practical obstacles are equally stark. The Charter’s amendment rule requires P5 consent, thus making self-abnegation the precondition for change, which is an implausible premise (UN, N.d.). The core claim here is therefore pragmatic. If the veto cannot be abolished, it can be bounded, legally through working methods, procedurally through General Assembly oversight and politically through sustained norm entrepreneurship (Hathaway & Patrick, 2024). It is in this context that the Uniting for Peace mechanism takes on renewed significance: strengthening its authority would provide the General Assembly with a conditional binding role when the Council is paralysed (see Annexure A). Historical background: design, doctrine and practice The League of Nations’ unanimity rule and major-power estrangement shaped the UN’s framers, who concluded that a credible collective security system required guaranteed great-power participation and a blocking right. The “Yalta formula” was therefore inscribed in Article 27: nine affirmative votes (originally seven, amended with Council enlargement) including the concurring votes of the permanent members, with an obligatory abstention when a party is involved in a dispute under Chapter VI or Article 52(3) (UN, N.d.). In practice, “concurring votes” has long been read to include P5 abstentions, not just affirmative votes, so an abstention does not kill a text (Galbraith, N.d.) The operational life of the veto evolved across three phases. During the Cold War, vetoes were frequent and largely bipolar. After 1990, the Council briefly coordinated on major enforcement, for example, Iraq/Kuwait, before veto politics reasserted themselves on accountability and humanitarian files (Wilkinson & O’Sullivan, 2004). Since 2011, Russia and China have used the veto repeatedly on Syria; Security Council Report counts 14 of Russia’s first 19 post-2011 vetoes as Syria-related, with eight of China’s nine in the same period on Syria (UN, 2024). The UN’s own Peace and Security Data Hub maintains an authoritative dataset of all vetoes since 1946 (UN DPPA, N.d). The abolitionist case and its structural limits The normative case against the veto is three-fold. First, it violates sovereign equality by privileging five states. Second, it erodes perceived legitimacy when one state can block action backed by an overwhelming majority. Third, it contributes to preventable harm by enabling stalemate in atrocity settings. Syria supplies the canonical example: Russia and China vetoed multiple resolutions on accountability and humanitarian access, including the 22 May 2014 attempt to refer Syria to the ICC (UN Press, 2014). Earlier, on 4 October 2011, they vetoed a text condemning grave human rights violations (UN Press, 2011). Yet, abolition flounders on black-letter law and bare-knuckle politics. Article 108 demands two-thirds of UN members including all P5 to ratify any Charter amendment (UN, N.d.). Each P5 sees the veto as an existential insurance policy against perceived interventionism (Russia/China) (The Economist, 2022), against constraints on Middle East policy (United States) (Gowan, 2024) or as a lever of global influence in relative decline (United Kingdom/France) (Tardy, 2016). Even if abolition were agreed in principle, the likely consequence would be great-power disengagement, recreating the League’s fatal flaw. From abolition to restraint: existing initiatives Recognising the amendment roadblock, states and civil society have shifted to restraint. Three streams matter. First, the France-Mexico political declaration (2015) calls on the P5 to voluntarily suspend the veto in situations of mass atrocities. Over 100 states have endorsed it (France-Mexico, 2015; GCRP, 2015). Second, the ACT Code of Conduct (2015) asks all  Council members to avoid voting against credible drafts aimed at halting genocide, crimes against humanity or war crimes. The code was transmitted to the Secretary-General as A/70/621 (GCRP, 2015). Third, the General Assembly’s “veto initiative”, resolution 76/262 (2022), which automatically convenes a GA debate when any veto is cast, raising transparency and reputational costs (UN, 2022). These tools do not nullify the veto, but reframe costs and expectations around its use (Johnstone, 2003). A regulation-first alternative: the Veto Use Integrity Framework (VUIF) If abolition is implausible, the reform frontier is use-regulation that is (i) anchored in existing law and practice, (ii) operationalizable through UNSC working methods and GA oversight and (iii) politically survivable for the P5. 1. Conflict-of-interest (COI) abstention, extended Article 27(3) already provides that “in decisions under Chapter VI and under paragraph 3 of Article 52, a party to a dispute shall abstain from voting. Contemporary dysfunctions typically arise under Chapter VII. The VUIF would adopt a Council working-methods note, a presidential note incorporated into the Council’s compendium of practices, extending the COI abstention norm to all substantive  votes when a member is directly implicated (named in the operative text, a belligerent or occupying power or materially supporting parties to the conduct at issue). Disputes over COI would be decided as procedural and thus not subject to veto by nine votes (Council practice on procedural questions and the “double veto” debates) (Security Council Report, 2024). This deliberately uses the Council’s own methods toolkit rather than Charter amendment. 2. Substantive carve-outs: atrocities and humanitarian access The VUIF would codify a presumption against veto in (a) situations where the Secretary-General, OHCHR or a UN investigative mechanism reports a credible risk or commission of genocide, crimes against humanity or war crimes and (b) resolutions whose primary purpose is humanitarian access, deconfliction or sanctions humanitarian carve-outs. This operationalises the France-Mexico declaration and the ACT Code into Council practice, moving from voluntary pledges to institutionalised  expectations. 3. Transparency and written justification Any veto, or public threat of a veto, would require a written justification submitted before the vote is taken, which justification should address an atrocity-risk assessment and COI. The justification would be annexed to the Council record and automatically transmitted to the GA under 76/262, thereby ensuring rapid and visible scrutiny (UN, 2022). And an independent briefing by SG, ICRC and/or UN investigative bodies, before votes where restraint could apply, would test the credibility of pretexts (Johnstone, 2003). 4. Oversight: scorecards and Uniting for Peace Building on 76/262, the GA would maintain a public scorecard tracking compliance with COI abstention and atrocity/humanitarian carve-outs. Where a veto blocks life-saving action notwithstanding these standards, the GA would move promptly under 377(V) “Uniting for Peace” to recommend collective measures that do not require Council authorisation (UN, 1950). The aim is not to override a veto, but to raise the cost of misusing it and keep alternative tracks moving. At present, however, Uniting for Peace resolutions are only recommendatory. They have political and moral force, but no binding legal effect. In order to close this gap, the proposed amendment would stipulate that where a Uniting for Peace resolution secures support from a majority of the P5, the decision shall be binding on all UN Member States; and abstentions would be treated as non-opposition, unless a permanent member explicitly casts a negative vote. This approach ties General Assembly authority to a measure of great-power concurrence while ensuring that a single veto cannot paralyse action indefinitely. Draft amendment text is provided in Annexure A. Complementary reform: Amending the Uniting for Peace framework The Uniting for Peace resolution was designed to empower the General Assembly to act when the Security Council fails due to lack of unanimity among the P5 and in so doing it provides for the Assembly to recommend measures, including collective action, but it does not grant legally binding authority. This limitation has curbed its effectiveness. The proposed amendment would transform Uniting for Peace into a conditional binding mechanism. When a resolution is adopted under UFP and supported by a majority of the P5, it would carry binding effect equivalent to Security Council decisions under Article 25 of the Charter. Certification by the Secretary-General would confirm whether the requisite majority is met, and such certification would be annexed to the GA record. This reform strengthens collective security while maintaining safeguards: no measure could become binding absent concurrence from most permanent members. Draft amendment text is provided in Annexure A. Working methods vs. Charter amendment: Pathways for reform A crucial distinction must be drawn between reforms that can be achieved through changes to the Security Council’s working methods or General Assembly practice and those that require a formal amendment of the Charter. Changes through working methods The majority of the proposals contained in the Veto Use Integrity Framework (VUIF) fall into the category of working methods reform. These are adjustments that can be adopted through Security Council presidential notes, incorporated into the Council’s compendium of practices or mandated through General Assembly resolutions without formally reopening the Charter. They include: Conflict-of-interest abstentions .  The requirement in Article 27(3) can be extended to encompass all substantive votes where a permanent member is directly implicated, which can be operationalised through a presidential note. Whilst it will not be legally binding, such guidance would shape practice and be enforceable through procedural votes that are not subject to a veto. Substantive carve-outs .  By establishing a presumption against the veto in cases of mass atrocities and humanitarian access, which builds directly on the France - Mexico and ACT initiatives, these commitments could be codified as standard working practices of the Council. Transparency measures .  Permanent members could be obligated to issue written justifications for actual or threatened vetoes. It can be instituted by Council practice and reinforced by the General Assembly’s 76/262 mechanism, which automatically triggers GA debate. Oversight mechanisms .  Scorecards and reporting systems could be maintained by the General Assembly in order to track compliance with restraint norms. This can be introduced without altering the Charter. In short, regulation of the veto’s use, its conditions, justification and scrutiny, can be advanced through procedural innovations and practice-based reforms. These do not formally curtail the veto right, but they increase reputational and political costs of its misuse. Changes requiring Charter amendment   By contrast, reforms that alter the legal authority of UN organs or the substantive scope of the veto require a Charter amendment under Article 108, meaning approval by two-thirds of the membership including all P5 and these will include:   The abolition or limitation of the Veto by removing or restricting the veto in specific subject areas, for example, atrocity crimes, would require an amendment to Article 27 of the Charter. Changing voting formulas, because any redefinition of “concurring votes” or alteration of the relationship between permanent and non-permanent members in decision-making would necessitate amending Article 27. Binding effect of General Assembly resolutions : At present, Articles 10 - 12 of the Charter limit GA authority to recommendations. The proposal to make Uniting for Peace resolutions binding when supported by a majority of the P5 would thus require a formal Charter amendment to extend the Assembly’s competence. Draft amendment text is provided in Annexure A. Implications This distinction underscores why the regulation-first strategy is more feasible in the near term. Changes to working methods can be secured by political agreement and institutional practice. However, the amendment of the Charter, particularly to empower the General Assembly under Uniting for Peace, would mark a structural shift in the allocation of authority under the UN system and faces significant political hurdles given that P5 consent is indispensable. Case illustrations: how regulation would have mattered Syria As already referred to, Russia and China vetoed a draft on 4 October 2011, condemning grave violations, and they later vetoed a text threatening Chapter VII measures. Then on 22 May 2014, they vetoed an ICC referral. Under the VUIF, (i) COI abstention could have been triggered for a state materially supporting parties, (ii) atrocity carve-outs would have strongly counselled against vetoing an accountability referral and (iii) written justifications and a GA scorecard would have elevated reputational costs, potentially shifting bargaining baselines in later humanitarian-access renewals. Rwanda The 1999 Independent Inquiry documented systemic failures that culminated in inaction during the genocide (UN S/1999/1257) (UN, 1999). While there was no formal veto, the logic of VUIF, that is independent briefings before protection votes, a standing atrocity carve-out and a GA backstop, would have created stronger procedural rails against drift. Ukraine  (Crimea, 2014; invasion, 2022) Russia vetoed condemning texts; China abstained (Milano, 2015). Under VUIF, COI abstention would clearly apply to a belligerent, because disputes about applicability would be treated as procedural (no veto) and sent to a vote of nine. Even if Moscow ignored the expectation, the GA scorecard, plus Uniting for Peace, would have deepened the multilateral response record and policy pressure. Why regulation is more feasible than abolition Three reasons. First, law-in-practice. The Council’s working methods and GA practice have been fertile ground for meaningful change without Charter amendment. The 76/262 “veto initiative” has already shifted incentives by guaranteeing post-veto debate. Second, political economy. Constraining use while preserving the right should be tolerable to at least some P5, for example, France has publicly campaigned for atrocity-context restraint (France, 2023). Third, norm dynamics. Once articulated and socialised, expectations of restraint harden, reputational costs accumulate and can change state behaviour at the margin (Johnstone, 2003). Objections include the “soft law” critique, but what if a P5 ignores the framework? The answer is that no single instrument can compel a veto-holder, but coupling Council working methods with GA transparency and Uniting for Peace raises the costs of misuse, keeps humanitarian tracks open in subsidiary bodies and sustains a public record of (non-)compliance that matters over time, for alliance-management, domestic scrutiny and broader legitimacy. Conclusion   Abolishing the veto would be normatively satisfying and under current conditions, politically impossible. The Charter requires the consent of those whose privileges abolition would target and therefore the great-power bargain that sustains the Council would likely collapse without their blocking right. The regulation-first agenda outlined here, COI abstention, atrocity and humanitarian carve-outs, written justification, GA review and Uniting for Peace linkage, does not pretend to dissolve hard power. It does aim to discipline it. This shift reframes the veto from an unreviewable prerogative into a responsibility that must be explained, bounded and, when abused, politically costly.   Coupled with the proposed amendment to the Uniting for Peace framework, which would make certain General Assembly resolutions binding when supported by a majority of the P5, this package of reforms strengthens both oversight and responsiveness. In a world where perfect justice is unattainable, that is how the Security Council and the wider UN system can become more legitimate and effective now, without waiting for a Charter amendment that will not come. References French Republic (France). N.d.. Why France wishes to regulate use of the veto in the United Nations Security Council.  [Online] Available at: https://www.diplomatie.gouv.fr/en/french-foreign-policy/france-and-the-united-nations/france-and-the-united-nations/france-and-the-united-nations-security-council/why-france-wishes-to-regulate-use-of-the-veto-in-the-united-nations-security-65315/  [accessed 17 September 2025]   French Republic & Republic of Mexico. 2015. Political Declaration on Suspension of Veto Powers in Case of Mass Atrocities.  Paris/New York. [Online] Available at: https://onu.delegfrance.org/IMG/pdf/2015_08_07_veto_political_declaration_en.pdf  [accessed 17 September 2025]   Galbraith, J. N.d. [Online] Available at: Notes and Comments. EndingSsecurity Council Resolution . Cambridge.org/core/journals/american-journal-of-international-law/article/abs/proposals-for-un-security-council-reform/2D26E684DCC727D9D06480E652FB3327 [accessed: 17 September 2025]   Global Centre for the Responsibility to Act (GCRP). 2015. Code of Conduct regarding Security Council action against genocide, crimes against humanity or war crimes.  New York: UN. [Online] Available at: https://www.globalr2p.org/resources/code-of-conduct-regarding-security-council-action-against-genocide-crimes-against-humanity-or-war-crimes/  [accessed 17 September 2025]   Global Centre for the Responsibility to Protect (GCRP). 2015. Political Declaration on Suspension of Veto Powers in Cases of Mass Atrocities (overview and signatories).  [Online] Available at: https://www.globalr2p.org/resources/political-declaration-on-suspension-of-veto-powers-in-cases-of-mass-atrocities/  [accessed 17 September 2025]   Gowan, R. 2024. The UN Security Council in the New Era of Great Power Competition. [Online] Available at: https://www.crisisgroup.org/global/un-security-council-new-era-great-power-competition?utm_source=chatgpt.com [accessed: 17 September 2024]   Hathaway, O.A. & Patrick, S. 2024. Can the UN Security Council Still Help Keep the Peace? Reassessing Its Role, Relevance, and Potential for Reform.  [Online] Available at:  [accessed: 17 September 2024]   Johnstone, I. 2003. Security Council Deliberations: The Power of the Better Argument, European Journal of International Law , 14(3), pp. 437–480. [Online] Available at: https://ejil.org/pdfs/14/3/428.pdf  [accessed 17 September 2025]   Milano, E. 2015. Russia’s Veto in the Security Council: Whither the Duty to Abstain   under Art. 27(3) of the UN Charter?.  [Online] Available at: https://www.zaoerv.de/75_2015/75_2015_1_a_215_232.pdf  [accessed 17 September 2025]   Security Council Report. 2024. The Veto: UN Security Council Working Methods.  [Online] Available at: https://www.securitycouncilreport.org/un-security-council-working-methods/the-veto.php  [accessed 17 September 2025]   Security Council Report. 2024. Procedural Vote (working methods explainer).  [Online] Available at: https://www.securitycouncilreport.org/un-security-council-working-methods/procedural-vote.php  [accessed 17 September 2025]   Tardy, T. 2016. 6 France and the United Kingdom in the Security Council.  The UN Security Council in the 21st Century , edited by Von Einsiedel, S.,  Malone, D.M. & Stagno, B.U. Boulder, USA: Lynne Rienner Publishers, 2016, pp. 121-138.  https://doi.org/10.1515/9781685853730-009   The Economist. 2022. Report: The world divided . [Online] Available at: https://www.economist.com/special-report/2022/10/10/china-seeks-a-world-order-that-defers-to-states-and-their-rulers?utm_source=chatgpt.com [accessed: 17 September 2025]   UN Department of Political and Peacebuilding Affairs. (UNDPPA). N.d. Security Council Data-Vetoes since 1946.  [Online] Available at: https://psdata.un.org/dataset/DPPA-SCVETOES  [accessed 17 September 2025]   United Nations. N.d. Charter of the United Nations. [Online] Available at: https://www.un.org/en/about-us/un-charter/full-text  [accessed 17 September 2025]   United Nations (UN). 1950. General Assembly resolution 377 (V) “Uniting for Peace”. [Online] Available at: https://docs.un.org/en/A/RES/377%28V%29  [accessed 17 September 2025]   United Nations. 1999. Report of the Independent Inquiry into the actions of the United Nations during the 1994 genocide in Rwanda (S/1999/1257). [Online] Available at: https://digitallibrary.un.org/record/405039 [accessed 13 September 2025]. Also summarized at: https://peacekeeping.un.org/en/report-of-independent-inquiry-actions-of-united-nations-during-1994-genocide-rwanda-s19991257  (accessed 17 September 2025).   United Nations (UN). 2022. General Assembly resolution 76/262 (Standing mandate for a GA debate when a veto is cast).  [Online] Available at: https://docs.un.org/en/a/RES/76/262  [accessed 17 September 2025]   United Nations Press. 2011. Security Council fails to adopt draft resolution condemning Syria’s crackdown owing to veto by China, Russian Federation (SC/10403). [Online] Available at: https://press.un.org/en/2011/sc10403.doc.htm  [accessed 17 September 2025]   United Nations Press. 2014. Referral of Syria to International Criminal Court fails as negative votes prevent adoption (SC/11407).  [Online] Available at: https://press.un.org/en/2014/sc11407.doc.htm  [accessed 17 September 2025]   Wilkinson, M.J. & O’Sullivan, C.D. 2004. The UN Security Council and Iraq: Why It Succeeded In 1990, Why It Didn't In 2003, and Why the United States Should Redeem It. [Online] Available at: https://ciaotest.cc.columbia.edu/olj/ad/ad_v9_1/wij01.html ? [accessed: 17 September 2025] Annexure A   DRAFT PROPOSED AMENDMENTS 1. Amendment to Article 27 (Voting in the Security Council) Insert a new paragraph after Article 27(3):   “In addition to the provisions above, the Security Council shall adopt working methods ensuring that a permanent member directly involved in a dispute under consideration shall abstain from voting on all substantive matters concerning that dispute. Disputes as to whether a member is directly involved shall be considered procedural and not subject to the veto.”   2. Amendment to Articles 10–12 (Functions and Powers of the General Assembly) Amend Article 10 to add:   “In exceptional circumstances where the Security Council fails to act owing to the lack of unanimity among its permanent members, and the General Assembly considers a matter under the Uniting for Peace procedure, resolutions of the General Assembly shall be binding on all Members of the United Nations if supported by a majority of the permanent members of the Security Council. For the purposes of this Article, abstentions by permanent members shall not count as opposition unless a permanent member explicitly votes against.”   Amend Article 12(1) to add:   “This restriction shall not apply to resolutions adopted under the preceding Article when supported by a majority of the permanent members of the Security Council.”   3. Certification by the Secretary-General   Insert a new clause in Article 98:   “The Secretary-General shall certify whether resolutions adopted under the Uniting for Peace procedure have obtained the support of a majority of the permanent members of the Security Council, and such certification shall be annexed to the official record of the General Assembly.”   These amendments collectively preserve the primary responsibility of the Security Council while ensuring that in circumstances of deadlock, the General Assembly can act with binding authority where a majority of the P5 concur. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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

