The full transcript of the video is provided below:

0:03 April 1994, Pritoria. Nelson Mandela is

0:06 elected president of South Africa. A

0:07 freedom fighter who spent 27 years in

0:10 prison, his election marks the end of

0:11 white apartheid rule. It was a moment of

0:14 hope for a new beginning for a new

0:16 nation. But fast forward to the present

0:18 and that hope is gone. South Africa

0:20 today is the most unequal country in the

0:22 world. It has the second highest level

0:24 of unemployment and among the highest

0:25 murder rates globally. It's a country

0:27 blessed with abundant natural resources.

0:29 But where 67% of the population lives

0:31 below the poverty line and basic

0:33 infrastructure is falling apart. How did

0:35 this happen? In this video, we tell the

0:37 story of how the country went from

0:38 national liberation to economic

0:40 catastrophe and ask how, if ever, it can

0:43 turn this nightmare around. I'm Andrew

0:45 20 and this is South Africa, the dream

0:47 that didn't last.

0:52 It's impossible to talk about South

0:53 Africa today without using one word,

0:56 apartheid. the system of white minority

0:58 rule that ran from the 1940s all the way

1:00 to the early '90s. It was a form of

1:02 racial segregation that politically and

1:04 economically subjugated the black

1:06 African majority as well as other ethnic

1:08 groups. Apart didn't just come out of

1:10 nowhere, though. It had its roots in the

1:11 British colonial system that governed

1:13 the country until 1931. As early as

1:15 1913, the British passed laws limiting

1:17 where people could live and buy

1:18 property, restricting black Africans,

1:20 who made up 70% of the population to

1:22 only 7% of its land. But the system

1:24 really took shape following the election

1:25 of Prime Minister FD Malin in 1948. A

1:28 hardcore Africana nationalist. His

1:30 government introduced apartheid in its

1:32 fullest, ugliest form. They classified

1:34 citizens into a strict racial hierarchy,

1:36 banned into marriage and segregated

1:38 housing and employment opportunities by

1:39 race. Black people had no voting rights,

1:42 no political representation, and no

1:43 economic opportunity. And from 1970,

1:45 they didn't even have citizenship. This

1:47 unsurprisingly created an incredibly

1:49 unequal society. By the mid1 1980s, the

1:52 average life expectancy for blacks of

1:53 Africans was only 58 years versus 72

1:56 years for whites. In education, the

1:58 government spent 88% less on black

2:00 children than on white children. And in

2:01 some sectors of the economy, such as

2:03 manufacturing, black Africans earned 71%

2:05 less than their white counterparts in

2:07 the same industry. But a system that

2:08 denied even the most basic rights to its

2:11 own citizens couldn't last forever. So

2:13 by the 1990s amid fierce civil

2:15 disobedience at home led by groups like

2:17 the ANC or African national congress and

2:19 international sanctions from most

2:20 western countries situation became

2:21 untenable. The Africana government by

2:24 this point led by President FW clerk

2:25 knew that time was up. The clerk eased

2:28 restrictions on black political

2:29 opposition and released leader Nelson

2:30 Mandela from prison paving the way for

2:32 universal suffrage at the 1994 election.

2:35 Mandela by now the leader of the ANC won

2:37 that election marking a historic return

2:39 to democracy. So aparttheid was now

2:41 over. But the task facing the ANC was

2:43 immense. They didn't just have to turn

2:45 over a new leaf. They had to rebuild an

2:47 entire society. And they failed

2:50 catastrophically. The ANC's whole

2:52 purpose was to fix inequality. But get

2:54 this. Since the end of a parttheid, the

2:56 wealth share owned by the top 10% has

2:58 actually increased, rising to a massive

3:00 90% by 2010. This insane stat puts

3:03 Africa far ahead of other crazily

3:05 unequal countries like Russia and the

3:07 US. In 2023, the average white household

3:09 earned around $41,000.

