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This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

Part 2

Padraig O' Malley

In 1995, one year after the apartheid government in South Africa had successfully negotiated itself out of power, South Africa achieved a rate of growth in GNP of over three per cent for the first time in fifteen years; inflation fell to its lowest level in decades; the projected rate of growth for 1996 is also in the region of three per cent. All good news, except for two disturbing blimps on the horizon: inward investment remains elusive, and, more ominously, the rate of unemployment remains close to 40 per cent. The manufacturing sector is shedding jobs as it downsizes to meet the challenges of the global market, and the labor market cannot absorb the number of new entrants that knock on its doors every year, to say nothing of having the capacity to address the backlog of millions. South Africa, like many other countries at more advanced stages of development, is helpless in the face of a phenomenon it cannot control: jobless growth. And on this score alone, the failure to create jobs, South Africa will rise or fall: Democracy is not edible.

The ANC inherited an economy which ranked among the most uncompetitive in the world, with management practices and attitudes firmly rooted in the nineteenth century; union practices that could not separate the legitimate business of unions as the custodians of their workers' interests from the imperatives of the liberation struggle; endemically low productivity; a relatively high wage structure given the country's level of development, and a pervasive belief that the proper relationship between labor and business is necessarily adverservial.

But the pragmatists in the ANC won the day. They accept that large scale direct foreign investment is a function of perceived fiscal and monetary prudence; that foreign bankers are not persuaded by noble sentiments to uplift the downtrodden masses who suffered under the jackboot of apartheid; that as far as the international community is concerned apartheid is a thing of the past, yesterday's story, and that unless South Africa gets its house in order, there will be no furniture deliveries. And pehaps, this is what has been most difficult for South Africans to grasp: Having been considered special for so long, having galvanized the world's attention for decades, they are having a hard time adapting to the fact that they are no longer special, just one more beggar in the international marketplace for the capital that insists on profit being part of the dividend of freedom.

The government, having absorbed the hard reality that in today's global economy sovereignty is a limited concept and that no country is at will to pursue economic and social policies of its own choosing without regard for external consequences, has produced a blueprint for growth and development which postulates a 6 per cent rate of growth per annum by the year 2000, a rate which would facilitate a massive redistribution of income to redress the gross social inequities that are still a daily reminder that the statutory abolition of apartheid or even the appurtenances of democratic governance are necessary but are not sufficient conditions for economic and social transformation. The plan, which calls for a budget deficit of 4 per cent of GDP, a is genuflection to the edicts of the World Bank, of the government's down payment on fiscal rectitude in return for the emolument of inward investment.

But the government's blueprint carries an enormous price-tag: Huge cuts in social expenditure, urgent inequities left unaddressed, basic services inadequately catered for; infrastructure left unattended to, investment in human capital neglected. And hence South Africa's basic dilemma: to attract foreign investment in the amounts necessary to generate the economic growth that can both raise standards of living and facilitate massive redistribution of resources (in the early 1990s, South Africa had the most unequal distribution of income of any country in the world), that will obviate the gross inequities of the past, it must prove its fiscal mettle to skeptical international financiers. To prove its fiscal mettle it must cut deeply into resources already insufficient to meet basic needs and curtail the degree of redistributive measures that would go some meager way to addressing the imbalances between blacks and whites. In the end, the government angers whites for what is being taken from them, little though it may be; it angers blacks for the little that is being given to them, and, to add to the uncertainty, there is no guarantee that the financial manna from the international community will drop from the cluttered heavens of excess opportunities where the supplicants for capital far outnumber the suppliers.

A growth rate of six per cent is a pipe dream, but the pipe draws on the dagga of hope; the dagga numbs and hope remains the repository of optimism. Optimism unfounded is perhaps better than no optimism at all.

As South Africa approaches the third anniversary of its blind leap into freedom, the punters hedge their bets. And, so do the foreign investors.

Suffice to say that the hard-nosed international business community is still not sufficiently convinced that all is well. Not that the country is not functioning -- it is, and many would say remarkably well for a country going through a difficult and painful transition to democracy, and it is certainly functioning better than it was during the last years of apartheid-rule. But South Africans would do well to remember, as they hew the building-blocks of their new nation, that self-empowerment is a process, not a once-off joyride into some economic nirvana.

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