ADDENDUMS ADDENDUM 1   Econometric model for government revenue    Long run equation Long run equation: graph of actual and modelled values Cointegration text of long run equation   The hypothesis of the cointegration test is as follows:   H0: No cointegration.   Source:  Own calculations   The results indicate that the variable is statistically significant (at 1% level), which means that we can reject the null hypothesis (of no cointegration). Short run (ECM) equation [1]     Diagnostic and Stability Tests of the ECM       Final (combined) model: actual and modelled values [2] Forecast [3] : Base case Assumptions (2024-2055): CPI and Inflation: increase of 4.5% per year GDP and RYD: Real increase of 2.0% [4] per year RM3: Real increase of 2,1% per year (Average of last 10 years) Prime: Decline from its current value to 9.5% per year over the next four years (until 20207), and then remain fixed at that value (9,5 based on the average of the last 10 years) Forecast: Graph of actual and forecast ADDENDUM 2   S1 and S2 data     ADDENDUM 3   Impact of an increase in the public sector retirement age   To mitigate some of the risks associated with longevity as highlighted in the report, this addendum looks at an additional scenario, namely an increase in the retirement age of public servants.   As far as South African legislation regarding retirement is concerned, the Public Service Act 103 of 1994 [5] provides broad guidelines by stating that:    Subject to the provisions of this section, an officer, other than a member of the services or an educator or a member of the Agency or the Service, shall have the right to retire from the public service, and shall be so retired, on the date when he or she attains the age of 65 years: Provided that a person who is an employee on the day immediately before the commencement of the Public Service Amendment Act, 1996, has the right to retire on reaching the retirement age or prescribed retirement date provided for any other law applicable to him or her on that day.   According to recent news reports the National treasury stated that ‘there is no standard retirement age that is set by government in South Africa,’ and that ‘Employees in formal employment… have a retirement age that is determined by the employer and the relevant retirement fund, which is not prescribed by government.’ In addition, it confirms that ‘there are no planned changes to the old age grant – which remains available from the age of 60 for men and women’ [6] .   However, as far as the Government Employees Pension Fund (GEPF) is concerned, the normal retirement age for GEPF members is sixty (60) years. The fund notes that ‘The GEPF provides for normal and early retirement, as well as retirement for medical (ill health) reasons. Members whose employment have been affected by restructuring or reorganisation are also able to receive retirement benefits’ [7] . Normal retirement rules further specify that ‘benefits paid depend on whether a member has less than 10 years’ pensionable service, or 10 or more years of pensionable service. Members with less than 10 years’ service receive a gratuity – a once-off cash lump sum that is equal to their actuarial interest in the Fund. Members with 10 or more years’ service receive a gratuity and a monthly pension annuity.’   Against this backdrop, this addendum aims to quantify a scenario in which the retirement age for all public sector workers is set at 65 years of age, starting from 2025. This scenario then includes an amendment of the GEPF rules to increase the normal retirement age to sixty-five (65) years of age.   Quantum of costs   As a starting point one needs to get an estimate of the number of government employees currently in the age bracket of 60-65, as well as their earnings.   The 2022 Medium Term Budget Policy Statement (MTBPS) provided a detailed breakdown of public compensation data [8] (see Table 1).  This document indicates that in 2022 around 1,308,123  individuals were employed by the public sector. By dividing the expenditure on salaries and wages by the number of employees per sector, in 2022 the average public sector employee earned R457,209 per year.   Table 1: Public-service salaries (R millions) and headcount (number), 2015-2022   Source:  National Treasury, 2022 MTBPS Annexure B   Although a detail breakdown by age is not provided in the MTBPS document, a parliamentary reply by the then Public Service and Administration Minister Dlodlo stated that ‘131 176 public servants will reach the retirement age of 65 in 2025’ [9] .   By dividing this number of individuals, by the total number of public sector employees, gives an estimate of around 10,1% [10] of public sector employees falling within the 60-65 years age bracket [11] .   To get a value for the pensionable portion of these employees, we assume an average contribution rate of 20,5%  - that is 7,5% by the individual self and 13,0% [12] by the employer. By applying this ratio to the average public sector pay, gives an amount of R93 728 per year per employee. By multiplying this amount by the estimated number of individuals in the 60-65 years age bracket equates to just over R12,3 bn per year of (potential) additional retirement savings (‘contributions’) (see Table 2).   Table 2: Public service employees numbers and costs, 2022   Source:  2022 MTBPS, DPSA, compiled by author   However, there is a (significant) caveat to this scenario, that is that if members retire later, the state needs to continue to pay them their salaries up to their retirement date. Using a similar methodology as explained above, the cost to the state to continue paying individuals aged 60 to 65 years would have amounted to around R59,9 bn [13] for 2022.   To project these values over the forecast period, they need to be adjusted for inflation. Actual inflation is used for 2023-2024 after which inflation of 4.5% per year is used (the same as the assumption use throughout the longevity report [14] ). We also have to assume a fixed level of employment over the forecast period.    According to the GEPF 2023/24 annual report, the value of their ‘funds and reserves amounted to R2.34 trillion on 31 March 2024 and accumulated funds and reserves grew at an average rate of 5.53% per year during the 2015 – 2024 period’ [15]   To get an idea of the retirement value of additional years of service, the annual contributions are adjusted for the inflation as well as the average growth rate, reported by the GEPF. To not overcomplicate the analysis, we exclude the impact of withdrawals [16] from the fund here. Figure 1: Additional salary costs (state) and retirement contributions and values (employees/pensioners), 2022-2055   Source : own calculations   Figure 1 indicates that, initially there exists a sizeable gap (around R48 bn) between the cost of additional salary payments of the state and the value of the accumulated retirement savings. This gap further increases to around R67 bn in 2038. However, thereafter, it is narrowed quickly to the point where the accumulated value of savings equals the additional salary expenses towards the end of the forecast period (i.e. 2054).  In reality this is an ‘accounting gap’ in the sense that the state will continue to have to pay the salaries but that the gap can be seen as a proxy for the ‘value to society’ derived from individuals being able to save additionally towards their own retirement.     Impact on the model   To equate the size of the ‘GAP’ to the model applied in the report, the results are compared to the base scenario, discussed in detail in Chapter 4 of the report. Given that the 60 to 65 age cohort is in focus here, it makes little sense to also apply the longevity shock, and it is therefore excluded.   The results indicate that the budget deficit is likely to increase by around 0,5 percentage points, compared to the base scenario during the initial forecast years (i.e. around 2025 to 2040). For 2025 this is equal to a deficit of 6,6% of GDP compared to -5,9% for the base scenario. However, the difference between the GAP and base scenario is expected to gradually decline thereafter to the point where the GAP actually indicates a (marginally) smaller deficit during the final year of the forecast period.   Figure 2: Budget Balance as % of GDP (Base and Retirement GAP)   Source:  SARB data, Own calculations and forecasts   As can be expected, larger annual deficits will push the debt to GDP ratio up, breaking 90% of GDP by 2037 compared the base scenario which indicates that it should remain below the 90% level. The difference between the two peaks at 5,0 percentage points around mid-2040’s after which it starts to decline to around 3,1% by the end of the forecast period.   Figure 3: Gross Debt to GDP (Base and Retirement GAP)   Source:  SARB data, Own calculations and forecasts   Summary   The aim of this section is to quantify the impact of an increase in the retirement age of public servants from 60 to 65 years of age, on the fiscus.   The results indicate that this will have both a social costs (salary payments) as well as social benefit (retirement savings). Initially the costs will outweigh the benefits but over time, and given growth in the investment portfolio, this is estimated to equalise.   The impact on state finances will be a larger budget deficit and debt, especially during the initial years, that should decline over time.   ADDENDUM 4   Impact of an increase in the qualifying age for the Old Age Grant (OAG)   To moderate some of the risks associated with longevity as highlighted in the report, this addendum looks at another additional scenario, namely an increase in the qualifying age of the States Old Age social grant (OAG).   Chapter 4 of the report provided a detailed analysis of the different expenditure items, expected to be most affected by longevity. Specifically, Figure 37 showed the relative contributions of the three items to the total shock, and highlighted the dominant impact of old age grants, followed by the health services expenditure. Old age grant payments represented on average around 60% of the total combined shock to expenditure.   Chapter 3 of the main report already showed that during the 2024/25 fiscal year around 4,1 million individuals received the old age grant, and this is budgeted to rise to just below 4,5 million by 2027/28. This item represents a significant cost to the state and is also the largest (by cost) of the different social grants. The OAG cost the state R106,8 billion currently and is budgeted to increase to R131,0 billion over the next three years (that is an average rise of 7,0% per annum over the medium term).   Recent developments include that the National treasury confirmed that ‘there are no planned changes to the old age grant – which remains available from the age of 60 for men and women’ [17] .   Given the relevance and prominence of this social assistance related expenditure item, this addendum thus aims to quantify a scenario in which the qualifying age for all recipients of the State’s Old age social grant, is increased to 65 years of age, starting from 2026. However, this is done subject to a phased in approach over five years.   Quantum of costs   The main report already provides detailed estimates of the cost to the State of providing the OAG. As far as this addendum is concerned one needs to calculate the possible ‘saving’ if individuals falling between the ages of 60 to 64, are excluded.    According, to StatsSA, in 2024 South Africa had some 24,6 million individuals older than 60 years, while 8,6 million individuals (or roughly 32.6% of the total older than 60 years) fell in the age bracket 60-64 (See Table 1). Table 1: South Africans aged 60 and above, 2024     Male Female Total % of Total 60-64 866481 1134227 2000708 32.6% 65-69 654162 921092 1575254 25.7% 70-74 459581 697690 1157271 18.9% 75-79 273676 471861 745537 12.2% 80+ 212322 441742 654064 10.7% Total 2466222 3666612 6132834 100.0% Source:  StatsSA, Mid-year population estimates, 2024 [18]   Using this as a proxy, we thus assume that around 30% of AOG recipients are likely to fall within the 60-64 age bracket .   As mentioned above this analysis further assumes that the State will follow a phased in approach, that is where the qualifying age for the OAG is increased by one year per annum starting in 2026. This means that for 2026, only individuals 61 years and older will be viable to receive the grant, in 2027 only those 62 years and older, etc., thus reaching the target of 65 years from 2030 onwards.   To not overcomplicate the analysis, we assume that there are an equal number of individuals in the age cohorts 60 to 64. This translates to a linear, cumulative decline (saving) of around 6% [19] per year between 2026 and 2030. All other assumption related to the base and shocked scenarios remain the same as use in Chapter 4 of the main report.   Results   The results indicate a noticeable deviation between the base [20] and adjusted (age to 65 years) scenarios over time. During the first five years (implementation phase) the base scenario continues to rise strongly from around R106.8 bn in 2025 to R154.5 bn in 2030. In contrast to this the adjusted scenario remains largely unchanged from R106.8 bn in 2025 to R108.1 bn in 2030. This is as expected given the continued phasing out of qualifying individuals during the implementation phase.    After 2030 both series starts to rise, but with a significant gap between the series evident throughout the forecast period (see Figure 1). Figure 1: OAG costs of base versus adjusted (age 65) scenarios,  2024 to 2055   Source:  National Treasury (base up to 2028), own calculations   When comparing the results to total government expenditure, we get similar trends but with noticeable lower values for the adjusted (age over 65) scenario. Over the whole period the average for the original (shocked) scenario is around 0.5 percentage point compared to 0.3 percentage points for the adjusted (age over 65)  scenario.   Figure 2: OAG shock to expenditure: impact of original (shocked) versus adjusted (age 65) scenarios,  2024 to 2055   Conclusion   The aim of this addendum is to quantify a scenario in which the qualifying age for all recipients of the State’s Old age social grant, is increased to 65 years of age. This was done by using a phase in approach over 5 years, that is from 2026 to 2030.   The results indicate a significant saving in expenditure, averaging around R25 bn per year between 2026 and 2030. This equates to some R126.1 bn over the whole 5-year period.   When comparing the results as a percentage of total government expenditure, the average value for the original (shocked) scenario is around 0.5 percentage point compared to 0.3 percentage points for the adjusted (age over 65)  scenario. That means an (average) ‘saving’ of around 0.2 percentage point of total government expenditure can be realised per year if the qualifying age of the OAG is adjusted to 65 years of age.   Figure 3:             OAG costs of all original versus adjusted (age 65) scenarios,  2024 to 2055   [1]  All non-stationary variables have been differenced appropriately based on stationarity tests. [2]  Evident from the graph is that, in general, the model provides a good fit and trend of the actual values. Some discrepancies between the actual and modelled values are evident towards the later part (2015+). However, these are to both the upper and lower side, meaning we do not have a specific bias in the model. The large fluctuations during the Covid-19 period (2020-2021) likely further complicates the model’s ability to trace the actual values. [3]  To perform a forecast of the dependent variable (government revenue in this instance), the econometric model requires values for all explanatory variables over the forecasting period. Therefore, the need for the assumptions. [4]  This relates to the upper limit of the SARB’s potential growth rate, as discussed in Chapter 2. [5]   Act 103 of 1994 [6]  Daily Maverick, 27 May 2025, available at: No, there is no change to the retirement age [7]   https://gepf.co.za/retirement-benefits/ [8] 2022 MTBPS Annexure B. Available at: https://www.treasury.gov.za/documents/mtbps/2022/mtbps.aspx [9]   https://www.dpsa.gov.za/thepublicservant/2022/03/09/govt-remains-largest-employer-in-sa-min-dlodlo/ [10]  This figure is likely understated, however it is difficult to determine the exact number of retirees in each age group per year, given the Minister’s broad statement. [11]  This seems in line with other sources such as StatsSA’s Quarterly Labour Force survey, which indicates that the 55-64 years age bracket represented around 7,8 percent of the total labour force in 2025.  P02111stQuarter2025.pdf . [12]  Note that this is the average rate, and that the DPSA states that the ‘rate is higher for members of the services, i.e. Police, Defence and Correctional Services. The employer contributes 16% of the member’s pensionable salary. Members of Intelligence Services also receive 16% of the member’s pensionable salary.’ https://www.dpsa.gov.za/policy-updates/nlrrm/conditions_of_service/pensions/pensions/ .   [13]  131176 (individuals) x R457 209 (average pay per year) [14]  4,5% per annum is the mid-point of South Africa’s official inflation target. [15]   https://gepf.co.za/wp-content/uploads/2025/01/GEPF_Annual-Report-2023_24_FINAL.pdf [16]  The GEPF is a defined contribution pension fund meaning that it does not guarantee a specific retirement benefit. Instead, both the employee and employer contribute a certain amount to an individual account, which is then invested, and the retirement benefit depends on the performance of these investments. ( Why withdrawing your pension from the GEPF could be your worst financial decision - Moneyweb ). [17]  Daily Maverick, 27 May 2025, available at: No, there is no change to the retirement age [18] P03022024.pdf [19]  30% assumption / 5 years = 6% per year [20]  Using the shocked scenario provides very similar trends and will thus not also be discussed here. See Figure 3 at the end of the Addendum for a combined graph of all different options and scenarios.    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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

