Volume 1 No 4 (2004)
 

 

UCH HAS BEEN MADE of the President’s supposed policy shift to the left, particularly because of the emphasis on the role of the state in development. But do the President’s recent statements really denote such a shift? Or do these perhaps signal a different emphasis, rather than a change in policy direction? Given President Mbeki’s renewed emphasis on service delivery, targets and performance management (of all spheres of government and of politicians and officials alike), is it not more likely that the President intends to continue on the path embarked on, but with greater vigour, a sense of impatience perhaps, and more attention for local delivery? It seems the President has lost patience with the slow pace of delivery, ineffective bureaucracies and, more disconcertingly, the complexities of institutional transformation. What will happen if the ambitious targets are not met (because surely, quite a few of these targets are unlikely to be realised)? What reasoning will be provided to explain such failings? It seems plausible that people and institutions (especially the local state) will be held responsible, rather than recognising that some of the targets and underlying policy assumptions are problematic.

Of course, it is important to speed up delivery and monitor performance. Targets can be a useful instrument in this respect. The problem with the current targets is not just that these are ambitious, but also that they have been pronounced ‘from above’. Moreover, the focus on quantity may eclipse the more complex political debate about the qualitative aspects of achieving holistic development outcomes. The delivery targets tend to reinforce sectoral development approaches, for example, providing x number of houses or to eliminate all informal settlements by 2014, etc. In the first six years of democracy, this very same approach has produced the unintended consequence of reinforcing apartheid spatial patterns.

To reiterate, this is not an argument against targets. The point is that the managerialism that seems to underpin the current approach to service delivery tends to foreclose a debate about the processes and quality of the development project. In our reading, the renewed emphasis on the role of the state may not denote a policy shift, but it does create opportunities for development activists – in whatever institutional setting – to push the boundaries and broaden the political space for discussion on the determinants of holistic development outcomes.

We invite you to share your thoughts and opinions on this matter for the Talk Back section in the next issue of Isandla Development Communiqué.

This issue’s feature article in our Thought Matters section is written by Sean Jacobs, a political researcher from Cape Town who is currently based in New York City. Sean juxtaposes two interpretations of the socio-economic achievements in the first ten years of democratic rule in South Africa.

   
 
 


On the 10-year mark
by Sean Jacobs

The latest slogan of Brand South Africa is, "South Africa: Alive with Possibility". On June 14th, I found South Africa's branding attempt plastered all over the walls and projected onto a giant video screen in a dining hall on the seventh floor of the New York Stock Exchange in Manhattan. The event was named "South African Branding, Trade and Investment to the United States".

A group of leading South African businesspeople, about 40 of them, and deliberately it seemed made up to reflect a multiracial present, had travelled to New York City (on the first leg of a three-city tour including Chicago and Atlanta) to entice American investors and companies to consider putting their money in South Africa.

The mood inside the room was bullish and meant to convey an overwhelming optimism among business and government elites about South Africa's first decade of democracy, its current state and its future. That morning, the most senior members of the delegation had attended breakfast with the President of the New York Stock Exchange and June 14th was declared "South Africa Day". Doug Franke, an American based at Pricewaterhouse Coopers in Johannesburg offered the assembled this advice: "Go long on South Africa."

The South African delegation was of course over-doing it. They were here, after all, to sell South Africa to possible investors. But it is also true that South Africa as a country has some things to be proud of. The New York meeting, along with an event one month earlier in Johannesburg, served for me as a backdrop against which to assess elite politics of the first decade of democratic rule in South Africa.

At the New York City meeting, Moss Ngoasheng, former economic adviser to President Mbeki and now chairman of the COEGA Development Corporation in the Eastern Cape, got straight to the point with his "seven facts in seven minutes" about the South African economy. As seven minutes became more like twenty, Ngoasheng offered a litany of economic statistics to confirm a country that has achieved much over the last decade and that appeared in good economic health.

