01/05/2017 09:58 SAST | Updated 02/05/2017 15:48 SAST

Venezuela Is Becoming An Example Of How Not To Do Radical Economic Transformation

Chris Malikane, adviser to Finance Minister Malusi Gigaba, believes Venezuela is a great model of what can be achieved in South Africa.

An opposition supporter is detained by riot police during a rally against Venezuela's President Nicolas Maduro in Caracas, Venezuela, April 26, 2017.
Marco Bello / Reuters
An opposition supporter is detained by riot police during a rally against Venezuela's President Nicolas Maduro in Caracas, Venezuela, April 26, 2017.


Venezuela is in the midst of a devastating crisis of political and economic turmoil. Those who cite it as an example of what "radical economic transformation" could look like in practical terms in South Africa have some difficult questions to answer.

In recent weeks, Venezuela has been fraught with violent protests in response to rising food costs, unemployment and a fourth year of recession.

WATCH: Why People Are Protesting In Venezuela

"Venezuela remains mired in a deep economic crisis," the International Monetary Fund (IMF) said in its most recent World Economic Outlook. To date, at least 28 people including protesters and journalists have been killed since the unrest erupted, according to Venezuela's attorney general.

Despite having the largest proven oil reserves in the world, Venezuela is in a state of serious economic demise, which is widely accepted as a consequence of some of the measures taken by its socialist government.

  • Unemployment is set to surpass 25 percent this year, and economists say it could and it could reach as high as 28 percent next year.
  • Frighteningly, the IMF's prediction for inflation in Venezuela is expected to surge to 720 percent this year and 2,068 percent next year.
  • The country is knee-deep in debt, with a fiscal deficit estimated at 20 per cent of GDP at the end of 2015, and external financing needs estimated at between US $25 billion and US $35 billion.
  • In 2016, its third year of recession, Venezuela's economy shrank by 18 percent and is predicted to be in the red this year, too.
  • Minimum wage was hiked to 65,021 bolivares per month, the equivalent of about US $46.70, or R622,73.
  • Investment has plunged, causing the capital stock to shrink.
  • The country is experiencing an endemic food shortage crisis, such that Venezuelans have endured weeks and in some cases months without basic foodstuffs such as milk, eggs, flour, soap and toilet paper. Prices for basic goods are so high that only few can afford them, and many have taken to eating out of rubbish bins.

Carlos Garcia Rawlins / Reuters
A student holding a sign that reads, "Maduro, you pulled the trigger that took to Juan Pablo", takes part in a tribute to Juan Pablo Pernalete, who died after being hit by a tear gas shot during a protest against Venezuelan President Nicolas Maduro, in Caracas, Venezuela April 27, 2017. REUTERS/Carlos Garcia Rawlins

And that's not all.

Anti-government protesters are calling for President Nicolas Maduro to step down, accusing him of eroding democracy, and in response, he deployed the Venezuelan armed forces to take to the streets to "maintain order." Maduro stands accused of creating a dictatorship in which the government has repeatedly blocked any attempts to oust him from power by a referendum, and has also delayed local and state elections.

In late March, the Venezuelan Supreme Court dissolved Parliament, transferring all legislative powers to itself -- a move that considered a coup attempt of sorts by opposition parties. The attempt was partially reversed three days later, after immediate and vocal rejection by the Global South community, but the removal of the final veneer of the government's claim to democratic legitimacy has energised massive street protests in Caracas, the capital city, and elsewhere around the country.

The regime has met these protests with a show of force and vows to govern "forever."

Similarly, President Jacob Zuma said in 2008 that the ANC would rule "until Jesus comes back."