South Africa: The Fear of Becoming Colombia
Tuesday, July 31, 2012
Daron Acemoglu and James Robinson

South Africa didn’t collapse economically after the end of Apartheid. In fact, following the tails of a long decline from the mid 1970s, its rate of economic growth picked up after the transition in 1994 and has been positive, though moderate, ever since. Despite how modest progress towards a different society has been, South Africa has not veered to populism, though as we saw in our last post there have been some threats.

But perhaps populism is not the main threat to South African democracy in any case. Perhaps the real danger lies elsewhere.

In Why Nations Fail we tell the story of how Latin American societies became highly unequal and extractive during the colonial period. Though they gained independence 200 years ago, most of Latin America, for example Colombia, continued along this path, with the traditional or new elites firmly remaining in control despite electoral democracy taking root. Though electoral democracy and other reforms removed the de jure control of these elites, their de facto command remained largely unchallenged.

Could it be that the endpoint for the transition in South Africa is a transition from Apartheid to a Colombian model?

Here is why this scenario is not so far-fetched: in Latin America, the elite managed to keep de facto power in attendance because it still controlled the main economic assets and wealth, and could capture and co-opt the new political elites. The situation is similar in South Africa. Economic assets and influence are still hugely concentrated. In the face of the economic power of the economic elite, the ANC leaders found themselves with both serious constraints on their behavior and new lucrative economic opportunities. Legitimately they feared the economic collapse that might have followed from the implementation of too radical a program. So they went slowly. But slow progress left economic power, opportunities and decision-making where they had been before. The once radical ANC began to empathize with the problems of business; they worried about the bottom line of businesses — after all, wasn’t business confidence crucial for the new South Africa? Private sector banks were involved with the attempt to build houses for the millions of black people living in shanty towns, but banks worry about collateral and profits, not about the positive externalities and the social transformation that would follow from an integrated society. The ANC started sympathizing with the banks, perhaps even forgetting about that social transformation.

In the meantime the reality of Apartheid fell into the past. People, especially new generations, started to get used to inequality. Perhaps with Apartheid gone, inequality appears less unjust, less rigged today.

The bottom line of this is that a clear trajectory for South Africa is not as a NIC or a BRIC but as a NLC, a Newly Latinamericanized Country, one with high inequality and persistently poor economic performance as a result of the fact that the vast majority of its population will still be poor and excluded from economic opportunities. Some people, of course, will be doing extremely well.

It is interesting that the German state after World War II, though devastated by the war and de-Nazification, was still able by the 1960s to largely re-build the infrastructure which the Allies had pulverized in the closing stages of the war. In contrast, the South African state has been unable in the same amount of time to get the poor people, who fought for the end of Apartheid and voted for it, out of shacks and shanty towns.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (
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