Mandela’s heirs face a rocky economic future

December 6, 2013

The death of Nelson Mandela is being mourned across the world, and for good reason. As the first president of post-apartheid South Africa, he served as a symbol of national reconciliation and as a defender of South Africa’s new and fragile liberal constitution. It is also true, however, that the movement he led, the African National Congress, has not lived up to lofty expectations, and that at least some of the responsibility lies with the great man himself.

Before we turn to what has gone wrong with post-apartheid South Africa, it is worth briefly rehearsing what has gone right, thanks in no small part to Mandela. During the apartheid era, South Africa’s Afrikaner-dominated ruling National Party warned that majority rule would bring violent reprisals against the country’s white minority, a Marxist revolution that would mean the end of private property, and an alliance with the Soviet bloc that would threaten the free world. None of that ultimately came to pass, for a variety of reasons. As the Soviet threat receded, and as anti-apartheid activists pressured governments in the U.S. and Western Europe to isolate the South African government, elements within the governing National Party sensed that the days of minority rule were numbered, and that some accommodation with the ANC was the only way to prevent a bloody denouement. And Mandela, to his great credit, proved a willing partner. Having established his moral authority within the liberation movement as a champion of armed insurrection against the apartheid government, he committed himself to a path of non-violence. One shudders to think of what might have happened had Mandela chosen differently. Mandela’s fateful decision to work with his former enemies paved the way for the ANC’s extraordinary political success.

Since 1994, when South Africa held its first authentically democratic and multiracial national elections, the ANC has won every national election by substantial margins, and there is good reason to believe that it will win the election that will be held next spring. Yet after almost two decades of ANC rule, the country suffers from shockingly high levels of poverty, unemployment, and violent crime. Hundreds of thousands of educated South Africans — white, black, and Asian — have emigrated in search of opportunity in Britain, Australia, the U.S., and elsewhere. Many middle-income countries that were in the same economic ballpark as South Africa in 1994 in terms of GDP per capita — like Poland, Malaysia, Chile, Mauritius, and neighboring Botswana — have raced ahead in the years since. When we compare South Africa to China or South Korea, the contrast is more dismal still.

One of the key reasons for South Africa’s weak performance is that while high-growth countries saw large numbers of workers shift from low-productivity sectors, like subsistence farming, into high-productivity sectors like export-oriented manufacturing, South Africa’s high-productivity sectors have seen little growth. There are many theories as to why this has been the case. Some will attribute this to the rigidity of South Africa’s formal labor market while others will attribute it to a failure on the part of South Africa’s government to pursue a more ambitious industrial policy. Regardless of the answer, what is striking is that despite South Africa’s economic woes, the same political party keeps winning election after election.

Over the five years Mandela served as president, he ceded most of his day-to-day executive authority to Thabo Mbeki, a polarizing figure notorious for his elitism and authoritarianism. Though Mbeki succeeded Mandela as leader of the ANC only in 1997, and as president in 1999, he was the true architect of the new South African state. By choosing Mbeki as his heir apparent, Mandela all but guaranteed that though South Africa had the formal trappings of a modern multiparty democracy, the ANC itself would remain a rigid Leninist organization, which would reflect the flaws and the pathologies of its leaders.

One of the most celebrated aspects of the ANC during the anti-apartheid struggle was its commitment to building a multiracial society, a reflection of the movement’s socialist ideals. Mbeki was far more willing to deploy racialist rhetoric to achieve his political objectives, something he did quite freely after Mandela exited the political stage. Moreover, though ostensibly still committed to socialism, Mbeki devised economic policies that essentially transferred wealth to a new politically-connected black elite. His leftist critics accused him of being a neoliberal technocrat who neglected the needs of South Africa’s poor. Yet he was hardly a champion of economic laissez-faire. Rather, Mbeki favored policies that entrenched and expanded his power. Over time, resentment of Mbeki built to the point where he was replaced by his temperamental and stylistic opposite, the charismatic Zulu populist, Jacob Zuma, South Africa’s current president. And it is under Zuma that the ANC has started to unravel.

Zuma, like Mbeki before him, has a habit of seeking to delegitimate his political opponents. South Africa’s largest opposition party, the Democratic Alliance, is a centrist party that has taken the ANC to task for its corruption and its economic mismanagement, among other things. Yet because it is a party that is closely identified with the country’s white minority, its ANC detractors often accuse its members of racism, or of wanting to reimpose Boer rule. Now, however, the ANC faces a new set of political rivals. Julius Malema, a former leader of the ANC’s youth wing, has established a political movement that aims to, among other things, seize the property of South Africa’s largest white landowners to redistribute it to the country’s black majority. Though it is unlikely that Malema will fare terribly well at the polls, he has managed to outflank the ANC when it comes to overheated rhetoric.

