About this site

This resource is hosted by the Nelson Mandela Centre of Memory, 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 It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

05 Sep 2000: Keys, Derek

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DK     … your waiting time and aggravation increases. That's capitalism and globalisation.

POM     My first lesson in capitalism and globalisation. This will be the opening quote in the book. We'll give the source as anonymous to preserve the –

     Mr Keys, I assume this will be the last 'official' interview, but I've come back to you now for ten years. You have been my economic barometer of sorts.

DK     Anchor man.

POM     You said at your most optimistic, a number of years ago, that the best this economy could hope for would be maybe a 1% reduction in unemployment per year up to the year 2000. On the scale of things that appears to have been rather optimistic?

DK     It's certainly difficult to estimate the size of the informal sector and the latest household census seems to indicate that the informal sector has been growing and that it's bigger than anything before.

POM     So what you are seeing is a loss of jobs in the formal sector and then the more entrepreneurial of the unemployed devise some form of activity to keep themselves alive in the informal sector. Are there government policies that are in any way geared to promoting the growth of jobs in the informal sector since this seems to be the only sector of the economy that is in fact growing?

DK     The Department of Trade & Industry has a whole section devoted to this, so it may either be helping or hindering the process depending upon your attitude towards government involvement. But the informal sector basically grows in a way where the bureaucratic apparatus seldom reaches. Interest rates have come down in this period. That must have helped a bit.

POM     Talking of that, in the last few years we've seen interest rates come down, we've seen the government rigidly adhere to GEAR with an absoluteness that would almost confound the most dialectical Marxist, yet growth is slow, per capita income in real terms is in fact slipping. Foreign investment, if I understood one of the charts in the paper this week, is actually a net – direct foreign investment is an outflow?

DK     There's no dispute that it's much too low. I have another article here that talks about how South African companies are investing like hell in Kenya and Tanzania and Lesotho, in fact all over the place, but they decide where their investment goes, wants to go, and their investment flows certainly don't want to go into SA.

POM     So if you, as you have been, were head of a corporation, CEO, where you pursued a policy where after five or six years the aims of that policy do not appear to have been achieved in any significant way, what would you do?

DK     …

POM     So that mean?

DK     Might change the Chief Executive.

POM     Well what if they did that in the elections last year?  Is it time for a modification of GEAR, a complete re-look at it?

DK     I think GEAR is being potentially modified now for several years. The problem is nobody can come up with the direction in which to move. Let's go back to the basic statement that the Washington Consensus is a necessary condition for growth but not a sufficient condition. Aspects of it like the smaller government deficit which helps to preserve savings, which allows better conditions for investment and so on, those things are absolutely crucial. But we have to ask ourselves what is needed to fill the gap between necessary and sufficient and then you're straight into the competition for investment worldwide and the attempts that have been made so far to bring that about which are not happening. When I became Minister of Finance the corporate rate was 45, maybe 48, it's now 30.

POM     The income tax rates are lower?

DK     Yes, that's right. So you can only get lower income tax rates and a lower deficit if you actually control your spending which they've done brilliantly.

POM     Which they've done well.

DK     Yes. Of course the other side of that good control of spending is so-called non-delivery, opposite sides of the same phenomenon. We tried to get a development aspect into the agreement with the EU, which they've had for instance with Morocco, which they had with Israel and one thing and another, I think without much success. The EU Agreement was fundamentally an agreement to drop barriers to trade which is always in favour of the stronger partner. We've tried with the arms purchase to get the famous offsets which all would have been, the ones that I've mentioned so far, would all have been in competition with existing South African businesses and the net result on the economy questionable.

POM     They being?

DK     Well there was going to be - the supplier of a submarine was going to put up a stainless steel plant at Coega, a port that doesn't exist yet, and they are going to be resiling from that extravagant gesture. In the meantime Columbus Stainless Steel, which incidentally has just become profitable, is the only major stainless steel plant in the world which has a local market as low as 25% of its output. The local price has always been higher than export prices. So in other words we have a stainless steel industry with a beautiful plant which has taken seven years to get to break even and if they had gone through with that particular offset we would have had two stainless steel plants, each of which would only have had 12½% of the local market.