CHAPTER 3 LITERATURE AND METHODOLOGY   Longevity’s impact on state finances: empirical evidence    The IMF [1]  notes that the economic and fiscal effects of an aging society have been extensively studied and are generally recognized by policymakers, but the financial consequences associated with the risk that people live longer than expected—longevity risk—has received less attention.  In this sense longevity can be defined as the risk that actual life spans of individuals or of whole populations [2]  will exceed expectations . The IMF notes that unanticipated increases in average life span can results from:   ‘ Misjudging the continuing upward trend in life expectancy, introducing small forecasting errors that compound over time to become potentially significant. There is also risk of a sudden large increase in longevity because of, for example, an unanticipated medical breakthrough. Although longevity advancements increase the productive life span and welfare of millions of individuals, they also represent potential costs when they reach retirement [3] .’   Longevity can broadly impact financial stability via two sources namely fiscal sustainability (e.g. as measured by deteriorating debt-to-GDP ratios) and solvency of private financial and corporate institutions (e.g. increases in their liabilities).    The Asian Development Bank Institute [4]  notes that ‘(the) rapid growth of aging population can pose a serious structural challenge to fiscal sustainability. Two main channels are referred to; (1) shrinking working population who are taxpayers, and (2) increasing government expenditures for age- related programs, particularly healthcare expenditure. In other words, the government’s ability to collect tax revenue decreases due to a smaller base of taxpayers while the government expenditure, particular on healthcare spending, continuously increases ’.   Liu and Zhao (2023) links to the above research by stating that ‘The impact of population aging on finance is primarily manifested in the change in the scale and proportion of government fiscal expenditure and the increase in the level of fiscal burden in old age’. In relation to research on population again they note that there are some variabilities in findings on the impact of population aging on fiscal sustainability due to ‘different research subjects and research methods. However, in general they indicate that the academic literature on the matter shows that ‘mainstream research has concluded that population aging significantly increases the fiscal burden and leads to fiscal unsustainability’. The same authors empirically analysed the impact of population aging in100 Chinese cities between 2010 to 2019 and find that population aging significantly inhibits fiscal sustainability, to the extent that each 1% increase in population aging reduces fiscal sustainability by 0.047%. The aging of the population notably inhibits fiscal sustainability through expenditure on healthcare and fiscal expenditure on social security and employment.   Fiscal sustainability in general remains a serious challenge in the Euro Area (EA) countries, especially after the sharp rise in public debt-to-GDP ratios in the aftermath of the financial crisis of 2008. In a 2020 study, Carmen Ramos-Herrera and Sosvilla-Rivero [5]  analysed  data from 11 EA countries over the period 1980–2019 and finds that a higher old-dependency ratio deteriorates the cyclically adjusted government primary balance of a country, especially for countries with a relatively old population and for more indebted economies. They estimate a rise of one percentage point of the old-dependency ratio can generate a reduction of cyclically adjusted government primary balance of up to 54.5 percentage points in these countries.   Governments in particular bear a significant amount of longevity risk. The IMF identifies three main sources namely: (1) through public pension plans, (2) through social security schemes, and (3) as the “holder of last resort” of longevity risk of individuals and financial institutions. They note that ‘ an unexpected increase in longevity would increase spending in public schemes, which typically provide benefits for life. If individuals run out of resources in retirement, they will need to depend on social security schemes to provide minimum standards of living’ [6] .     Methodology    The study uses two methods, namely time series modelling (or an extrapolation method) as well as testing South Africa’s fiscal stance against the European Commission’s S1 and S2 indicators.     Time series analysis   Anderson (2012:4) states that ‘ the standard approach when assessing fiscal sustainability is an extrapolation method to project future public expenditure and revenues. The main steps are to make a decomposition of expenditures and revenues on demographic characteristics of the population in a given base year and combine this with a population forecast to generate paths for future public sector expenditures and revenues .’ He adds that and advantage of this method is that it is ‘ relatively easy to apply’ . However, he cautions that ‘ a problem could be that it relies on an underlying path for the economic development which may not be feasible, and which disregards important adjustment mechanisms. This may bias the assessment of fiscal sustainability in an unknown direction’ .   In deciding which methodology to use, the researcher is guided primarily by the type of data available. When looking at fiscal sustainability, state revenue becomes the limiting or ‘dependent’ variable against which other expenditure items are measured. We therefore first develop a workable model for state revenue, that can then be used for forecasting.     For this study we are working with time series data, which means that a time series econometric model will be utilised. The econometric modelling applied in this study is based on the Engel-Granger method [7] , in which a long term (cointegrated and a priori economic theoretically correct) and short-term error correcting (“ECM”) components are combined, to provide a final (holistic) model. The error term (“equilibrium error”) from the long run model is used to link the long and short run components.   Annual time series data, from 1990 to 2023 is used for the baseline revenue modelling. This implies using least 33 observations. Once an economic meaningful and statistically significant model has been developed, it can be used for out of sample forecasting.   To determine the impact of longevity on the expenditure side of state finances, this report takes guidance from the European Commission’s (“EC”) ageing [8]  and fiscal sustainability [9]  reports. As far as a methodology for determining total age-related public expenditure items, the EC [10]  identifies four main categories namely: health care, long-term care, education and pensions.  As far as the EC’s entire age-related expenditure projection is concerned it entails four steps namely:   Making population projections; Making exogenous macroeconomic assumptions, covering items such as the labour force (participation, employment and unemployment rates), labour productivity and the real interest rate; Estimating the age-related expenditure items; and Aggregating the above to provide an overall projection of age-related public expenditures.   An overview of how the different steps is combined can be seen in Figure 21.   Below is a brief discussion of the main expenditure items identified. However, it is important to note that the methodologies used by the EC are not all applicable to the South Africa economy and/or fiscal realities. For example, South Africa do not have a social security system (as defined by a mandatory publicly managed system). Also as highlighted in the first section of the report, South Africa’s demographics are (likely) more complex, notably the significant difference observed between population groups. Figure 21: Overview of Age-Related Public Expenditures   Source: European Commission (2021), The Ageing Report, 2     Health care    In its 2021 Ageing Report [11] , the EC notes that population ageing may pose a risk to the sustainability of health care financing in two ways:   Firstly, increased longevity, without an improvement in health status, leads to increased demand for services over a longer period of the lifetime, increasing total lifetime health care expenditure and overall health care spending. It is often argued that new medical technologies have been successful in saving lives from a growing number of fatal diseases but have been less successful in keeping people in good health.   Secondly, public health care is often financed by social security contributions of the working population. Ageing leads to an increase in the old age dependency ratio, meaning fewer contributors to the recipients of services. This can result in fewer people contributing to finance public health care in future, while a growing share of older people may require additional health care goods and services.   The impact of increasing longevity on health care expenditure critically depends on the health status of individuals over the additional lifetime (i.e. whether extra years are spent “in good or bad health”). Here a ‘trade off’ can develop between mortality and morbidity, e.g. in some cases mortality has decreased at the expense of increased morbidity, meaning that more years are spent with chronic illnesses. In contrast, if increasing longevity goes in line with an increasing number of healthy life years, then ageing may not necessarily translate into rising health care costs. Therefore, forecasting the health status of any population is challenging due to the difficulties associated with predicting the changes in morbidity and measuring ill-health.   Health spending is under pressure and the 2025 Budget [12]  notes that ‘ R28.9 billion is added to the health budget, mainly to keep about 9 300 healthcare workers in our hospitals and clinics ’. Figure 22 provides the comparison between the health budget from the 2024 and 2025 budgets, with our own calculations indicating a difference (rise) of closer to R37.1 billion for the years 2025 to 2027. There is also a noticeable pickup in the trend over the Treasury’s medium-term forecast compared to the 2024 budget figures.   Table 11: Health expenditure   Source: National Treasury 2024 Budget Review, 54 https://www.treasury.gov.za/documents/national%20budget/2024/review/Chapter%205.pdf     Figure 22: Total Consolidated Health Expenditure, 2024 and 2025 Budget Source: National Treasury, 2024 and 2025 Budget Reviews   To assess the impact of longevity this research isolates spending on health services (around 85% of the health budget), as these are the items from Treasury’s health budget, most likely to be affected by longevity risk. Population forecasts (using UN forecast) are used to calculate per capita health services spending.   Next an estimation is made of the proportion of this spending going to individuals older than 65 years.   The study assumes that government’s projections (i.e. this study’s base case forecast values) uses an unchanged stance as far as differences in population age groups and longevity is concerned [13] .   The study uses earlier findings and forecasts to model longevity risk using two separate aging effects:   Structural effect : this relates to the size of the population group older than 65 years old, increasing relative to the overall population (so-called pyramid effect), and Old age effect : this considers people literally getting older than expected.   The second (old age) effect is used to ‘reverse’ the per capita data, back to a nominal time series. The combined effect provides a longevity premium which can then be compared to the original times series.     Long-term care   For long-term care the proposed methodology considers the impact of changes in the age-structure and life expectancy of the population, on long-term care spending. It consisted of applying profiles of average long-term care expenditure per capita by age and gender to population forecasts.   The approach aims to maximise the number of factors affecting future long-term care expenditure. This may include [14] :   the future numbers of elderly people (through changes in the population projections used); the future numbers of dependent elderly people (by making changes to the prevalence rates of dependency); the balance between formal and informal care provision; the balance between home (domiciliary) care and institutional care within the formal care system; the costs of a unit of care.   The World Bank [15]  notes that, Similar to other low- and middle-income countries (“LMICs”), the populations in sub-Saharan African countries view the family unit as the primary provider of LTC services for older family members.   The HIV/AIDS epidemic has also strained the traditional family structure in that older adults may have to care for their adult children, sick family members, or grandchildren who are orphaned or left behind by migrant parents … This presents additional challenges as older adults balance their increasingly complex health needs with caregiving responsibilities for their family members.   Financing LTC appears to be a key issue in preventing the expansion of services across the continent. Financing of programs and facilities comes from a variety of sources, including donors and non-governmental organizations (NGOs), religious organizations, and out-of-pocket payments. Even in South Africa where 74 percent of facilities are government subsidized , funds from donations and out-of-pocket payments are needed to cover the costs of care provision   South Africa is one of the few sub-Saharan African countries that has residential facilities for the elderly. Sassa [16]  states that ‘if you are a senior citizen with no relatives available to take care of you in the golden age of 60 plus, there’s no need to worry. You can apply for the SASSA Old Age Grant also known as the old age pension and receive support through an old age home provided by the South African Department of Social Development (DSD ).’   The SASSA website [17]  notes that ‘ old age homes, also called retirement homes or assisted living facilities, are special residences for seniors who require different levels of care and assistance. Depending on the home, services typically include services such as housing and meals, personal care, health monitoring, and transportation’     To qualify for admission to a government-subsidized old age home the individual must:   Be aged  60  or older Be a South African citizen with a valid  ID document Receive the  SASSA Old Age Grant  or other pension fund Need full-time frail care due to health issues  (provide medical report) Have no family or other means to be properly cared for. However, to get aggregated data on public old age homes in South Africa is challenging.  Some information is provided by the Western Cape Government [18]  which notes that ‘ in the Western Cape, there is a total of 300 old age homes of which, 117 are funded by the provincial DSD. For the 2020/21 financial year, R 250 million has been budgeted towards services for older persons .’     Given that the Western Cape accounts for roughly 12% of the total SA population, we can use the R250 million to estimate a total for South Africa of R2,1 billion [19]  in 2020/2021.     Education    The methodology related to education spending considers the expected demographic and labour market developments, notably the  ratio of students to working-age population. The hypothesis is that a reduced ratio of students to working-age population should leads to a reduction in the ratio of total education expenditure to GDP. It does not assume a general rise in the education levels but analyses the effects of expected demographic and labour market developments given the present enrolment and cost situation.   The EC [20]  noted however that ‘ The projections of reduced education expenditure depend on a number of variables. As no underlying trend in enrolment rates is included, wealth effects on the demand side, or investment considerations e.g. related to the Lisbon objectives, could lead to savings being even more limited. The same can happen if expenditure per student should rise relative to GDP per worker, e.g. because of smaller classes or an increase in relative wages . In addition, ‘ enrolment and/or cost levels (could) increase more than what follows from the projections, because of implemented or planned legislation or other policies. This is especially relevant for enrolment in tertiary education. As education is to a large extent an investment in future human capital, many (countries) may also wish to direct any savings arising from demographic developments (rather to) increases in quality or intensity .’   Funding of education (notably tertiary education) in  South Africa remains complex, notably since the ‘FeesMustFall’ campaigns and the announcement by former President Zuma at the beginning of 2018 that ‘ free higher education will be provided to all new first year students from families earning less than R350 000 per year [21] ’ . Since then, changes have been made e.g. to change the support from a bursary scheme to a loan and partial bursary scheme [22] . The main entity offering free higher education is the National Student Financial Aid Scheme (NSFAS) [23]  via fully subsidised government bursaries to qualifying students.   Given the complexities with which to determine the trade-off between demographic changes versus possible changes in legislation or other policies, this item is excluded from the analysis of this report. Pensions (Old age grants)   The EC’s methodology includes social security and other public pensions as well as mandatory private pensions. Social security and other public pensions are broken down into two main categories:   old-age and early retirement pensions (including minimum and earnings-related pensions), with a preference to include also disability and widow’s pensions paid out to persons over the standard retirement age; other pensions (disability, survivors’, partial pensions without any lower age limit, including minimum and earnings-related pensions).   Making this relevant to South Africa, this study will analyse likely change due to longevity in the spending on old age grants.     SASSA notes that ‘ the Old Age Grant, also known as the Old Age Pension, is a South African social welfare program offering financial support to elderly citizens who are 60 years or older and have no income. Administered by SASSA Status check, this grant is available to South African citizens, refugees, and permanent residents. Eligibility is determined through a means test that evaluates the applicant’s income and assets. Once approved, recipients receive monthly payments [24] ’   According to the SASSA website [25] , social assistance (grants) is subject to a means test, which implies that SASSA evaluates the income and assets of the person applying to determine if these are below a stipulated amount. This currently (2024) amounts to an income of not more than R86 280  if you are single or R172 560 if married. The asset threshold is set at not more than 1 227 600 if you are single or R2 455 200 if you are married. The payments to individuals are  R 2 180 per month and R2 200 for individuals older than 75 years [26] . Table 12: Social Protection Expenditure   Source: National Treasury, 2025 Budget Review  https://www.treasury.gov.za/documents/national%20budget/2025/review/Chapter%205.pdf    During the 2024/25 fiscal year around 4,1 million individuals received the old age grant, and this is budgeted to rise to just below 4,5 million by 2027/28. This item represents a significant cost to the state and is also the largest (by cost [27] ) of the different social grants. Old age grants cost the state R106,8 billion currently and is budgeted to increase to R131,0 billion over the next three years (that is an average rise of 7,0% per annum over the medium term) (see Tabel 12).   Like the methodology for LTC,  the grant data already applies to individuals 60 years and older, and we do not need to apply a structural (‘pyramid’) effect [28] . Therefore, only an old age effect is applied. Other assumptions    As far as this research is concerned, important macroeconomic assumptions include that:   Trends observed during the last ten (10) [29]  years will continue. Inflation is assumed to remain at 4.5% per year, that is the mid-point of the SARB’s  inflation target. GDP growth to average 2.0% per year, linked to the SARB’s potential growth calculations The time horizon for forecasting will be 20 to 30 years. Additional scenarios can include the assumption that a basic income grant is introduced at the food-poverty line.      S1 and S2 indicators   An important starting point for the analysis is to determine a definition for fiscal sustainability. However, this is not as straight forward as it might seem. The European Commission (EC) (2006:3) [30]  notes that ‘ the issue of debt or fiscal sustainability is a multifaceted one and there is no agreed definition on what a sustainable debt position is  . The same commission luckily also provides a detailed definition of debt sustainability, specifically within the context of budgetary challenges posed by ageing populations, namely:   A definition of sustainability is derived from the government’s intertemporal budget constraint. It imposes that current total liabilities of the government, i.e. the current public debt and the discounted value of all future expenditure, should be covered by the discounted value of all future government revenue over an infinite horizon. In other words, the government must run sufficiently large primary surpluses in the future to cover the increasing cost of ageing and to pay off interest on outstanding debt. ( European Commission, 2006:3).   