South Africa Pushed to the Limit: The Political Economy of Change

South Africa Pushed to the Limit: The Political Economy of Change’-Hein Marais

An analysis of Hein Marais' exploration of how real improvements can only come with sweeping change in the political and economic landscape of South Africa.

Between President Jacob Zuma’s State of the Nation Address in February and upcoming local government elections in May, questions arise about how much will really be done to reform South Africa’s economy. The  facilitation of large-scale job growth is greatly needed to alleviate what is perhaps the country’s biggest problem: unemployment, currently officially standing at 24.0%, and, unofficially, at around 38%. In his new book ‘South Africa Pushed to the Limit: The Political Economy of Change’, Hein Marais argues that real improvements can only come with sweeping change in the political and economic landscape of South Africa.

Looking at the last 17 years since President Nelson Mandela’s election in 1994, Hein Marais attributes a great degree of the country’s problems not only to apartheid, a common villain, but to key strategic policy mistakes made by the African National Council (ANC) and those in power. Although a steadily growing economy with an average annual gross domestic product (GDP) growth rate averaging between 3% and 5% in the 2000s, it neither matches the growth of other upper-middle-income countries, nor translates growth into large-scale improvements of living conditions in the country: in many ways South Africa is a big disappointment.

Why has South Africa not been able to fulfil its prophecy as Africa’s ‘beacon of hope’? Talking to Think Africa Press, Marais argued that a “kind of distorted reality” has developed: South Africa’s politicians have clung to the false assumption that economic growth automatically equates to job growth and improvements in social rights. However, South Africa’s growth was built on dependency on the mineral sector and a growing, “parasitic” financial sector – both of which did not facilitate large-scale job creation. Economic growth was narrowly geared toward the market and profit, rather than achieving social progress and racial equality. Having squandered their leverage over South Africa’s large corporations, politicians find their hands somewhat tied, depending on the economy remaining unchanged in order for the surplus to be used and redistributed.

It is this narrow perspective that Marais criticises, “the ANC itself is increasingly vested in this very economy”, he says. At the centre of South Africa’s political landscape rests an elite lobby of powerful black businessmen, beneficiaries of the Black Economic Empowerment (BEE) policy, who are at the helm of some of the country’s most profitable companies and closely tied to the ANC. The likes of Tokyo Sexwale and Cyril Ramaphosa head both Empowerdex’s list of the most influential and powerful businessmen, as well as adorning Zuma’s cabinet and parliament. It is a policy implemented for greater racial equality, but even anti-apartheid veteran Archbishop Desmond Tutu has asked critically, “What is black empowerment when it seems to benefit not the vast majority but an elite that tends to be recycled?”. These “incestuous linkages”and widespread corruption are a barrier to the much-needed broadening of the economy and focus on labour-intensive industries, such as export manufacturing. There is too much at stake for theANC and its position of power.

Although Zuma’s State of the Nation Address is clear in stating that job creation is a priority thisclarity has not yet filtered down into any microeconomic reform or macroeconomic management. As Tim Harris of the opposition Democratic Alliance (DA) party put it, the fear that the ANC’s economic reforms will amount to little more than “tinkering around the edges” has not subsided. Zuma’s own Industrial Policy Action Plan, implemented in early 2010, still relies heavily on extraction of natural resources and on the financial sector, and differs little from its predecessor AsgiSA. Its aim to create 2.4 million jobs by 2020 seems unrealistic. Marais says that to successfully create sustainable jobs, rather than short-term job opportunities, is currently “beyond the reach of the ANC”.

Rows over labour regulations between the ANC and the Congress of South African Trade Unions (COSATU) - an alliance partner of the ANC - have stalled progress. Marais traces the dire state of poverty amongst those with jobs, the ‘working poor’, back to the deregulation in the 1990s that allows businesses to circumvent workers’ benefits by using less-skilled, casual or outsourced labour – an attempt to compete in a global market. The disparity between some progressive labour laws successfully fought for by the trade union movement and the reality, businesses hiring off the books, is for Hein Marais a “sad paradox” in South Africa. Yet even opposition party DA calls for less “red tape” undermining the economy which might attract investors yet create greater insecurity in the workforce.

The upcoming municipal elections in South Africa will be significant in determining local governance across the country. The DA, having successfully run the province of the Western Cape since 2009, is set to gain more ground from the ANC. Its unemployment statistics look promising: the Western Cape has a net employment outlook of +9% for the second quarter of 2011, compared to +5% in the Free State and +3% in KwaZulu-Natal. Marais points out that the ANC’s frequent focus on quantity and not quality has left government services in ANC-run municipalities ineffective, whereas the DA’s service delivery is seen as a success.

However, the DA’s overall outlook still looks bleak: Marais says it has “very little scope of becoming a formidable political force” and of politically challenging the ANC. Bringing about effective, lasting change in terms of a broad economy, rising employment and decreasing poverty hinges on more than ground-level work. The status quo has to be challenged. Hein Marais clearly shows that only a sweeping overhaul of the industrial strategy to diversify the industrial sector can really generate large numbers of jobs. But is the ANC, so dominant in South Africa, willing to make the sacrifices needed? It is unlikely that Zuma would be prepared or even able to break the political-economic circuitry that is currently in place – nor that companies have enough faith in the stability of the ANC to go along with it. Looking systematically at past and present economic developments, Hein Marais’ significant and decisive work exemplifies that a large shift in the fundamental political and economic structure is needed to stop South Africa from idling forth.

TAP

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