What Went Wrong In The 'New' South Africa?
"Free Trade" And Water Mostly.
In 1994, Nelson Mandela was elected the first black leader of what was hailed as a new multiracial, multicultural and
democratic South Africa. Now in 2003 in Soweto, one of the central battlegrounds in the anti-apartheid struggle, people
get their electricity cut off and no longer have ready access to water. Private security firms evict them from their
inadequate housing. Through 1999 and 2000, protests grew against unemployment and privatization of basic services.
Crackdowns by the ruling African National Congress (ANC) became increasingly repressive.
In 2002, private security guards fired live ammunition to disperse around one hundred people demonstrating over
electricity cutoffs in Soweto outside the home of Johannesburg's Executive Mayor, Amos Masondo in the swank Jo'burg
suburb of Kensington. The ANC, aiming to make an example, arrested the demonstrators, denied them bail and held them in
Sun City, a notorious maximum security prison near Johannesburg which formerly held anti-apartheid activists. The 'new'
South Africa has rapidly regressed into the South Africa of old.
However, in the 'new' South Africa the repression is not to enforce a rigid racial hierarchy. Now, the ANC is
suppressing opposition to its policies which have led to a marked stagnation in economic development. Annual total gross
domestic product growth (GDP) has stagnated at about one to three percent since the early 1990s. Unemployment figures in
most of the country's provinces have hovered near the 50% mark since the late 1990s. Social services have suffered
massive cuts despite South Africa's national health emergency due to AIDS.
The usual suspects - enter the IMF and the World Bank
The promises of a free, democratic, prosperous and peaceful South Africa which appeared so close to fruition after the
demise of apartheid have disappeared fast. Tears and pain have rapidly supplanted hope.
The forces of neo-mercantilist globalization responsible for South Africa's continuing economic and social chaos were
entrenched years before apartheid collapsed. Indeed, when the apartheid government was clearly doomed, faced with
overwhelming international protests and a strong sanctions regime at the climax of the Cold War in 1989, the
international financial institutions (IFIs) stepped in. They were determined to influence the forces of social and
economic change in the interests of international finance and business.
In the early 1990s, the World Bank sent advisors to South Africa to recommend neo-liberal ideology and policies
promising economic growth. In 1993, the International Monetary Fund (IMF) granted South Africa a $750 million loan
conditioned on the adoption of neo-liberal policies.
Although it is currently in vogue to label the policies of the IFIs as 'neo-liberal' these policies are purely
neo-mercantilist. They emphasize centralized corporate control over under-developed economies through 'free' trade
agreements while only allowing liberalization in areas which the developed economies and their multinational
corporations already dominate, such as international capital flows.
The globalization currently being imposed through the World Trade Organization (WTO), regional trade agreements and IFI
Structural Adjustment Programs (SAPs) throughout the under-developed world really hark back to the age of nineteenth
century imperialism. Now, as then, the resources of the imperial possessions in the periphery are directed towards the
core developed economies - these days Europe, North America and Japan.
Free trade - the dream and the reality
Indeed, a liberalized global economy was merely a theoretical pipe dream of nineteenth century liberal economists such
as Adam Smith and David Ricardo. "Free trade" is a theoretical ideal with no basis whatsoever in reality. Unfortunately,
Nelson Mandela and the new ANC establishment in South Africa adopted elements of the neo-mercantilist agenda
enthusiastically in the first post-apartheid national economic program called the "Reconstruction and Development
Program (RDP).
The RDP did retain some redistributive elements but was rapidly abandoned in favor of a purely neo-liberal program
called the Growth, Employment And Redistribution (GEAR) program in 1996 due to the growing influence of the neo-liberals
in the ANC.
GEAR was drawn up almost solely by fifteen 'neo-liberal' economists picked from the World Bank, 'neo-liberal' think
tanks and various African Development Banks. The GEAR program emphasized commercializing and then privatizing all of
South Africa's public companies and services. It drastically cut government spending, and secondary taxes on corporate
profits. It meant substantially and prematurely reducing tariffs designed to protect South Africa's key infant economic
sectors including textiles and value-added manufactured agricultural goods.
GEAR also liberalized capital controls and foreign exchange rates which left the value of South Africa's national
currency, the Rand and South Africa's import and export economic activity highly susceptible to the volatile and rapidly
changing nature of international capital markets. Thus South Africa, a newly emerging semi-developed economy was forced
to adopt economic standards of liberalization which no developed economy including the United States has been able to
implement successfully.