This definition (related to the intertemporal budget constraint) has become known as the so-called S2 indicator. Anderson (2012:2 [31] ) provides an interesting angle to the discussion by noting that intertemporal budget constraint definitions do not take a stand on whether current policies are optimal, or desirable, but rather asks whether they are feasible    In addition, the EC notes that the assessment of long-term sustainability of public finances should go beyond answering the question whether current policies are sustainable or not. ‘ An estimation of the size of the budgetary imbalances is also needed. This is provided by sustainability gap indicators that measure the size of a permanent budgetary adjustment’ . This additional condition is known as the S1 indicator and focusses on a country reaching a pre-determined level of debt to GDP.   Since its inception these indicators have also been revised and a 2023 report [32]  by the EC notes that ‘ (t)he S2 indicator measures the fiscal effort needed to stabilise public debt over the long term. The revised S1 indicator measures the fiscal effort required to bring the government debt-to-GDP ratio to 60% in 2070 [33] , hence capturing vulnerabilities due to high debt levels. The methodological approach differs from the Fiscal Sustainability Report 2021, which determined long-term fiscal risks based on the S2 indicator and the DSA results. The revised S1 indicator provides a better long-term complement to the S2 indicator, as based on a similar time horizon. ’   The EC’s uses the following equation to forecast the evolution of the debt-to-GDP ratio:   (Equation 1)   Where:   Related to the impact of ageing on the S2 indicator, it is explained that (ceteris paribus)  the higher the projected cost of ageing, the more difficult it is to fulfil the intertemporal budget constraint, as higher revenue – in present terms – is required to cover these costs, in addition to the other non-interest expenditure and debt service (European Commission, 2023:71) [34]   In practice, various types of fiscal balances exist, which according to the IMF [35] , often ‘ relate to special issues or circumstances and are only partial approaches and indicators for assessing complex situations . Some of the diffident types include:   Current fiscal balance:  this represents the difference between current revenue and current expenditure. It provides a measure of the government's contribution to national savings. When positive, it suggests that the government can at least finance consumption from its own revenue. Primary balance:  this balance excludes interest payments from expenditure. It can be said to provide an indicator of current fiscal effort, since interest payments are predetermined by the size of previous deficits. For countries with a large outstanding public debt relative to GDP, achieving a primary surplus is normally viewed as important, being usually necessary (though not sufficient) for a reduction in the debt/GDP ratio. Cyclically adjusted or structural balances [36] :  this item seek to provide a measure of the fiscal position that is net of the impact of macroeconomic developments on the budget. This approach takes account of the fact that, over the course of the business cycle, revenues are likely to be lower (and such expenditure as unemployment insurance benefits higher) at the trough of the cycle. Thus, a higher fiscal deficit cannot always be attributed to a loosening of the fiscal stance but may simply reflect that the economy is moving into a trough.   According to the National Treasury, ‘ the government's fiscal balance before accounting for interest payments on its outstanding debt. It is calculated as the difference between total government revenues and total non-interest expenditures. A positive primary balance indicates that the government’s revenues exceed its non-interest spending, while a negative primary balance suggests a shortfall [37] ’.   As far as its relevance to fiscal studies Bond Economics [38]  notes that ‘ the standard working assumption is that the primary balance is the result of fiscal policymakers, and that they do not wish to depart from this set policy. For example, they do not want to be forced to raise or lower taxes, as that has political consequences. The same holds true for programme spending. The usual interpretation of holding the trajectory of the primary balance fixed is to see whether the current fiscal policy settings are "sustainable" ’ However, the same source also cautions that ‘ the basic problem is that it makes very little sense for fiscal policymakers to care about the primary balance. Taxes are not imposed in the form of absolute levels; they are almost always imposed as percentages of nominal incomes and activity (e.g., income and sales taxes). As such, the tax component of the primary balance will shift based on the economic cycle, even if policy settings are unchanged…The net result is that the primary budget balance moves in a counter-cyclical fashion with the business cycle (deficits rise during recessions) ’.   In applying the EC’s methodology to this research, the development of the primary budget balance will be analysed to determine its relevance to the overall debt trajectory (S2) and to quantify what it should be to bring the debt-to-GDP ratio down to 70% of GDP [39]  by 2055 (S1).  Factors impacting longevity will be included via the adjusted expenditure figures, as discussed in the previous section. CHAPTER 4 ANALYSIS    As explained in Chapter 3, the analysis uses two methods, namely time series modelling (or an extrapolation method) as well as testing South Africa’s fiscal stance against the European Commission’s S1 and S2 indicators.     Time Series Analysis  At its core, fiscal analysis boils down to two items namely government revenue and expenditure. When looking at fiscal sustainability, state revenue becomes the limiting or ‘dependent’ variable against which expenditure items are measured. This section therefore first presents a workable model for state revenue, that is used for forecasting.    From here a base scenario  is created in which existing expenditure trends (evident during the past 5 to 10 years), are extrapolated and compared to the estimated development in revenue (as obtained from the econometric model).   The next step it to apply shocks to the base scenario, notably by changing expenditure items that are likely to be impacted most by longevity risks.  Additionally, the implementation of a BIG (Basic Income Grant), is also analysed.     Government revenue model and forecast   Econometric model    A time series can be defined [40] as a set of observations on the values that a variable takes at different times. Such data is usually collected at regular time intervals, such as daily (e.g. stock prices, weather), monthly (e.g. inflation, money supply), quarterly (e.g. GDP), annually (e.g. government budgets) or even at longer time intervals.   Although time series analysis is used heavily in econometric studies, it does present specific problems, notably the assumption that underlying time series are stationary. In short, stationarity can be defined as a time series for which the mean and variance do not vary systematically over time.   However, by using cointegration techniques, as proposed by the econometricians Clive Granger and Robert Engle, or generally referred to as the ‘Engel-Granger’ [41] type analysis, time series that are non-stationary can be shown to share the same common trend so that regression analysis will be meaningful (i.e., not spurious). They are thus said to be cointegrated. Economically speaking, variables will be cointegrated if they have a long-term, or equilibrium, relationship between them. [42] Short run disequilibrium is likely to still exist, but this is corrected by the error correction mechanism (“ECM”), [43]  as also proposed by the Engel-Granger method.   The econometric modelling used for government revenue in this Report is based on the Engel-Granger method, in which a long term (cointegrated and a priori economic theoretically correct) and short-term error correcting (“ECM”) components are combined, to provide a final (holistic) model.  The error term (equilibrium error) from the long run model is used to link the long and short run components. Therefore, this term (i.e. its coefficient and statistical properties) becomes very important in the ECM, as also discussed in more detail below.   Annual time series data, from 1990 to 2023 is used for the baseline revenue modelling. This implies using 33 observations. All data was sourced from the South African Reserve Bank, National Treasury and Statistics South Africa. Because budget data is usually reported in fiscal years, the researcher must take cognisance of other economic variables provided in calendar years, which could impact the comparability of the different datasets. Fortunately, the SARB also provides calendar year values for most of the major state finance line items. The revenue model presented here is therefore run on annual (calendar) year data [44] .   The long run component of the modelling process is done to obtain a cointegrated, long-term trend, or equilibrium relationship between variables. In this sense one wants to rather use fewer variables, that are likely to have theoretically sound economic impacts on the dependent variable. For this purpose, GDP and household disposable income was used and it was confirmed that there does exist a cointegrating relationship between the long run variables (see details in Addendum 1).   The short run component, also known as the error correction mechanism (“ECM”), is defined as the part of the model that corrects for disequilibrium. Variables included in the ECM included household disposable income, the prime interest rate, money supply (“M3”) and inflation. In addition to this the long run component are included (as required) via the residual variable from the long run equation (i.e. ‘Res_Rev’). All variables were differenced appropriately for stationarity and the relevant diagnostic and stability tests confirmed. The detailed specifications and estimated results are provided at the end of this chapter in Addendum 1   In general, the model indicates a good fit as the modelled values closely follows the trend of the actual values (see Figure 23). Some discrepancies are evident towards the later part (around 2020). However, these are to both the upper and lower side, meaning we do not have a specific direction of bias in the model. The large fluctuations in the data itself during the Covid-19 period (2020-2021) likely further complicates the model’s ability to trace the actual values. Figure 23: Revenue Model: Actual and Fitted Values (Real, R millions)   Source:  Own calculation     Revenue forecast   Out of sample forecasting is performed next,  for the period 2024 to 2055 – that is over a period of three decades. The assumptions for the explanatory variables are as follows:   CPI and Inflation: increase of 4.5% per year (as per the mid-point of the SARB’s inflation target) GDP: Real increase of 2.0% [45] per year RYD: Real increase of 1,2% per year (average of last 10 years) RM3: Real increase of 2,1% per year (average of last 10 years) Prime: Decline from its current value to 9.5% per year over the next four years (until 20207), and then remain fixed at that value (9,5 based on the average of the last 10 years)     Base scenario    To make the results from the revenue model comparable to expenditure, the real values are deflated using the CPI. This indicates a continued upwards trend in (nominal) government revenue. Over the short term the modelled annual growth in revenue picks up from 2.3% in 2023 (actual) to 6.9% and 7.7% during 2024 and 2025 respectively. Over the long term (2030 and beyond) the growth rate settles on around 7.1% per year.  This compares very well to the historic average growth of 7.2% per year recorded by this item during the last decade.    As explained in the methodology section, government expenditure is forecasted using an extrapolation (moving  averages) method. To obtain the likely long-term trend in expenditure, it is increased by 6,9% [46] per year – equal to the average rise in this item during the last decade.    Figure 24: Revenue Model: Actual and Forecasted (@1,5% and 2% GDP growth) (Real, R millions)   Source:  Own calculation   Figure 25: Base Scenario: Long term Estimates for Revenue and Expenditure (Nominal, R millions)   Source : SARB data, Own calculations and forecasts   Evident from the comparison of the two long term forecasts, is that expenditure continue to outperform revenue over the forecast period. Reasons for this include that, government is currently running a budget deficit, meaning that expenditure starts from a higher value. Also, despite the higher projected growth rate in revenue (7.1% from 2030 onwards) compared to 6.9% average for expenditure, revenue is struggling to make inroads into expenditure, even over the 30-year time horizon.   Another way of looking at this is to calculate the projected budget balance, which indicates a gradual decline from a deficit 6,0% of GDP in 2023 to around -5.8% in 2030 and only dipping below -5.5% of GDP from 2050 onwards (see Figure 26).   This means that under the base scenario the budget deficit is expected to remain negative, albeit declining, over the forecast horizon.   In addition, this means that state debt will continue to climb to fund the annual deficits. Given a rise of 2.0% per year in GDP, debt is expected to continue rising but also to stabilise just below 90% of GDP around the middle of the 2040’s.   However, if the economy only manages to record growth of 1.5%, the debt level is expected to continue accelerating, reaching 90% of GDP in roughly a decade (i.e. around 2034).   Figure 26: Budget Balance as % of GDP (@1,5% and 2% GDP growth) Source:  SARB data, Own calculations and forecasts   Figure 27: Gross Debt to GDP (@1,5% and 2% GDP growth) Source: SARB data, Own calculations and forecasts   Evident from the above is that in order for debt levels to remain below 90% of GDP [47] , the economy will have to grow by a level of at least 2,0% per year [48] . Any value less than this will mean a continued upwards trend, i.e. to clearly unsustainable debt levels. However, the aim of this section is to establish a base scenario on which further analysis can be performed. For this reason, it the (more optimistic) 2,0% per year GDP assumption  will be applied during the remaining of this Section.      Longevity impact scenario    The aim of this section is to quantify and analyse the impact of longevity on a selection of government expenditure items, as identified in the methodology. The items will be quantified individually after which the combined impact will be analysed against the forecast results from the base scenario model.     Health care    The impact on healthcare is calculated by only using health services related spending (around 85% of the total health budget) and using population forecasts to calculate per capita figures. Two separate aging effects are then analysed namely a structural effect (relative size of the population older than 65 to the total population) and an old age effect (people living longer than expected).    Initially health services spending is calculated by using 84.8% of total health expenditure up to 2027 (for which National Treasury data is available), after which it is forecasted by using the 10-year average ratio of this item to total expenditure.     Structural effect   Per capita health services expenditure is calculated , and from there the proportion of this relevant to the elderly (65+) is calculated using a fixed ratio of 6,5% of the population (i.e. the ratio where this age group was at 2024). A second scenario uses an increasing ration (i.e. individuals over 65 years old increasing from 6.5% to 11.2% of the total population).  Figure 4.6 provides the results of the two scenarios. Figure 28: Per Capita Spending by Elderly (65+) on Health Services (Base and Shocked Scenario)   Source:  Own calculations     Old age effect:   In addition, a longevity effect(i.e. the risk that life expectancy is underestimated) need to be added, which is done by applying an aging coefficient (around 0.5 percent per year) to only the population older than 65 years [49] . In brief this increases the size of the 65+ population group in 2055 by around 1.4 million individuals. The ‘new’ total population is then calculated by replacing the old age group with the new numbers. See Figure 29 for the impact of this adjustment. This adjusted population data is used to re-calculate the nominal rand values.   Figure 29: Total Population (Base and Alternative Scenario)   Source : Own calculations Total healthcare effect   The results indicates that the gap (difference) between the base and shocked scenario will continue to increase over the forecast period, reaching and amount of R110,0 billion in 2055.   Figure 30: Health Services (Base and Shocked Scenario)   Source:  Own calculations   Another way to look at this is to compare the gap to total government expenditure, which indicates a shock starting at less than 0.1% of total expenditure around 2030 but rising to around 0.6% of total expenditure in 2055 (see Figure 31).   Figure 31: Health Shock to Expenditure   Source : Own calculations     Long-term care   For long-term care the analysis focus on the impact of changes in life expectancy of the population. Specifically, how these factors are likely to impact the cost of providing public old age homes by the South African Department of Social Development (“DSD”).   As mentioned in the methodology section, it proved difficult to find aggregated data on public old age homes. Some data from the Western Cape Government indicated that in 2020/21 this province spent R250 million on services for older persons.   Using this as a benchmark we estimate a spending for South Africa of around R2,1 [50] billion during the same year.   As base scenario this amount is inflated (using an annual inflation rate of 4.5 % per year). This takes LTC spending from around R2.4 billion in 2024 to R9.4 billion in 2055.   To determine the likely impact of longevity on these figures, a shocked scenario is then developed. As the data already applies to individuals 60 years and older, we do not need to apply a structural (‘pyramid’) effect [51] . Therefore, only an old age effect is applied.   The resultsare presented in Figure 32, which indicates a difference between the base and shocked scenario reaching R500 million in 2040 and further increasing to around R1.5 billion by 2055.   Figure 32: Long term care (“LTC”) Costs (Base and Shocked Scenario)   Source:  Own calculations    Compared to total government expenditure, the LTC shock is fairly small [52] , rising to around only a 10 th  of a percent by 2055.   Figure 33: LTC Shock to Expenditure Source:  Own calculations     Pensions (Old age grants)   The analysis focus on how changes in life expectancy of the population could impact pension payments. Specifically, how this is likely to affect the cost of social assistance payments (so called old age grants).   Like previous sections, a base and shocked scenario is developed. The base scenario uses data from the National Treasury up to 2027/28 after which the item is expected to increase equal to the 10-year average (that is 8.6% per year for old age grants).   The shocked scenario uses this same base data and forecasts but applies an old age coefficient to capture the impact of people in general living longer than expected.   The results are presented in Figure 34 which indicates a difference between the base and shocked scenario reaching R30 billion in 2040 and further increasing to around R195 billion by 2055. Figure 34: Pension Costs (Base and Shocked Scenario)   Source:  Own calculations   The results indicate a relatively large gap averaging 0,5% of total expenditure over the forecast period.  Annual values of more than 1% of total expenditure is reached from 2050 onwards  (see Figure 35).   Figure 35: Pension Shock to Expenditure   Source:  Own calculations     Combined (Health, LTC and pensions)   By adding the three items (Health, LTC and pension), the total impact is derived. In rand value the impact (shock) on total government expenditure is expected to increase over the forecast period, reaching around R40 billion in 2040, and increasing to over R300 billion by 2055.   In percentage terms, this is equal to an average rise of around 0,8% of expenditure over the period, with annual values reaching 1,0% in 2040 and peaking at 1,7% in 2055 (see Figure 36).    Figure 36: Total Shock to Expenditure (R value and %)   Source:  Own calculations   Figures 37 shows the relative contributions of the three items to the total shock, which clearly indicates the dominant impact of old age grants, followed by the health services effect.   Figure 37: Total Shock to Expenditure (Components)   Source:  Own calculations Impact on fiscus   The last part of this section is to consider the impact of the shocked expenditure values on South Africa’s overall fiscal stance. This is done by comparing it to the modelled revenue values and base scenario developed in Section Four. Note that the base scenario using 2% GDP growth [53] is used for comparison.   