Perspective Chapter: Unravelling the Policy Paradox – A Critical Examination of Post-Apartheid South Africa’s Healthcare Development in the Context of Developmental State Goals

Abstract

Post-apartheid South Africa has had economic development goals aligned with that of a developmental state (DS). However, almost three decades later, persistent rates of high inequality, poverty, and unemployment prove that not only has the African National Congress (ANC) been unsuccessful in achieving its development goals; but the reality of its macroeconomic policy has not been that of a developmental state. While the presented policy on healthcare in South Africa appears, prima facie, to be committed to deep developmental goals, other policies thwart the intentions of this legislation. These policies entrench and perpetuate inequalities in health outcomes between rural and urban, private, and public, as well as racial profiles of citizens. The policies that undo the developmental spending on healthcare include cadre deployment which ensures weak civil service management and conflicting messages in policy decisions as they develop. Further, this mixed policy approach towards healthcare has undermined South Africa’s development goals. Although the ANC may have to combat the apartheid legacies of inequality, poverty, and unemployment, its failure in achieving meaningful development can be largely attributed to its misdirected policy approach to both its macroeconomic environment and basic healthcare.

1. Introduction

South Africa has, under the leadership of the African National Congress (ANC), long promoted becoming a democratic developmental state (DS) to combat persistent levels of unemployment, poverty, and inequality. Since the explicit commitment to becoming a DS in 2011, the ANC has not translated its policy promises into reality. South Africa has taken a neo-liberal character across its economy and institutional fabric, which has effectively thwarted its ability to first, become a developmental state and second, to achieve the level of economic development it so desired. Whilst this paper does not intend to focus on why there has been stark economic underdevelopment since 1994, it wishes to prove that the ANC has effectively failed to embody the developmental state it so envisioned. Defining the developmental state, its ideal characteristics, and specifically the ideal approach to education will help cross-compare the relative experience in South Africa. The state of its economic underdevelopment signifies the ANC’s failure to effectively realise not just its developmental goals, but for the scope of this paper, its embodiment of a DS. An evaluation of macroeconomic policy and health outcomes shall illustrate the ANC’s incapacity to effectively realise a DS, contrary to its policy promises.

2. An overview of the developmental state

A DS has the potential to stimulate rapid economic development. In a historically underdeveloped country; applying the DS framework to South Africa seems to be a worthwhile trajectory to adopt. Even though the ANC committed itself to becoming a DS in 2011, it effectively failed to realise their policy promises. I first define the DS and discuss the key ingredients of a successful DS according to Chang. This allows us to make a cross-comparison of the socio-economic reality of the DS in SA. I then distinguish that the failure of the DS in SA is not to be attributed to a lack of capacity. Instead, the ANC’s failure to realise a DS is a product of its policy incoherence, corrupt bureaucracy, and its inability to dismantle the neoliberal character of the state, which consequently stifles the development of an underperforming healthcare sector.

2.1 Defining the developmental state (DS)

Best illustrated by the East Asia miracle economies, the developmental state broadly refers to one that stimulates economic development through deliberate state intervention. The East Asian miracle economies centred the nature of their state intervention around achieving rapid economic development through selective industrial policy; and the level of development achieved determined its political success. A successful DS tactfully intervenes to promote rapid and holistic economic development. Development in these states was to be signified by a combination of structural change in terms of policy thinking and welfare enhancement through policy implementation [1].

DS literature is known for directly opposing the Washington Consensus (WC) policies that were popular at the time [2]. The WC, supported by the World Bank and the International Monetary Fund (IMF), promised country’s rapid economic growth should they adopt the neoliberal policy framework. The role of the state itself was to be minimal and should in no way be involved in the allocation or distribution of resources. Instead, the market forces would stimulate a competitive macroeconomic environment that through the product of neoliberal policies like financialisation, deregulation, and privatisation [3, 4]. The DS instead promoted state intervention, and deemed the ‘invisible hand’ as an ineffective measure to achieve economic development. DSs saw the need to stimulate and strengthen the institutional framework to dismantle historical economic fragmentation; this would ultimately reinforce the “embedded autonomy” of the state [3, 4].

2.1.1 The ‘ingredients’ of a DS

The ‘ingredients’ of a DS can be divided into two streams. First, there are three key ‘features’ that are foundational for any state attempting to transition into a DS. Second, outside of these features, there are ‘tools’ that help guide the effective strategy of state-led economic development. This section will explore these defining mechanisms.

2.1.2 The ‘key features’

Developmental state literature is adapted to suit the specific economic needs of a country. However, there are key ‘ingredients’ that form the foundational framework of a successful DS. These features can almost be understood as ‘pre-requisites’ for a state trying to adopt a DS approach. First, a state needs to be run by a highly organised, well-educated bureaucracy [1]. By having a reliable, well-resourced bureaucracy that can carry out effective decisions that improve the socio-economic environment of the country, citizens will develop a sense of trust in their government. This leads to the second key feature of a DS, which is a sense of national unity. Namely, successful implementation of macroeconomic policies relies on their being a cohesive relationship between the state and its citizens. This cohesive state-citizen relationship helps foster the third key feature: a unified developmental vision. Having a common developmental vision, along with a sense of national unity, ensures the internal and external social cohesion that is necessary for effective policy absorption. Cohesion, internally, between state actors and externally, between the citizen and the state, is a vital mechanism for any DS. For example, Johnson emphasises cross-sector cohesion for the sustainable maintenance of long-term, holistic economic development¹ [5].

2.1.3 Tools of a successful developmental state (DS)

Chang [1] stresses that economic development theories guide us, and thus following a step-by-step blueprint in applying the DS theory is unnecessary. Instead, the development thinking of successful DSs is to be assimilated and adapted to the needs of a particular state. For example, Singapore’s DS was more flexible in that they used the combination of a strong State-Owned Enterprises (SOE) sector, free trade and Foreign Direct Investment (FDI) to promote economic growth. Japan embodied a more classical and rigid approach to the DS agenda through the aggressive use of SOEs that helped the state shape policies and remain ever-present in the guidance of economic development. Hence, besides the abovementioned ‘ingredients’, Chang outlines a framework of socio-economic tools that successful developmental states have applied [1].

