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April 23rd, 2008

South Africa in serious crisis

Dr. Manning Marable

Part I of II

I was recently invited to deliver the commencement address at the School of Business, University of Wittswatersrand, in Johannesburg, South Africa. That such an event, a black progressive scholar giving the graduation lecture at a white elite university, would have been unimaginable twenty years ago under the white minority regime called apartheid, goes without saying. What is more complicated, however, is what has transpired since Nelson Mandela’s presidential victory in 1994, which led South Africa into a new democracy. Because unfortunately, for millions of mostly black and poor people, the demise of apartheid has not translated into a better life.

To much the world since its transition to democracy, South Africa’s and especially its robust economy, represents a remarkable success story. In 2005, the South African Stock Exchange recorded a return of 43 percent, which was the third highest percentage of growth in the world. South Africa’s stock exchange grew at a pace nearly 400 percent higher than that of other African countries.

The growth of capital markets has also generated a new class of South African millionaires. According to the 2006 World Wealth Report, which defines "millionaires" as holding more than one million (US) dollars in financial assets, excluding their primary residences, South Africa’s dollar-millionaires grew by nearly 16 percent in 2005, to 42,883 individuals. South Africa is producing millionaires at a faster rate than Indonesia, Hong Kong, Singapore, Saudi Arabia and the United Arab Emirates.

Increasingly, class rather than race, is becoming of greater significance in how millions of South Africans describe themselves and their future social mobility. Some interesting data on class identity in this regard has been compiled by FutureFact, a South African research group that began in 1998. In 2006, slightly less than one-half of all South Africans surveyed defined themselves as "middle-class." Only one-fourth of those surveyed, however, described their own parents as "middle-class." Roughly one-third of South Africans claimed to belong "to a higher social class than their parents."

Since the demise of apartheid, the racial composition of both the middle classes and professional/managerial elite has markedly changed. Back in 1991, according to FutureFact, the upper ten percent of South Africa’s income earners was virtually all white. By 2005, one-quarter of the top ten percent income earners was black.

Despite the "business-friendly" approach of the Mbeki government, most South African-based corporations and the new class of dollar-millionaires show little loyalty to their native land, by investing the majority of their profits outside the country. The Congress of South African Trade Unions has even described the widespread failure by local businesses to invest in the economy as an "investment strike."

As journalist William Mervin Gumede recently observed in his 2007 study of Thabo Mbeki: "Naively, Mbeki and ANC strategists thought that the implementation of a liberal economy would somehow develop a greater social conscience in the business community … Productivity was up and profits were the highest they’d been in many years. But instead of appreciation, the government received constant complaints from business about ‘excessive’ demands to contribute to development programmes." Banks implemented their "investment strike" through discriminatory policies of "redlining", refusing to loan money to nonwhites buying homes either in black townships, or in formerly all-white suburbs. A November 2006 study by the World Bank established that two-thirds of South Africa’s one million black women entrepreneurs were "redlined" by banks, having absolutely no access to loans. Despite affirmative action reforms, the South African corporate establishment continues to be overwhelmingly white. Ninety-eight percent of the directors of corporations listed on the Johannesburg Stock Exchange are white.

There indeed have been "winners" and "losers" in the new South African economy, since 1994. The major corporations, most of which actively functioned under the former apartheid regime, have clearly benefited from the government’s privatization program, the tax concessions and the decline in inflation. An aspiring black entrepreneurial bourgeoisie, and a growing black professional, administrative and managerial class have also profited. Even within a section of the working class – fulltime, permanent workers, most of whom are unionized – their real wages rose substantially in the decade following 1994.

The "losers" have been millions of South Africans who lacked the education, skills and material resources to make the adjustment to the nation’s neoliberal economy. By 2001 the official unemployment rate stood at 26 percent, and it continued to climb. A growing number of black workers found themselves trapped between the unemployed on one side, and skilled unionized workers on the other. Temporary, part-time, and contractual labor now comprises the majority of South Africa’s black working class labor force. These workers earn substantially less than unionized employees, and lack the protections and benefits of unionization.

The African National Congress government of Thabo Mbeki has done relatively little to address the growing gap of inequality and poverty experienced by millions of blacks, who sacrificed greatly to achieve their victory over apartheid. The fundamental question is how long will poor and working class black South Africans continue to wait before they experience the long-awaited freedom they’ve been promised.

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