The presentation of alternative paths, both positive and negative, that South Africa could take influenced the contending parties to adapt their political and economic strategies and arrive at a negotiated settlement that few expected at the time.

Indeed, most expected the political impasse would end in a bloodbath as the ruling National Party refused to negotiate with the African National Congress (ANC), Mr Sunter reminded delegates.

Using this flag-based system Mr Sunter told South African risk managers that the news from the National Assembly on the Information Bill had enhanced its chances of dropping into the second division of countries and could even hasten its fall into the third category of countries dominated by violence.

To allow this to happen would be a travesty, according to Mr Sunter, who pointed out that South Africa has been in the ‘premier league’ of nations since 1994 when it became a ‘proper’ democracy.

The league consists of the 59 nations listed in the IMD World Competitiveness Yearbook, that is annually produced by Swiss business school IMD, ranked 14th in the Financial Times world MBA rankings.

Mr Sunter pointed out that, at the turn of the century, South Africa was ranked in the mid-to-late 30s of this ranking, which is where he said it should be given that it is the 32nd largest economy in the world.

But South Africa fell to 53rd place in 2008 because of international concerns over the ‘quality of its infrastructure’, especially in light of the rolling blackouts of Eskom, the country’s leading electricity provider, he said.

In 2009 and 2010, South Africa was promoted back to 48 and then 44 as none of its banks were bailed out during the financial crash.

But this year it was dumped back to 52 because of government policy uncertainty and its adverse impact on foreign direct investment, which is down 70% this year alone, said Mr Sunter.

The scenario planner told risk managers at the IRMSA conference that this means that South Africa is now firmly ‘back in the relegation zone’.

The decision by the National Assembly to ratify the State Information Bill threatens to see the country drop even further down the leagues into the desolate non-league regions occupied by countries such as Afghanistan, if it leads to a violent response.

The plight of South Africa would clearly be improved if the Constitutional Court were to reject the Information Bill, as now sought by opponents. This would reassure trading partners and investors that the country is not on the slippery slope towards non-league status.

But otherwise Mr Sunter said that the country faces three basic scenarios.

“The first is that we get our ducks in a row and move back into the 30s where we rightfully belong,” said Mr Sunter. He pointed out that South Africa is the only African country listed in the premier league at the moment and has four key challenges ahead of it to retain that status.

First it must demonstrate ‘inclusive leadership’ to the world, which he believes President Jacob Zuma is capable of.

Mr Sunter said that those nations that are ‘united as a team’ have risen up the premier league fastest.

“The outstanding example is Singapore which in 2011 is number three after the US and Hong Kong who are joint number one. We give Jacob Zuma a tick in this category, particularly as he has recently disciplined the party,” said Mr Sunter.

But, Mr Sunter’s website pointed out that he is worried, as most people in South Africa are, about some of the divisive statements currently emanating from the ruling party. “The last thing South Africa wants to become right now, given the global hard times, is a racially polarised team,” he stated on the site.

Second South Africa must focus on ‘pockets of excellence’ that the country enjoys such as the efficiency of its tax collecting agency the SRA.

Third it must ensure that the 25,000 schools that he classifies as ‘dysfunctional to shocking’ are raised to the standard of the top 5,000 rather than ‘dumbing down’ the best to the standards of the lowest.

And fourth, the government needs to balance the outwards and inwards economy by focusing on key national strengths such as mineral wealth, tourism and the nation’s role as ‘gateway’ to Africa to help cope with the national debt.

According to Mr Sunter’s flag-based system, which did forecast the 2001 terror attacks on the United States, there is a 50% chance of this occurring.

The second scenario is that the country fails to get its ducks in a row, shoots a few own goals and is relegated into the second division of ‘poor but peaceful’ third world countries, said Mr Sunter.

If this happens Mr Sunter said that South Africa would lose its premier position in Africa to Nigeria, which already boasts an economy two thirds South Africa’s size, and the West African state would replace it in the G20.

