Rainbow at risk: Improving South Africa’s prospects

This policy brief by the Institute for Security Studies (ISS) argues that South Africa is caught in a 'middle-income trap' characterized by sluggish growth, deep inequality, and declining government effectiveness. The authors advocate for a paradigm shift away from a state-led developmental model toward a more flexible, labour-intensive economy and a knowledge-based society driven by private sector partnerships and technological innovation.

• South Africa is currently stuck in a 'middle-income trap' defined by sluggish economic growth, deep-rooted inequality, and an unsustainable welfare model. Without significant change, the country risks a long-term low-growth trajectory fueled by poor job creation and rising unemployment, which may increase the frequency of violent protests that have been rising since 2010.
• Government effectiveness and the control of corruption have declined significantly between 1996 and 2014, despite the public sector growing by 28% over a decade. World Bank rankings for government effectiveness fell from 79 to 65, and corruption rankings dropped from 78 to 54 during this period.
• The authors argue that South Africa's reliance on a state-led 'developmental state' model is no longer viable due to fiscal constraints and the inefficiency of the public sector. This model relegates the private sector to a supporting role, despite the private sector being the only entity capable of creating wealth and jobs in an open market economy.
• To escape the middle-income trap, South Africa must transition to a knowledge economy by strengthening domestic technological innovation. The authors recommend tripling research and development spending from the historical 0.76% to 4% of GDP to match the levels of countries like South Korea.
• The document recommends a shift toward a labour-intensive, low-wage, and less-regulated growth path to address unemployment. This includes reducing red tape, improving access to low-cost finance, and increasing labour market flexibility, particularly for small and medium-sized businesses.
• The authors suggest replacing broad-based black economic empowerment (B-BBEE) and employment equity with a 'class-based redress agenda' supported by specific race-based initiatives to more effectively address poverty and deracialisation.
• The future trajectory of the country is heavily dependent on the internal politics of the African National Congress (ANC), specifically the conflict between 'reformists' and 'traditionalists'. The authors identify the ANC's December 2017 leadership decisions as a critical juncture for the country's medium- to long-term future.

APA

Cilliers, J., & Aucoin, C. (2016). Rainbow at risk: Improving South Africa’s prospects. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/PolicyBrief83.pdf

Chicago

Cilliers, Jakkie, and Ciara Aucoin. Rainbow at risk: Improving South Africa’s prospects. Institute for Security Studies, 2016. https://issafrica.s3.amazonaws.com/site/uploads/PolicyBrief83.pdf.

Wikipedia

{{cite report |last1=Cilliers |first1=Jakkie |last2=Aucoin |first2=Ciara |title=Rainbow at risk: Improving South Africa’s prospects |publisher=Institute for Security Studies |date=June 2016 |url=https://issafrica.s3.amazonaws.com/site/uploads/PolicyBrief83.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cilliers2016rainbow, author = {Cilliers, Jakkie and Aucoin, Ciara}, title = {{Rainbow at risk: Improving South Africa’s prospects}}, institution = {Institute for Security Studies}, year = {2016}, month = jun, url = {https://issafrica.s3.amazonaws.com/site/uploads/PolicyBrief83.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }