The early 1990s marked a moment of profound change for two countries on opposite sides of the world: Poland and South Africa.
In Poland, the collapse of communist rule after four decades of Soviet domination opened the door to sweeping economic reform. Under the Balcerowicz Plan, the new Polish government moved quickly, with prices liberalised, inefficient state industries losing their subsidies, and new private enterprises allowed to flourish. State-owned firms were privatised through investor sales, employee buyouts and public share offerings. Foreign investment was welcomed through the establishment of special economic zones. Strong property rights and institutions were established to encourage investment and entrepreneurship.
The reforms, often described as “shock therapy”, were not without their challenges. Prior to their implementation, inflation had reached 600% in 1989 and the early years of this economic programme saw recession and rising unemployment. Yet short-term pain was met with long-term gain. Today Poland is one of Europe’s most dynamic and fastest-growing economies. It was the only major European Union economy to avoid recession during the 2008 financial crisis, and while many Polish citizens moved westward in search of economic opportunity in the early 2000s, the economic gap between Poland and Western Europe is rapidly closing. Indeed, some economists now suggest that Poland’s GDP per capita could overtake Britain’s by the early 2030s.
South Africa, at roughly the same historical moment, appeared to be entering its own era of opportunity. The end of apartheid in 1994 lifted sanctions and opened the country to global markets. For a time, the results were encouraging. As the editor of this publication has noted, South Africa’s real GDP growth averaged 3.6% between 1994 and 2003 and 5.1% between 2004 and 2008.
Yet the long-term trajectory of the two countries could hardly be more different. Poland’s GDP per capita has more than tripled since 1994, rising from $13,200 to $45,153 in 2024 in purchasing power parity terms. South Africa’s GDP per capita, by contrast, has barely moved – increasing from $10,143 to $13,598 over the same period. In other words, while Poland has become dramatically richer, South Africans have largely stood still, and in recent years, they have begun even moving backwards.
South Africa recorded GDP growth of 1.1% in 2025, a figure celebrated by some in government as a three-year high, albeit lower than the 1.4% targeted by the Treasury. But with population growth estimated between 1.1% and 1.3% per year, the reality is stark. Each year the national economic pie grows slightly, but the number of people sharing it grows even faster. The result is that the average citizen’s slice continues to shrink and people get poorer.
Why did two countries that began the 1990s in broadly similar economic positions end up on such dramatically different paths? The answer lies in the economic choices their governments made.
Poland pursued a programme of economic liberalisation – reducing the role of the state, strengthening property rights and encouraging private enterprise. South Africa pursued something very different: a programme known as the National Democratic Revolution. The NDR envisions the transformation of South African society through the expansion of state power and the pursuit of demographic “representivity” across every sphere of economic life. Today, more than 145 race-based laws regulate everything from liquor licences to estate agency ownership. As economic policy has become increasingly politicised (by an ideology doomed to ever-repeating failure), investor confidence has weakened. Not helping this has been legislation such as the Expropriation Act allowing the state to seize property with “nil compensation”, further undermining confidence in property rights – a basic foundation of economic prosperity.
As the constitutional scholar Professor Koos Malan has argued, the governing party increasingly seeks control over what it calls the country’s “levers of power”. That ambition does not stop at parliament or the courts. It extends into the economic and civic spheres as well. The result is an economy suffocated by racial bureaucracy, incompetence and uncertainty – one doomed to economic decline.
For the Western Cape, continued centralised control over economic policy is an existential crisis. A province that remains one of South Africa’s most productive regions cannot indefinitely prosper while the national economy stagnates. Like a cancer, the decisions made by the majority of voters in the rest of South Africa will suck out the economic prosperity by the taxpayers in the Western Cape.
The principle of self-determination – recognised in the African Charter on Human and Peoples’ Rights – affirms that peoples have the right to determine their political status and pursue their own economic development. The Western Cape government should therefore be invoking this right to begin asserting greater control over economic matters where it can. It should challenge unfair fiscal allocations from the central government in court, resist destructive legislation such as the Expropriation and PIE Acts that undermine property rights in its jurisdiction, and use its provincial authority to protect businesses from race-based policies that discourage investment and growth.
In the face of a government that increasingly treats the constitution as little more than a piece of paper, Western Cape authorities should not hesitate to use the full extent of their constitutional powers – and the rights afforded under international law – to safeguard the people to whom they swore an oath to serve and protect.
This article originally appeared in The Cape Independent: Thinking clearly about South Africa’s economy - The Cape Independent