South Africa, with consistent positive economic growth over the first 10 years of ANC government according to Ngoasheng, has "had the longest upswing since World War II between 1994 and 2004". Inflation is at its lowest in 40 years; interest rates at their lowest in 23 years. In the last ten years, the budget deficit as a percentage of GDP has been cut from 9.5% in 1993 by 2.6% by last year. Ngoasheng was warming up. South Africa had a "manageable and prudent debt-equity ratio," he continued; the country has considerably cut public sector debt. Employment was up: 11.6 million employed in 2004 as against 9.3 million in 1996. In fact, he suggested optimistically, most would agree that the last ten years amounted to "a good economic management story."

Ngoasheng assured his audience that they could trust the ANC to keep to a programme of market-led economic management. Why? The ANC has a "twenty-year view". Broken down, that means the ANC does not see itself losing elections for at least next two decades, no matter what its policies. And this has allowed the ANC to develop long-term policies. This freedom from pressure at the ballot box means it can put through almost any set of economic policies without fear of reprisals from the mass of South Africans and organised political formations such as the trade unions.

Rick Menell, one of the heads of the delegation and a heavyweight of the South African economy, announced himself to have been a consistent ANC voter since 1994, praising the ANC leadership as "rational, moderate and responsible" and as having a "pragmatic approach to creating wealth". For Menell, the ANC's policies made clear that the organisation would not "mortgage the country's future on short-term gains". He did not spell out what "short-term gains" meant, but it seemed clear that he was referring to the demands of the majority (the 90% that can claim to own only about 15-20% of the country's wealth) as reflected in the targets of the now-abandoned Reconstruction and Development Programme. As Doug Franke summed it up, in South Africa "when business talks, government listens".

Now and then, what Ngoasheng called "niggling problems" forced themselves back into the conversation. These included massive unemployment, cuts in social services, industry's lack of spending on training, the impact of the HIV/AIDS pandemic, and the government's controversial response (or lack thereof) to the HIV/AIDS crisis. But no one wanted to dwell on such downers, something resorting to statements bordering on misrepresentation. Ngoasheng kept on repeating an unconvincing unemployment statistic of 28%. Wendy Luhabe, the chairperson of the International Marketing Council, briefly mentioned "reducing the high incidence of HIV/AIDS" and reforming the lopsided education system to create "entrepreneurs". There was nothing on Zimbabwe, although there was a lot of reference to regional strategies in Southern Africa.

Not all was a practiced, united front. Luhabe called for scrapping foreign exchange controls completely, but Ngoasheng implied that they protect South Africa from the kind of shocks that befell the Asian economies in the late 1990s. Robert Emslie, managing director of Absa Merchant Bank, went so far as to call the racially skewed distribution of wealth "unsustainable". Even then this, however, represents a business opportunity: Absa, through a "black empowerment" merger, wants to create a bank that can absorb this majority.

Ultimately, the message was that South Africa is going places and that with current government policies bolstered by an infusion of foreign direct investment, it could triple current GDP growth levels (to about 6%), tackle unemployment and deliver satisfying profits to all concerned. This with few exceptions, and minus the overt marketing pitch, has been the message of government, business and its boosters since 1996. But not all elites agree on the performance of the last ten years.

Earlier this year, another international gathering offered a similar description of South Africa's current economic strategy, but a very different assessment. In early May in Johannesburg, the United Nations launched its Human Development Report 2003. The authors of the South African section, in a stinging critique, advised the government that a total rethink of its GEAR economic policy was urgently needed, in favour of a "pro-poor growth strategy", which it claimed was never a central part of government policy.

The UN report puts a different face on some of the numbers trumpeted by business here in New York City. For example, it notes that even though the percentage of people living below the national poverty line of R354 a month has fallen, a drop from 51.1% in 1995 to 48.5% in 2002 still means that nearly half the population – 21.9 million people - is without basic services such as food and clean water. And the respectable average annual economic growth rate of about 2.7% over the past decade has not translated into jobs, concentrating the effects of that growth at the top of the economy. Around the same time, economist Stephen Gelb has pointed out that the kind of growth South Africa has experienced has further enriched those who were already rich, and increased the gap between rich and poor. As such, growth is not "broad-based" or "democratic" and remains characteristic of an "enclave"
economy.