The experiences of the East-Asian Tigers serve as proof that the same ‘tools’ of a DS can be designed and implemented in different ways and yet still yield rapid economic growth. Thus, DS tools or further ‘ingredients’ should ideally:

1. Meet the development needs of the particular country.

2. Make use of the state’s strengths and resources.

There are six core tools² that have been identified as significant contributors to implementing a successful DS. First, the South Korean DS, for example, used export-led industrialisation patterns to achieve a high level of domestic economic growth; but also to incentivise their producers to align with the political agenda of the state [6]. Producers received aid from the Korean DS so that their firms could keep up with the competitive market and enhance their productivity. In return, the firms were incentivised politically to align themselves with the state, and ensure they maintained a high-performing industrial sector [6].

Redistributive social policies highly depend on a capable bureaucracy and a strong institutional base. These policies are pertinent to welfare development. Examples include egalitarian wage structures, implemented to reduce inequality and a progressive taxation system [1].

SOEs and Central Planning Agencies are both instrumental in coordinating policy-thinking and the implementation thereof. These organisational vehicles help orientate the state and its institutional frameworks. Public-private partnerships (PPP) further promote cross-sector cohesion by creating an environment in which both the private and public sectors work together to maximise resources, productivity and, thus, economic performance. Sweden, for example, achieved a durable industrial policy and improved economic performance through the use of strategic PPPs, further explained in Section 4 [1].

Last, human capital development is one of the most crucial tools of a DS. Having a well-educated bureaucracy is necessary for effective planning and decision-making, which drives economic growth [7]. This allows the state to impress the development vision and national identity on the population. Educational opportunities are aligned to industrial policy so that the education system produces a human capital base for the specific jobs the state wanted to endorse, as seen in South Korea [6]. These 6 tools help DSs realise rapid, state-led economic growth. Therefore, as this essay seeks to explore the prospects of the South African DS, it is important to note that these tools are intended to work together so that sustainable, holistic economic development is stimulated.

3. The rhetoric of a developmental state

South Africa’s development challenges are not unfamiliar to the average citizen, or even the international community. This section intends to contextualise the country’s developmental challenges as foregrounding information. Although this is a minor point to my argument, it applies to understanding the root of the ANC’s policy motivation. Further, this section serves as evidence that the development commitments made by the ANC have not translated into reality. This signifies the ANC’s failure to not only realise its promises as a developmental state but to also achieve the rapid economic growth that would ideally come with it.

The African National Congress’s development discourse has promised to uplift and transform the state and create a “better life for all”, at least in its policy-thinking and socio-economic goals [8]. Preceding the New Growth Path, the ANC approached the abovementioned development obstacles through a series of different economic frameworks. After the failure of AGISA to effectively realise the development promises it had made, the ANC switched its economic policy framework. In its attempt to stimulate the economy and improve citizenry welfare, the ANC began identifying with the ingredients of a developmental state as the backbone of its macroeconomic policy goals. The developmental state dream was coined to improve upon the failures of the initial post-apartheid policy frameworks. However, the implementation and outcome of ANC’s developmental state policy promises seem to be misaligned with the reality of South Africa’s present economic fabric. Although the ANC has alluded to being a DS in its development policy, the definition of what being a developmental state means to South Africa is still unclear.

3.1 The complexities of South Africa’s political economy: a background

The Republic of South Africa battles not just present socio-economic fragilities but has inherited the apartheid regime’s uniquely unequal and fragmented political economy. South Africa’s history has been one of the central causes of its current underdevelopment and a motivating reason for the ANC’s push for rapid economic growth and development. The consequences of the apartheid regime on South Africa’s current democratic framework have raised controversy on what the best way forward is.

Post-apartheid South Africa experiences some of the highest rates of inequality, poverty, and unemployment; whilst simultaneously upholding one of the best constitutional frameworks in the world [9].

The rates of inequality, poverty, and employment are indicators of South Africa’s economic development failures. The National Treasury declared these three determinants as the primary reason for the economic unsustainability of the state. Whether it is unemployment causally reinforcing poverty and inequality, or the structural legacies of apartheid have become too huge for the government to effectively dismantle—development in South Africa needs rapid, meaningful, and sustainable solutions.

3.2 Unemployment, poverty, and inequality: indicators of underdevelopment

The transition into a democracy promised economic transformation of the state. The ANC acknowledged that revitalising the economy would include diversification of sectors, macroeconomic stability and a series of other economic development promises that are discussed in Section 3. However, the bureaucratic regime in the South African state entrusted its economic transformation is plagued by patronage, clientelism and corruption [10]. The reality of the average South African citizen is economically dismal, contrary to the hope we started the democratic era with. After each policy release, the ANC acknowledges the fiscal unsustainability of South Africa’s debt-to-GDP ratio, unaffordable expenditure by State-Owned Enterprises (SOE), and our declining investment rates. Each year, there has been a promise to restructure the state in a “different” way to previous policy attempts. There is a promotion of the necessity of state intervention and the need to transform South Africa into a developmental state in 2011, and then, policies promoted in these documents immediately took on a neoliberal character. The following year, inequality has increased, unemployment has increased, and poverty remains persistently high; and the blame is shifted to the previous fiscal year’s austerity measures or lack of coherence between policy thinking and implementation. No matter how you look at it, the trajectory of South Africa’s ‘triple threat’: unemployment, inequality, and poverty signifies the state’s failure to actualise its policy promises. Ultimately, this characterises the state as one in crisis, with possibilities of meaningful economic development and becoming a developmental state seeming untenable [11].