POM     And take at least 14 years to break even.

DK     Iscor has established this Saldanha plant. The Billiton efforts are not negligible particularly if you take a regional view rather than a South African national view. A hillside plant on the … smelted together are huge contributors to GDP. In Mozambique they add 1% to the GDP, that plant on its own, it's only half the size it's going to be eventually. So what have we lacked? Oh, wait a bit, thirdly, the motor industry has been put on a decent basis where the local plants now are in general making for distribution worldwide. In other words these plants are suitable for making left-hand drive or right-hand drive, for driving on the left-hand side of the road, vehicles for sale round the world and so we're producing one BMW model for the rest of the world. We're going to produce one Mercedes model for ourselves and the rest of the world. We've got substantial business, the Volkswagen plant has got a substantial export business in the Volkswagen worldwide set-up. So there you can see globalisation working in a helpful way. Actually if you sign a free trade agreement in an economy which was formerly a siege economy a hell of a lot of things that you used to make you can't make at a profit any more. The clothing industry has suffered fantastically and that's a big employer. The textile industry has suffered.

POM     My question would be, before I come to -

DK     Your question is: what would I do? And the answer is, I don't know.

POM     Now if you put this in the context of where the World Bank is expecting the economy in the developing world to grow by 5.5% this year, had expected Africa to make 4% and SA would make under 3%, yet it is the economy, the developing economy within the world, that has a strong first world sector yet this strong first world sector seems unable to act as the engine of change for the region since they are unable to access the engine of change for what's immediately around it.

DK     Our first world sector was largely a smokestack thing, the first world stuff smokestack and a new economy. We didn't have much new economy. We've had some good entrepreneurs but we don't have a basis and besides the rest of Africa is hardly interested in that.

POM     Hardly interested in?

DK     The new economy. It's still interested in the smokestack which is why the SA businesses who are unable to develop profitably here are doing the next best thing, going into the rest of Africa. One of the first things that the Afrikaans farming community did was to come to a deal with Mozambique in terms of which they could establish farms in Mozambique trying to get back into an earlier era of time. How they knew how to farm was still advanced in Mozambique

POM     A few people have mentioned to me that there's a shift going on in terms of where skills are going somewhat parallel to what happened in 1948. In 1948 the Afrikaners shut the English out of the public sector and filled it with themselves so the English were forced to become entrepreneurial and to go into more business than they had been in, and now you have the present government moving blacks into the public sector, Afrikaners moving out and moving into small entrepreneurial businesses on a larger scale and the vacuum being left by emigration, which is mostly English-speaking people, is not being filled by Afrikaners.

DK     That's could be, I don't know. Anecdotally it sounds very convincing. There's no doubt that the Afrikaans community, not in any sort of formal way approved by congresses of the volk, but just as individuals, that they're making a fantastic adjustment. Do you know that in 1994 there were 570,000 people in tertiary education, broadly defined, in other words universities and technikons. Last year there were 460,000. In the 1994 figure of 570,000, 260,000 were whites. In the latest figure 160,000 are white and the biggest decline is at the technikons. In other words if you're an Afrikaner who can get a degree at a decent university you're still going there. As a matter of fact I find these figures so ironic, the only group at universities that is increasing its numbers is the historically Afrikaans white university. If you're an Afrikaner who can still get a degree you're going for it, you go to university, but if you were going out to become a plumber or a carpenter or a something else you realise those jobs are probably just not going to be available.

POM     You had a movement, you said the number of Afrikaans speaking has dropped from 260,000?

DK     No, no, white.

POM     Sorry, white has dropped from 260,000 to 160,000.

DK     A hundred thousand less.

POM     Why would there be 100,000 less?

DK     Because they don't go to the technikons any more.

POM     OK. So when you said tertiary education then you were saying, you were including?

DK     Universities and technikons.

POM     And technikons. I suppose what I don't get is if more of them, or 100,000 less of them are going into tertiary education that those who are going into tertiary education are going to universities, not technikons.

DK     The university section is unaffected, largely unaffected, not completely. The Afrikaners who have no thoughts of going anywhere else unless they get job hunted are making an adjustment, accepting facts as they are and coming to terms with it. The English-speaking white South African component is on the brink of adopting ex-patriot thinking about SA. I find myself in many communities, at meetings, gatherings, virtually alone.