Neva Makgetla, a COSATU economist writing in Business Day, noted that the report reaffirms that in "South Africa extraordinary high levels of unemployment reflect not problems in the labour market or a simple mismatch in skills, but rather the structure of growth and the historic marginalisation of most of the poor" that continues in the democratic context. A rose may be a rose, but growth without jobs does not smell as sweet, especially given desperate unemployment.

If trade unionists and most South Africans felt vindicated by the UN report, what was surprising was the response from government and its boosters. Business doubted the relevance of the report's findings and the government questioned its credibility, while pro-market commentators said it made for "disappointing reading". Critics say that the report tells us nothing new. But knowing something and doing something about it, is not the same thing. Since 1996 the government, under pressure and with support and encouragement from local business elites, pro-market policy advisers and analysts as well as international financial institutions, has stuck to an economic policy framework that they claim will deal with these problems. All the evidence, however, points in the opposite direction and the UN Report suggests that government change course.

The second major criticism was that the report was ideological. It was not the UN speaking, but a reflection of ideological and policy advocacy of the researchers who compiled the report. But as Xolela Mangcu, executive director of the Steve Biko Foundation, noted afterwards: GEAR is also ideological and not objective, and there is nothing natural or preordained about the economic status quo. "It's not so much the content of the idea as the UN-backing that troubles the critics. They are in a panic because they are acutely aware of the influence of the United Nations in the global field of competing forces".

Both events signal the intent of the ANC government to stick with neo-liberal positions and policies, to vilify criticism, and are in line with current "two economies" thesis. It may also be true that the current leadership of the ANC enjoys unparalleled public confidence (having just received a two-thirds electoral victory) which it translates as a mandate to continue with GEAR. It is also true that business enjoys favourable access to government and that
the government insists on sticking to the "fundamentals" on economic policy, remaining hostile to critics from the left and inside the Alliance. But events like the UN report, as well as skirmishes within the ANC-led Alliance, create gaps that civil society and pro-poor researchers and activists can exploit.

Perhaps this is the biggest challenge at the end of the first ten years of democratic rule and perhaps the biggest hope for the foreseeable future: as Mangcu noted in his newspaper column, we need a new set of ideas around economic growth that is shared growth, in an integrated economy, for all South Africans - one that sees in the economy not just numbers, but the human realities behind the numbers.

   
 
 
NEW DARK ROAST (No. 17) is available on our website. In the latest issue, Maliq Simone observes that urban planning interventions aimed at overcoming the fractured nature of South African cities themselves tend to have fracturing effects. His provocative paper starts from the premise that the right to the city should be interpreted as the right of urban residents to pursue their aspirations. This raises challenging questions about the extent to which urban policy and planning, especially in its current form, can contribute to the fulfilment of the right to the city.

Also on our website, you will find the Key Note Address by Prof Jakes Gerwel at the launch of our publication Voices of the Transition: The Politics, Poetics and Practices of Social Change in South Africa.

   
 

N 29 JUNE, Isandla convened its first session of a new project called: A Reading Group on City Development Strategy in Cape Town. The group is made up of a diverse array of urban development activists from various sectors, including government, parliament, private sector, academia, advocacy organisations, cultural organisations and the creative fields. The purpose is to facilitate an open(-ended) discursive space to closely interrogate the conceptual roots of policy thinking on city development strategies, with an eye on
formulating more socially just and creative alternatives. The Reading Group also aims to rekindle a love for reading and critical debate. It is hoped that this pilot project will help us shape a similar initiative at a national level during 2005.


Contact details
Director
PO Box 12263 Mill Street
Cape Town, 8001
Edgar97@icon.co.za

Editorial collective: Edgar Pieterse, Katherine McKenzie
and Mirjam van Donk