The base scenario indicated that the budget deficit is expected to peak at 5.8% of GDP around the mid-2030s,after which it will gradually decline to around 5,4% by the end of the forecast period. In contrast to this, the shocked scenario does not see a peak, but instead for the deficit to continue increasing (worsening) over the forecast period, to reach just below 6% of GDP in 2055 (see Figure 38)   Figure 38: Budget Balance as % of GDP (Base and Shock)   Source:  SARB data, Own calculations and forecasts   In addition, this means that state debt will continue to climb to fund the annual deficits. In the base scenario debt is expected to stabilise just below 90% of GDP around the middle of the 2040’s. Again, in contrast the shocked scenario does not see a peak, but indicates a continual rise, breaking the 90% level around mid-2040’s and climbing to 93% of GDP by 2055. On average this will mean a higher debt to GDP ratio of around 1.8 percentage points over the forecast period.    Figure 39: Gross Debt to GDP (Base and Shock)   Source:  SARB data, Own calculations and forecasts     Impact of longevity and Basic Income Grant (“BIG”)    As a last part of this section, the aim is to analyse the impact of a possible Basic Income Grant (“BIG”) being implemented. The assumption here is that the existing (temporary) Covid-19 SRD grant be transferred to a basic income grant. The 2025 Budget indicates that around 8,3 million individuals are receiving the SRD at a cost of R35,5 billion to the state.   We assume that the BIG will be implemented at the food poverty line, which is R796 per month (“StatsSA [54] ”). To provide this to 8,3 million individuals will cost the state around R79,3 billion per year. That is roughly double the amount of the SRD.   In addition, we assume that part of the individuals receiving the grant could in future also need old age assistance, thus the values are also adjusted for and ageing coefficient. The BIG is assumed to be implemented in 2025.   The results indicate that the budget deficit is likely to increase by around 1 percentage points, compared to the shocked scenario. For 2025 this is equal to a deficit of 7,0% of GDP, which is expected to gradually decline to around 6,6% by the end of the forecast period.    Figure 40: Budget Balance as % of GDP (Base, Shock and BIG)   Source:  SARB data, Own calculations and forecasts   As can be expected this will push the debt to GDP ratio up even further, now breaking 90% by 2033 and 100% in 2044. This also adds a significant increase over the shocked scenario, of an average of 8,1 percentage points higher over the forecast period.   Figure 41: Gross Debt to GDP (Base, Shock and BIG)   Source: SARB data, Own calculations and forecasts     S1 and S2 indicators   The S2 indicator measures the fiscal effort needed to stabilise public debt over the long term while the S1 indicator measures the fiscal effort required to bring the government debt-to-GDP ratio to a measurable target at a specific date in future. Both these indicators have a strong focus on the development of the primary budget balance, that is the difference between total revenue and non-interest expenditure, and how this in turn affects the trajectory of government debt levels.    This section first looks at general trends in South Africa’s budget and primary budget balances after which the two indicators are analysed. This builds on the work of Section Four, in as far as the longevity impact on expenditure has already been developed and can thus be further utilised here.     Overview of fiscal balances   An overview of the post-1990 trends in South Africa’s fiscal balances, indicate three distinct periods:   Prior to 1994:  Worsening of fiscal stance as the state ran continued larger deficits, reaching -7.5% of GDP in 1993. 1994 to pre 2008/09 GFC: The improved economic climate re South Africa, after 1994 is evident as the fiscal deficits got smaller, to a point where surpluses were recorded during 2005 and 2006. The primary balance improved significantly and recorded surpluses, averaging around 3% of GDP, during the period 1995 to 2008. Also noticeable during this period is the narrowing in the gap between the fiscal budget and primary balances (In figure 4.19 this is evident from the light blue and orange lines converging during the period). Post 2008/09 GFC: There is a clear switch in sentiments during (and after) the 2008/09 Global Financial Crisis as a large fiscal deficit of -4.7% is recorded in 2009, while the primary deficit records -2.6% of GDP. Both these indicators remain in negative territory (deficits) until 2019, during which a widening (divergence) between the two are again observed (likely as debt starts to increase, driving up debt-service costs). The further severe impact of the Covid-19 crisis is evident in large deficits recorded during 2020-21.   Figure 42: South Africa’s Budget and Primary Balances, 1990 to 2022 Source:  World Bank   Comparing developments in the primary balance to government debt, shows a decline in debt levels between 2000 to 2007 (that is when large primary surpluses were run). 2008 again indicates an inflection point, that is a sharp and sudden reversal in trends as debt starts to climb post the 2008/09 GFC, while the primary balance falls and records deficits for the remainder of the period  (up to 2022) (see Figure 43).      As far as more recent developments the Treasury seems to be committed to focus on establishing and maintaining a primary surplus. The 2025 Budget Review [55] notes that ‘ government projects a main budget primary surplus of 0.5 per cent of GDP, which will increase to 0.9 per cent in 2025/26 ’ and that this ‘will achieve a longstanding ambition to stabilise debt next year through the strengthening primary surplus. The fiscal strategy will continue to manage fiscal risks, support essential services and encourage economic growth .’    Figure 43: Primary Balance and Debt, 2000 to 2022   Source:  World Bank   It is evident that the state is also looking for potential fiscal anchors ‘ to support responsible borrowing and spending. In 2025/26, the debt stabilising main budget primary surplus will serve as the fiscal anchor, with larger primary surpluses planned for the remainder of the decade to reduce debt as a proportion of GDP [56] ’.   However, worrying are statements [57] made after the 2025 budget by the Minister of Finance regarding a change in the budget’s focus from ‘ spending cuts to higher taxes’ , as these could undermine the proposed fiscal anchors as well as outlook of the primary balance. There also remain some uncertainty over some budgeted proposals (notably the implementation of the proposed VAT hike(s)).    Table 13: 2025 Budget: Main Budget Framework   Source:  2025 Budget Review, 31     S2 indicator    The S2 indicator measures the fiscal effort needed to stabilise public debt over the long term. In this case we use equation 1  (see Chapter Three) to estimate the future trend of debt. The starting point is to forecast data for the explanatory variables, after which Dt (the debt-to-GDP ratio) is calculated.   The primary budget balance plays a critical role in these calculations and is obtained as the difference between revenue and non-interest expenditure. To obtain non-interest expenditure, we use the (shocked) expenditure values (obtained earlier in this Chapter [58] ) from which debt service costs are subtracted. This is then expressed as percentage of GDP, using the nominal GDP values. Over the medium term (2026 to 2028) National Treasury’s projections [59] from the 2025 budget is used (see the last row in Table 4.1 above). To forecast the values, the 10-year average (i.e. 2019 – 2028) is used, which equals a value of -0.5% to GDP.    To limit the number of ‘moving parts’ the forecasts for the nominal GDP and nominal interest rates (Repo) are kept pegged at their 2024 values. Figure 44: Primary Balance and Debt Forecast (S2), 2002 to 2055   Source: National Treasury and own calculations   Using the above, the debt trajectory is expected to continue increasing and breach 90% of GDP by 2038 and 100% around mid-2040s.   Further interesting conclusions include that the debt level continues to rise as long as the primacy balance remains negative, albeit by a small margin.      S1 indicator    As explained previously, the S1 indicator will be modified to measures the fiscal effort required to bring South Africa’s government debt-to-GDP ratio to 70% by 2055.   From the S2 scenario we know that any negative value will not be sufficient to stabilise the debt trajectory. Therefore, it is evident that the value for PB needs to be some positive value. By testing different forecast scenario’s, it was determined that a primary surplus of at least 1.15% of GDP needs to be maintained throughout the forecast period to bring the debt level down to 70% of GDP by 2055 .   This compares well to National Treasury’s statement (see Section Four) that the ‘primary surplus will increase to 0.9 per cent in 2025/26’ and that this ‘will achieve a longstanding ambition to stabilise debt’. Albeit that this research indicates that an even higher surplus will be required to actually drive down the debt level. Figure 45: Primary Balance and Debt, S1 Adjusted   Source:  Own calculations     S1 and S2 criteria     The European Commission provides various criteria against which to compare the results. This includes a decision tree (see Figure 46) and threshold levels for the different indicators (see Table 47).   If we start with the S2 indicator as calculated for South Africa, the debt level in 2032 is expected to be 80,4%, placing the country in the medium (‘between 60% and 90% of GDP’) risk category. However as far as the debt trajectory is concerned, it is evident that it should ‘still increase at end of projection’ placing the country in the high category. According to the decision tree (Figure 46), at least one high risk item is sufficient to conclude that South Africa will fall in the high-risk category as far as overall (i.e. S2) debt sustainability is concerned .   Figure 46: Decision Tree for Assessment of Fiscal Sustainability Risks   Source: European Commission [60] , p183   As far as S1 is concerned the criteria state that ‘ the risk classification derived from S1 depends on the amount of fiscal consolidation needed to reduce debt to 60% of GDP over the medium term. When this requires a large effort of more than 2.5% of GDP on top of the baseline assumptions, this identifies a high risk. When no additional effort is needed as debt is already projected to stand below 60% of GDP, corresponding to a negative S1, the risk is low. For intermediate values of S1, the risk is medium [61] ’.   Figure 47:  Debt Sustainability Thresholds   Source: European Commission [62] , p185   Important to note is that, in this research both the forecast horizon (2055 rather than2070) and point target (70% of GDP instead of 60% of GDP) differs from that used by the EC, which complicates then comparison   However, using the required correction value of 1.15% of GDP as calculated above, this will put South Africa in the ‘intermediate’ or ‘medium risk’ category as far as the S1 indicator is concerned. Combining the S2 and S1 indicator puts South Africa in a ‘high/medium’ overall risk category. CHAPTER 5 CONCLUSIONS    The aim of this study is to assess the impact of longevity (i.e. people living longer than expected) on fiscal sustainability in South Africa. These risks were quantified using time series econometrics as well as the European Commission’s S1 and S2 fiscal sustainability indicators.   As far as demographics is concerned the study finds evidence that South Africa’s are indeed ‘living longer’,  as indicated by measures for the median age as well as life expectancy. Looking at recent demographic trends, South Africa’s median age increased from 22 years in 1996 to 28 years by 2022, thus placing the country at the upper end of the ‘intermediate’ age category.  Over the last 22 years, total life expectancy rose by 11.8 years, or roughly 0.54 years per year. By extrapolating from here, life expectancy could rise by between 10.7 years (2045) and 16.1 years (2055) taking life expectancy to respectively 77.2 years (2045) and 82.6 years (2055).   At the same time evidence of ageing is found, notably South Africa’s population aged 65 and higher, increasing from 4,0 percent of the total population in 1994, to 6,5 percent in 2023. The growth rate among elderly (60 years and older) measured 2.84% in 2024 – that is almost 1.5 percentage points higher than that of the overall population. As far as it expected future trend, and depending on different assumptions, the population aged 65 and higher is estimated to increase to between 9,0% and 11,2% of the population in 2055 (in 30 years’ time) - that is almost double the current size.     An overview of the fiscal and economic environment show that South Africa finds itself in a bind as far as its state finances are concerned. South Africa has been accumulating significant amounts of debt during the last decade with gross loan debt rising from 23.6% of GDP in 2009 to 73.8% of GDP in 2024.   A (time series) econometric model is used to model and forecast government revenue, while expenditure is forecasted using recent (five to ten-year average) growth rates. Using these a base scenario is developed against which various shocks can be analysed. The study finds that even under the base scenario, significant fiscal pressure is already evident, including a high probability of continued budget deficits and a concomitant increase in debt levels.   Three age-related public expenditure items (health care, long-term care and old age grant payments) are analysed. The study finds that the combined impact of the three items is equal to an average rise of around 0,8% of total expenditure over the forecast period, with annual values reaching 1,0% in 2040 and peaking at 1,7% in 2055. As far as relative contribution the dominant impact is due to extra expected spending for old age grants, followed by the health services effect.   The combined expenditure shock is tested against the base scenario. The base scenario indicated that the budget deficit is expected to peak at 5.8% of GDP around the mid-2030s, after which it will gradually decline to around 5,4% by the end of the forecast period. In contrast the shocked scenario does not peak but instead predicts a continue increase in the deficit over the forecast period, to reach just below 6% of GDP by 2055. In addition, state debt will continue to climb to fund the annual deficits. The shocked scenario does not see a peak, but indicates a continual rise, breaking the 90% level around mid-2040’s and climbing to 93% of GDP by 2055. On average this will mean a higher debt to GDP ratio of around 1.8 percentage points over the forecast period.    An additional scenario is analysed wherein a Basic Income Grant (“BIG”) implemented at the food poverty line (currently R796 per month), replaces the (temporary) Social Relive of Distress (“SRD”) grant. To provide this to 8,3 million individuals will cost the state around R79,3 billion per year. The results indicate that the budget deficit is likely to increase by around 1 percentage point, compared to the shocked scenario. For 2025 this is equal to a deficit of 7,0% of GDP, which is expected to gradually decline to around 6,6% by the end of the forecast period. This pushes the debt to GDP ratio up further, and indicates that it will break 90% of GDP by 2033 and 100% in 2044.   Related to the European Commission’s S2 indicator, this study finds that the debt trajectory is expected to continue increasing and breach 90% of GDP by 2038 and 100% around mid-2040s. In addition, it becomes evident that the debt level will continue to rise as long as the primacy balance remains negative, albeit by a small margin.   As far as the S1 indicator is concerned, it is determined that a primary surplus of at least 1.15% of GDP needs to be maintained throughout the forecast period, to bring the debt level down to 70% of GDP by 2055.   Comparing the results from the S1 and S2 indicators to the EC’s debt sustainability criteria, puts South Africa at a ‘high/medium’ overall risk category.   The study therefore concludes that longevity poses a significant additional risk to South Africa’s long term fiscal sustainability, given South Africa’s existing fiscal pressures.   In closing, South Africa can find guidance from the IMF regarding proposals on how to mitigate longevity risk to countries in general:   The IMF notes that: a three-pronged approach should be taken to address longevity risk, with measures implemented as soon as feasible to avoid a need for much larger adjustments later. Measures to be taken include: (1) acknowledging government exposure to longevity risk and implementing measures to ensure that it does not threaten medium- and long-term fiscal sustainability; (2) risk sharing between governments, private pension providers, and individuals, partly through increased individual financial buffers for retirement, pension system reform, and sustainable old-age safety nets; and (3) transferring longevity risk in capital markets to those that can better bear it. An important part of reform will be to link retirement ages to advances in longevity. If undertaken now, these mitigation measures can be implemented in a gradual and sustainable way. Delays would increase risks to financial and fiscal stability, potentially requiring much larger and disruptive measures in the future [63] .   CLICK HERE TO CONTINUE TO ADDENDUMS       [1] https://www.elibrary.imf.org/display/book/9781616352479/ch004.xml   [2]  Important is to differentiate between whole populations or aggregate longevity risk, as opposed to individual (or ‘idiosyncratic’) risk which refers to individuals outliving their financial resources. The focus in this research is on firstly mentioned, i.e. the risk that a population on average live longer than expected.  [3]   Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012 [4]   https://t20japan.org/policy-brief-aging-population-impacts-fiscal-sustainability/   [5]  Fiscal Sustainability in Aging Societies: Evidence from Euro Area Countries ( https://www.researchgate.net/publication/347529813_Fiscal_Sustainability_in_Aging_Societies_Evidence_from_Euro_Area_Countries ) [6]   Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012 [7]  See Enders W. (2004). Applied econometric time series. 2nd edit. Wiley, pp. 1-9; Stock, J.H and Watson M.M (2012) Introduction to econometrics. 3rd edit. Pearson, pp. 691-701  [8]  Two ageing report are available, for 2006 and 2021  https://ec.europa.eu/info/publications/economic-and-financial-affairs-publications_en . [9]   https://ec.europa.eu/info/publications/economic-and-financial-affairs-publications_en . [10]  The 2006 report also included a category for unemployment benefits, however this was excluded in the 2021 report The impact of ageing on public expenditure - Publications Office of the EU   [11]   The 2021 Ageing Report: Economic and Budgetary Projections for the EU Member States (2019-2070) - European Commission , 107-109 [12]   https://www.treasury.gov.za/documents/national%20budget/2025/excelFormat.aspx   [13]  This is a relational expectation as no indications to counter this is evident from the budget documents. Also keep in mind that Treasury’s forecasts usually focus merely on the medium term, i.e. a rolling three years forecast period, during which the impact of longevity risks are of little concern.   [14]  European Commission (2006), The impact of ageing on public expenditure - Publications Office of the EU  p. 139 [15]   World Bank Document [16]   Old Age Homes for SASSA Pensioners - Sassa Check [17]   Old Age Homes for SASSA Pensioners [March 2025] [18]   All Residential facilities for Older Persons must be registered | Western Cape Government [19]  This figure seems in line with findings from other academic research on funding elder care in South Africa, see Funding elder care in South Africa: New report | UCT News [20]  Ibid. 164 [21]   What does free higher education actually mean in South Africa? - Hypertext [22]   Government making strides in fee-free tertiary education drive – The Mail & Guardian [23]   https://www.nsfas.org.za/content/bursary-scheme.html   [24]   SASSA Old Age Grant – How to Apply, Approve Grant? [25]   https://www.sassa.gov.za/Pages/Older-Persons-Grant.aspx   [26]   Old age pension | South African Government [27]  Note that in term of number of recipients the child support grant is biggest, with around 13,2 million recipients in 2024/25 [28]  Technically this report defines the old age grouping as individuals 65 years and older, however for the sake of not overcomplicating the analysis, we use the data as given (thus also including individuals from 60 years old) [29]  A ten-year average is chosen to provide a bit of a longer time period and to diminish some of the impact of the Covid-19 crisis on most variables [30] https://ec.europa.eu/economy_finance/publications/pages/publication7903_en.pdf [31]  Anderson, T.M. (2012). Fiscal sustainability and fiscal policy targets. Economics Working Papers, 2012-15 . AARHUIS University. [32] https://economy-finance.ec.europa.eu/system/files/2023-06/Chapter%20III%20Long-term%20fiscal%20sustainability%20analysis.pdf [33]  This end date (i.e. 2070) was likely selected to link the findings of this report to the 2021 Ageing Report, that was published in May 2021 also by the EC, see The 2021 Ageing Report: Economic and Budgetary Projections for the EU Member States (2019-2070) - European Commission ( europa.eu )  This study focus mainly on the next 30 years, thus the fiscal target needs to be adjusted (‘loosened’), to e.g. an interim target of 70% of GDP by 2055.  [34] https://economy-finance.ec.europa.eu/system/files/2023-06/Chapter%20III%20Long-term%20fiscal%20sustainability%20analysis.pdf [35]   IMF Pamphlet Series - No. 49 -Guidelines for Fiscal Adjustment - How Should the Fiscal Stance Be Assessed? [36]  The IMF (ibid.), adds that ‘ The usefulness of these indicators is limited by difficulties in identifying potential and trend output, and, consequently, in distinguishing cyclical and underlying elements of the fiscal deficit ’ [37]  2025 Budget Review [38]   Bond Economics: What Is the Primary Fiscal Balance, And Why Its Use Should Be Avoided [39]  Note the departure from the EC’s objective of a 60% Debt to GDP ratio by 2070, due to the shorter forecast period used in this study.  [40]  Gujarati, D.N, & Porter, D.C. (2009). Basic Econometrics. Fifth edition. McGraw-Hill International Edition. p 22       [41]  See Enders W. (2004). Applied econometric time series. 2 nd  edit. Wiley, pp. 1-9; Stock, J.H and Watson M.M (2012) Introduction to econometrics. 3 rd  edit. Pearson, pp. 691-701 [42]  Gujarati, D.N, & Porter, D.C. (2009). Basic Econometrics. Fifth edition. McGraw-Hill International Edition. p. 762 [43]  Ibid., Pp. 764-765; Stock & Watson (2012) pp. 700-701 [44]  This should also be kept in mind when comparing the values to, e.g. data provided in the various National Treasury Budget documents. However as this study is more interested in the long term trends, the short term discrepancies between the fiscal and calendar year values are of less importance.  [45]  This relates to the upper limit of the SARB’s potential growth rate, as discussed in Chapter 2. To illustrate the impact of different growth scenario’s, the forecast using 1,5% GDP growth is added to this section. The significant impact of this ‘relatively small’ difference in growth performance should be evident over the longer term. Similarly, the assumptions about various of the other explanatory variables, notably the level of inflation can also have significant impacts on the results, especially given the relatively long forecasting time frame.  The aim here is however to establish a base scenario from which further shocks can be analysed and not necessarily on sustainability analysis per se. [46]  The average rise is calculated using the latest fiscal year data. [47]  Broadly in line with the OECD’s guidelines as discussed in Section 2.1. However, even at the current (2024) level of around 75% debt to GDP South Africa is already in trouble as it is at the ‘ability to stabilise the economy’ level. [48]  By default, the other assumptions listed above will also have to materialise  [49]  One can argue that this is still underestimating the impact of longevity as this should actually be applied to the population as a whole. However for the purpose of this study, applying it to only the elderly (65+) population should be sufficient. [50]  Also see Funding elder care in South Africa: New report | UCT News [51]  Technically this report defines the old age grouping as individuals 65 years and older, however for the sake of not overcomplicating the analysis, we use the data as given (thus also including individuals from 60 years old) [52]  Evident however is that the amount included here are for servicing of the facilities while items such as capital outlay, etc. should also be included to provide a fuller indication of costs associated with old age care. But as explained data for this remains scarce.  [53] Likely any of the GDP growth scenarios can be used as ‘base’ as we focus on the changed between the base and shocked versions not necessarily the absolute level. [54]   https://www.statssa.gov.za/publications/P03101/P031012024.pdf   [55]   https://www.treasury.gov.za/documents/National%20Budget/2025/review/FullBR.pdf   [56]  Ibid. 25 [57]   ‘Spending cuts were not effective, now we look to higher tax revenue’ – Godongwana - Moneyweb [58]  Note that this item includes the longevity related ‘shocks’ [59]  It should be noted that National Treasury’s projections are rather optimistic, given the longer-term trend in the primary balance. This, by implication also provides a ‘more optimistic’ forecast of debt trajectory. [60]   Fiscal Sustainability Report 2021 (Volume) [61]  Ibid., 181 [62]  Ibid. [63]   Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 © 2025 Inclusive Society Institute   PO Box 12609 Mill Street Cape Town, 8010 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.   October 2025   Author: Fanie Joubert   CONTENTS   EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION Background Demographic overview and projections for South Africa Total population Median age Crude birth and death rates Life expectancy Age structure Old age dependency ratio Population forecasts Unemployment Retirement provision Research problem and objective CHAPTER 2: THE FISCAL AND ECONOMIC DEVELOPMENTS IN SOUTH AFRICA Fiscal developments Government expenditure and guarantees Social assistance Revenue State debt Economic outlook Recent trends in the South African economy Projections for the South African economy CHAPTER 3: LITERATURE AND METHODOLOGY Longevity’s impact on state finances: empirical evidence Methodology Time series analysis Health care Long-term care Education Pensions (Old age grants) Other assumptions S1 and S2 indicators CHAPTER 4: ANALYSIS Time Series Analysis Government revenue model and forecast Econometric model Revenue forecast Base scenario Longevity impact scenario Health care Structural effect: Old age effect: Total healthcare effect Long-term care Pensions (Old age grants) Combined (Health, LTC and pensions) Impact on fiscus 56 Impact of longevity and Basic Income Grant (“BIG”)  S1 and S2 indicators Overview of fiscal balances S2 indicator S1 indicator S1 and S2 criteria CHAPTER 5: CONCLUSIONS ADDENDUM 1 ADDENDUM 2 ADDENDUM 3 ADDENDUM 4 Cover photo: istock.com - Stock photo ID:146770973 EXECUTIVE SUMMARY   The aim of this study is to assess the impact of longevity on fiscal sustainability in South Africa. The International Monetary Fund (“IMF”) defines longevity as the risk that actual life spans of individuals or of whole populations will exceed expectations.   This study finds that over a 30-year horizon (that is until 2055) significant risks exists concerning additional pressure from longevity on government expenditure. Using fiscal sustainability measures developed by the European Commission, South Africa’s general risk level (including the impact from longevity) is found to be ‘high/medium’.      Looking at recent demographic trends, South Africa’s median age increased from 22 years in 1996 to 28 years by 2022, thus placing the country at the upper end of the ‘intermediate’ age category.  Over the last 22 years, total life expectancy rose by 11.8 years, or roughly 0.54 years per year. By extrapolating from here, life expectancy could rise by between 10.7 years (2045) and 16.1 years (2055) taking life expectancy to respectively 77.2 years (2045) and 82.6 years (2055).   The proportion of the elderly in South Africa is on the increase. South Africa’s population aged 65 and higher, as a percentage, increased from 4,0 percent of the total population in 1994, to 6,5 percent in 2023. The growth rate among elderly (60 years and older) rose from 1,40% in 2002–2003 to 2,88% for the period 2019–2020. Covid-19 dampened these figures, but the growth rate for this age group still measured 2.84% in 2024 – that is almost 1.5 percentage points higher than that of the overall population.   South Africa’s old age dependency ratio (elderly to working age population) rose from a level of 8 in 2011 to 10 in 2022, meaning that for every 100 working-age adults in 2022, there were 10 elderly persons requiring support.   Forecasts show that South Africa’s population is set to continue growing for the foreseeable future, but at a continuously slower rate. The World Population Review, based on data from the United Nations (“UN”), indicates that South Africa’s population could reach around 80 million in 2055 and 93,5 million by the end of the century. As far as the growth rate is concerned, they estimate some deceleration in the speed with which the population is growing to around 1.0% in the mid-2030’s, and then further to 0.7% (around 2040) and 0.65% (2050).   Using the long-term average, the population aged 65 and higher is estimated to increase from 6,5% of the population to around 9,0% in 2055 (in 30 years’ time). The short-term trend (last 5 years average) shows a more dramatic rise to 11,2% of the total population in 2055 – that is almost double its current size.     An overview of the fiscal and economic environment shows that South Africa finds itself in a bind as far as its state finances are concerned. South Africa has been accumulating significant amounts of debt during the last decade with gross loan debt rising from 23.6% of Gross Domestic Product (“GDP”) in 2009 to 73.8% of GDP in 2024. In nominal terms it rose from around R577bn in 2008 to 5,207bn in 2024 that is 10 times more in the scope of 15 years. An unavoidable consequence of this is that interest on debt ballooned and is currently amongst the fastest rising expenditure items in the budget - between 2008 and 2022 this item has been rising at an average annual rate of 13,1%, compared to an average rise of 8,5% per annum in all spending items. Given the pressure to stabilise (or lower) debt levels, this leaves little room for additional expenditure pressures.   The growth outlook shows that South Africa can at best expect meagre economic growth going forward. Various organisations (including the IMF, SARB and The National Treasury), expect growth to remain pegged in a range of between 1.5% to 2.0% per annum over the next few years This in turn affects the state’s ability to generate sufficient and/or additional revenue.    To quantify the impact of longevity risk, the study uses two methods, namely time series modelling (or an extrapolation method) as well as testing South Africa’s fiscal stance against the European Commission’s S1 and S2 indicators.   A (time series) econometric model is used to model and forecast government revenue, being the limiting factor as far as state finances is concerned. Government expenditure is forecasted using recent (five to ten-year average rate) growth rates as basis. By combining the revenue and expenditure forecasts, a base scenario is developed against which various shocks can be analysed. Given the current (existing) pressure on South Africa’s state finances, it should be noted that even under the base scenario, serious fiscal pressure is already evident, including likely continued budget deficits and a concomitant increase in debt.   The three main age-related public expenditure items analysed in this report include health care, long-term care and pension (old age grant) payments. The study finds that the combined impact of the three items is equal to an average rise of around 0,8% of total expenditure over the period, with annual values reaching 1,0% in 2040 and peaking at 1,7% in 2055. As far as relative contribution the dominant impact is due to extra expected spending on old age grants, followed by the health services effect.   The combined expenditure shock is tested against the base scenario. The base scenario indicated that the budget deficit is expected to peak at 5.8% of GDP around the mid-2030s, after which it will gradually decline to around 5,4% by the end of the forecast period. In contrast the shocked scenario does not peak but instead predicts a continue increase in the deficit over the forecast period, to reach just below 6% of GDP by 2055.   In addition, state debt will continue to climb to fund the annual deficits. The shocked scenario does not see a peak, but indicates a continual rise, breaking the 90% level around mid-2040’s and climbing to 93% of GDP by 2055. On average this will mean a higher debt to GDP ratio of around 1.8 percentage points over the forecast period.    An additional scenario is analysed wherein a Basic Income Grant (“BIG”) implemented at the food poverty line (currently R796 per month), replaces the (temporary) Social Relive of Distress (“SRD”) grant. To provide this to 8,3 million individuals will cost the state around R79,3 billion per year. The results indicate that the budget deficit is likely to increase by around 1 percentage point, compared to the shocked scenario. For 2025 this is equal to a deficit of 7,0% of GDP, which is expected to gradually decline to around 6,6% by the end of the forecast period. This pushes the debt to GDP ratio up further, now breaking 90% by 2033 and 100% in 2044.   The European Commission’s S2 indicator measures the fiscal effort needed to stabilise public debt over the long term while the S1 indicator measures the fiscal effort required to bring the government debt-to-GDP ratio to a measurable target at a specific date in future.   Related to the S2 indicator, this study finds that the debt trajectory is expected to continue increasing and breach 90% of GDP by 2038 and 100% around mid-2040s. In addition, it becomes evident that the debt level will continue to rise as long as the primacy balance remains negative, albeit by a small margin.   As far as the S1 indicator is concerned, it is determined that a primary surplus of at least 1.15% of GDP needs to be maintained throughout the forecast period to bring the debt level down to 70% of GDP by 2055.   Comparing the results from the S1 and S2 indicators to the EC’s debt sustainability criteria, puts South Africa in a high/medium overall risk category.   The study therefore concludes that longevity poses a significant additional risk to South Africa’s long term fiscal sustainability, especially given South Africa’s existing fiscal pressures.   In closing, South Africa can find guidance from the IMF regarding proposals on how to mitigate longevity risk to countries in general:   ‘a three-pronged approach should be taken to address longevity risk, with measures implemented as soon as feasible to avoid a need for much larger adjustments later. Measures to be taken include: (1) acknowledging government exposure to longevity risk and implementing measures to ensure that it does not threaten medium- and long-term fiscal sustainability; (2) risk sharing between governments, private pension providers, and individuals, partly through increased individual financial buffers for retirement, pension system reform, and sustainable old-age safety nets; and (3) transferring longevity risk in capital markets to those that can better bear it. An important part of reform will be to link retirement ages to advances in longevity. If undertaken now, these mitigation measures can be implemented in a gradual and sustainable way. Delays would increase risks to financial and fiscal stability, potentially requiring much larger and disruptive measures in the future [1] .’   CHAPTER 1 INTRODUCTION   Background    The IMF notes that as populations age, the elderly will consume a growing share of available resources. This will strain public and private balance sheets and, to a certain extent, governments and private pension providers have been preparing for the financial consequences of an ageing population. However, the IMF [2]  cautions that ‘ these preparations have often been based on baseline population forecasts, which in the past have consistently underestimated how long people live ’.   South African currently finds itself in a situation, where its population is growing strongly, but at the same time there are indications that the age structure of the population is changing and that people in general are living longer. At the same time the country’s state finances is under severe pressure as far as rising debt levels are concerned, while the economy is consistently underperforming on the growth front.   It is against this backdrop that this study aims to assess the impact of longevity on fiscal sustainability in South Africa.     Demographic overview and projections for South Africa    Total population   At the dawn of the new democracy, by 1994, South Africa’s population measured just over 44 million people. StatsSA indicates that according to the 2024 mid-year population estimate the population stood at 63 million people, that is an increase of 19 million people over the last three decades.   As far as the population growth rate is concerned StatsSA notes that ‘ the estimated annual population growth rate increased from 0,92% for the period 2002–2003 to 1,46% for the period 2019–2020…The overall growth rate increased between 2021 and 2024 and is now estimated to be 1,33% in the period 2023–2024. The increase in population growth rate is due to a decline in deaths, revival of positive net migration since the COVID-19 pandemic and increase in births .’   Figure 1: South Africa’s Population (mil.) and Growth Rate (%) 1960 to 2023.   Source:  World Bank, World Development Indicators   Evident from the population growth rates (see Figure 1), is the peak around the early 1980’s, after which the rate declined during most of the 1990’s. It bottomed out at 0,85% in 2001 after which a steady increase is again evident.   However also evident from the data is the heterogeneity between the demographic groups, e.g.: with Africans making up around 81,4% of the total population in 2022, while the smallest grouping was the Indian/Asian population with 2,7%.   Table 1: South Africa’s Total Population by Race 1996 to 2022   Source: StatsSA     Median age    StatsSA notes that ‘ South Africa is quietly undergoing a demographic shift that could reshape its future’ , specifically referring to the fact that ‘ a declining birth rates and increasing life expectancy are steadily pushing the median age upward.   As far as its importance in determining demographic trends, StatsSA adds that ‘ the m edian age is a key measure used to understand a country’s population structure. This figure helps determine whether a population is considered young, intermediate, or old. According to experts, a median age below 20 indicates a young population, between 20 and 29 is classified as intermediate, and 30 or older means the population is aging.’ [3]     The same report indicates that the median age of South Africa increased from 22 years in 1996 to 28 years by 2022, thus placing the country at the upper end of the ‘intermediate’ category .   Although the median age increased between 1996 and 2022 for the total population, large discrepancies between racial groups are evident. By 2022, whites (45) and Indians/Asians (37) recorded the highest median ages, while Black Africans remained significantly ‘younger’ at a median age of 27 years. Using the above rule means that all population groups, except Black Africans, will thus be classified as ‘aging’. However, even the Black African groups also recorded a noticeable increase in the median age between 2011 and 2022 (see Figure 2).    Figure 2: Median Age by Population Group in South Africa, 1996 to 2022   Source: StatsSA, ibid., 20     Crude birth and death rates   The crude birth rate measures the number of births in a year per 1,000 mid-year population of a specific year [4] . Figure 3 indicates that the birth rate increased between 2003 and 2008, thereafter it follows a general pattern of decline between 2009 and 2017, after which it remains stable at around 20 births per 1000 persons.   Crude death rate (“CDR”) in contrast measures the number of deaths in a year per 1 000 of the  population. The crude death rate (“CDR”) has increased from 13,3 (2002) to 14,4 deaths per 1000 in 2006, thereafter declining to 8,7 deaths per 1 000 people in 2024. Largely as expected a temporary uptick is evident during the Covid-19 period (see Figure 3)   By combining these two indicators the rate of natural increase (“RNI”) can be calculated. This is defined as the rate at which the population is increasing or decreasing in a given year due to the surplus or deficit of births over deaths, expressed as a percentage of the base population. This indicator rose strongly during the period 2005 to 2013. Thereafter the rate fluctuated downwards until 2020.  StatsSA notes that ‘ due to the COVID-19 pandemic, the rate of natural increase in South Africa dropped drastically from 1,2% in 2020 to 0,9% in 2021. With a stable birth rate and a declining death rate between 2022 and 2024, RNI climbed to 1,1% in 2024’ [5]   Figure 3: Crude Birth and Death Rates, 2002 to 2024   Source: StatsSA     Table 2: Demographic Indicators for South Africa, 2002 to 2024   Source: StatsSA   HIV prevalence is of a serious concern to South Africa, with a fifth of South African women in their reproductive ages (15–49 years) being HIV positive. For 2024, an estimated 12,7% of the total population was HIV positive. StatsSA notes that ‘ accessibility of treatment post 2006 and changing eligibility criteria to access treatment, have allowed for HIV positive children and adults to live to older ages thereby increasing prevalence ’. This statement is important to the study as it indicates potential drivers of longevity risk, as well as costs related to medical treatment of HIV positive individuals.   Figure 4: Population Living with HIV, 2002 to 2024   Source: StatsSA Life expectancy   The OECD defines life expectancy as ‘ how long, on average, people would live based on a given set of age-specific death rates .’ However, they add that ‘ the actual age-specific death rates of any birth cohort cannot be known in advance. [6]   Demographic data indicates that South Africans, in general, are living longer. Stats SA [7]  notes that ‘ Life expectancy at birth declined between 2002 and 2006, largely due to the impact of the HIV and AIDS epidemic experienced, however expansion of health programmes to prevent mother-to-child transmission as well as access to antiretroviral treatment has partly led to the increase in life expectancy since 2007 ’.   In 2007, life expectancy was 55,4 and 52,1 years for females and males respectively. However, in the scope of just more than a decade, by 2020 these figures rose to 68,4 for females and 62.3 for males (see Figure 5 and Table 2). That is a increase of 23.5% for females and 19.6% for males. The Covid-19 pandemic did cause a slight drop in the life expectancy values, but it is also evident that this was a temporary effect as the trend quickly recovered. By 2024 the total combined (male and female) population life expectancy measured 66,5 years, that is above the pre-Covid-19 high level  (StatsSA, 2024 [8] ).    Figure 5: Life Expectancy by Gender: 2002 to 2025   Source: StatsSA, Mid-year population estimates, 2025 (P0302)   This means that over the scope of the last 22 years the total life expectancy rose by 11.8 years, or roughly 0.54 years per year. By simply extrapolating from here, assuming a 20-30 years’ time horizon,  we could see life expectancy rise by between 10.7 years (2045) and 16.1 years (2055).   This will take life expectancy to respectively 77.2 years (2045) and 82.6 years (2055).     The above forms the crux of this study, namely the risk of these figures materialising and/or still being too low (i.e. additional unexpected increases in life spans) and the cost of this to the economy and fiscus. Age structure   South Africa’s population structure (or population pyramid) indicates a change from a clear triangle shape during the mid-1980’s to a more thinning/normalisation of the base as older cohorts (notably the 20-34) became more prominent over time.   Figure 6: South Africa’s Population Structure: 1985 to 2022 1985 Census 1996 Census 2001 Census 2011 Census 2022 Source: StatsSA   A breakdown of the population pyramid by race, is shown in Figure 7. Whereas the Black African group is similar to the shape of the overall population (as expected given their large share in total population), the Indian/Asian indicates a clear bulged in the middle, while the white population is more ‘top heavy’. Figure 7: South Africa’s Structure by Population Group 2022   Source: StatsSA, Report-03-00-232022.pdf , 27   Important for this study is the differences between growth rates for different age cohorts of the population. The proportion of the elderly in South Africa is on the increase with the growth rate among elderly (60 years and older) rising from 1,40% in 2002-2003 to 2,88% for the period 2019–2020. Covid-19 dampened these figures, but the growth rate for this age group still measured 2.84% in 2024 – that is almost 1.5 percentage points higher than that of the overall population. See Figure 8.   Figure 8: Population Growth Rates by Selected Age Groups: 2002 to 2025   Source: StatsSA, Mid-year population estimates, 2025 (P0302) Old age dependency ratio    South Africa’s population aged 65 and higher, as a percentage, increased from 4,0 percent of the total population in 1994, to 6,5 percent in 2023. Evident from Figure 9 are upticks (accelerations) in the trend around 1995 and again from 2017 onwards. On average, this indicator has been rising by 0.08 percentage points per year during the period1990 to 2023. However, looking at only the last five years (2018 to 2023) it almost doubled to 0.15 percentage points increase per year.   Figure 9: Population Ages 65 and Above (% of Total Population)   Source:  World Bank, Population ages 65 and above (% of total population) - South Africa | Data   This indicator also varies significantly between demographic groups as is evident from Figure 10 below. Figure 10: Population Ages 65 and Above (% of Total Population), by Race   Source: StatsSA, Report-03-00-232022.pdf   The old-age dependency ratio is a measure of the proportion of the elderly population aged 65 and older to the economic active  population (aged 15–64 years).  StatsSA note that ‘ it is assumed that the working population aged 15-64 are economically productive and those aged 65 and older are no longer economically productive ’   South Africa’s old age dependency ratio remained largely unchanged at a level of 8, over the period 1996 to 2011, after which it increased noticeably to 10 in 2022. StatsSA explains that this means that ‘ for every 100 working-age adults in 2022, there were 10 elderly persons requiring support in South Africa’. [9]   Figure 11: Old Age Dependency Ratio   Source: StatsSA, Report-03-00-232022.pdf     Population forecasts   Although difficult to determine with certainty [10] , various forecasts show that South Africa’s population is set to continue growing for the foreseeable future, but at a continuously slower rate.   The latest (2024) StatsSA mid-year population estimates indicates that South Africa has an estimated 63 million individuals. The population growth rate was 1,33 percent in 2024, while the 10-year average was slightly higher at 1,5%. Using these rates to project the population, indicates that by 2055 the population will be 94,8 million (@1.33% per year) and 100,0 million (@1.5% per year).      A better (more scientific) option is to use dedicated demographic research sites such as the World Population Review [11] , based on UN data and demographic trends, which indicates that South Africa’s population will continue to grow, reaching around 80 million [12]  in 2055 and 93,5 million by the end of the century .  As far as the growth rate is concerned, they note that ‘ South Africa’s population growth rate is currently 1.4% per year’  which they estimate will decelerate to around 1.0% in the mid-2030’s, and further to 0.7% (around 2040) and 0.65% (2050) (see Figure 12).    These figures relate well to the ISS African Futures report [13]  that project the population to grow to 74.4 million in 2043, compared to 75,6 million in World Population Review. ISS further notes in explaining this that ‘ average total fertility rate fell from 3.7 births per woman in 1990 to around 2.5 in 2023. South Africa will get to replacement level of 2.1 births by 2037. However, large inward migration flows from the wider region have introduced uncertainty in these forecasts. Our Current Path is for net inflows of two million migrants to South Africa from 2024 to 2043 ’   Figure 12: Projected Population and Growth Rate (%), 2006 to 2055   Source:   https://worldpopulationreview.com/countries/south-africa   Using the World Bank data of the population aged 65 and higher (see Figure 9), we can extrapolate possible future trends. By using the more conservative, long-term average (since 1990), the proportion of this age group to the whole population is estimated to increase from the current 6,5% of the population to around 9,0% in 2055 (in 30 years’ time). The short-term trend (last 5 years average) shows a more dramatic rise to 11,2% of the total population in 2055 – that is almost double the current size.   These estimates relate well to a recent OECD report [14]  which estimates that around 12,0% of South Africa’s population will be older than 65 years by 2050. As far as the population over 80 years old, they foresee a rise from the current 1,0 percent to around 2,5% of the population by 2050. Interesting to note it that although South Africa is seeing an increase in these indicators, the country does remains well below the OECD averages [15] . Reasons given for this include that ‘mortality rates were highest in South Africa (1 893 per 100 000 population)’ [16] , including preventable mortality rates [17]     This also resonates to a report from the ISS African Futures which notes that: ‘ Whereas nearly 6.3% of South Africans were 65 and older in 2023, by 2043, that portion will have increased to 10.3% ’ In addition, and important to this report they state that ‘ While this is not a significant trend compared to many developed countries experiencing rapid ageing, it does indicate a gradual demographic shift that will increase healthcare costs  given the expenses associated with treating non-communicable diseases typical of older populations. At the same time, a smaller child population could provide a much-needed opportunity for quality improvements in education ’. [18]   Figure 13: Forecast for Population Ages 65 and Above (% of Total Population)   Source:  World Bank data, own forecasts     These trends are further evident when looking at forecasts of likely changes in the population structure over the next few decades. Comparing South Africa’s 2024 and 2055 population pyramids indicates that although by 2055 the 20-34 cohort will remain the largest, there is some evidence of ‘thinning’ at the base (0-19 years) as well as ‘bloating’ at the top (notably from ages 55 onwards) (see Figure 14).   Figure 14: South Africa’s Projected Population Structure 2055   2055   Population: 81,4 million (est.) Source: Populationpyramid.net, https://www.populationpyramid.net/south-africa/2055/   Unemployment    In 2024, of the roughly 63.0 million South African, 41,2 million formed part of the working age population (15-64 years). Amongst these, 16,6 million people were employed, 8,3 million were unemployed and 16,2 million were not economically active (this includes around 3,0 million discouraged work seekers). Using these figures one can calculate that, during the second quarter of 2024,  South Africa’s official unemployment rate was 33,5%. This indicator measured 26,6% in 2016 meaning a rise of almost 7.0 percentage points (or roughly 1,0 percentage point increase per year) during the last eight years alone.   Figure 15: South Africa’s Unemployment Rate:  2016 to 2024   Source: StatsSA [19]     Retirement provision   In total, some 7 million South Africans belong to retirement arrangements. The Government notes that this is ‘a high proportion of the workforce by international standards, although far short of universal coverage’. According to the Registrar of Pensions Funds Report 2016, this number is estimated to be 11 million. However, it is important to note that there is double counting because workers may have a retirement annuity fund besides a pension/ provident fund [20] .   Using the 7 million, it means that less than half (42.1%) of the employed population formally makes provision for retirement. Compared to the total working age a mere 16,9 percent are making some form of provisions.     Research problem and objective   Evident from the above is that South Africa’s population is growing strongly, longevity is increasing, and the group of older people (above 60 years) are growing faster than the total population. In addition to this (as elaborated on in the next section) the economy seems to have a growth ceiling  (potential GDP growth rate) of around 1,5 to 2,0% per year [21] . Unemployment is high and rising, while even individuals who are employed, seems to be making insufficient provision for retirement. This means that the state will ultimately have to provide a ‘safety net’ for those individuals who either made no or insufficient provision for retirement. If these trends continue, and given that our economic growth is not improving significantly, by when will the country ‘run out of money’? Or put otherwise: for how much longer will the state be able to fund the current welfare payments.   The rest of this study is structured as follows: Chapter Two provides an overview of South Africa’s recent fiscal and economic developments, while Chapter Three focuses on literature related to longevity as well as the methodology employed in the study. The analysis is provided in Chapter Four, followed by some concluding remarks in Chapter Five.   CHAPTER 2 THE FISCAL AND ECONOMIC DEVELOPMENTS IN SOUTH AFRICA   Fiscal developments   South Africa finds itself in a bind as far as its state finances are concerned. Given the pressure to stabilise (or lower) debt levels, this leaves little room for additional expenditure pressures. Any potential pressures for additional expenditure should thus be carefully analysed. Since the global financial crisis of 2008, the South African government has used expansionary fiscal policy with increased borrowing to stimulate domestic demand and economic growth. Again, during the economic crisis owing to the Covid-19 lockdown in 2020, the annual budget deficit of the government increased to record levels. This conforms to measures taken by various other countries during crisis periods. However important is that these measures should typically be short term (i.e., one to two year) interventions, while it seems as if South Africa is indefinitely continuing with these ‘expansionary’ policies.   With an estimated budgeted deficit before borrowing of some 4,7% of GDP in the 2024/25 fiscal year and with government debt before borrowing increasing from around 25% of GDP to more than 75% of GDP since 2014, the South African government has clearly not followed an austerity policy. In the narrowest sense of the definition, austerity policy will imply a government running a balanced budget (expenditure not exceeding revenue).   The South African government funds its annual budget deficit by borrowing primarily in the domestic capital market, but some borrowing is also done in international capital markets [22] . The borrowing incurs interest costs which are included in the budget as expenditure items. Continuing budget deficits lead to increases in outstanding government debt and increased interest payments. South Africa has been running larger deficits post the 2008/09 Global Financial Crisis, as is evident from Figure 16. Noticeable also is the correlation in movement between die annual deficits and changes in the level of government debt.    Figure 16: South Africa’s Annual Budget Balance Versus Changes in Gross Debt 1991 to 2023 Source:  SARB, own calculations   Budget deficits can be seen as supportive to future economic growth, for example, if they are used to finance government investment in infrastructure. However, excessively large annual budget deficits that persist for too long can harm the economy, particularly in instances where borrowed funds are used for current expenditure, rather than expenditure of a capital nature. Such deficits can lead to the ‘crowding out” problem: the offsetting of a change in government spending by a change in private sector spending in the opposite direction. Government has fallen into a “consumption trap”, with civil service remuneration, social grant payments and interest on government debt comprising the bulk of expenditure. While government expenditure and particularly government consumption has grown, investment expenditure by the government has stagnated.     Government expenditure and guarantees   Table 3 shows how the size of the South African government in the economy, measured in terms of percentages of GDP, continues to increase. The continued increase in the revenue of the South African government relative to GDP, as well as the growth of expenditure relative to the GDP show that government activities grow at a faster rate than the GDP. This is an early warning of a government approaching the limits of its ability to raise revenue and spend.   Table 3: South Africa: Consolidated Government Revenue and Expenditure per Fiscal Year, Percentage of GDP 2019 to 2024 end March (End of Previous Fiscal Year)   Source:  SARB Quarterly Bulletin, September 2024, page S-156 A further issue that limits the ability of the South African government to increase expenditure is the precarious financial state of most SOEs; some of which are kept operational based on government guarantees. Financial failure of SOEs operating with such guarantees will imply that the guarantees will be called upon and be payable immediately. Although these are contingent liabilities, rather than actual liabilities of the government, the financial failure of any entity with a guarantee will place considerable additional pressure on the fiscus. Guarantees granted to SOEs are reported in Table 4.   Table 4: South African Government Guarantees to Selected SOEs, 2023/2024 Source:  National Treasury, 2024, Budget Review Chapter 7: 81   Total government expenditure is budgeted to amount to R2,368 billion in the 2024/25 fiscal year. A functional analysis of the main components of this government expenditure is shown in Table 5. It transpires that the eight most important expenditure components account for some 82,6% of budgeted government expenditure for the 2024/25 fiscal year. Also notably is that at 16,1% of total government expenditure, debt service cost is by far the largest of these items. Therefore, the government has limited space to reconfigure expenditure (or to reprioritise expenditure) to provide for additional expenditure on health within its current expenditure framework.   Table 5: Functional Analysis of the Main Components of South African Government Expenditure, 2024/2025 Fiscal Year Source: National Treasury, 2024, Budget Review Chapter 5: 49     Social assistance   According to the National Treasury, the objective of the social assistance programme is to provide some form of income over the medium term to eligible beneficiaries whose income and assets fall below the set thresholds. During 2024 these programmes provided support to 4.1 million elderly people, 1.1 million people with disabilities, 13.5 million children, and around 168 000 children with disabilities who require care and support services, and 218 000 foster children [24] .   The Old Age grant specifically provides income support to people aged 60 and older, earning less than R101 640 (single) and R203 280 (married) a year, and whose assets do not exceed R1 438 800 (single) and R2 877 600 (married). The number of individuals receiving the old age grant rose from 3.7 million in 2020 to 4.1 million in 2024 – that is around  100 000 individuals are added each year. It is expected to grow by 3.2% per year over the medium term reaching 4.4 million  individuals in 2026/27. As far as the cost, the state spent R81.0bn in 2020 and 107.0bn in 2024 on this programme.  The expected average growth rate over the medium term (up  to 2026) is set at 7.2% per annum. Table 6 indicates that the old age grant is the largest expenditure item of the social grants (36.4% of social protection allocation) and second largest as far as numbers (19.0%). Also, as mentioned above, for both of these measures it has amongst the highest expected annual growth rates of all the grant items, over the medium term.   Table 6: 2024 National Budget: Social Development Expenditure   Source: National Treasury (2024:53) [25]   Social assistance payments form part of a group of expenditure items referred to as the ‘social wage’. National treasury notes in the 2024 Budget Review that  over the medium term the social wage will account for an average of 60.2 per cent of non‐interest spending, and that this includes items such as education, health, social protection, community development and employment programmes [26] . Table 7 provides a summary of the costs associated with the social wage’s items, as per the 2024 National Budget. Table 7: 2024 National Budget: Social Wage Items Source: National Treasury (2024) [27] Revenue    The ability of the state to fund these costs, depends directly on its ability to generate sufficient and additional revenue. In South Africa, personal income tax (“PIT”), value added tax (“VAT”), and corporate tax (“CIT”) are the main sources of revenue, with PIT being the largest contributor amongst these three. However, a major problem facing SA is that we already have a relatively high PIT burden, thus limiting the scope for further hikes in this category. Figure 17 indicates how South Africa’s PIT burden (being an upper-middle income country) compares to levels seen in high income countries, as far as both the marginal rates and PIT as percentage of GDP are concerned.   Figure 17: South Africa’s Personal Income Tax Burden   Source:   2021 National Budget, Individual chapters 4: 46   Table 8: Budgeted Revenue Sources of the South African Government, 2024/25 Fiscal Year (February 2024 Estimates)   Source:  2024 National Budget, Review, Chapter 4: 36   It is evident from Table 8 that the largest tax burden is carried by personal taxpayers. Table 9 from the 2024 Budget Review  also shows that this tax burden is carried disproportionally by a small number of personal income-tax payers.   Table 9: Personal Income Taxpayers, 2024/25 Tax Year (February 2024 Estimates)   Source: National Treasury   In the 2024/25-fiscal year 14,2 million people are registered as taxpayers, but only some 7,4 million of these taxpayers earn incomes above the tax threshold of R95 750 per annum for persons under the age of 65. [28]       State debt    As far as state debt is concerned, South Africa has been accumulating significant amounts of debt during the last decade. Following the 2008/09 Global Finance Crisis (“GFC”), SA’s total national gross loan debt rose from around 23.6% of GDP in 2009 to 73.8% of GDP in 2024. In nominal terms it rose from around R577bn in 2008 to 5,207 bn in 2024. That is almost 10 times more in the scope of 15 years (see figure 18). An unavoidable consequence of this is that interest on debt ballooned and is currently amongst the fastest rising expenditure items in the budget.  