One of the headlines in South Africa’s policy promises has been dedicated to reducing unemployment. The NDP signifies the causal relationship between unemployment and translation into inequality and poverty. Explicitly stated, the NDP (among other policy documents) claims that increasing employment rates will eliminate poverty and reduce inequality through the enhancement of individual income and overall productivity growth of the state [10]. This narrative has been reproduced from the initial transition into a democratic state in 1994, through to our current socio-economic policy promises in 2020. However, as depicted in Figure 1, the official unemployment rate has subsequently increased since 1994, from 20% to 29.2% in 2020. 1995 was the lowest level of unemployment at 16.9% the post-apartheid state has ever achieved. It can thus be concluded; that the employment-orientated policy approach has effectively been unsuccessful [13].

Figure 1.

Official unemployment rate as percentage, South Africa [12]. Data Source 1: *Data sourced from the South African Reserve Bank [12] for the creation of this graph.

It is no surprise, then, that the high levels of inequality and poverty have not been eliminated, but systematically widened. The bottom 50% of the population has had a decreasing share of pre-tax national income, whilst the top 10% of the population have enjoyed an increasing level of pre-tax income [13]. The top 1% of the population, although account for a lower percentage of national income than the top 10% of the population, still enjoy higher levels of income on average than the bottom 50% [13]. This level of income inequality is, as shown by the graph, only widening with time. Wealth inequality has too been skewed in favour of South Africa’s elite few, at the expense of the poor. Wealth has been concentrated in the hands of the top 1% of the population, with the rate of wealth owned by the top 1% of the population increasing over time, since 1994 [13]. The inability of the South African state to effectively diminish the wage and wealth gap means that many South Africans will continue to live below the poverty line. And, although poverty has gradually declined since the 1990s, South Africa’s poverty rates are still obstinately high. The persisting structural inequality ensures that the country remains socially fragmented and systematically underdeveloped. Conclusively, despite the ANC’s promises to deliver on economic development through a process of eliminating inequality and poverty, via increasing employment opportunities—the realities of the state seem in contradiction with what was outlined on paper.

4. A history of the ANC’s macroeconomic policy approach

We have seen in the importance a DS places on a coherent policy framework that works in sync with the rest of the economy. However, it was not until the release of the New Growth Path (NGP) in 2011 that the ANC committed to becoming a developmental state. To fully conceptualise the capacity of its bureaucracy, it is helpful to understand the contextual background of the ANC’s macroeconomic policy from the time of its leadership in 1994 before its commitment to a developmental state rhetoric. This section discusses the South Africa’s macroeconomic patterns and then implores an evaluation of its policies thereof.

One of the flaws in South Africa’s development approach can be boiled down to the misdirection in their policies. Before the DS dream, the policy-thinking of the state was internally inconsistent, externally unsuccessful and lacked a sense of coherence from one policy agenda to the next [9]. The ANC seemed to be:

1. Uncertain about its policy approach and

2. In contradiction with its own goals from the onset of its leadership.

This inconsistency and policy uncertainty translated into the developmental state era. Namely: that it promised a commitment to a developmental state framework, yet its policy implementation has contradicted its promises by remaining entrenched in a neoliberal political economy.

Some observe that the state has been the catalyst for development failures through a policy mis-focus on technocratic policy solutions. However, in slight contradiction to policy implementation, some argue the failure of the state to address development effectively is a lack of focus at an institutional level and a lack of clarity regarding macroeconomic policy for correct implementation [14]. Ansari (2021) argues that South Africa’s policy pitfalls materialised post-1994 for three reasons. First, he argues there has consistently been a policy misalignment between the theoretical aims of the state and its eventual application. Second, he argued that the lack of coherence within the state and instability at a government level rendered policy measures ineffective. Third, the policy aims of the government to achieve pro-poor development contradicted with the neoliberal behaviour of the state across macroeconomic frameworks and institutions, such as in education and healthcare. For instance, although the post-apartheid democracy aimed to decrease social inequalities through social interventionist tactics; the policy adjustments introduced by GEAR encouraged the privatisation of education, which effectively contributed to increasing the educational inequality gap between private and public learner outcomes [15]. Thus, it is imperative to further investigate the evolution of the ANC’s policy inconsistencies and incoherence.

4.1 The evaluation of SA’s policy documents, 1994-2020

The Reconstruction and Development Programme (RDP) was the first policy criteria put forward by the new democratic state. It set the tone for the African National Congress (ANC) as a developmental state, with policy aims outlining six key principles for its development process. “Integration and Sustainability”, “Nation Building” and “Assessment and Accountability” are the headlines of three of the set-out principles of the RDP, which align strongly with the focus of a redistributive policy approach [8]. At this point, there was not an explicit commitment to DS goals, but the ANC cemented its commitment to achieving economic development and enhancing the welfare of South African citizens through diminishing the stark inequalities left behind by the apartheid regime. The RDP was an ambitious national policy agenda that emphasised welfare goals, such as employment creation, poverty, and inequality reduction. It further promoted liberalised trade policies, restricting of industries through industrial policy, was compatible with privatisation and was an overall commitment to fiscal and monetary discipline [8, 16]. Two years later, Growth, Employment, and Redistribution (GEAR) was implemented as a response to the insufficient economic growth achieved by RDP.

Although GEAR initially claimed that it would build its framework in line with RDP’s redistributive goals, it completely shifted macroeconomic policy-thinking by transferring the state into one characterised by neoliberalism. Favouring the use of the market, and trickle-down economics as the determinant of economic development, neoliberalism promoted free trade, financial deregulation, and privatisation of markets. Neoliberal economists viewed the achievement of economic growth and efficiency, namely by using increased Gross Domestic Product (GDP) as the signifier of economic development. The attachment to free-market fundamentalism rejected the use of state intervention [17]. Neoliberals believed that by allowing rational agents and the markets to behave under their self-interested goals, the economy would naturally stimulate itself.