GEAR turns the screw
South Africa's next President, Thabo Mbeki, elected in 1999, was an even more enthusiastic advocate of neo-liberal
policies than Nelson Mandela and was one of the main political forces behind the adoption of GEAR. The GEAR program has
accomplished the exact opposite of it's stated aims.
While the International Monetary Fund (IMF) praises the fact that the GEAR programs have resulted in an economic growth
rate of around three percent for 2003, the Congress of South Africa Trade Unions (COSATU) and the ANC itself estimates
that South Africa will need an economic growth rate of at least six to eight percent to achieve even minimal reductions
in unemployment.
Although GEAR promised 120,000 new formal sector jobs in its first year of implementation South Africa lost more than
100,000 formal sector jobs by the end of GEAR's first year. For the remaining eleven million employed people in South
Africa in 2003 at least four million are employed in the volatile, low wage informal sector and engage in temporary,
subcontracted economic activity ranging from prostitution to street hawking.
There has been an enormous wealth polarization under the ANC. South Africa has the dubious distinction in 2003 of having
a larger income gap between the rich and poor than any other country in the world except Guatemala.
The most surprising aspect of South Africa's post-apartheid economic programs was that the programs were embraced so
wholeheartedly by the ANC. South Africa, with its comparatively low foreign debt of only around five percent of its
total budget deficit in the 1990s, was under no pressure from the IFIs. While highly indebted states throughout Africa
were having neo-liberal programs imposed on them through SAPs, South Africa adopted them willingly.
Water water everywhere - at a price
Patrick Bond, an professor at Witwatersrand University in Johannesburg termed these ANC policies 'homegrown structural
adjustment'. This is the most saddening and sickening aspect of all, the fact that the effects of these programs could
have been almost entirely avoided.
South Africans are now forced to deal with self-imposed corporate-controlled globalization in increasingly desperate
ways which meet with increasing repression. Even though all South African citizens are constitutionally guaranteed
"sufficient food and water" in South Africa's Bill of Rights, the ANC, encouraged by World Bank advisors, embarked on a
nation-wide campaign to privatize South Africa's public-owned and operated water systems.
They contracted out the management of water systems to large multinational bidders such as the French
water-multinational Suez whose sole raison de'etre, needless to say, is profit.
The ANC completely ignored more realistic, viable and legal methods of ensuring water access to South African citizens.
They might easily have funded small-scale local service providers and maintained overall regulation of the national
water system to ensure water access to the low income groups that would not be able to afford the new privatized water
rates.
Nor did the ANC contractually obligate the water-MNCs to provide water to the poor. The results of this rapid
privatization without corporate accountability in a country in which the majority of the workforce is unemployed was
disastrous.
Public health jeopardised
By 2001 there was a massive cholera outbreak that had spread from rural areas in Kwa-Zulu Natal Province to the
outskirts of Johannesburg. It sickened hundreds of thousands of people and killed at least three hundred people who had
to turn to polluted, cholera infected water systems after they could no longer afford the water charges of the new
privately owned water companies.
The cholera epidemic cost the South African government millions of dollars as it sought to contain the outbreak and
treat infected people and contaminated river systems.
In the Eastern Cape Province water prices increased by 300 percent in the town of Fort-Beaufort and to similar heights
in other urban areas throughout South Africa.
Now, in 2003, village, town and city councils throughout South Africa are trying to cancel the contracts with the water
multinationals (MNCs). The urban councils are contractually obligated to pay the debts to the MNCs which the poor and
unemployed can't obviously afford. Nevertheless, the ANC continues to illegally restrict access to water despite the
constitutional right of all South Africans to water.
Protest and resistance suppressed
The government continues to arrest individual citizens and members of community organizations. Prominent among these are
the Anti-Privatization Forum (APF) and the Soweto Electricity Crisis Committee (SECC). In addition anti-housing eviction
campaigns risk arrest and detention as they try to restore electricity to residences, prevent housing evictions from
taking place and destroy prepaid water meters, installed so water can only be accessed by those who can pay.
The chairperson for the APF, Trevor Ngwane, is a former ANC member who was expelled from the party for opposing its
privatization policies. He was arrested and held without bail in 2002 for protesting outside Jo'burg Mayor Masondo's
property. Ngwane has said, 'Corporations seeking profit from a natural resource will never create a product or system
that will benefit the disadvantaged'.