3:11 That is more than 80% above the average

3:14 for a black household. And the list goes

3:16 on and on. Unemployment has surged and

3:18 per capita real GDP is actually lower

3:20 than it was 20 years ago. Put really

3:22 simply, the ANC inherited the country

3:24 scarred by decades of apartheid. But

3:26 instead of fixing it, they ran it even

3:28 further into the ground. And after more

3:30 than 30 years in government, it is

3:32 ordinary South Africans who are paying

3:33 the price.

3:37 The thing is, South Africa speech didn't

3:38 just vanish. No, no. It was quite

3:40 literally stolen by the greed and

3:42 corruption of its own government. And if

3:44 there's one thing that best encapsulates

3:46 the country's descent into the abyss,

3:47 it's ESCOM, South Africa's state-owned

3:50 energy company. So, let me tell you a

3:52 story. The day is the 30th of December,

3:54 2022. Andre Deiter, the CEO of Escom, is

3:57 at the company's offices outside

3:58 Johannesburg. It was a normal day,

4:01 emails, meetings, coffees, but suddenly

4:03 everything changes. Doiter becomes dizzy

4:06 and confused. He starts vomiting and

4:08 collapses and is rushed to the doctor.

4:10 The diagnosis, cyanide poisoning. Doiter

4:14 survived, but the conclusion was

4:15 inescapable. Doit had become CEO of

4:18 ESCOM in 2020 and had led a massive

4:20 crackdown on corruption and fraud at the

4:22 company. And along the way, he had made

4:23 some pretty powerful enemies, some of

4:25 whom clearly wanted him dead. Escom had

4:28 gone from being the backbone of the

4:29 South African economy to the personal

4:31 piggy bank of its parasitic elite. The

4:33 company once produced 95% of the

4:35 country's electricity. But by 2023,

4:37 South Africa suffered from power

4:38 blackouts on 290 of the 365 days in that

4:41 year, costing the economy more than

4:44 175.5 billion in lost output. And here's

4:47 the thing, these rolling blackouts,

4:48 which South Africans call load shedding,

4:50 were the direct result of years of theft

4:52 and mismanagement by successive ANC

4:54 governments. Systematic corruption

4:57 particularly during the Jacob Zuma

4:58 presidency saw millions of dollars

5:00 extracted from the company in crooked

5:02 contracts and procurement deals in a

5:04 process that investigators are called

5:05 state capture. So let's take an example.

5:07 One of the biggest beneficiaries of

5:09 state capture in South Africa was an

5:10 Indian family called the Guptas.

5:12 Arriving in South Africa in 1993, the

5:14 Gupta brothers quickly established

5:15 themselves as some of the most

5:16 successful businessmen in the country.

5:18 Building an empire that spanned media,

5:19 mining, infrastructure, and more. Their

5:21 main mining interest was called Teeta

5:23 Exploration Resources. And here's the

5:25 thing. The groups just happen to be

5:26 pretty good mates of President Zoomer.

5:28 And they used this connection to win

5:30 together a contract to supply coal to

5:31 Escom totaling more than $235 million

5:34 US. In one of these contracts, ESCOM

5:37 agreed to buy $24 million of coal for

5:39 its power plants despite knowing the

5:41 coal wasn't even usable. And in another,

5:44 ESCOM agreed to prepay Gupta business's

5:46 $94 million to finance the purchase of

5:48 another mining company, Optimum Coal.

5:50 The deal made a fortune for the Gupta

5:53 consortium, which just happened to

5:55 include President Zuma's own son, who

5:58 took home $20 million from it. Like,

6:00 isn't that just an amazing coincidence?

6:03 The Zondo Commission set up to

6:05 investigate corruption under Zuma

6:06 estimated that in total 57 billion rand

6:10 or around 3.4 $4 billion was extracted

6:12 from the state through these dodgy deals

6:14 with more than 97% of this coming from

6:16 Escom and Transnet, the state-owned rail

6:19 and port company. And what makes this

6:21 unique is that the rot wasn't just at

6:23 the top. It was at pretty much every

6:25 level. Thieves literally stole coal,

6:27 fuel, oil, and equipment from Escom

6:29 plants with losses reaching more than

6:30 $55 million per month. The result of the

6:33 corrupt deals and theft was that by

6:35 2023, a massive 45% of Escom's installed

6:38 capacity was out of action due to

6:40 breakdowns or maintenance, wiping as

6:41 much as 1.8% off GDP that year alone.