GEAR streamlined its focus on the liberalisation of markets, a relaxation of exchange controls and an advancement of the private sector role with the assumption that this model would speed up economic growth, employment, and private investment [18, 19]. The focus on economic growth as the key mechanism to reduce high levels of unemployment, poverty, and inequality [19]. Some other features of GEAR that aligned with the neoliberal economic model that was popular at the time included monetary policy that used inflation targeting, trade liberalisation, a stringent fiscal deficient and increased competitiveness of industrial sectors [16]. The explicit focus on clearly neoliberal tactics leads to a negative impact on the economy’s performance, with heavy social costs. Unemployment skyrocketed, and income inequality immediately widened, as did the wealth inequality gap. The austerity measures introduced by the National Treasury compromised the economy and led to a stark increase in inequality [16]. Therefore, contrary to even the initial promise of GEAR to keep the development goals set out in the RDP, its implementation was conducive to that of the neoliberal state, which negatively affected the economic performance of the state.

In 2006, the Accelerated and Shared Growth Initiative for South Africa (AGISA) was launched in response to the failures of GEAR by committing to the narrative that economic growth was to be a national effort and acknowledged the need for upskilling the population to improve the growth of the employment sector [20]. The commitment to a neoliberal agenda remained with the emphasis on trickle-down economic assumptions and the behaviour of the government was still significantly aligned to a neoliberal economic character. However, internal inconsistencies became apparent as AGISA emphasised trickle-down effect, whilst simultaneously wanting to increase state interventions as a mechanism to improve the welfare of the marginalised. Despite AGISAs promise to effectively halve unemployment and poverty, these economic determinants worsened after its implementation [16]. The mixed and incoherent policy approach of the ANC became apparent: first, the shift from RDP to GEAR and second, the inconsistency internally in the AGISA framework. The important thing to note with RDP, GEAR and AGISA is first, that the ANC exposed its incapacity to remain consistent with its promises set out in its policy frameworks.

It was only with the New Growth Path (NGP) that the commitment to a developmental state became the clear standpoint of the ANC. As previously established, the persistent rates of unemployment, poverty and inequality continued to plague the economy with stringent limitations, effectively stunting development and growth. Thus, the adopting of the developmental state goals became the ANC’s response to the failure of its preceding policy attempts. Similarly, to the RDP, GEAR and AGISA, the NGP started off with the acknowledgement of South Africa’s “triple threat” that had systematically remained the same, or even worsened since 1994 [21]. The NGP ensured South African citizens they were going to prioritise economic development and optimise the performance of the government in its quest to promote “a more inclusive economy” in line with the DS narrative it had since promised [21].

Chapter 4 of the NGP (2011) titled “Institutional Drivers: Developmental State” outlined the ANC’s commitment to being a DS as a critical means to stimulate employment opportunities and economic growth thereof. The NGP made an explicit commitment to acknowledging that their DS would not be held “hostage to market forces”. Instead, the NGP committed to enhancing the state’s efficiency and cohesion with civil society. Economic development was to be stimulated through export-led industrial policy, job-creation, and income distribution. Thus, it was here that the DS rhetoric [21].

A year later, the NDP was launched. Even though there was a commitment to being a developmental state in 2011, the NDP openly criticises the failures of South Africa’s (and the world’s] neoliberal economic approach. It emphasised the inability of competitive, capitalist neoliberal economical methods to foster meaningful development, especially within South Africa’s highly complex economic environment [22]. It was with the release of the NDP that the disparity between the ideological, economic thought and the policy in practice became starkly clear. The incoherence in policy-thinking had now persisted for almost a decade along with the socio-economic complexities of South Africa’s civil society. Hence, the ANC was using the promises of being a developmental state as a smokescreen for its failure to properly execute it in practice [23]. The role of economic stability and access to public goods became a predecessor of any other method of economic stimulation. A streamlined focus on improving access to quality healthcare, education, housing, electricity, and water was detailed. Alongside the promises made to civil society, and acknowledgement of the need to create an accountable, corruption-free bureaucracy was employed as a central goal of the government at large. The shift in policy-thinking seemed highly committed to a developmental agenda.

However, the NDP was still not internally consistent. We saw with previous policy documents there was an issue of internal inconsistency, as well as external implementation. The failures of South Africa’s economic development trajectory have been largely attributed to its poor policy approach and weak civil service. Part of the poor policy approach includes the internal incoherence within the document itself, which is not consistent with the requirements of DS literature that requires an absolute commitment to coherent policy; and another part of it is attributed to its implementation [or lack thereof]. For example, the NDP cements itself to the ideology of becoming a DS as the only meaningful mechanism to combat South Africa’s development challenges [22]. The promise to build a capable DS by coordinating government sectors vertically³ and horizontally,⁴ strengthening and stabilising the public service and improving the governance of SOEs, is outlined as the primary role of the state [22] . However, the state still preserved a neo-liberal macroeconomic policy. For example, the NDP still maintained a minimalist state role and labour market de-regulation [16]. Despite the NDP critiquing neo-liberalist economic policy and committing itself to being a DS; South Africa remained entrenched in the neoliberal character it had set out for itself in 1996.

Outside of policy inconsistencies, the ANC seemed to forget the pre-requites any successful DS requires. Not only does the NDP negate responsibility for SAs failed development, but it lends it only to the legacies of apartheid. In such, it forgets that the developmental state will fail if there is not an efficient bureaucracy capable of effectively executed the policies outlined. There was a further lack of commitment to detangling the capitalist and neoliberal commitments of the country. Hence, the institutional framework of the country remained largely characterised by capitalist relations and a competitive market-led economy. It thus argued that the NDP committed itself to being a developmental state without adequately adapting the methods and character of its bureaucracy and institutional framework to be aligned to developmental paradigms. For example, the NDP asserted the ANC’s commitment to eradicate corruption and embody an accountable bureaucracy aligned to a Confucianist value system, as DS literature encourages [16]. However, as Figure 2 depicts below, there has been little improvement to the “Corruption Perceptions Index” since 2003. Figure 2 illustrates that in the years 2011 and 2013, when the NGP and the NDP were released, the country experienced some of its highest corruption rates from 2003 to 2020. It can be concluded that in the same years the ANC declared its commitment to the DS, the country’s corruption rates worsened. The stagnant and worsening levels of corruption indicate the ANC’s inability to develop an accountable bureaucracy that is needed for a functioning state. This means that the state continued to be characterised by political illegitimacy, and an unaccountable bureaucracy. The lack of state capacity signifies the ANC’s inability to effectively realise as DS, as opposed to their policy promises.

