Exploring El Salvador's political turnaround. Could South Africa learn a thing or two?
Political Mountain Climbing
As South Africa enters negotiations to form political coalitions and/or agreements, I can’t help thinking about El Salvador, a country that for decades suffered from political corruption and the highest rate of gang-related violence in the world. In 2015 the country’s homicide rate reached 103 homicides per 100,000 of the population. The population faced high levels of unemployment and poverty and limited economic opportunities. Their history of political polarisation between the two main parties hindered effective governance and policy implementation. Corruption was pervasive, affecting various levels of government and institutions. El Salvador struggled with social inequality with marginalised communities facing barriers to access education, healthcare and other basic services.
Does any of this sound familiar?
Nayib Bukele was elected as the President of El Salvador on 3 February 2019, and with that came a significant shift in Salvadorian politics! He was the youngest president of the country at the age of 37 and came to power with the promise of addressing corruption, improving security, promoting economic development and addressing social issues in El Salvador.
His work to clean up El Salvador includes Anti-Corruption measures where he prioritised combating corruption within government institutions. His whole cabinet underwent a lifestyle audit, and corrupt politicians were at least fired, and at worst imprisoned.
He implemented security measures to combat crime and violence, which included deploying the military to high crime areas to combat gang violence and organised crime. In 2023 he built an enormous high security prison with capacity for 40,000 prisoners and he arrested thousands of gang members and imprisoned them.
He focused on infrastructure projects to improve the country’s transportation, energy and telecommunication systems, which created jobs and enhanced the country’s competitiveness. The mega-prison was one of these projects.
He introduced economic reforms to stimulate growth and attract investment by creating tax incentives for businesses. He also streamlined bureaucracy to make it easier to do business in El Salvador. In 2021 El Salvador became the first country in the world to accept Bitcoin as legal tender.
Social programs aimed at reducing poverty and improving access to education, healthcare and other basic services were implemented and the country engaged in diplomatic efforts to strengthen relationships and attract foreign investment.
The homicide rate has dropped to 18 per 100,000 and Bukele has just been re-elected in a landslide victory with more than 80% of the vote. Taking drastic steps to improve doesn’t come easily and while some may applaud his efforts to address longstanding challenges, others have expressed concerns about issues such as human rights, democratic governance and the concentration of power in the executive branch. Public debt has skyrocketed as a result of social benefits that have been paid to the country’s poorest. After spending his first term tackling security and corruption concerns, his second term will need to focus on uplifting the economy and attracting foreign investors!
If you’re interested, Tucker Carlson recently interviewed Nayib Bukele. It’s just over an hour long, but worth a listen.
Tucker Carlson interviews Nayib Bukele
I hope that he can be as successful in his second term as he was in his first and manages to tackle the next set of problems facing the country.
I also hope that our collective political conclave can reach some decisions that benefit our nation and start a term of righting some of the basics of administrating a country for the good of all. We are on a knife’s edge and any wrong footing at this stage could have some dire consequences. Be strong South Africa, we are a country where miracles happen!
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.
Political Mountain Climbing
As South Africa enters negotiations to form political coalitions and/or agreements, I can’t help thinking about El Salvador, a country that for decades suffered from political corruption and the highest rate of gang-related violence in the world. In 2015 the country’s homicide rate reached 103 homicides per 100,000 of the population. The population faced high levels of unemployment and poverty and limited economic opportunities. Their history of political polarisation between the two main parties hindered effective governance and policy implementation. Corruption was pervasive, affecting various levels of government and institutions. El Salvador struggled with social inequality with marginalised communities facing barriers to access education, healthcare and other basic services.
Does any of this sound familiar?
Nayib Bukele was elected as the President of El Salvador on 3 February 2019, and with that came a significant shift in Salvadorian politics! He was the youngest president of the country at the age of 37 and came to power with the promise of addressing corruption, improving security, promoting economic development and addressing social issues in El Salvador.
His work to clean up El Salvador includes Anti-Corruption measures where he prioritised combating corruption within government institutions. His whole cabinet underwent a lifestyle audit, and corrupt politicians were at least fired, and at worst imprisoned.
He implemented security measures to combat crime and violence, which included deploying the military to high crime areas to combat gang violence and organised crime. In 2023 he built an enormous high security prison with capacity for 40,000 prisoners and he arrested thousands of gang members and imprisoned them.
He focused on infrastructure projects to improve the country’s transportation, energy and telecommunication systems, which created jobs and enhanced the country’s competitiveness. The mega-prison was one of these projects.
He introduced economic reforms to stimulate growth and attract investment by creating tax incentives for businesses. He also streamlined bureaucracy to make it easier to do business in El Salvador. In 2021 El Salvador became the first country in the world to accept Bitcoin as legal tender.
Social programs aimed at reducing poverty and improving access to education, healthcare and other basic services were implemented and the country engaged in diplomatic efforts to strengthen relationships and attract foreign investment.
The homicide rate has dropped to 18 per 100,000 and Bukele has just been re-elected in a landslide victory with more than 80% of the vote. Taking drastic steps to improve doesn’t come easily and while some may applaud his efforts to address longstanding challenges, others have expressed concerns about issues such as human rights, democratic governance and the concentration of power in the executive branch. Public debt has skyrocketed as a result of social benefits that have been paid to the country’s poorest. After spending his first term tackling security and corruption concerns, his second term will need to focus on uplifting the economy and attracting foreign investors!
If you’re interested, Tucker Carlson recently interviewed Nayib Bukele. It’s just over an hour long, but worth a listen.
I hope that he can be as successful in his second term as he was in his first and manages to tackle the next set of problems facing the country.
I also hope that our collective political conclave can reach some decisions that benefit our nation and start a term of righting some of the basics of administrating a country for the good of all. We are on a knife’s edge and any wrong footing at this stage could have some dire consequences. Be strong South Africa, we are a country where miracles happen!
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.