Between 2008 and 2022 this item has been rising at an average annual rate of 13,1%, compared to an average rise of 8,5% per annum in all spending items [29] . Figure 18: South Africa’s Gross Loan Debt, 1990 to 2027 (Fiscal Years) Source : National Treasury, 2024 Budget Review data and forecasts    The government debt guidelines of the OECD suggest that beyond a debt threshold, government debt can undermine economic activity and the ability to stabilise the economy. Different channels through which debt can affect the economy are assessed. Empirical evidence gathered from the literature shows that:   high government debt levels are associated with lower growth (when the government debt/GDP ratio is above 80 to 100% of GDP), though causality is probably running both ways; the ability to stabilise the economy decreases at a government debt/GDP debt ratio above a level of about 75% of GDP; when a specific role for government debt in financing public infrastructure is taken into account, estimations find a positive but limited “optimal” government debt level at about 50 to 80% of GDP; and government debt provides a safe asset in a very liquid market, thus easing liquidity constraints. Therefore, low levels of government debt are welfare enhancing.   Empirical cross-country evidence by the OECD suggests different debt thresholds, defined as the turning point at which negative effects of debt on the economy kick in, for three groups of countries: [30]   For higher-income countries, a government debt/GDP threshold range of 70 to 90% of GDP is considered sustainable. For Euro Area countries, the debt threshold is lower, as they do not control monetary policy. Given the no-bail-out clause, the absence of debt pooling, a higher dependency on foreign financing and difficulties in adjusting to shocks, the sustainable government debt/GDP ratio threshold is 50-70%, which is aligned to the Maastricht conversion criteria prescribing a debt threshold level of 60% of GDP. For the emerging economies the sustainable government debt/GDP threshold is even lower at 30 to 50% of GDP as they are exposed to capital flow reversals.   The OECD states that “(t)hese debt thresholds are used to anchor prudent debt targets. Prudent debt targets should be set to avoid an overshooting of the debt thresholds in the case of large adverse shocks. Prudent debt targets consider uncertainties surrounding macroeconomic variables and are thus country specific.” [31]  As an emerging economy, South Africa’s government debt/GDP ratio is clearly not aligned with the thresholds suggested by the OECD.   When analysing these developments as a whole, it becomes understandable that South Africa’s sovereign risk rating was downgraded significantly, notably in the last decade. Credit ratings agencies provide detailed information about the sovereign risk associated with a country. South Africa’s ratings were lowered significantly between 2012 to 2020, with all three major rating agencies (i.e. Fitch Ratings, S&P Global and Moody’s) currently rating South Africa well below investment grade. Following the 2024 elections S&P Global gave its approval to the formation of the GNU, by (unexpectedly) raising its outlook on SA’s sovereign risk rating from stable to positive in November 2024 [32] . However, its rating remains on three notches below investment grade, in so-called ‘junk’ status. Fitch Ratings was less optimistic following the 2024 MTBPS, siting, amongst others, continued pressure from public sector commitments to SOE’s as risks to the fiscal outlook. [33]   Another reality is that revenue collection in general, correlates strongly to GDP growth of a country. Figure 19 indicates how the performance of revenue tracked changes in nominal GDP over the last two decades. As discussed in below South Africa seems to be caught in a low growth trap, which therefore has a direct impact on the country’s ability to generate additional income for the state.   Figure 19: Changes in Government Revenue and Nominal GDP, 2000 to 2023   Source:  SARB, own calculations Economic outlook    Recent trends in the South African economy   The South African economy expanded strongly in the first decade of this century up to the global financial crisis of 2008, including GDP increasing by over 5,0% annually for three consecutive years towards the end of  that period. In 2008, average living standards measured by per capita income were 21% higher in real terms than in 2000 and 27% higher than in 1994. The global financial crisis of 2008 and the subsequent Great Recession interrupted this high growth rate trend and real GDP fell in 2009. From 2010 to 2013 there was a recovery in the economy although growth rates were lower than in the previous decade. However, since 2013 there has been a significant decline in economic growth to low levels, and a technical recession in the first half of 2018. The average low rate of growth has continued since 2019, despite the large swings during the Covid 19-lockdown and its aftermath. The result is that real per capita incomes have declined or remained stagnant for every year since 2013. [34]  In 2023 real per capita income was R76 444, some 5,0% lower than in 2013. [35]   There are various reasons for the decline in the rate of economic growth, notably post the 2008-09 GFC, including falling productivity and low consumer and business confidence arising from structural rigidities in the economy. The changes in real GDP and other measures of the performance of the economy are shown in Table 10. One of the most concerning trends in the last few years has been the slow growth or decline in Gross Fixed Capital Formation, or in other words fixed investment in the economy.   The fall in the rate of economic growth has led to an increase in the rate of unemployment. The economy has increased job numbers for a number of years, with employment rising from an average of 13,8 million in 2010 to 16,4 million in the third quarter of 2019 [36] and to 16,7 million by the second quarter of 2024 [37] . However, this initial increase in employment, followed by stagnation, has been insufficient to absorb the growth in the labour force during the period. The result has been an increase in the rate of unemployment from 24,7% in 2013 to 29,1% in the third quarter of 2019 and a further increase to 33,5% by the second quarter of 2024. [38] The expanded definition of unemployment, which includes people who have given up looking for work, was 38,5% in the third quarter of 2019 and increased to 42,6% by the second quarter of 2024. For young people in the age group 15-24, the situation is even worse, with an unemployment rate of 60,8% in the second quarter of 2024. [39]   Coinciding with lower rates of economic growth, South Africans have experienced relatively high interest rates for borrowing money for buying consumer products on credit and funding homes while companies have also faced rising finance costs. During the Covid-19 lockdown, the prime overdraft rate declined to 7,0% but subsequently increased to 11,75% [40] owing to increased inflationary pressure in the economy. Since the third quarter of 2024, the prime overdraft rate declined again, owing to a decline in the central bank’s repurchase rate.   Table 10: The South African Economy: Summary of Recent Performance 2019 to 2025   *Own estimate based on data from 2024Q1 and 2 **Own forecast Source: StatsSA, SARB and own calculations     Projections for the South African economy    The long-term growth outlook of an economy (or potential growth) depends on technological development and political and economic institutions that determine the incentives to invest in new productive capacity and improve productivity in the economy.   As far as growth limiting factors are concerned the SA Reserve Bank list load-shedding, logistical challenges, and policy uncertainty, although load-shedding has been alleviated since the second quarter of 2024. According to the central bank, these factors “weighed heavily on economic activity and sentiment, depressing business credit appetite and household spending”. [41] However, looking forward the SA Reserve Bank notes various improvements, including “(p)rivate investment in renewable energy, increased maintenance by Eskom and transmission system development, along with reforms in ports and rail, should further reduce energy and logistical constraints. As the economy’s productive potential improves and inflation eases, so too will corporate and household balance sheets, further improving sentiment and investment beyond the network sectors” [42] . It should, however, be evident that various of these reforms are likely to take some time (and funding) to implement without necessarily guaranteeing the envisioned outcomes.    In its latest Monetary Policy Review  the SARB states: “The economy’s growth potential [43]  is projected to average 1.4% over the forecast horizon (i.e. until 2026) against a steady-state potential growth rate of 2.5% (see Figure 20). This compares poorly to South Africa’s emerging market trading partners, whose potential growth estimates range between 2.0% and 6.5% over the same period”. [44]   Figure 20: South Africa’s Potential Growth Estimates   Source:  SARB, Monetary Policy Review, October 2024, page 23   The National Treasury has for a considerable time been committed to restoring public and investor confidence in government finances.  Back in its 2019 Medium Term Budget Policy Statement  (“MTBPS”) it stated that, “policy certainty and a conducive business environment are critical to support the confidence of businesses and households. As far as structural problems are concerned, it identified “high levels of inequality, spatial disparities, low levels of education, the uneven quality of public services and inadequate state capacity. Remedial measures in the MTBPS include stabilising SOEs and solving their governance failures; managing “the massive risk to the economy and the fiscus associated with Eskom;” [45] and improving spending efficiency and reducing waste in public sector spending.” [46]   This message has been reiterated in various Budgets since 2019. In the 2024 National Budget it is stated that ”(g)overnment is staying the course on the fiscal strategy outlined in the 2023 Medium Term   Budget Policy Statement (“MTBPS”) and will achieve a primary budget surplus (meaning revenue exceeds non‐interest spending) in 2023/24, with debt stabilising by 2025/26”. It adds that this will help “promoting economic growth and supporting the most vulnerable members of society” [47]   As far as its outlook is concerned, the National treasury forecasts a ‘jump’ in GDP to 1.7% in 2025, after which the figures rise only marginally to 1.9% by 2027. Evident from the analysis is that various organisations (including the IMF, SARB and Nation Treasury), expect growth to remain pegged in a range of between 1.5% to 2.0% per annum over the next few years.   In summary the above section shows that South Africa finds itself in a challenging position as far as its state finances are concerned. Given the pressure to stabilise (or lower) debt levels, this leaves little room for additional expenditure pressures.  Any potential additional expenditure pressures thus need to be carefully considered. The growth outlook shows that under current circumstances, South Africa can at best expect meagre economic growth going forward. This in turn affects the state’s ability to generate sufficient and/or additional revenue. The rest of this report therefore analyses the likely impact of longevity risk, as a potential additional expenditure pressure, on fiscal sustainability in South Africa.   CLICK HERE TO CONTINUE TO CHAPTER 3     [1]  Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012 [2]  Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012 [3]  Is South Africa Growing Older? The Unseen Shift in Our Population | Statistics South Africa [4]  Mid-year population estimates, 2024 (P0302) [5]  Ibid, 6 [6]  Life expectancy and healthy life expectancy at age 65 | OECD, 62 [7]  P03022022.pdf (statssa.gov.za) [8]   https://www.statssa.gov.za/publications/P0302/P03022024.pdf [9] https://www.statssa.gov.za/publications/Report-03-00-23/Report-03-00-232022.pdf , 23 [10]  As far as difficulty in forecasting the IMF notes that ‘ forecasters, regardless of the techniques they use, have consistently underestimated how long people will live. These forecast errors have been systematic over time and across populations . Chapter 4: The Financial Impact of Longevity Risk in: Global Financial Stability Report, April 2012 [11]   https://worldpopulationreview.com/countries/south-africa [12]  This estimate relates well to other forecasts, e.g. the ‘ Worldometers’  which put the population at 79,1 million in 2050 ( https://www.worldometers.info/world-population/south-africa-population/ ). [13]   South Africa - ISS African Futures [14]   Life expectancy and healthy life expectancy at age 65 | OECD , 211 [15]  For the sample of 38 OECD countries, the average population aged 65 and over is expected to rise from 18,0% to 27,0% by 2050. For the population over 80 the average rise from 4,8% in 2021 to 10,0% I 2050. Source: Ibid (OECD), 210-211 [16]  Ibid (OECD), 66 [17]  Ibid (OECD), 68 [18]   https://futures.issafrica.org/geographic/countries/south-africa/#chart2   [19]   https://www.statssa.gov.za/publications/P0211/P02114thQuarter2024.pdf   [20]   https://www.gov.za/sites/default/files/gcis_document/202108/45006gon741.pdf [21]  See for instance Fedderke & Mengisteab (2017), available at: https://doi.org/10.1111/saje.12153 [22]  Government borrowing in international capital markets serves a number of purposes, inter alia  to set a sovereign benchmark for other borrowers of the country in the international capital market. [23]  Total exposure to Eskom is R354,0bn due ‘to adjustments to inflation‐linked bonds as a result of inflation rate changes and accrued interest’ (2024 National Treasury) [24] https://www.treasury.gov.za/documents/national%20budget/2024/ene/Vote%2019%20Social%20Development.pdf [25]   https://www.treasury.gov.za/documents/national%20budget/2024/review/Chapter%205.pdf [26]   https://www.treasury.gov.za/documents/national%20budget/2024/review/Chapter%205.pdf [27]   https://www.treasury.gov.za/documents/national%20budget/2024/review/Chapter%205.pdf [28]  National Treasury. 2024. 2024  Budget Review, Chapter 4: 40. National Treasury: Pretoria. [29]  2024 National Budget, MACROECONOMIC POLICY: A REVIEW OF TRENDS AND CHOICES, p25 [30]  Ibid. [31]  Ibid. [32] https://www.businesslive.co.za/bd/national/2024-11-15-sandp-surprises-as-it-raises-sas-credit-rating-outlook-to-positive/   [33] https://www.businesslive.co.za/bd/economy/2024-11-05-fitch-sceptical-about-medium-term-budget/ [34]  SA Reserve Bank. 2024. Quarterly Bulletin . June. S-160. [35]  Ibid. and own calculation. [36]  StatsSA Quarterly Labour Force Survey , Quarter 3, 2019 page 1 and QLFS Trends 2008-2019Q3. [37]  StatsSA. 2024. Quarterly Labour Force Survey (QLFS) Q2:2024 . chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://www.statssa.gov.za/publications/P0211/Presentation%20QLFS%20Q2%202024.pdf   [38]  Ibid. [39]  Ibid. [40]  SA Reserve Bank. 2024. Op cit. S-32. [41]  South African Reserve Bank (SARB), Monetary Policy Review, October 2024, page 5 [42]  Ibid, page 5 [43]  Potential growth is the rate of GDP growth that could theoretically be achieved if all the productive assets in the economy were employed in a stable inflation environment. It is derived from the South African Reserve Bank’s (SARB) semi-structural potential output model. The measurement accounts for the impact of the financial cycle on real economic activity and introduces economic structure via the relationship between potential output and capacity utilisation in the manufacturing sector (Monetary Policy Review, October 2024, page 52 and 54. [44]  South African Reserve Bank (SARB), Monetary Policy Review, October 2024, page 25. [45]  Ibid, page 6. [46]  Ibid, page 12. [47]  National Treasury, 2024 Budget Review, Chapter 3, page 23.    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 Inclusive Society Institute (ISI) partnered with Stellenbosch University’s School for Public Leadership (SPL) in its hosting of the 18th International Winelands Conference, held from 22 to 24 October 2025 at the Asara Wine Estate in Stellenbosch. The event brought together leading academics, policymakers, practitioners and researchers to explore how societies can strengthen democratic participation and ethical governance in a rapidly changing world. The ISI was represented by its Chief Executive Officer, Daryl Swanepoel and one of the Institute’s Senior Research Associates, Dr Klaus Kotzé.   Under the theme “Citizen Participation in Turbulent Times: Grasping Opportunities and Navigating Threats,” the conference created a vibrant platform for dialogue on how to deepen citizen engagement, renew public trust and equip leaders to respond effectively to social, environmental and governance challenges.   The conference was officially opened by Professor Zweli Ndevu, Director of the School for Public Leadership, and Professor Pieter von Wielligh, Dean of the Faculty of Economic and Management Sciences at Stellenbosch University. Both reflected on the SPL’s 60-year contribution to developing ethical and capable leaders for the public sector. The Opening Address was delivered by the Minister of Public Service and Administration, the Hon. Mzamo Buthelezi, who stressed that citizen participation is essential to restoring confidence in government and ensuring responsive service delivery.   A highlight of the first day was a plenary panel discussion on “Citizen Participation in a Complex Global Context,”  in which Mr Daryl Swanepoel, Chief Executive Officer of the Inclusive Society Institute, served as a panellist. Drawing on the Institute’s research and policy work, he cautioned that “too often, what we call participation is less about sharing power and more about managing discontent.”  He argued that “when citizens lose faith in the process, every other part of democracy begins to crumble,”  and that public engagement must be treated not as a procedural obligation, but as a constitutional partnership between government and the governed.   The second day of the conference featured four parallel work streams, each addressing a critical dimension of democratic governance:   Public Leadership and Governance Policy Innovation and Democratic Participation Sustainable Development and Environmental Governance Accountability, Integrity and Social Justice   Mr Swanepoel presented his paper on public participation during the Accountability, Integrity and Social Justice  stream. He emphasised that South Africa’s Constitution makes participation a binding duty, not a courtesy, and noted that courts have repeatedly invalidated laws where consultation was absent. He argued that “the right to be heard is intrinsic to the very idea of democracy,”  and urged that participation be transformed from “democracy with a clipboard”  into a culture of deliberate listening, supported by practical reforms such as clear consultation standards, multilingual access and digital inclusion.   Another valuable contribution came from Dr Klaus Kotzé, who participated in the Public Leadership and Governance workstream. He presented a paper titled “Republican Constitutionalism: Reviving South Africa’s Democracy,”  in which he examined how shifts in constitutional interpretation and institutional practice have weakened the republic’s founding balance between power and accountability. He argued that South Africa’s constitutional framework risks becoming overly technocratic at the expense of democratic engagement, and called for a renewed commitment to republican principles of civic virtue, ethical leadership, and public accountability. He also co-chaired the afternoon session of the same work stream, where participants discussed strategies to restore integrity and strengthen ethical governance within the public sector.   A fitting conclusion to the conference was the Gala Dinner, held on 23 October 2025 at the elegant Devonvale Golf Estate, marking the 60th anniversary of the School for Public Leadership. Sponsored by the Inclusive Society Institute, the event celebrated six decades of excellence in public leadership education.   In his address at the dinner, Mr Swanepoel, himself an alumnus and Research Fellow of the School, reflected on the shared mission of the SPL and ISI. He remarked that “a society cannot be inclusive without a capable state, and a capable state cannot endure without social cohesion,”  observing that these twin pillars are the foundation of South Africa’s renewal. He toasted the School’s “six decades of academic excellence and public service,”  and reaffirmed the Institute’s commitment to strengthening ethical, inclusive governance across all spheres of society.   Through its participation and sponsorship, the Inclusive Society Institute once again demonstrated its dedication to building an inclusive, capable and ethical state, one grounded in citizen participation, social cohesion and principled leadership.