Figure 2.

Corruption perception index, South Africa.

In 2019, the policy document: “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa” was released [18]. Prior to this, thought, President Cyril Ramaphosa continued to stress the ANC’s creation of the developmental state by using the state as a vehicle to drive social, economic, and political transformation. There was a stringent belief in the capability of the Presidency to lead a capable developmental state [24]. The trust in the bureaucratic regime meant that the policy promises of the ANC remained committed to the creation of DS to deliver meaningful economic development to the country. The Reconstruction and Recovery plan, established in 2020, continued to align itself with DS goals by continuing to assert the role of state and planned interventions as the mechanism for economic reconstruction recovery and stimulation post-COVID-19 [25]. However, even when the ANC clamped down on the role of state as the primary means of restoring economic stability to the economic fragility catalysed by COVID-19, the policy promises were not actualised. The austerity measures adopted by the National Treasury, the cadre deployment and Covid-related corruption all worked to dismantle, again, the ability for the state to realise a developmental state to any extent [24]. The macroeconomic character of the state remained obstinately neoliberal with the continued liberalisation of markets and minimal state interference in its institutions [26].

4.2 The ANC’s failed developmental state: a consequence of policy incoherence

The previous section analysed the ANC’s move towards the DS rhetoric since the release of the NGP in 2011. It showed us that barriers to achieving a DS, is not one of capacity, for South Africa has both the ability and need to become a DS. SA’s impossibly detrimental development challenges do not prevent it from implementing the DS agenda successfully. The East-Asian Tigers and successful Latin America DS’s were all inherently underdeveloped, battling legacies of structural inefficiency and economic fragility. The DS literature pulls economies out of their “economic rut” and into an era of meaningful, sustainable development patterns. Hence, this chapter has argued that the ANC’s failed DS is not because of unfavourable economic conditions, but can be attributed to:

1. An incoherent and inconsistent policy framework,

2. Cadre deployment and rising corruption,

3. A misalignment between DS policy promises and their macroeconomic approach. Although the policy-thinking has been that of a DS, the macroeconomic environment of SA has remained persistently neoliberal [26].

The ANC has tried to deal with South Africa’s development issues by adopting a DS. However, this has not been actualised because of policy incoherence between the policy and reality, and the ANC’s failure to properly implement the ideal characteristics of a DS. Instead, there has been a neoliberal approach that has undermined the ANC’s progress as a DS. This can be more clearly seen in South Africa’s healthcare sector.

5. Case study: the ANC’s approach to healthcare

In this chapter, we turn our attention to healthcare within the context of a developmental state. Understanding the intricacies of healthcare provision and financing is crucial for assessing a nation’s progress towards developmental goals, particularly with South Africa. Before understanding the South African case, the nexus between healthcare and economic development is explored, along with an overview of the South Korean case.

5.1 The nexus between healthcare and economic development

The nexus between healthcare development and economic growth is well-documented in the literature. Health has a vital role in maintaining economic development, as it is essential for and a result of economic progress. A country’s health status affects economic development in multiple ways, as it influences human capital accumulation, workforce efficiency, and quality of life. Moreover, the impact of healthcare expenditure on the economy’s growth is a subject of extensive study. While some research shows the positive relationship between healthcare expenditure and economic growth, other studies emphasise the need to account for issues such as corruption, bureaucracy, underinvestment, and inefficiency in health-related resource utilisation. This is where the developmental state comes in.

South Korea provides an interesting example of the interplay between economic growth and healthcare development, achieving universal health insurance within 12 years. This achievement has contributed to improving the overall health of the population, which has had a positive impact on the country’s economic development, in line with its developmental state goals [27, 28].

5.2 The south Korean healthcare system: a public private partnership (PPP) system in a developmental state (DS)

There are multiple methods by which healthcare service financing and delivery systems can be designed [29], and can include, but are not limited to:

1. Government-led provision (public health centres, dementia centres, public hospitals, local medical centres) in which the government delivers (or entrusts to the private sector) health and medical services using tax resources.

2. Privately led hospitals and clinics that deliver health care services; users freely select and use private hospitals and clinics, and then the Corporation, the public payer, reimburses the user’s costs.

3. A private sector delivers healthcare services and private insurance companies provide financing.

4. Communities such as medical cooperatives provide health care services as funders, deliverers, and users.

5. A corporation, a public funder, directly provides health care services with health insurance funds (corporation-operated hospitals and clinics, corporation health promotion projects).

Among the five types above, Korea’s health care service delivery system and financing fall into the second type, in which private hospitals and clinics deliver medical services using national health insurance as a resource; otherwise known as a form of PPP [2]. The proportion of public hospitals in Korea is only 6%, and the rest are all private hospitals. This is in comparison to the average proportion of public hospitals in the Organisation for Economic Co-operation and Development (OECD) countries is 51% [29].

Since the National Health Insurance Act was enacted in the 1970s, Korea has aimed to provide medical services through private hospitals and clinics rather than public hospitals. The government at the time needed to minimise national welfare expenditures while making national economic development its top priority, so it did not establish public hospitals but instead used the private industry to maintain efficiency of healthcare provision whilst aligning it with the state, as per DS literature suggests [29]. As a result, instead of establishing a public hospital, the government had private providers provide medical services and raise financial resources through public insurance [29].

