Impressions on visiting South Africa - June 2018

South Africa today, almost three decades after the abolition of apartheid is a very confusing place. I suppose it could be somewhat simplistically described as a dual economy, a society caught in-between the first and the third worlds (as those terms are colloquially understood) with elements of both.

On the one hand there is a modern, industrialized technologically sophisticated economy, with beautiful highways, and vibrant businesses, large and small. The food is fantastic and cheap. And investment and expansion is all around, construction of residences and businesses everywhere. The urban populations are growing dramatically.

On the other hand there is the third world misery within this. Unemployment is rampant. Crime is very high. A large portion of the population is miserably poor. The wealthy live behind walls and barbed wire fences. There are chronic water shortages and electricity blackouts.

The government is typically third world - but with aspects of the rule of law remaining - for example in the judiciary and the electoral system. But people here tell me it is being eroded bit by bit. Corruption is rife, the police are useless, mobs and gangs are powerful and dangerous, especially in the townships and depressed areas. It is doubtful, that no matter how bad things get, the ruling ANC party will ever relinquish power. And the situation is ripe for the flowering of populist politics and economics.

The expenditure tax rate is high (15% VAT) and only 6% of the population of 50 million pay income tax. So the tax base is very small and is falling as the young among the wealthy and the educated leave in large numbers.  The country's human capital is being diminished by this. There is immigration that somewhat offsets this, from all over the world - people leaving bad situations coming to benefits from the manifest business and employment opportunities that do exist, but I don't know the resulting balance between these two trends.

So it is a really mixed bag, one whose future is really difficult to predict.