Thoughts on South African and international politics and culture

Tuesday, April 26, 2005

IDASA gives SA a limited grade
The IDASA study into South Africa's democracy was released yesterday, giving SA a 63% on their democracy index. Particular notice was given to the strength of the democracy, heavily credited to President Mbeki, but there were significant caveats as well, specifically around the incessant growth in inequality and the continued poverty problems in the country.

Poverty was always going to be the perennial kicker in post-Apartheid democracy. Much has been made of the fact that more people have moved into unemployment and poverty in the fifteen years since Mandela's release than those before it, but one has to look at educational realities to find answers. In the absolute destruction of non-white education by the Apartheid state, finding its sweet spot in the mid-70's, a generation of non-white students were largely bullied out of education, forced to learn in Afrikaans and given no support from the state. This was also at a time of exponential growth in the non-white population. What resulted is a glut of unskilled labour that started to hit the employment market just around the time of Mandela's release. These workers, many of them rural, had few skills to offer employers and struggled to find employment, thus reinforcing the cycle of poverty and unemployment.

This may seem like an unnatural rationale for the poverty problems prevalent in our country, but I do believe that one has to look at circumstances beyond simple statistics. The Apartheid state delivered, by design, a huge pool of unskilled labour for the economy's main drivers in resource mining but the problem was, they delivered too much of it. After Mandela's term, which was largely tasked with keeping the country out of civil war, Mbeki started his term needing to position South Africa in the world community, stabilise the democracy, and drive employment to alleviate poverty. I agree with a recent book review in the Financial Mail (no link available but found in edition 8/04/05) that postulates that Mbeki had to turn his back on a purely welfare based state to position his government away from its socialist/communist associations to attract foreign direct investment into the country, improve credit risk profiles and build the economy. Mbeki also determined the wisdom of keeping the money in the economy to diminish the forward book inherited from Chris Stal's days and to improve South Africa's debt profile. This then would allow South Africa to move to a longer term vision of poverty reduction driven out of employment gains rather than handouts. This is the situation that we find ouselves in now. It took a decade to solidify the macro-economic picture, and Mbeki's recent state of the union address specifically moved to targeting poverty alleviation off the back of this stability.

Whilst the basic income grant remains controversial, the government has set in place a number of initiatives aimed squarely at the reduction of poverty. Whilst I completely acknowledge that I am speaking from a position of privelage, not poverty, I do believe that Mbeki and his finance department have done the best that they could have to develop the economy to a place where we can start to make real gains against poverty in South Africa, and most improtantly, that they are based in sustainable employment, rather than handouts.