Under the policy goal that health insurance finances should not hinder national economic development, the government limited insurance benefits items and applied strong price controls on insurance benefit items and high out-of-pocket ratios [29].

Korea’s medical system has become the foundation for all citizens to receive medical services at low prices anytime, anywhere, making it one of the most exemplary healthcare systems worldwide. Understanding South Korea’s healthcare system is important as it provides insight into the trade-offs and policy decisions made in balancing economic development goals with the provision of healthcare, quality, and spending. This can provide the reader with an understanding of what should idealistically inform South Africa’s endeavours to achieve its developmental state objectives.

5.3 A contextual analysis of South Africa’s healthcare sector

The healthcare sector in South Africa is marked by significant inequalities, reflecting the broader social and economic disparities in the country. The South African health system faces systemic and structural challenges, including inefficiencies, staff shortages, and variability in care levels between rural and urban areas [30]. The healthcare system comprises a large poorly funded public sector and a smaller, better-resourced private sector, leading to persistent inequality between the two [31]. This inequality is further exacerbated by high levels of poverty and unemployment, with the public sector being under-funded and overburdened.

Similar to the education sector, where deep inequalities persist, the healthcare sector also experiences disparities along racial and socio-economic lines. For instance, racial inequality is clear in the healthcare sector, with differences in access to quality care and health outcomes [32]. Socio-economic status contributes to disparities in health outcomes, reflecting the wider social determinants of health. These disparities are further compounded by the two-tiered nature of the healthcare system, with significant differences in access and quality of care between the public and private sectors [33].

The healthcare sector in South Africa is characterised by significant disparities. According to the General Household Survey, only 17 out of 100 South Africans have medical insurance, with about 73% of white individuals, 52% of Asian individuals, and only 10% of black Africans being members of a medical scheme [34]. The private health sector in South Africa accounts for the largest share of health expenditures, with about 79% of doctors working privately [35]. This disparity in private coverage reflects the broader inequalities in the healthcare system.

Furthermore, the distribution of healthcare resources is inequitable, with over 120 medical schemes historically excluding black South Africans until the 1970s and still mostly catering to the wealthier population [35]. The public healthcare system, which serves most of the population, faces challenges such as medicine shortages and procurement issues [35]. The country’s healthcare system is burdened by the largest HIV/AIDS epidemic in the world, accounting for about 17% of the global burden of HIV infections [30].

The public sector serves roughly 84% of the population without private health insurance, while the private sector caters to the remaining 16% [31]. This unequal distribution of resources has led to significant disparities in the quality of care and patient outcomes between the two sectors.

The public healthcare system faces a range of challenges, including widespread inefficiencies, staff shortages, and suboptimal care levels [36]. Despite being one of the top five African countries in terms of density of medical personnel per 1000 population, the South African public health system is chronically understaffed, particularly in rural and remote areas [36]. About 70% of doctors work only in the private sector, leaving only 30% of physicians available to serve the public sector [36]. This shortage of healthcare workers contributes to the suboptimal care levels and patient management in the public sector, who depend on the under-resourced public sector [37]. This has perpetuated inequality in access to quality health services.

In summary, the two-tiered nature of the healthcare system in South Africa has led to significant disparities in the quality of care and patient outcomes between the public and private sectors. The public sector faces challenges related to inefficiencies, staff shortages, and suboptimal care levels, while the private sector is largely funded through individual contributions to medical aid schemes or health insurance, serving a smaller portion of the population [31]. Addressing these disparities requires comprehensive efforts to strengthen the public healthcare system and reduce inequalities in access to quality health services.

5.4 Misalignment between the developmental state goals and the approach to healthcare in South Africa

5.4.1 The role of policies and thwarting health outcomes

Section 3 outlined the inconsistency, incoherence, and mixed policy approach of the ANC. Should the policy approach be fragmented and misdirected, it is understandable then, that sectors such as education are underperforming. The misdirection of macroeconomic policies creates a foundational base for an inefficient and incapable institutional environment. Health outcomes are compromised. This is like the disparity identified with the release of the NDP. There was a commitment to being a developmental state, but no effort was made to ensure the state could implement the developmental agenda. Further, there was not a meaningful attempt to detangle the neoliberal character of the country inherited from the apartheid regime and maintained by the previous macroeconomic frameworks. The lack of a consistent provision of resources, service delivery, and infrastructure development is a failure on behalf of the macroeconomic promises made within the abovementioned policy documents to achieve universal healthcare, and economic development.

5.4.2 The example of the National Health Insurance (NHI) program, and post-Covid reflections

To improve the healthcare system, the SA government proposed the introduction of an NHI. The NHI, uncoincidentally like that used in South Korea (outlined in Section 4.2.), a well-established developmental state, has the primary goal of improving the health system both in access and quality, for equality of care. Despite the ANC’s commitment to the DS paradigm, the reality of its macroeconomic policy diverges from the developmental ethos envisioned. This misalignment is clear in the healthcare sector, where policies ostensibly aimed at advancing developmental goals paradoxically perpetuate inequalities in health outcomes, exacerbating disparities between rural and urban areas, and the public and private sectors.

5.4.2.1 Defining the National Health Insurance

South Africa has been desperately trying to solve its development challenges since the shift to a democratic regime in 1994. One of the ANC’s first attempts to improve the welfare of South African citizens was to introduce the NHI Bill in 1994. The primary aim of the NHI was to equalise access to quality healthcare for all South Africans. It is important to note that the NHI’s primary function is to finance citizens’ medical care, and not an organisational vehicle to run the hospitals. The NHI was to be implemented in three stages, a systematic approach characteristic of a developmental state approach [38, 39, 40].

1. The first stage was dedicated to improving the quality of health systems by strengthening the overall governance and management of hospitals.