South African fitted with "free trade" straitjackets
Instead of taking South Africa's status as a low-income country and the needs of its impoverished majority into account,
the ANC governments embarked on a system of complete privatization of its essential services. This centralized
corporate-mercantilist control of South Africa's resources will become even more entrenched under 'free' trade
agreements wither already completed or on the table with the United States and the European Union (EU).
The World Trade Organization (WTO) recognizes that semi-developed economies like South Africa need "special" and
"differential" terms permitting trade tariffs and other trade protections to shield their developing economies. But the
current bilateral negotiations have undermined those WTO prescriptions as well as South Africa's industry, agriculture
and labor force.
For example, the 'free' trade agreement with the EU forces South Africa to open 90 percent of its trade to the EU. The
EU in return only allows the South African economy access to 50 percent of its market. The EU has also enacted further
non-tarriff barriers (NTBs) to trade with South Africa such as strictly enforcing health and safety regulations which
block many South African goods from entering the huge market of Europe.
The EU trade agreement also only encourages South Africa to export cheap raw materials instead of more value added
goods, such as manufactured goods which reinforces South Africa's position as a dependent, periphery economy.
South Africa has also entered into 'free' trade negotiations with the United States along with the other semi-developed
southern African states that belong to the Southern African Customs Union (SACU) such as Namibia and Swaziland. These
negotiations are due to conclude at the end of 2004.
This trade agreement with the US will also increase corporate control of southern Africa's economies, resources and
labor. Indeed, in order for southern Africa to qualify for 'free' trade with the United States, all southern African
states must liberalize all sectors of their economies, including social services. Corporate taxes have to be reduced or
eliminated. Corporations must be allowed to purchase social services, land and resources wholesale from African
governments. At the same time duties and tariffs on manufactured goods from the US must be substantially reduced.
Concentrated wealth distorting national development
The US, the EU and the large multinationals aim to gain as many concessions as possible from South Africa through these
trade agreements while simultaneously seeking to avoid even limited concessions and access to markets in return. South
Africa cannot even begin to compete with the developed economies. So economic development within South Africa has
collapsed. While there is economic growth in assets such as stocks and property, these assets are concentrated among the
wealthy minority.
Unfortunately, the ANC government remains unenthusiastic about national development strategies designed to lift the poor
black majority out of wrenching poverty. According to the Landless People's Movement(LPM) of South Africa, the
government, although constitutionally obligated to do so, has not initiated even small-scale land redistribution to
impoverished black South Africans.
In 2003, eighty six percent of land in South Africa remains under the ownership of around 120,000 white farmers and the
central government.
Government economic policy has favored rigid, narrow growth strategies designed only to increase corporate profit and
roll back the state. South Africa's economy depends overwhelmingly on the economies of the developed countries. This
means South Africa's infant industry remains stunted and its impoverished black majority marginalized. The extreme
concentration of wealth, the collapse of social services, the explosion in social problems like prostitution, crime,
urban terrorism and gang warfare and the rapid spread of AIDS mean the end of hopes for a better future.
The dreams of millions of South Africans which rose to such heights after the collapse of apartheid have turned into a
national nightmare with no end in sight.
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- Andrew Nowicki is a social justice advocate based in Washington D.C. email: nowicki_andrew@yahoo.com
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Information in this feature article was sourced from:
US-South Africa Business Council Business Report, July 2003
Southern African Regional Poverty Network (SARPN)
Landless People's Movement (LPM)
The Third World Network-Malaysia
The Anti-Privatisation Forum (APF)
APF can be contacted at: drdalet@metroweb.co.za
South Africa Bill of Rights (Chapter 2)
Action for Southern Africa (ACTSA)
Global Issues
'The Great Jobs Gap', The Sunday Times, Aug. 10, 2002
Trevor Ngwane & George Dor. 'IMF Can Only Bring Misery to SA,' The Sowetan, July 12, 2000.
Paul Kingsnorth. 'Globalization Made Them Do It,'
The Shop Steward
The Environmental News Network (ENN)
Independent Media Centre-South Africa
The Center for Pubic Integrity
Desai, Ashwin. We are the Poors. Monthly Review Press, New York, NY, 2002.