Home' Trinidad and Tobago Guardian : December 12th 2013 Contents DECEMBER 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
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While there is no doubt that former South
African President Nelson Mandela, who
died last week at the age of 95, is deserv-
ing of every accolade that has been
bestowed on him, there is some analysis
in the international media which argues that his economic
legacy may not be entirely positive.
Nearly 20 years after the pernicious system of apartheid
was scrapped, questions are being asked about the extent of
the economic and financial progress made by South Africa s
majority ethnic group, which comprises 79 per cent of the
country s population of 53 million people.
Put another way, it is being noted that those who prospered
the most from the apartheid system---the ethnic group that
makes up 8.9 per cent of the country s population---continue
to prosper fabulously after 19 years of post-apartheid, majority
Meanwhile, the lives of most of those members of the
majority group---who were entitled to expect that the end of
apartheid would have brought them dividends in terms of sig-
nificant and measurable improvements in the quality of their
lives---remain nasty, brutish and short.
Much of the reporting on the South African economy empha-
sizes the fact that the unemployment rate remains very high,
while the difference between the incomes enjoyed by the ethnic
majority and minority remains as skewed as under apartheid:
It is estimated that on average a minority household earns six
times as much as a majority one.
Bloomberg.com, in a story on December 6, stated that Man-
dela emerged in 1990 after 27 years in apartheid jails, promising
to nationalise the country s mines and banks, but that four
years later, when he was president, his African National
Congress administration cut spending and courted foreign
This led to South Africa experiencing 15 years of growth,
which only came to an end at the onset of the global financial
"Yet Mandela s legacy of economic stability is beginning to
come under attack as the country fails to slash unemployment
and reduce inequality. The jobless rate remains 24.7 percent,
while average earnings for black households are a sixth of their
white counterparts. The ANC s youth wing last year waged
a campaign for the nationalization of banks and mines, the
very policies ditched by Mandela in 1994, and poor communities
have staged a series of protests against a lack of housing and
basic services," according to Bloomberg.
In a story headlined, "Nelson Mandela s mixed economic
legacy," the euronews website makes it clear that South Africa s
high unemployment rate has some social realities, concluding
that the effects of apartheid can still be seen in the jobless
"Just over 28 per cent of black Africans are unemployed,
24.2 per cent of what the South African government calls
coloured are without work, for those of Indian or Asia origin
it is 10.8 per cent and just 6.6 per cent of whites are without
One imagines that the rate of unemployment among young
people of the majority ethnic group is much higher than 28
In an op-ed piece in the New York Time headlined "The
Contradictions of Mandela" South Africa-born, Ohio University
professor Zakes Mda writes: "It is ironic that in today s South
Africa, there is an increasingly vocal segment of black South
Africans who feel that Mandela sold out the liberation struggle
to white interests. This will come as a surprise to the inter-
national community, which informally canonized him and
thinks he enjoyed universal adoration in his country....With
the rampant corruption of the current ruling elite, and the
fact that very little has changed for a majority of black people,
the euphoria has been replaced with disillusionment."
Much of the commentary on the issue of Mandela s economic
legacy makes it seem as though his choice in 1994 was limited
to embracing the policies that benefited local and foreign
investors OR engaging in Mugabe-style redistribution, which
is the economic policy with which Mandela emerged from jail
after 27 years.
South Africa s future is not a binary equation.
What the country needs to do, most of all, is improve the
quality of life of the majority population, while ensuring that
the economy continues to grow. This is because the only way
that the wealth of the nation is going to increase is if the econ-
omy grows. And the only way the economy is going to grow
is if there continues to be new investment from both the local
and the international holders of capital. Finally, the only way
the holders of capital are going to continue investing in South
Africa is if they have clarity and predictability with regard to
the country s future taxation and spending policies.
In that regard, then, Mandela was right to adopt the con-
ventional and prevailing economic wisdom when he emerged
from jail 23 years ago.
So, South Africa needs to increase the redistribution of the
nation s wealth, while ensuring that that wealth continues to
Kenya-born, Peter Hain, who is Labour MP in England, put
it very well when he wrote: "A new social contract is needed,
where privilege and reward are renegotiated in favour of a
more equal dispensation. Otherwise, its ANC rulers face a
revolution of rising expectations and frustration."
This new social contract should include the following fea-
1) The imposition of negotiated higher income taxes on
wealthy South Africans and high corporate taxes on the
country s businesses.
If the country needs to generate more revenue to improve
the quality of life of the majority of South Africans, there are
a few ways that that can be done, but increasing taxation is
one of the quickest and surest ways.
There is likely to be a great deal of opposition from the
minority who have lived off the fat of the South African land
for generations, but at the end of the day, higher taxes on
people earning over a certain threshold is fair and equitable,
given the decades of inequity and unfairness that the majority
of South Africans have had to ensure.
There is also likely to be opposition to higher taxes from
the multinational companies that have flocked to South Africa
because it is a beachhead into the rest of Africa and as a result
of its open economy, its rule of law and its pro-investment
2) South Africa needs a national minimum wage.
It is a little surprising that a country as large and diverse
as South Africa has a sector-by-sector minimum wage, but
not one for the entire country. Low wages are the principal
reason why millions of South Africans took to the streets in
strikes and demonstrations last year. The Government needs
to legislate higher wages---after a thorough parliamentary and
extra-parliament debate and dialogue;
3) The country needs a T&T-style housing policy.
While the ANC has made significant progress in improving
the distribution of electricity and water, one of the shortcomings
of the post-apartheid administrations is the fact that low-
quality slums remain a fact of life for many urban dwellers
in the country.
The Government there needs to take the lead in building
high-quality, low-income houses in the country.
4) The government there needs to encourage the majority
population to own shares in South Africa s prosperous com-
Is Mandela's economic
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