Only economic freedom can reverse SA’s decline in human development

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Riaan Salie | Writing Fellow | African Liberty | Free Market Foundationmail me


South Africa’s access to healthcare and housing is ‘increasingly deteriorating’, according to the 2020 Ibrahim Index of African Governance (IIAG). The IIAG assesses governance in 54 African countries based on public goods and services that citizens have a right to expect from their governments, and the responsibility of a government to deliver.

In the last ten years, South Africa jointly ranks eighth for the most deteriorated country on the index, causing citizens to suffer from a lack of access to basic services – such as security, health, and shelter.

The IIAG categorises human development as a key feature of Overall Governance, which features access to healthcare and housing as an important influence on development.

Misguided government policy and corruption

Due to COVID-19 lockdown regulations, poor South Africans were disproportionately affected economically. This is primarily because the government placed restrictions on movement, which affected employees and job-seekers, particularly those deemed as ‘non-essential.’

Even before the lockdown, misguided government policy and corruption has long caused poor access to healthcare and housing, particularly over the last decade. The lockdown regulations only worsened human development for all.

The public healthcare system provides services to 84% of South Africans, while the private-sector is consumed by only 16% of the population. This disproportionate consumption is dependent on efficient service delivery.

However, government mismanagement and corruption produce severe consequences for citizens. Between 2010 and 2017, an irregular expenditure of R6.9 billion was identified in the Gauteng healthcare system. As a result, an estimated 143 mental health patients died in the Life Esidimeni case, an increase in tuberculosis infections and tragic loss of life.

The brutal human cost of the pandemic

An undeniable link exists between State Capture and the government’s failure to provide adequate services, specifically when COVID-19 social relief grants fraudulently benefited 1,500 Johannesburg officials.

Despite the brutal human cost of the pandemic on South Africans, unchecked state power created the conditions for wide-scale corruption. Unsurprisingly, tender procurement processes have been abused to favour the politically connected, while the poor remain economically disenfranchised by their supposed liberators.

South Africa’s increasing deterioration of access to healthcare services, according to the IIAG, is trending by -5.5 points.

Poor access to healthcare is a function of increasing anti-market policy because bureaucracy burdens practitioners with endless red tape. Adding unnecessary administrative middlemen – where none are required – to justify spending because of budget allocations creates an endless cycle of wasteful spending.

Spending cuts are pivotal to rooting out corruption. This incentivises governments to use budgets efficiently, unquestionably, creating more accountability because spending can be easily accounted for.

In reality, larger budgets produce more inefficiency and reckless spending on unnecessary administrators – to justify budgets – that hinder the work of healthcare practitioners.

Furthermore, the access to housing is on a devastating trend, of -15.6 points, which contributes to social inequality.

Increasing informal settlements

Since 1994, the housing backlog has increased to 2.1 million units, while informal settlements increased by 650%.

The problem is exacerbated by poor delivery of housing to individuals who were affected by apartheid and fosters a culture of social dependency among the youth. The youth dilemma stems from unemployed youth who suffer the consequences of ineffective government policy, thus remaining dependent on state welfare.

The solution to the housing crisis would be state-funded housing vouchers. These grant disadvantaged individuals the freedom to make autonomous economic choices, as opposed to outdated and inefficient government plans that could take 20 years to solve the existing housing backlog.

It allows the free market to build efficient, low-cost housing, while individuals choose to either use their voucher on new housing or upgrading existing infrastructure.

Importantly, these autonomous economic choices cultivate an environment of economic freedom for millions affected by poverty, while preserving constitutional rights of South Africans which is dependent on individual freedom. These would create the conditions for economic prosperity and build South Africa’s economy without zero-sum economic trade-offs.

Generating and accumulating wealth freely

Countries with more state intervention into their economies suffer from poor human progress and are ranked as ‘regressive’ on the Heritage Foundation’s Index of Economic Freedom, primarily because individuals are hindered from creating personal wealth while welfare programs create an endless cycle of poverty.

In contrast, societies with less government intervention create more opportunities for individuals to freely go about generating and accumulating wealth.

Reforming healthcare, by removing unnecessary middlemen, will create efficient service delivery, faster access to treatment, and will leave South Africans better-off.

Additionally, reforming housing programmes to create opportunities for individual empowerment as opposed to state dependency. This will create new markets in South Africa’s economy for affordable housing and invariably lead to the stimulation of the labour market.

State intervention in South Africa’s economy has negatively impacted human development across the country because it creates the condition for corruption and endless red tape.

Market-based solutions would disempower the government and empower disadvantaged citizens. Thus, for human development to begin, the free market must be embraced as a catalyst for change.


 




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