Concluding a two-year investigation, researchers at Harvard Kennedy School’s Growth Lab have issued a stark diagnosis of the “collapsing state capacity” in South Africa after decades of policy failures, mismanagement, and patronage, with painful consequences for millions of poor, jobless people.  

The research team offers a set of concrete recommendations that could help the country turn around. They include overhauling dysfunctional state-owned enterprises, especially the electricity utility ESKOM, now plagued by daily scheduled blackouts across the country. The final report urges South Africa to take steps to free up entrepreneurs to exploit opportunities in green growth industries that could create jobs at home and drive clean energy exports.  

It also recommends longer-term reforms to create more dense housing clusters located closer to business centers. Black and poor communities are largely stuck in desolate rural areas and in isolated suburbs far from jobs in urban areas—a legacy of South African apartheid. 

Ricardo Hausmann

“It is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion.”

Report from research team led by Ricardo Hausmann

The team’s research draws on insights from nine studies published over the two-year project, culminating in the final report, “Growth Through Inclusion in South Africa.” The Growth Lab is based at Harvard’s Kennedy School of Government; the Growth Lab’s team of more than 50 research scholars has led growth strategy projects in dozens of countries around the world. 

The report’s authors include a dozen researchers, led by Growth Lab founder and director, Professor Ricardo Hausmann, the Rafik Hariri Professor of the Practice of International Political Economy, and contributors included scholars based at a similar strategy lab at the London School of Economics. In South Africa, the Harvard researchers engaged with a network of local experts, including the Centre for Development and Enterprise, a leading think tank, as well as many community representatives across the country. 

In the 170-page report’s opening words: “It is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion... Three decades after the end of apartheid, the economy is defined by stagnation and exclusion.” 

Asking why the nation’s economy is growing far slower than reasonable comparator countries, the study identifies the predominant reason as: “South Africa is facing the economic consequences of collapsing state capacity.”  

Government reform initiatives in recent years “are encountering systemic, deep-seated, and underlying issues of political gridlock, ideology, patronage, and an overburdening of state organizations with goals beyond their core missions and capabilities.” Those goals include requiring state-owned businesses to employ politically connected people and to procure supplies from favored firms, in line with longstanding Black Economic Empowerment policy. 

“South Africa also needs to develop new and better mechanisms for driving inclusion, empowerment, and transformation that include far more of society,” the authors write, arguing that solutions should include more competitive hiring and fewer constraints. 

The green-growth strategy recommendations are grounded in some of South Africa’s traditional strengths, including manufacturing skills that create opportunities for production of fuel cells.  But achieving these goals will need reforms to remove regulatory barriers and allow more skilled immigrants into the country.  

The Growth Lab report has prompted extensive news coverage in South Africa since its publication on Nov. 15. Some columnists noted that the dire assessment would hardly surprise South Africans, who live daily with hours-long power outages known as load-shedding, along with frequent water cutoffs as pipes and other infrastructure fail, but having a nonpartisan, independent analysis may help bring further attention to the issue. 

Tim Cohen, a journalist at the Daily Maverick news site, wrote: “First, it’s useful that the criticism comes from outside the South African political system because it is a bit less easy for the ANC [ruling African National Congress party] to pin on an ‘agenda’ label and toss it under the mat.  Second, it’s important that it comes from experts in development who can make interesting comparisons with what other countries facing similar issues have done—for example, electricity generation in [South Africa] and Chile.” 

The report itself notes that many of its recommendations are not new—but they will require new approaches. “Given the toll that collapsing state capacity is having, government leaders will have to exercise bolder leadership to overcome the four-fold causes of state collapse. Current leaders are presiding over a collapsing state and will need to overcome the underlying issues of gridlock, ideology, overburdening of public entities, and patronage that prevents proximate solutions from moving forward.” 

Banner image: Workers in a cafe use an emergency gas-powered lamp to illuminate the kitchen after a load-shedding power outage stopped their electricity supply in Johannesburg, South Africa. Photo by Waldo Swiegers/Bloomberg/Getty Images

Faculty portrait by Martha Stewart

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