By Imraan Buccus
The ANC seems determined to ensure that it suffers a similar fate as the Botswana Democratic Party (BDP).
The recent Medium-Term Budget Policy Statement (MTBPS) is a hardcore austerity budget.
The budget outlines significant reductions in public spending, including the termination of the COVID-19 Social Relief of Distress (SRD) grant, which had provided essential support to many vulnerable people.
The Congress of South African Trade Unions (Cosatu) has expressed strong opposition to the austerity measures detailed in the MTBPS.
In a statement, Cosatu condemned the budget cuts, stating that they would “entrench racialised apartheid-era economic policies” and fail to address the pressing needs of the country’s most vulnerable populations.
Similarly, the National Union of Metalworkers of South Africa (NUMSA) has criticized the government’s fiscal approach.
Numsa argues that austerity measures have “destroyed South Africa’s growth trajectory,” leading to increased unemployment and poverty.
Numsa has emphasised the long-term harm of austerity, stating, “In the past 3 decades we have bemoaned the crisis caused by the neoliberal macroeconomic framework which championed austerity measures and as such it hollowed out the role of the state in the economy and in delivering critical strategic infrastructure to our people such as roads, schools, hospitals, leading to closure of agriculture, nursing and teachers colleges.”
The termination of the SRD grant is particularly concerning, as it had provided a critical lifeline to more than seven million people, helping them to cover basic needs amid high unemployment and economic instability.
Its removal marks a harsh turn in policy, leaving millions with no support and pushing many deeper into poverty.
The numbers tell a damning story. In real terms, South Africa’s health budget has seen significant reductions. Adjusted for inflation, the 2024 mid-term budget shows a real decrease of approximately 10% in health spending compared to pre-Covid levels.
This reduction has meant fewer resources for hospitals, fewer healthcare workers, and a strain on essential services.
Education has also been a victim of austerity. In real terms, the education budget has dropped by about 6% from 2020 levels.
This drop has translated into overcrowded classrooms, limited resources for learners, and diminished support for higher education institutions.
Young people, especially from poor and rural areas, are now facing reduced access to quality education, further entrenching inequality.
Adding to the existing systemic crisis in education, austerity has contributed to a severe shortage of teachers, particularly in rural and under-resourced urban schools.
Overcrowded classrooms are now the norm, with teacher-to-student ratios that make individualised instruction and quality education nearly impossible.
Schools face budget constraints that prevent them from hiring enough educators to meet demand, leaving students without adequate support in critical subjects.
This shortage is compounded by a lack of professional development and competitive salaries, which deters qualified teachers from entering or remaining in the profession.
Addressing this shortage is vital for building a skilled workforce and breaking the cycle of poverty that austerity policies continue to reinforce.
The policing budget has also faced cuts, with a real-term decrease of 5% over the past three years.
South Africa already struggles with frighteningly high rates of crime, yet austerity measures mean there are fewer police officers on the streets, fewer resources for training, and inadequate funding for crime prevention programmes.
The origins of austerity can be traced back to the economic experiments in Chile after the US-backed military coup against President Salvador Allende in 1973.
Under General Augusto Pinochet’s dictatorship, Chile implemented radical free-market reforms advised by economists from the University of Chicago.
These measures included slashing public spending, privatising state enterprises, and reducing welfare programmes.
This neoliberal austerity-driven model of reform became a template, later exported through structural adjustment programmes across the Global South.
In the 1980s and 1990s, the World Bank and the IMF imposed devastating structural adjustment programmes on African countries as conditions for loans.
These programmes mandated severe budget cuts in public services, privatisation of state resources, and the dismantling of social safety nets.
The result was an erosion of healthcare, education, and essential infrastructure, deepening poverty and inequality and leaving lasting scars on economies and societies.
Clara E. Mattei, in her brilliant historical analysis, points out that austerity has historically functioned as a “tool of social discipline” rather than genuine economic reform.
She argues that austerity is implemented not because it works for the majority, but because it protects elite interests by preserving the existing power structures.
South Africa’s post-apartheid economic policies have often leaned towards appeasing global markets and investment firms, with the government prioritising credit ratings and foreign investment over job creation and poverty alleviation.
Austerity often has political as well as social impacts. This was seen in Greece, where a debt crisis led to the imposition of harsh austerity measures by the European Union and the IMF.
These cuts resulted in widespread poverty, skyrocketing unemployment, and a healthcare system on the brink of collapse. In response, anti-austerity sentiments reached a boiling point, leading to the election of Syriza in 2015, a party that campaigned against austerity.
As former Greek Finance Minister Yanis Varoufakis argued, “Austerity is being used as a weapon to wage class war”.
This example serves as a cautionary tale for South Africa. Greece’s experience with austerity policies led not to recovery but to social and economic devastation.
It also led to a rapid political change with the election of a left populist government. That government was soon betrayed by some of its leaders but events in Greece show how quickly austerity can result in rapid shifts in electoral sentiment.
The argument that austerity is necessary to reduce debt is deeply flawed. Austerity may, in theory, reduce fiscal deficits, but it also stifles growth.
As public spending shrinks, so does the economy, creating a vicious cycle where reduced spending leads to reduced revenue.
Instead of generating economic stability, austerity policies produce stagnation, further exacerbating the debt problem they purportedly address.
To break out of this destructive cycle, South Africa needs bold fiscal policy that prioritises growth and development over debt reduction.
There must be substantial public investment in infrastructure, healthcare, and education, which would stimulate job creation and economic activity.
If the ANC blindly continues with austerity it will be removed from power. We do not have a left party and will not have one for as long as the SACP and Cosatu remain tied to the ANC and Numsa and Abahlali baseMjondolo do not work towards building an inclusive mass-based left project.
We do not even have a social democratic party with the DA and the various other liberal parties funded by white capital all pushing the same neoliberal economics.
As a result, the electoral consequences of austerity are likely to increase electoral abstentionism and support for the corrupt and authoritarian populists increasingly gathered around Jacob Zuma.
The ANC’s austerity is already an economic disaster. It could soon become a political disaster too.
* Dr Buccus is senior research associate at ASRI
** The views expressed do not necessarily reflect the views of or Independent Media.
Opinion
