BEE Partner, South Africa Economy Watch

Since large residual white populations remained in southern Africa after independence, a considerable degree of accommodation has been required to reduce conflict between the owners of the resources and the new majority “owners” of the state. South Africa’s 4.5 million whites continue to dominate industry, commercial agriculture, the financial sector, mining, and the vast majority of agricultural lands and resources. However, after more than three centuries, most white South Africans have no ties to an ancestral homeland. Thus a cynical replay of the “Zimbabwe model”—white emigration or de facto state expulsion—is unlikely in South Africa, at least without the violence all parties to the 1994 transition sought to avoid.

Hence the adoption of GEAR and the abandonment of the RDP in 1996 were a concern to many both within and outside South Africa. Rather than rely solely on an unpredictable market mechanism, the RDP explicitly sought to shift some of the responsibility for redress onto the beneficiaries of apartheid, as well as address specific social needs. In fairness, both before and since GEAR’S enactment, the state has made improvements in some areas among the urban and rural poor. Since 1994, infant mortality has declined and some black household incomes have increased. By December 1997 the ANC government had constructed 250,000 new houses, provided electricity to 1.4 million homes, built or upgraded 560 health clipics, and completed 1,020 new water projects that provided access to clean water for 8.9 million people (du Toit 2001, 123-124). These improvements are cited in survey data as the most recognizable achievements of the ANC government (Afrobarometer 2003a). Yet, glaring inequities continue to exist, not only in regard to basic needs, but also in employment, ownership, and opportunities for advancement.

Some assert that a new black middle class has emerged, which offsets some of the concerns about the macroeconomic framework. This is misleading, however. First, because it overestimates the size and stability of this new black middle class (S. Taylor 2002).Second, it fails to give sufficient attention to the magnitude of South Africa’s poverty: 76 percent of South African households are below the poverty line (EIU 2003c, 22) and the state is the only institution uniquely suited to address it. The state has taken some proactive steps to stimulate black advancement. It has legislated changes to the Labor Relations Act and implemented the Employment Equity Act (1998), which requires white-run firms to meet specific black employment targets or face fines (S. Taylor 2002), and it recently published its “Black Economic Empowerment” strategy (EIU 2003c). However, most of these policies suffer from erratic enforcement and affect more urbanized, relatively more educated blacks—still a comparatively small portion of the population. Meanwhile, the mass of poor, uneducated, or undereducated black South Africans face few solutions and declining household incomes. They therefore find themselves increasingly desperate, and as some surveys indicate, disillusioned with ANC and democracy (Mattes 2002) and perhaps turning to crime (du Toit 2001). In short, economic deprivation in the black community remains the Achilles’ heel of the postapartheid state: it makes plain the absence of substantive democracy and imperils the genuine trains of the 1994 “miracle.”

There are some recent signs of backlash against the ANC’s embrace of big business and a substantially neoliberal agenda. In addition to several strikes and threatened strikes, in 2004 many of the ANC’s labor allies, including COSATU, condemned the black economic empowerment process as enriching only a “few politically connected figures,” such as ANC stalwarts Cyril Ramaphosa and Saki Macozoma (Reed 2004). Aware of this growing resentment among much of its labor and urban constituents in particular, the ANC began to, rhetorically at least, move away form its strict embrace of neoliberalism (SouthScan 2004, 1). It remains to be seen, however, whether this will result in any measurable policy change on the part of the ruling party.

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