POM     And the reason for the exodus has it more to do with perceptions?

DK     Oh there are all sorts of reasons.

POM     I mean this whole … on the part of Trevor Manuel and Tito into the numbers are here and the perceptions are there and all our economic fundamentals are fine but the perception is –

DK     I find the perceptions of the white English-speaking South African community to be exaggerated on the negative side.

POM     This goes back to something you said years ago about the wives in the country clubs who make corporate policy, tell their husbands when they go home, "This is what I heard today and - "

DK     "This is what happened to so-and-so." Yes. Sometimes it's true.

POM     So the bottom line would be if you were in charge of this corporation called SA?

DK     I would still be looking for a way to position this country as a desirable field for industry of any kind, brothels, I don't mind, we could become the sex tourist destination.

POM     Let's put that in the context of AIDS which I have become very, very interested in in the last couple of years.

DK     I saw you at your most passionate the last time you were here.

POM     I've even gotten more so since then because the situation is getting worse.

DK     It's getting worse exactly along the lines that one could predict.

POM     I'm now working on this journal that I edit, I'm doing an issue on the macro impact socially and economically of AIDS on SA. Government policy appears to be much like it is on the economy. I had a long talk with Pallo Jordan at the Racism Conference about this. He said it's all about taboos. The government won't face dealing with the taboos.

DK     Taboos on what?

POM     Taboos like the culture that doesn't talk about sex, that you're not going to get religious leaders going onto pulpits saying to young people, "If you must have sex use condoms", they're just going to say, "Abstain". So what the young people do when they hear that advice is say, "Let us ignore it", probably in much the same way they would ignore the advice if they were told to use condoms. But he said it's all about taboos and we can't move away from our taboos and that within government there is a divide. There's one side that says we should nudge people gently forward towards change and then there are the others who say we should push, push hard. So far the moderates are ahead of the pressures.

DK     I know, I asked one of the managers the other day –

POM     I'm seeing Mr Motlanthe later this month and I'll say to him that the ANC is a revolutionary movement so this is the first revolutionary movement I know that believes in letting things alone. You'll have to move at a slightly faster pace. The raw data that I can get my hands on as I'm talking to people and looking at studies would suggest that if the present level of AIDS continues, even if you were able to hold it, the effect of what's there has to run it's way through but there is next to no prospect of this country achieving a 5% growth rate which it needs to break through and start making a real difference in the lives of the masses. So the government is confronted by two things, an economic policy that's not going any place and a catastrophe looming on the other hand which they do not appear to be giving their attention to. I make that statement in the context of having been one of the few white people who attended the Racism Conference last week and I came out of it with the same passion and enthusiasm that was put into a conference on AIDS, the same breakdowns as to what was going to be done, almost micro-policy making. You don't hear of them making policy, but people are far more interested and passionate in talking but AIDS never came up in the whole conference. Four days, there was no mention.

DK     It would have been racist.

POM     Sorry, it was mentioned once in the context of it being seen as a black disease.

DK     It's not just neglected.

POM     Again, if you had to give advice to government on this? They say, ministers say, it's one among many priorities. I say, no, it's the priority because if you don't resolve this one the rest get subsumed by it. No-one will buy into that. There is still a form of, not a denial about racism, but even greater denial still about the impact of AIDS will have, is going to have.

DK     Is having I suppose. I don't know whether it's denial or preservation of taboos or nudging or what it is but we sure don't have an effective AIDS policy.

POM     You don't have an effective economic policy and you don't have an effective AIDS policy.

DK     We have an effective economic policy.

POM     But it's not working.

DK     It's not sufficient.

POM     But you can't add it to, you can't tell me what must be added to it. If I were a foreign investor, if I had to say I would bring in R100 million in an investment and the odds are I'm going to have to hire three workers because two out of three are going to be dead in twenty years and if I invest in them, if I train them, why don't I go some place where I have to invest once in a person, human capital.

