South Africa: a crisis for business over social reform


I was recently in South Africa to make a film for the BBC, and everyone thought the horrific police massacre of striking miners – 34 killed and 78 injured – at Lonmin’s Marikana platinum mine last August was a watershed for the country. It seemed to symbolise the unresolved legacy of apartheid: a wealthy white-owned corporation pitted against its poor black workers. Lonmin took me underground to observe its awesomely impressive hi-tech operation. More than 30,000 are employed in a complex of mine shafts and smelters stretching across 250 sq km, producing nearly a quarter of all the world’s platinum, and part of a mining industry that contributes a vital fifth of South Africa’s economic output.

Yet in the shadow of the mine, most of its migrant workers live in Wonderkop, a sprawling shanty settlement of 40,000 people with no running water, no proper electricity, no sewage – families in unspeakable poverty. I saw even more destitute circumstances 700 miles south near Mandela’s birthplace in the Transkei, home to the widow of one murdered strikers, their extended family income suddenly destroyed. It was hard to see how two decades of democracy had made any improvement to their living standards.

Under apartheid, government and big business were run exclusively by the white minority. When white rule finally came to an end, the fear was that white businesses and investors would flee. Instead a deal was struck. Mandela’s extraordinary leadership and insistence on reconciliation ensured a peaceful transition toward a stable multiracial democracy. Big business was reassured and stayed. A black majority now ran the government but the white minority still ran the economy. This deal could not have been otherwise or the emergence of the joyous “rainbow nation” would never have occurred.

But it is a deal now in crisis. Companies like Lonmin have brought black South Africans into their management – they recently appointed a black African CEO, Ben Magara. A new black business elite has been empowered– even creating some black billionaires. In return the ANC-aligned trade unions have tried to ensure strike-free production, with some of their leaders also part of the new enriched black elite.

The arrangement met the requirements of global investor confidence, but left most workers on low wages and, at Marikana, their ANC-aligned National Union of Mineworkers – a pillar of the anti-apartheid struggle – lost rank and file credibility to a breakaway union. Negotiations collapsed and violence soon followed, the ANC appearing to turn its guns on its own people with dreadful echoes of apartheid.

Marikana has become an emblem of what ANC critics say is a cosy deal with white-run business at the expense of South Africa’s poor – triggering grassroots disaffection worsened by local and national ANC leader corruption. Simply co-opting a black elite into the same unequal, white controlled economy is not sustainable. But can necessary economic reform to give all a much greater stake be achieved without jeopardising competitive realities and global investor confidence?

Many of South Africa’s fundamentals are still strong: a constitutional democracy, an independent judiciary and above all a strong and vocal civil society. It has a wealthy economy, with a transparent, well regulated legal and financial structure, accounting for fully a fifth of total GDP for Africa – with a population of 50 million in a continent of 1 billion. Now a member of the Brazil-Russia-India-China Brics nations, it is ideally placed to be the gateway for fast rising African economic growth.

The ANC has brought electricity, housing, water and sanitation to millions. Nevertheless a growing population, swelled by some three million immigrants from Mali to Zimbabwe, means the demand for basic services seems insatiable. There are horrendous levels of black unemployment, worsened by apartheid’s deliberate policy of ensuring blacks had no skills. Despite the ANC doubling the numbers at school, teachers who take great pride in high standards then despair when their bright, well qualified pupils cannot get either appropriate, or any, jobs.

Carefully thought-out ANC pro-poor economic policies, with a lot of money spent on development plans, are intended to make a difference, but there is a chronic lack of government capacity and delivery – further hindered by political and administrative corruption.

The economy has hardly changed from its old role: to deliver for just 9% of the population – except that this now includes a new black element. There seem to be only two options: the one is to develop a new social compact where privilege and reward is renegotiated in favour of a more equal dispensation. The other is to face a revolution of rising expectations and frustration where South Africa could once again become as ungovernable as it was during the dog years of apartheid.

These are stark choices – but some within the ANC are seriously rethinking the model they inherited. Charismatic national trade union leader Zwelinzima Vavi has talked about the country’s “Lula” moment. There is plenty of evidence, not only that Brazil has done a great deal to narrow the gap between rich and poor nations, but also that South Africa’s economic thinkers are preparing to use some of the same strategies.

The ANC’s Strategic Intervention in the Minerals Sector (Sims) report, adopted at its December policy conference, looks at some of Brazil’s financial planning, like borrowing from the insurance/pensions sector and using state-owned enterprises to promote social development – which the private sector does not automatically do.

The ANC is trying out something crucial to those who want an alternative to the predominant global neoliberal economic model. But simultaneously maintaining essential international investor confidence and promoting social justice is difficult enough in a society like Britain, let alone South Africa with an apartheid legacy which remains a gigantic millstone around the country’s neck.