“Companies will still make money here as they do in other third world economies, but for the government it will be exceedingly tough. They won’t get the tax revenue they got in the premier league and they certainly won’t get the access to international capital that they currently enjoy—just when Eskom needs another R800bn for its next generation of power stations,” said Mr Sunter.

The prospect of this scenario currently stands at 15%, he said.

The third scenario is the worst by far and on Tuesday night leapt up from 10% to 15% on Mr Sunter’s scale because of the National Assembly’s decision to ratify the State Information Bill.

“If the flag of violence goes up, we move into a scenario called ‘Failed State’ where we join the likes of Afghanistan, Somalia and Libya. Other nations turn their backs on us because we are too unpredictable and violent for any kind of trading relationship whatsoever. Obviously, the violence in South Africa at the moment is nothing like it is in Libya even when you include the statistics on violent crime. We only gave this scenario a 10% level of probability till yesterday but it is now jacked up to 15%,” he explained.

There are three other flags that could trigger this nightmare scenario for South Africa and the European companies that have been busy investing in the country in recent times in search of growth to compensate for stagnant domestic demand.

The first is nationalisation.

Speculation has risen in recent times about the potential nationalisation of the critical mining industry by the government since the global and financial economic crisis hit in 2008.

The debate was inflamed earlier this year by influential South African ANC youth leader Julius Malema who called for a mass seizure of land and nationalisation of major industries, not least mining.

He also called for a requirement that minerals are refined in South Africa before going abroad, which could add impetus to the government's costly plans for processing plants and smelters.

At Deutsche Bank's 8th Annual BRICS Metals and Mining Conference in London at the end of October, South Africa’s Mineral Resources Minister Susan Shabangu repeated earlier statements that the nationalisation of South African mines is not government policy.

She said: “I am fully aware that my own repeated assurances as well as numerous statements by government and our President have not yet removed the investor concerns in this regard. No matter how often our government states the obvious, that nationalisation is neither South African government policy, nor is it ANC policy, the controversies and potential fears do not seem to disappear,” said Ms Shabangu.

But South Africans remain unconvinced. And if the government were to compound its recent efforts to restrict the freedom of information through such a policy it would be viewed by the majority of the world as an ‘extremely retrogressive’ step, said Mr Sunter.

The second red flag would be a ‘clumsy’ implementation of national health insurance reform, which would lead to a decline in private medical care. “This would trigger another major exodus of young talent from this country,” as their major priority is quality education and healthcare for their children, stated Mr Sunter.

And, again underscoring the significance of the State Information Bill, Mr Sunter said that the third flag would be a media tribunal with punitive powers.

“The first journalist that is sent to jail for spilling the beans on a prominent individual would trash our reputation of being a liberal democracy at the tip of Africa,” he said last week.

Moreover, Mr Sunter stated on his website that such a move would ‘open the floodgates’ of corruption because it would no longer be counterbalanced by the fear of exposure.

The fourth flag is an outbreak of land grabs such as that which occurred in Zimbabwe and was a major factor in its subsequent economic collapse.

This is another of the radical demands made by ANC youth leader Julius Malema who, according to news agency Reuters, told a news conference in May: "We should transfer the ownership of the land over to the state."

Mr Sunter said that he hosted a two day meeting with senior members of the Zanu-PF government in Zimbabwe back in 2008 and, not surprisingly, the topic of land grabs was on the agenda.

He said that one member of the Zanu-PF delegation admitted that the land policy was a disaster and would ideally like to see the clock turned back. “In retrospect the land invasion was a mistake because we were the fastest growing economy [in the region] in the 1990s. After the first land invasions we hit the wall,” he reportedly told Mr Sunter.

“This is precisely what would happen in South Africa. The issue has to be resolved but it can’t be land grabs,” added Mr Sunter.

South Africa clearly has serious economic and social problems just like most other countries in the world currently.

As Mr Sunter suggests, however, it would be a huge shame if the government were to hit the panic button now and wreck its image of the shining light of liberal democracy and economic opportunity in Africa just at the time when Africa seems on the verge of a new dawn.

Over to you Mr President.

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