Opinion Disillusion in the rainbow nation
In post-Apartheid South Africa,growth has been mediocre. The biggest failure has been the lack of progress in reducing poverty and inequality
Next year will mark 20 years since Nelson Mandelas inauguration as the first president of South Africas new democracy. In the early years,the rainbow nation basked in the afterglow of world admiration for the seemingly miraculous transition from Apartheid to democratic government. Times are tougher now,but South Africa continues to punch above its weight in world affairs.
In 2010,it was invited to join the BRICs club as a fifth member and has just hosted the organisations annual meeting in Durban. Many commentators expressed surprise that a country with an economy little more than a fifth of the size of the next smallest member country,Russia,should be invited to join a club of such heavyweights. Also,South Africas growth rate has hardly been stellar. Over the last decade,GDP per capita grew at only 2.2 per cent per annum. This was much slower than in all the other BRICS countries,except for Brazil,where growth was little better at 2.4 per cent per annum. Other largish middle-income countries such as Thailand,Turkey and Malaysia all grew much more rapidly than South Africa.
As democracy dawned in 1994,South Africa was faced with enormous challenges low growth,a mountain of government debt,high unemployment and gaping inequality. Macroeconomic stability was restored by means of a mild self-imposed structural adjustment
programme,the Growth Employment and Redistribution strategy (GEAR). Much criticised by the left,this programme restored fiscal health and created the platform for sustainable expansion in spending on social services and infrastructure.
While growth has been mediocre,the biggest failing has been the lack of progress in reducing poverty and inequality. Poverty levels have declined slightly due to an expansion of social grants. Also,basic services such as piped water and electricity now reach a much higher percentage of the population. But the most intractable problem is unemployment,which has risen since 1994 and stands at 25 per cent. And inequality has increased as growth has trended to benefit higher income groups.
Here one has to look at the performance of government. There is little wrong with policy. For instance,macroeconomic policy has been sound,inflation is low and government debt is manageable. The planning ministry recently unveiled a comprehensive and well received National Development Plan. What has been lacking is implementation. Apartheids baleful legacy in education has simply not been adequately addressed and education outcomes at school level remain below those of many,much poorer countries. The same applies to health where the position was exacerbated by the devastating AIDS epidemic. This scourge was disastrously handled by the Mbeki administration,but is now thankfully in retreat.
The rollout of infrastructure at a macro and micro level has been plagued by problems. For instance,a lack of electricity capacity has meant that the state-owned power utility,Eskom,is resorting to paying large users to cut back on consumption. Expansion in the mining sector has also been hobbled by a lack of port and rail capacity. These constraints,combined with delays in issuing and renewing mining licences,have meant that South Africa has failed to reap the full benefit of the recent commodity boom. But it is perhaps at the local level that the rollout of infrastructure has been most problematic. Incompetent and corrupt management has wasted resources and deprived poorer citizens of improved provision of housing,roads and other basic amenities. One result has been the widespread eruption of service delivery protests. While corruption remains well below the levels of many developing countries,Transparency Internationals Corruption Perception Index reports a steadily worsening trend over the last five years. Investor confidence has been further shaken by the recent violent strikes in the mining and agricultural sectors.
But these are all problems which can be fixed. Two massive new power stations are nearing completion,mining bosses are working out new long-term solutions with their respective workforces and there are new initiatives to deal with corruption. A significant change is the growing acceptance at the highest levels that a truly professional civil service is an absolutely vital condition if South Africas development potential to be realised. And the potential is huge,if one considers South Africas treasure trove of resources,well-developed physical and financial infrastructure and high-level skills. In addition,South Africa is well placed in relation to Africa,which The Economist recently dubbed as the worlds fastest growing continent. This,after all,was a major reason that the BRICs invited South Africa to join their club in the first place.
There is no doubt that there have been many disappointments since 1994. Without doubt the most vexing has been the limited progress in overcoming the historical legacy of poverty and inequality. Even government leaders concede that the country could have done much better. But South Africa is a vibrant democracy with a proven ability to overcome daunting problems. This is perhaps the ailing former presidents greatest legacy.
Anthony Black is professor of economics,University of Cape Town,South Africa
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