2. The second stage was focussed on cementing how the financing framework of the NHI would operate. In Ghana, implementing an NHI did not effectively combat health inequality primarily because it was not tax-funded and thus 60% of Ghanaians could not afford the premium [41]. This way, persisting income inequality affects the ability to access medical insurance. Thus, to simultaneously target public vs. private sector divisions and income inequality, the design of South Africa’s NHI financing would be funded by progressive taxation measures [39].

3. The third stage was to continue the strengthening of the healthcare institutions started in stage one, whilst formalising the payment structures and tax allocations for the NHI; and distributing resources to equalise the quality of healthcare across hospitals.

At the time of the NHI policy proposal, SA was characterised by extreme inequalities, such as unequal access to quality healthcare. It was the intent of the NHI not just to join the global move towards a universal healthcare system, but to deliver on the promises of Section 27 of the Constitution. Section 27 of the Constitution states that one of the fundamental rights of all South African citizens, irrespective of race, gender, or class, is the right to equal access to quality healthcare [38]. However, fast-forward 27 years, South Africa’s healthcare system is still vastly unequal in both quality and access; distinctly clear between the private and public sectors. Although, theoretically, SA is in its second stage of the NHI, the government could not effectively deliver on its policy promises, leading to public mistrust in the NHI. The implications of the NHI, should it be carried out effectively, will not just dissipate the inequalities persisting in the healthcare sector and relieve the overburdened public sector, but it will also start macroeconomic spill-overs that contribute positively to long-run economic growth [39].

5.4.2.2 COVID-19, a health crisis, or an opportunity to realise the DS?

The reality of SA’s socio-economic environment battles stubbornly high unemployment rates that have remained above 20% since 1997. This has contributed to the poverty rates, which were sitting at 55.5% in 2015 [9]. From those that are employed, there is stark income inequality clear by the Gini-coefficient of income that has persistently remained above 0.60 [9]. These macroeconomic factors have only been worsened by the pandemic. COVID-19 increased unemployment rates, which consequently aggravated the poverty and inequality rates. Thus, this leaves a large proportion of the population unable to meet their own financial needs, let alone pay for amenities such as healthcare. Along with a plethora of other challenges, COVID-19 has harshly affected, and exposed, the inequities present in its healthcare sector.

Before the onset of the pandemic, South Africa’s health institutions were already characterised by harsh divisions between the public and private health sectors; inequalities in access between rural and urban areas; and the overall stress of under-resourced and under-managed hospitals nationwide [38]. One of the primary reasons for the inequalities in access to quality healthcare is affordability. Like much of SA’s socio-economic environment, its healthcare sector is bifurcated between public and private health sectors. Most South Africans cannot afford medical aid, which allows people to access healthcare of a much higher quality from the private sector. As discussed above, fewer South Africans can afford healthcare as unemployment rates have risen, illustrating the need for universal healthcare in the country.

Some other effects the pandemic had on the health sector included exposing the incapacity of the public health sector. Hospitals, nationwide, could not meet the demands of the care required by ill patients. They were overburdened, under-staffed and under-resourced. Comparatively, the private sector, although also struggled to keep up with the increased healthcare demand, was far more able to deal with the onslaught of the pandemic. This further exacerbates the already concerning and persistent inequality in the country. By deepening the divide between those who can afford private healthcare and those who cannot, this provides additional motivation for the necessity of the NHI.

5.4.2.3 The increasing need for the NHI

COVID-19, if anything, has exposed the importance of non-economic factors, such as healthcare, education and climate change, have on the development and basic functioning of global economies [42]. Seeing that healthcare is one of the most pertinent public goods worldwide, it is essential that polices be put forth to protect and promote the quality of that good. The pandemic has sparked a global shift towards including non-economic factors in the framework of international governance [42]. South Africa is no exception, and it is thus essential that the state strengthens its health sector so that citizens may realise their basic human rights, and so the economy can be stimulated effectively.

Recall that the NHI’s primary goals are to improve equity and social protection. If the pandemic has only heightened socio-economic inequities, and essentially left many citizens without the security of quality healthcare, then a fortiori, the potential equity gains from implementing the NHI are vital.

5.4.2.4 Necessary, but unfeasible, measure: the reality of SA’s bureaucracy

However, it would be ignorant to disregard the fact that SA has not implemented the NHI thus far. As Reid (2020) highlights, the NHI is an idealistic concept that is likely to take a while to be envisioned [43]. The SA government has a track record of being unable to realise its policy thinking in practice. The corrupt bureaucratic regime has historically proved its incapacity to be a capable state-head. With the onset of the pandemic, we saw the bureaucracy engage in further rent-seeking activities. This has proved, especially to the public, that the ANC-led bureaucratic regime is incapable of being the accountable state head that the NHI would rely on. The fear associated with the NHI in SA is that it will simply provide state actors with more rent-seeking opportunities; and thus, civil society will be further disadvantaged.

COVID-19 stimulated cross-sector dependence, and collaboration between the health minister and the scientific community, which are much-required facets for the efficient implementation of the NHI in a DS. This provided the state with the perfect opportunity to re-imagine its attempt at the DS. It provided the evidence needed that perhaps, with the effective management and accountability structures in place, and the correct application of the DS ingredients, Universal Health Care (UHC) is not simply an idealistic dream.

The proposal of the NHI in South Africa reflects the government’s ostensible commitment to addressing deep-seated socio-economic disparities [40]. However, despite the kick-start opportunity provided by COVID-19, implementing the NHI has continued to be hindered by bureaucratic inefficiencies, conflicting policy decisions, and cadre deployment practices, which undermine effective civil service management. These systemic challenges not only hinder the realisation of developmental objectives but also perpetuate socio-economic inequalities, particularly clear in health outcomes.