DK     You've got such a marvellous memory. Have I told you about when I was in the IDC in 1957? I joined the IDC at the beginning of that year and we had a very dynamic leader. By the end of that year an edict went out from the top that every officer in the IDC had to come up with a project inside the next three months. Why? Because the future field for profitable investment looked so barren. (In brackets, I came up with aluminium.) At that time, towards the end of the fifties, the IDC, the government's Development Bank, wasn't sure which way to go, it wasn't obvious. We left the Commonwealth in 1960 and between 1960 and 1994 you had increases in the development of a siege economy in terms of which SA businesses couldn't invest outside but in terms of which they could be encouraged, rewarded, etc., etc., to make the country more and more self-sufficient. That was your investment. Those were your projects.  You couldn't develop an export-orientated business in that thing, it became progressively more and more difficult. In the end exporting basic commodities was difficult.

     Then in 1994 you had the change and 30 years of investment direction becomes questionable. Now you're back in 1957. I didn't know then, well I knew but I haven't got a fresh answer and I haven't heard a fresh answer. The best answer I've heard was from the brains in Shell in London, who said to me we should try to establish Silicon Valley at Stellenbosch, but we haven't been able to do it.

POM     The government would not go for establishing Silicon Valley in Stellenbosch?

DK     Sure they would but the perception was that those people demand the highest quality of life in the world. It's no accident that it happens in California and not in New York.

POM     I had a young friend who had been in the MK, he went very young and he came very young but he got out of the country and went to the States and he picked up computer skills and he is now the Manager, the Director of all international operations for the San Francisco office. He must earn about $200,000 a year. He put himself through MIT, he was a Soweto boy. He was back recently for his father's funeral and he was telling me that Microsoft went after him. They took him to Seattle and showed him the whole spread and then he saw the employees lived in compounds and he said, "From my days in Angola I've had enough of compounds", and so Microsoft was out. What an attitude!

DK     Let me tell you, the World Bank doesn't have the answer and the IMF doesn't have the answer. It's not that they haven't been asked, and Michael Porter doesn't have the answer at Harvard.

POM     Do you think that perhaps one of the reasons the government has become so obsessed with issues like equality legislation, what I would call behaviour legislation, legislating behaviour and trying to legislate people into being good people or whatever –

DK     Norm setting.

POM     Yes. Is a substitute for not being able to deal with – ?

DK     I think it would have happened anyway but perhaps it sticks out more, it's more obvious because there isn't enough of other stuff going on. I don't know. I'm only saying that because I know your memory is so good so I feel embarrassed in repeating it but it is important to say. You know our transition, due to blessings from above, took place from the top down. The first thing that happened was Mandela replaced De Klerk. That took a certain time. The Mandela Cabinet replaced De Klerk's. So things slowly worked their way through. We only arrived at the backyards about a year ago where all these issues of racism and behaviour issues that you're talking about become highly relevant. They didn't have to talk about any of those things when the only change that was taking place was when Mandela replaced De Klerk.

POM     Are you becoming more emergent because there is a more emerging middle class, black middle class?

DK     No, no, no, you're getting down to where it hurts. I'm a property owner in Killarney. I'm still paying the rates that were adequate for only white Johannesburg, not Soweto. Today, today I'm still paying those rates. I should be paying double, maybe more.

POM     Is this due to the fact that local government is inefficient, slow, hasn't gotten around to doing it?

DK     Some of it - Johannesburg isn't, we're known as a single unit here. Cape Town. Durban is quite -

POM     I'm coming towards a view, in an odd way it's based on – I find that making comparisons between the development of Ireland from 1920 to 1970, to the eighties almost, and then from 1980 on to the end of the century, it's like two entirely different things. The first was it was a top-down settlement. The Russian Revolution. There was no affirmative action, the question never arose. But we slavishly followed one British manufacturing practice. The British were the people to follow when it came to trade and commerce, inherited the feeling that to be involved in public service, on its staff, was to be involved in the hand of industry, if your Latin and Greek weren't up to scratch if you couldn't make it into the public service.  But with a well educated work force even then, and it took 40 years to make the leap from where we were to where we are, and I'm tending more towards the view that it may well take this country just as long to make that kind of a leap.

DK     Of course. It's a much bigger leap. Much bigger leap.

POM     So that people's expectations are still being overfed.