6:44 The decline of Escom is a symbol of how

6:46 the marriage of politics and big

6:48 business pushed the country over the

6:49 edge. And it took South Africa from

6:51 being one of the world's largest coal

6:52 and energy producers to a country that

6:54 could barely keep the lights on.

6:59 The ANC's leadership hasn't just been

7:01 corrupt. It's also been defined by naive

7:03 economic policymaking that's worsened

7:05 the very problems it was meant to solve.

7:07 So when the ANC came to power after

7:09 apartheid, their main task was to put

7:10 the country's wealth back in the hands

7:12 of its people, specifically the black

7:13 majority. Their flagship policy for this

7:15 was called black economic empowerment or

7:17 be. And the goal was simple. They needed

7:20 to increase black participation in the

7:22 economy. At the core of BE is the idea

7:24 of a scorecard for firms which is used

7:26 to determine eligibility for licenses,

7:28 permits, and contracts with state and

7:29 public entities. And this is quite

7:31 literally what it sounds like. Firms are

7:33 awarded points across five different

7:35 elements, ranging from black ownership

7:36 to management to blackowned suppliers to

7:39 their overall public welfare

7:40 initiatives. And this policy was clearly

7:42 well-intentioned, but it's been a

7:43 spectacular failure both in its own

7:45 terms of increasing black participation

7:47 in the economy, but also in the broader

7:48 development of the country more

7:49 generally. So rather than transferring

7:51 economic ownership into the hands of the

7:52 black working class, it has instead been

7:54 handed to a small group of oligarchs

7:56 with connections to the ANC. By one

7:58 estimate, up to 1 trillion rand or

8:00 around 61 billion US has been

8:02 transferred to just 100 politically

8:04 connected individuals. So let's take an

8:06 example. And so if you want to

8:07 understand how this worked, look no

8:09 further than the country's current

8:10 president, Sur Ramaposa, who built a

8:12 fortune north of $450 million in his

8:14 post-apartite business career. He did

8:16 this by founding an investment holding

8:18 company called Shanduka, which held

8:19 stakes in well, pretty much everything

8:21 from telecoms to mining to real estate.

8:24 Shanduka got these in part because both

8:27 domestic and international businesses

8:29 needed black shareholders to get things

8:30 done in the country, which meant that

8:32 Shanduka became the partner of choice

8:34 for companies like Coca-Cola,

8:36 McDonald's, and Glenor in South Africa.

8:38 Meanwhile, being a blackowned investor

8:40 allowed us to secure discounted stakes

8:41 in lucrative opportunities. For example,

8:43 when Shanduka became a 12% shareholder

8:45 in mining group Assau in 2005, it bought

8:48 in at a nominal price of 127 rand or

8:51 around $8 per share, but paid only 85

8:54 rand per share, a more than 30%

8:56 discount. It sold the shares to another

8:58 BE partner in 2011, netting a juicy $140

9:01 million profit in the process, despite

9:03 selling the shares at a 23% discount to

9:05 the company's monthly average share

9:07 price, presumably to create a similar

9:09 arbitrage opportunity for the next BE

9:11 investor. And so instead of creating a

9:13 new black middle class, what be has done

9:15 is create a new oligarchy and to

9:17 facilitate the kind of corruption we

9:19 talked about earlier in the video. But

9:20 it hasn't just been a failure in its own

9:22 terms. It's been a complete disaster for

9:24 economic growth in South Africa. One

9:26 South African think tank estimates the

9:28 total cost of BE compliance is around

9:30 145 to 290 billion rand per year or

9:33 around 18 billion US. That's equivalent

9:35 to 2 to 4% of annual GDP. The need to

9:38 comply with BE imposes a huge burden on

9:41 South African companies both in terms of

9:42 sheer paperwork and by forcing them to

9:44 buy from blackowned suppliers who may

9:46 not be the cheapest or most suitable.