The COVID-19 pandemic further exposed the vulnerabilities within South Africa’s healthcare system, amplifying existing inequities and highlighting the urgent need for comprehensive healthcare reforms. While the NHI represents a critical step towards addressing these challenges, its feasibility remains contingent upon addressing the systemic barriers hindering its implementation, particularly within the context of misdirected policy approaches and bureaucratic inefficiencies. The failure of South Africa to attain the status of a DS has had significant repercussions on its healthcare system, as exemplified by the challenges encountered in implementing the NHI. This failure to achieve meaningful development post-apartheid is intricately linked to a misaligned policy approach, particularly clear in healthcare. The discrepancy between policy intent and implementation not only undermines the principles of the DS but also exacerbates existing socio-economic disparities, particularly in access to quality healthcare.

5.4.3 The ANC’s healthcare approach: a misfocus on healthcare quality and a note on healthcare spending

South Africa’s healthcare spending has seen a stark increase from 1994 to 2022, as shown in Figure 3. However, this increased expenditure has not always translated to a proportional improvement in the quality of healthcare. According to a report on public services, government employment, and the budget, South Africa’s provincial healthcare spending has shown annual nominal growth over the years. Despite this increased spending, the country’s health system continues to face systemic and structural challenges, including widespread inefficiencies, staff shortages, and suboptimal care levels. The healthcare system comprises a large, poorly funded public sector and a smaller, better-resourced private sector, leading to persistent inequality in the quality of health service provision.

Figure 3.

Gross healthcare expenditure, South Africa.

The disparities in healthcare spending and resource allocation have contributed to the inefficiency and inequity in South Africa’s healthcare system. The country’s two-tiered, highly unequal healthcare system has perpetuated inequality rather than addressing it, with the public sector being under-funded and overburdened.

Despite the increased healthcare spending, the reality of service provision, infrastructure, and medical resources remains a challenge, with persistent shortages and variability in care levels between different areas.

The ANC has significantly increased healthcare spending in South Africa, with approximately 6–6.5% of the Gross National Product (GNP) being allocated to health services. However, despite this increased funding, the country’s healthcare system continues to face challenges related to inefficiency, inequity in service provision, and the misallocation of financial resources [44]. The public sector, which serves most of the population, is under-funded and struggles to provide quality care, while the private sector caters to a smaller portion of the population with well-resourced facilities [45]. This unequal distribution of resources has led to a situation where the high cost of private care has detrimental effects on public health care, perpetuating inequality in access to quality health services [46].

The high cost of private healthcare has led to limited access for most of the population, who depend on the under-resourced public sector, as seen in the Eastern Cape [46]. This has resulted when the public sector cannot meet the healthcare needs of the population effectively, despite increased funding. The disparities in healthcare spending and resource allocation have contributed to inefficiency and inequity in South Africa’s healthcare system.

Although South Africa has witnessed a growth in healthcare spending over the years, this increased expenditure has not always translated to a commensurate improvement in the quality of healthcare. The country’s two-tiered healthcare system, characterised by disparities between the public and private sectors, has contributed to inefficiencies and inequities in service provision. Addressing these challenges requires comprehensive efforts to strengthen the public healthcare system and reduce inequalities in access to quality health services.

6. Executive summary

South Africa’s policy approach to healthcare has undermined its development goals, despite the commitment, prima facie, to deep developmental objectives in healthcare policy. The aspiration to become a developmental state has not been effectively realised, as evidenced by persistent inequalities in health outcomes and shortcomings in the public health infrastructure. While introducing the NHI aimed to ensure access to quality health services for all citizens, other policies have perpetuated disparities in healthcare provision and policy implantation. Issues such as cadre deployment, conflicting policy decisions, and a mixed policy approach have hindered proves towards achieving meaningful development in healthcare; and as a result in economic development.

The well-documented nexus between healthcare development and economic growth. Health plays a crucial role in sustaining economic development, acting both as a determinant and a result of economic progress. A country’s health status affects economic development through various channels, including human capital accumulation, workforce productivity, and overall quality of life. This was briefly explored in the DS, South Korea, as one exemplar in healthcare development emphasising that South Africa has not fully realised the potential in this area. The analysis underscores the need to strengthen the health system, improve infrastructure, and address shortages of medical professionals to effectively realise and align with the country’s DS development goals in healthcare.

Ultimately, this chapter calls for aligning state policies with the ideals of human development and socio-economic justice to overcome the persistent development deficits in South Africa’s healthcare system, so that the dream of becoming a developmental state is not incessantly deferred.

7. Conclusion

Under the leadership of the ANC, South Africa has claimed to be a developmental state in their policy rhetoric since the release of the NGP. However, years later, this rhetoric has not translated into reality. Instead, the state has taken a persistent neo-liberal character which has consequently undermined both the economic development goals of the ANC and, more importantly, their capacity to embody a developmental state. This disparity between policy promises and reality can be seen in healthcare where, despite the ANC’s promises to be a DS, they have consistently embodied neoliberalism in their education spending and learning outcomes, undermining the economic development and DS goals of the state. We saw that a combination of other macroeconomic policies and cadre deployment has sufficiently thwarted the country’s ability to realise a DS. It can thus be concluded that if the ANC continues its current development trajectory, its policy incoherence, incapable bureaucratic regime, and its ability to coordinate institutional development such as in healthcare, its dream to be a developmental state will be incessantly deferred.

List of abbreviations

ANC	African National Congress
GEAR	Growth, Employment and Redistribution
RDP	Reconstruction and Development Programme
NGP	New Growth Path
NHI	National Health Insurance
DS	developmental state
FDI	Foreign Direct Investment
SOE	State-Owned Enterprise
NDP	National Development Plan
WC	Washington Consensus
IMF	International Monetary Fund
HIV	Human Immunodeficiency Virus
AIDS	Acquired Immunodeficiency Syndrome
AGISA	Accelerated and Shared Growth Initiative for South Africa
PPP	Public-Private Partnership
GDP	Gross Domestic Product
GNP	Gross National Product
OECD	Organisation for Economic Co-operation and Development
SA	South Africa
RSA	Republic of South Africa