DK     Yes except that the white idea of what the black expectations are is not very close to the other two. People measure their progress in terms of where they started and a lot of black people, not just the emerging middle class, a lot of black people have improved their standard of living over this last 20 years tremendously and it's going on and they've got various psychic additions to it in the behaviour area, etc., etc. So the black people are not impatient, they don't have unrealisable targets for what they want to do. What do they want to do now? They want to get their children into school and a lot of them are managing. Sometimes I tell my wife we're paying for most of them, but a lot of whites, it's a wonderful thing, several black children being educated at private schools. Wonderful. My reserve driver's daughter has gone to computer college and got very good results. He and I collaborated on buying her a computer. Sitting in Soweto they are working 24 hours a day. Great. For that family that's like getting to the moon. Nancy isn't suffering from disappointed expectations. He came all the way from Zimbabwe in order to enjoy the slow rate of progress here.

POM     Let me ask you two questions about Zimbabwe.

DK     It's not an area I know much about.

POM     One, was there, again in the world community, what one might call Zimbabwe contagion, an immediate feeling that if it happened in Zimbabwe one day there's going to be a domino effect, it will affect Zambia, South Africa and all the way down the continent. Indeed I think everybody from the Hereros to the Nama are putting in reparation claims. How soon will you be back to prehistorical times?

DK     That's right. Why didn't you show me the wheel, you bugger.

POM     Would you say that, again, a lot of government policy to what's happening and has happened in Zimbabwe has to be judged in the context that because Zimbabwe is South Africa's biggest trading partner, that it can't allow Zimbabwe economically to go under, that in a sense SA is the bailer out of last resort?

DK     They owe us a hell of a lot of money already, let's start from that. They haven't paid for the transport services or the electricity for a long time now. When you read about SA being prepared to underwrite a bond issue for Zimbabwe for 800 million, all we're trying to do is convert a bad debt into tradable paper, straight into Zimbabwe and out to us. The fact that we provided is like a fly in the ointment. The idea of a country going insolvent or anything else of course is a media myth. Countries do go down but if your GDP falls by 5% you're still 95% of what you were. So it's not that bad to start with. I don't know how many Zimbabweans there are in this country but the ones that I've met are excellent chaps and a few more of them wouldn't necessarily be a bad thing, mainly very good workers, they don't come down here to be unemployed. And what can you do to prevent them coming in with a land border like ours and a river that's dry for six months of the year? You'd have to put up a wall.

POM     Does it again though have an impact on the way investors think about SA? Do they make any differentiation between Zimbabwe and SA, or Namibia?

DK     No, they don't know which one's which. We're not talking about direct investment now. People who go for direct investment they know the markets, but it has a huge effect on the portfolio industry.

POM     Where does that leave SA? Do you think the country will go along at 2½% - 3% for the year, the standard of living of the masses will increase incrementally whether it's through the provision of water or electricity, better services, better education in their schools and the unemployment situation is going to bottom out more or less at what it is and the informal sector is going to grow some more and that's what people have been used to and in time they will become used to this revolution? They're not particularly unhappy about it.

DK     That seems to be the case.

POM     One can still go into the smallest shack and you will see a television set.

DK     It's the first item of purchase.

POM     I think I would too.

DK     Our housekeeper has to see at least two of the daily soaps and for half an hour in the morning she watches the one and she has to see it that night, the repeat.

PAT     Can I ask a question? It has to do with does the economic profile improve with the AIDS. If the AIDS pandemic had existed …  How can Trevor Manuel sit there today and ignore the impact of AIDS to look at what the forecasting is for the economy for the future of government spending?

DK     A whole lot of questions there. Let's just talk a bit about AIDS. There are two costs as far as AIDS is concerned. One is the lost productivity and the second one is people after they've stopped working, alleviating their problem and trying to prevent death or seeing them through to death. The second cost here will hardly register. That's the cost of their dying, treating them after they've stopped working until they die.      And they don't even identify it as AIDS. It often is also TB and things like that. So the cost is there but it won't register in the GDP figures or anywhere else. It will show itself in longer waiting times as far as hospitals are concerned and that sort of thing but those are already rather long. That's the first part of the answer. The second part of the answer is that government actually, apart from launching a great campaign and trying to get the people to think differently about it, has no power to decide on how AIDS will be treated apart from that. Doctors decide and families decide and employers decide. The government doesn't actually have any direct way of influencing that process. It can influence, as Uganda has shown, it can influence the way young people behave up to the age of 25. It can do that. We aren't doing it at the moment. But it's actually, the hospitals are there, the doctors are there, the nurses are there, the families are there and they will do their thing.