9:48 And because the compliance requirements

9:49 are less stringent for smaller firms,

9:51 that creates a massive disincentive for

9:53 growth. A 2026 survey of South African

9:55 firms reported 35% reduced net

9:57 employment as a result of BE compliance

9:59 while 40% reduced new investment and 50%

10:02 reported reduced reinvestment as a

10:03 result. The overall impact of this is a

10:06 collapse in the average number of

10:07 employees per firm as you can see in

10:09 this chart as well as overall investment

10:10 in this African economy. So to put it

10:13 really really simply be was a nice idea

10:15 which has ultimately become a major

10:17 economic distortion crushing growth and

10:19 deepening inequality. Okay, but let's be

10:22 clear it's not the only problem. It's

10:25 actually just the most prominent of a

10:26 set of market unfriendly policies in the

10:28 ANC that have held back the country's

10:30 development. Take for example the ANC's

10:33 1995 labor rights act intended to

10:35 rebalance the injustice of the apartheid

10:37 system. It gave employees and trade

10:39 unions extensive rights around wage

10:40 setting and job security and it was

10:43 great for workers but terrible for

10:45 firms. In the World Bank's now

10:46 discontinued global competitiveness

10:48 report South Africa ranked 124th out of

10:51 141 countries on flexibility of wage

10:53 setting and 129th on hiring and firing

10:55 practices. So whilst these laws are good

10:57 for people who have jobs, they have

10:59 suppressed overall job creation in the

11:01 country particularly for smaller

11:02 businesses and that means weak economic

11:04 growth and rampant unemployment. And

11:07 this it's where the deep irony of the

11:08 ANC's policy platform becomes clear. The

11:11 ANC thought that if they prioritize

11:12 financial redistribution then an

11:14 economic growth would come as an

11:15 inevitable result of that. But in

11:16 reality this focus on redistribution has

11:19 crushed economic growth and employment

11:20 in South Africa and harmed exactly the

11:22 people that it was meant to help. South

11:24 Africa is a tragic case of wasted

11:26 potential. The country is blessed with

11:28 extensive natural resources and a large

11:30 young population. But after years of

11:33 mismanagement and corruption by its

11:34 government, it has struggled to move on

11:36 from its dark aparttheid past. However,

11:38 there's also a recent case of optimism.

11:40 In the 2024 election, the ANC actually

11:42 lost its 30-year parliamentary majority,

11:44 forcing into a coalition with several

11:46 other parties. This new unity government

11:48 has enacted structural reforms to try

11:49 and turn the ship around. Chief amongst

11:51 these is repairing the country's

11:53 decaying energy and transport

11:54 infrastructure as well as reigning in

11:55 government borrowing. And these early

11:57 steps are starting to bear fruit. In

11:59 November last year, South Africa's

12:01 sovereign credit rating was upgraded for

12:02 the first time in 20 years. And in June,

12:05 it posted its third consecutive fiscal

12:06 surplus, beginning the process of

12:08 bringing down its debt burden. Things

12:10 are even getting better at

12:11 long-suffering ESCOM, too. After reforms

12:14 to clean up ESCOM and open up the

12:15 generation market to private

12:16 competition, South Africa sought zero

12:18 days of blackouts last year. The state

12:20 utility now even produces a power

12:22 surplus. And on the railroads, freight

12:24 capacity started to climb again

12:25 following market liberization with 20

12:28 million tons of extra capacity expected

12:30 by the end of next year. These green

12:32 shoots of economic hope are young and

12:33 fragile, but they demonstrate that the

12:36 country's problems can be solved with

12:37 time and pragmatic thinking. And so a

12:39 successful economic turnaround for South

12:41 Africa will depend on the survival of

12:42 this current more pro business coalition

12:44 to chart a transparent promarket course.

12:47 In 2014, then President Jacob Zoomer

12:49 claimed that the ANC had a divine

12:51 mandate to rule the country for

12:53 eternity. But as South Africans see the

12:55 possibilities of a prosperous future

12:56 without the party, the ANC should

12:58 remember that nothing lasts forever.

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