A more formidable challenger to the ANC is Agang South Africa, another centrist opposition party that has much in common with the Democratic Alliance, yet which has the distinct advantage of being led by Mamphela Ramphele, a renowned anti-apartheid activist who can’t be dismissed as a white interloper. And there are growing signs that the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP), both of which are part of a Tripartite Alliance with the ANC, might break off to form a new labor-aligned political party. ANC loyalists find the prospect of a more diverse, more competitive political environment distasteful. But this political fragmentation could mean that South Africa is finally moving past the soft authoritarianism that was first established under Mbeki and, despite his best intentions, Mandela. Given time, it’s at least possible that some other party will be able to take a crack at steering South Africa’s economy in a more promising direction.

PHOTO: South Africa’s President Jacob Zuma addresses a media briefing on arrangements relating to the passing of former President Nelson Mandela, at SABC Studios in Auckland Park, Johannesburg, December 6, 2013. REUTERS/Siyabulela Duda



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Not to fret. SA will be just what it has always been: a mess.

Nice that Obama and his wife are going home for the funeral.

Posted by timebandit | Report as abusive

From someone who knows Africa and South Africa, having met the Finance Minister, a namesake (Pravin Gordhan) whose parents hailed from the same State in India as mine (Gujarat), let me commend the author for an informed balanced article… Under the ANC South Africa is going downhill fast. The most visible indicator are the brownouts (electrical power shortage). Industry (mining, manufacturing, energy)all need power and cuts are devastating, leading to unemployment. Just look at Cape Town. Once a beautiful city, now you traverse it at your peril, dodging marauding gangs. Indeed several times the State Electric Company (ESCOM) offered us financial support if we could do something with the Inga dam projects in the Congo, offering to sign long term power purchase agreements with upfront money… so desperate is the need for electricity. As for corruption, all roads lead straight to the top with leaders having their own coterie of hand-picked “bag men”… Cheers… pravin at

Posted by Bludde | Report as abusive

Postcript: If recent India State elections are any indicator, and the resounding win by Modi presages a win next May as Prime Minister of India, “all roads will lead to India” as Western Investors rush in. The Indian origin portfolio managers sitting here in New York and over in London are already buying shares in India pushing the Rupee up .. now below 62 to the USD from a low above 68. I wonder what Obama will do should Modi become PM? Modi is banned from visiting the USA. I am sure Netanyahu (and Israel) is following developments closely. A Modi win will surely deepen the now covert relationship between the two, whilst relations with Pakistan will nosedive…

Posted by Bludde | Report as abusive

It is comical that Salam ignores the structural problems that apartheid created, and that in spite of difficult efforts, South Africa was bound to answer to those problems, and instead blames the country’ problem on ANC. Salam expects Mbeki and Zuma to pursue laissez-faire economic policies, without correcting for the underlying distortions of apartheid. None of the countries Salam mentioned compared to South Africa–not China or South Korea or India, South Africa remains unique.

Posted by 0okm9ijn | Report as abusive

South Africa is going to end up looking like Britain after the Romans left…

Posted by onlyif | Report as abusive

Laissez-faire economics by its very nature is anti-developmental because it requires defense of the economic privileges of the elite. While proponents rightly argue that laissez-faire economic policy also protects the property rights of the less well-off, it is a striking phenomenon that the lower and middle classes in countries such as the US and the UK have seen their property rights surreptitiously violated by lowered wages, asset values and tax structures. In the case of South Africa, a substantial fraction of the elite, whether white or black, either inherits stolen property or stole it themselves. In such a landscape, economic stagnation and inequality is the only possible outcome of laissez-faire economics, no matter how well it is implemented. Ultimately, all economic development involves some kind of wealth redistribution at some point. Note that the major dividing line between developing/undeveloped counntries and developed ones is the evenness of income and asset distribution. You have wisely stopped short of saying that true laissez-faire economic policy would alleviate South Africa’s problems possibly because, with the exception of Hong Kong, no economically successful country got to where it is following laissez-faire economics. The economic histories of many economically successful countries such as the US, the UK, China, South Korea, Japan and (arguably) Malaysia show that the relationship between corruption and economic stagnation is not as strong as many neo-liberals would have us believe.

While South Africa must deal with corruption, government inefficiency and all the other problems that plague South Africa, the only way it can get out of its economic rut would be through a package of policies that would upset all parties. This would include a more aggressive land reform programme with land of modest but efficient size redistributed to South Africa’s peasants, even if it means seizing White farmland forcibly. This should be carried out by a politically independent agency to prevent a Zimbabwe-style fiasco. Those dispossessed of land should be compensated with government bonds as well as equity in new government initiated corporations. Corporations with some government ownership and run by professional businessmen would have the scale necessary to withstand what is, at this point, unfair competition from foreign TNCs. Such companies, in the mold of all economically successful countries while at similar stages of development, would help re-establish South Africa’s industrial base. Finally, a certain amount of protectionism is needed to grow these “infant industries”.

Land reform will provide South Africa with the requisite tax base necessary for national public education and health systems.

Posted by asrinath3 | Report as abusive

Mandela served as a symbol of national reconciliation and as a defender of South Africa’s new and fragile liberal constitution. v

Posted by kamoru | Report as abusive