POM     Yet the policy, most studies that I have come across say that the debate about the effectiveness of certain anti-retrovirals, like for mother to child transmission, is a dealt and done issue and this country is still debating and researching and that to treat somebody, from an economic point of view it makes economic sense to do so because no matter what the cost of the medicine –

DK     Don't misunderstand me. I'm not saying the government is in the right position or anything else. All I am saying is that the government doesn't have much say about how the community experiences the AIDS crisis. It can't say AIDS patients must have priority in hospitals. It can't say don't admit AIDS patients to hospitals. It will just flow into the system.

POM     Why can't they say don't admit AIDS patients to hospitals?

DK     Nobody would follow that.

POM     Why can't they say, "You've AIDS, there's nothing we can do for you." They do it in American hospitals, they tell you to go home and die. If you're dying they tell you, "Listen you're occupying a bed and we can do nothing for you."

DK     The doctors will take their own decisions. That's reality.

POM     The doctors are white doctors?

DK     And black doctors.

POM     But mostly white?

DK     In the country areas I don't think mostly, there are a lot of Cuban doctors. The doctors aren't doing their thing. As I say, if they don't have the drugs, they don't have the drugs. That's certainly wrong. The government's position on that is ridiculous.

POM     If you again were a foreign investor putting up a plant here or something and you went down this catalogue of statistics regarding AIDS and said, "Oh, one in every 15 year old who is alive today is going to die of AIDS (break in recording) … to have the highest rate of infection and the rate of infection is increasing and the government policy seems to be all over the place. I don't think that's a very good place to put my money."

DK     The decision about whether it's a good place to put his money will be taken by the entrepreneur on the basis of the profit that he makes.  He would factor into his labour cost calculations, he would factor in what the business community here was doing businesswise in relation to AIDS sufferers. That would go into his cost calculations. If the profit was adequate he would be here, if the profit wasn't adequate he wouldn't be. Investors in Colombia, and there are certain additional costs associated with running a nickel plant in Colombia, the fact that those costs are fundamentally occasioned by the drug trade and this, that and the other and so on, we know that, but from our point of view we factor in those costs and if the profit is adequate we will increase our investment and if the profit isn't that good we won't. That's it. Every country has problems, special features.

POM     Would you say that HIV/AIDS is an active contributor slowing economic growth?

DK     No, just as what you have to do in Colombia is a factor slowing economic growth there.

POM     Would you say that, again if I said prioritise, don't tell me the list of challenges facing the country, prioritise them for me, where on that list would you put HIV/AIDS?

DK     Where on that list would you put clean water? I don't know. I would have to look at what all the items were on the list first.

POM     But it wouldn't immediately come into your head.

DK     I don't have the same exposure that you've had and I haven't reacted in the same way. If I had a list of things and had to assign priorities I would have to see what the whole list is first because there are plenty of areas in which the expenditure of money can bring about observable good results which isn't clear in large areas of AIDS. Where would you prioritise caring for diagnosed AIDS sufferers, adults, non-pregnant? Where would you put that on your list? Number 202?

POM     I think I've raised this with you before, I'm not quite sure I have, but if one is cold and callous about it one can say like everything else there are certain benefits that are associated with HIV.

DK     I've seen the list before and I reacted strongly against it then and I react strongly against it now.

POM     But it is true. It can cut unemployment.

DK     The first thing it does is cut employment. People die in their work.

POM     Let's take this, a government that seems to be acting like Hamlet with regard to economic policy, acting like Hamlet with regard to HIV/AIDS.

DK     Acting like Hamlet is a wonderful phrase. Economic policy, they've done what was necessary. They don't know what to do to make it sufficient or to personalise it. I would have done what they've done, it was necessary, and I wouldn't know what to do to make it sufficient. It's very different from the AIDS thing.

