Political balance of power is shifting to poor majority, making pro-poor human capital investment more likely
delivered his maiden medium-term budget policy statement earlier in November in the midst of great political turbulence.
Similarly, “contingent liabilities” are critical for the sovereign’s debt dynamics. Many state-owned enterprises, not least power utility Eskom and SAA, have huge government-backed debt that they can’t service. In fact, the National Treasury is already paying back principal and interest on this debt.
Moreover, the ANC may not meekly surrender its majority and render itself beholden to coalition partners without trying to maintain its parliamentary majority. In contexts such as SA, with a low share of informed voters, governing parties facing a real prospect of electoral defeat are tempted to undertake a spending binge as they desperately try to hold onto power.
Finally, 27 years after the first democratic gains, much-needed human capital investments to address the apartheid legacy and diversify the economy away from commodities towards a human capital-centred growth path may be possible. However, opportunities also bring risks. However, the 2021 breakthrough need not be all doom and gloom for the country. It is clear that the political balance of power is shifting, and in turn productivity-enhancing human capital investment is more likely.
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