POM     In that sense is the not knowing what to do to make it sufficient, is this mostly a problem of globalisation so that the factors that would make it efficient are factors that are outside the control of SA itself rather than within their control? They've done everything that is within their control and now they're kind of sitting back and saying, "Does all this pay off?"

DK     In 1957 when I had the problem that I say has now recurred, globalisation wasn't as marked and the worldwide institutional framework for accelerating globalisation wasn't there and we still had problems.  But SA, and just to contrast with Ireland, SA is very poorly placed in the light of globalisation. People who have a problem in globalisation are the unskilled. We have more than most countries, partly our fault, largely.

POM     We should argue for resources going into education.

DK     Which they are trying to do. Poor old Asmal.

POM     50% on the pass rate, not yet, maybe another –

DK     He would really like to see results. He's an intelligent man, totally committed, suffering from cancer but going as only someone who realises his span isn't that long can go.

POM     That must be why he's gone back to smoking.

DK     He's got tremendous resistance, a generation of teachers who haven't been …

POM     That in itself might take a generation, at least one.  I laughed at the privatisation theory, the reaction to the government's privatisation plan – on the one hand the market is saying it's really not a mess and on the other hand COSATU and the SACP saying they're going way too far, that everything would have been revealed except what was some way fairly predictable but not left out. It's again this case of government not being clear-cut in its plans in that until, again, foreign investors say, "We want to see what they're actually going to do with privatisation, we're going to start seriously again thinking in certain terms and putting our money down."

DK     The determinant of the rate of investment and largely foreign investment into these areas is purely governed by the rate at which government feels it can move vis-à-vis the labour movement. There's no problem getting foreign investors once they sort that out. We've had very good prices and very good interest.

POM     In that regard is the alliance slowly approaching the point of having an identity crisis or are the fissures becoming open chasms rather than things that can be mended?  Pallo Jordan said to me, "We've always had these positions. It's like a troubled marriage. Before all the rows were in the bedroom, now the rows are in the living room."

DK     They have had these bits of … really bitter when none of the parties is in power, that's clear, and the attitude of COSATU was actively supported by the ANC when it was in a white governed state, opposition to use of …  That brings you 180 degrees.

POM     The ANC have, COSATU hasn't.

DK     No, COSATU knows this was the right policy before and COSATU has to have a strike about something on average once in six months because otherwise they vote the leadership out of power. The idea of a happy labour movement that doesn't need to strike for several years, forget about it.

POM     To the degree that they argue that, privatisation particularly –

DK     We've got creeping privatisation. That's very much the right way to describe it, it's like trench warfare and where they can go a bit further they go a bit further and so on. Sometimes they have to come back, take two steps forward and have to come back one step and so on. That creeping privatisation will go on and the cost to the country isn't great because the way in which the businesses are being run is improving. For instance in Transnet the employment is down to half of what it was. There have been tremendous productivity improvements under government ownership that were highly necessary. When I was in government it didn't worry me that privatisation was a long way off because the scope for improving the way the businesses were run was so enormous.

POM     Without privatisation?

DK     Well, or with partial privatisation. Look at what's happened to the Airports Company. They've got 25% Italian ownership, Italian ownership, and they run it fantastically. They're more customer friendly than they were.

POM     What did Valli say? He wanted to go back to being - Valli Moosa wanted at arrival in the country that there would be, it sounded like he wanted to be greeted in a more African way.

PAT     That's right, the welcome should be African when they arrive.

DK     So you get great benefits. Swissair has bought 25% of SAA, you can see the change. It's improved.

POM     If you look at the whole picture and the document I have here which is the document that the people's revolution will lead to transformation. The word 'revolution' is every third or fourth sentence. It's one of the delusions of the ANC itself that (a) they got a revolution, (b) that they are in fact a rather conservative lot.

DK     Yes, perhaps. Their dream is not to be America. The old Soviet is a hell of a lot closer to what they aspire to be.

POM     This is one of the reasons why you have –

DK     Can I just say that was true of the Afrikaners as well.

POM     The ideology has moved to creating a value ideology. If you didn't snuff out economic or whatever philosophy to a value ideology, that you acted in certain ways, a brave new man and this brave new man does A, B, C, D, E, F sacrifices on behalf of these values, these noble, non-human being things. But the mindset is the same, it's just a different kind of ideology from the one they gave up.

DK     In my experience you couldn't find a bigger bunch of pragmatists than the government. They were interested in what works and what doesn't work, Manuel, Erwin, Mboweni, Naidoo. Have I told you that I'd prepared myself for ideological discussions, not one of which ever took place. They wanted to know firstly where are the bodies, second, where's the money? I said the bodies I can't help you with but this is where the money went.

POM     How would you judge business's reaction to government's privatisation plans?

DK     By now I think they've accepted the fact that it's going to creep.

POM     And they've adjusted. But do they understand that government faces, that they have the labour movement?

DK     They have the same problems themselves. Private business now can't fire people in any sort of fair sized scale without creating a crisis.

POM     There are all kinds of procedures that you must go through.

DK     A lot of it's in place. A company that I'm associated closed their small plant on the East Rand, there were 110 workers involved. I thought it's a hell of a time to decide to close this plant, it's an international company, so I started to go into what the conditions would be and so on. Well each of these workers was going to get R50,000 as a retrenchment bonus and they were going to withdraw … of their credit in the provident fund which in each case was R50,000. So on average they were going to come out of there with R100,000 with which they could buy a house in Soweto and let out rooms which they don't need, R700, R800 a month extra income. Transferring to the informal sector.

POM     So you don't see, even though there's been increasing talk about the alliance having reached a dead end, that the alliance members, leaders, are having still a big laugh saying, "These guys just don't get it, we're not going to split."

DK     Yes, I don't think there's a plus balance for anybody in splitting. It's like going to confrontation outside rather than going to confrontation inside. They have more chance of securing changes in policy.

POM     Affirmative action, this came up big at the Racism Conference.

DK     I gave you the example of what's happening in the educational sphere. I think the biggest results of affirmative action are the kind of career choices that young people are making.

POM     Why are blacks moving into technikons rather than to universities?

DK     No, they're going into universities in a big way too. The white numbers in technikons have gone down.

POM     Whites are leaving technikons in larger numbers?

DK     Technikons are going down in total.

POM     They're just going down.

DK     What's happening to the project? Changing?

POM     No. Two things. One I'm writing and I think I've written about a quarter of a million words before I realised I hadn't come to chapter one. I've got 18,000 hours of interview material. I've talked to my publishers and we've agreed on a two-pronged approach. One is that I owe them a 700 page book, but I will draw selectively on perhaps a small core group of interviews.

DK     That will be your executive summary of - ?

POM     But in a way that the reader can identify with the person who is being interviewed, that the person doesn't just become one more name. It's to sell in the US. Then the second is to produce over a series of years, all the interviews, edit them all, comment on them all and 1990/91/92/93/94, for each year and do two volumes a year for the next five, six, seven years and have them done by University Press.

DK     May you be spared.

POM     I've been trying to edit, one person I was editing it took me three days to edit four pages of one interview. Then I have to go back and check all the changes. So it's a monstrous job. What I am looking for and I'm asking you this just because you may have ideas, is I'm looking for funding. So far I've financed this entire thing myself and it's cost me everything I had but now I have to put all the disks on CD Roms and hire somebody who can allow me to move back and forth between Europe and –

DK     How are you going about finding the funding?

POM     I haven't done anything so far.

DK     Let me assure you, you won't get a cent.

POM     You won't get a cent if you don't ask or you won't get a cent if you do?

DK     You must work out a plan that you can put on two pages and you must distribute this to people. The longer you wait the less interest they will have in assisting you.  You're getting older, what you're doing is getting further back. You should have done this seven years ago.

POM     The money part or - ?

DK     The money part. Every time you left this office in whatever frame of mind I sort of mark down another year in which he hasn't asked for any money. Two different cultures.

POM     I guess so.

DK     We have a fund which puts some money into good causes. Most of it goes to black causes of course but this I reckon could be smuggled in.

POM     I'll do that then.

DK     Two pages, not more than two pages.

POM     That will be donated to a different kind of cause.

DK     There are people that do this sort of thing, raise this sort of money.

POM     There are?

DK     Who go about it professionally.

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.