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In
1994, Nelson Mandela was elected the first black leader
of what was hailed as a new multiracial, multicultural
and democratic South Africa. Now in 2003 in Soweto,
one of the central battlegrounds in the antiapartheid
struggle, people get their electricity cut off and
no longer have ready access to water. Private security
firms evict them from their inadequate housing. Through
1999 and 2000, protests grew against unemployment
and privatization of basic services. Crackdowns by
the ruling African National Congress (ANC) became
increasingly repressive.
In
2002, private security guards fired live ammunition
to disperse around one hundred people demonstrating
over electricity cutoffs in Soweto outside the home
of Johannesburg's Executive Mayor, Amos Masondo in
the swank Jo'burg suburb of Kensington. The ANC, aiming
to make an example, arrested the demonstrators, denied
them bail and held them in Sun City, a notorious maximum
security prison near Johannesburg which formerly held
anti-apartheid activists. The'new' South Africa has
rapidly regressed into the South Africa of old.
However,
in the 'new' South Africa the repression is not to
enforce a rigid racial hierarchy. Now, the ANC is
suppressing opposition to its policies which have
led to a marked stagnation in economic development.
Annual total gross domestic product (GDP) has stagnated
at about one to three percent since the early 1990s.
Unemployment figures in most of the country's provinces
have hovered near the 50% mark since the late 1990s.
Social services have suffered massive cuts despite
South Africa's national health emergency due to AIDS.
The
usual suspects - enter the IMF and the World Bank
The
promises of a free, democratic, prosperous and peaceful
South
Africa which appeared so close to fruition after the
demise of apartheid have disappeared fast. Tears and
pain have rapidly supplanted hope. The forces of neo-mercantilist
ì globalization responsible for South Africa's
continuing economic and
social chaos were entrenched years before apartheid
collapsed. Indeed, when the apartheid government was
clearly doomed, faced with overwhelming international
protests and a strong sanctions regime at the climax
of the Cold War in 1989, the international financial
institutions (IFIs) stepped in. They were determined
to influence the forces of social and economic change
in the interests of international finance and business.
In the early 1990s, the World Bank sent advisors to
South Africa to recommend neo-liberal ideology and
policies promising economic growth. In 1993, the International
Monetary Fund (IMF) granted South Africa a $750 million
loan conditioned on the adoption of neo-liberal policies.
Although
it is currently in vogue to label the policies of
the IFIs as 'neo-liberal' these policies are purely
neo-mercantilist. They emphasize centralized corporate
control over under-developed economies through'free'
tra êde agreements while only allowing liberalization
in areas which the developed economies and their multinational
corporations already dominate, such as international
capital flows. The globalization currently being imposed
through the World Trade Organization (WTO), regional
trade agreements and IFI Structural Adjustment Programs
(SAPs) throughout the under-developed world really
hark back to the age of nineteenth century imperialism.
Now, as then, the resources of the imperial possessions
in the periphery are directed towards the core developed
economies - these days Europe, North America and Japan.
Free
trade - the dream and the reality
Indeed,
a liberalized global economy was merely a theoretical
pipe dream of nineteenth century liberal economists
such as Adam Smith and David Ricardo. "Free trade"
is a theoretical ideal with no basis whatsoever in
reality. Unfortunately, Nelson Mandela and the new
ANC establishment in South Africa adopted elements
of the neo-mercantilist agenda enthusiastically in
the first post-apartheid national economic program
called the "Reconstruction and Development Program
(RDP). The RDP did retain some redistributive elements
but was rapidly abandoned in favor of a purely neo-liberal
program called the Growth, Employment and Redistribution
(GEAR) program in 1996 due to the growing influence
of the neo-liberals in the ANC.
GEAR
was drawn up almost solely by fifteen 'neo-liberal'
economists picked from the World Bank, 'neo-liberal'
think tanks and various African Development Banks.
The GEAR program emphasized commercializing and then
privatizing all of South Africa's public companies
and services. It drastically cut government spending,
and secondary taxes on corporate profits. It meant
substantially and prematurely reducing tariffs designed
to protect South Africa's key infant economic sectors
including textiles and value-added manufactured agricultural
goods.
GEAR
also liberalized capital controls and foreign exchange
rates wh which left the value of South Africa's national
currency, the Rand and South Africa's import and export
economic activity highly susceptible to the volatile
and rapidly changing nature of international capital
markets. Thus South Africa, a newly emerging semi-developed
economy was forced to adopt economic standards of
liberalization which no developed economy including
the United States has been able to implement successfully.
GEAR
turns the screw
South
Africa's next President, Thabo Mbeki, elected in 1999,
was an even more enthusiastic advocate of neo-liberal
policies than Nelson Mandela and was one of the main
political forces behind the adoption of GEAR. The
GEAR program has accomplished the exact opposite of
their stated aims. While the International Monetary
Fund (IMF) praises the fact that the GEAR programs
have resulted in an economic growth rate of around
three percent for 2003, the Congress of South Africa
Trade Unions (COSATU) and the ANC itself estimates
that South Africa will need an economic growth rate
of at least six to eight percent to achieve even minimal
reductions in unemployment.
Although
GEAR promised 120,000 new formal sector jobs in its
first year of implementation South Africa lost more
than 100,000 formal sector jobs by the end of GEAR's
first year. For the remaining eleven million employed
people in South Africa in 2003 at least four million
are employed in the volatile, low wage informal sector
and engage in temporary, subcontracted economic activity
ranging in everything from prostitution to street
hawking. There has been an enormous wealth polarization
under the ANC. South Africa has the dubious distinction
in 2003 of having a larger income gap between the
rich and poor than any other country in the world
except Guatemala.
The
most suprising aspect of South Africa's post-apartheid
economic programs was that the programs were embraced
so wholeheartedly by the ANC. South Africa, with its
comparatively low foreign debt of only around five
percent of its total budget deficit in the 1990s,
was under no pressure from the IFIs. While highly
indebted states throughout Africa were having neo-liberal
programs imposed on them through SAPs, South Africa
adopted them willingly.
Water
water everywhere - at a price
Patrick
Bond, an professor at Witwatersrand University in
Johannesburg termed these ANC policies 'homegrown
structural adjustment'. This is the most saddening
and sickening aspect of all, the fact that the effects
of these programs could have been almost entirely
avoided. South Africans are now forced to deal with
self-imposed corporate-controlled globalization in
increasingly desperate ways which meet with increasing
repression. Even though all South African citizens
are constitutionally guaranteed "sufficient food
and water" in South Africa's Bill of Rights,
the ANC, encouraged by World Bank advisors, embarked
on a nation-wide campaign to privatize South Africa's
public-owned and operated water systems. They contracted
out the management of water systems to large multinational
bidders such as the French water-multinational Suez
whose sole raison de'etre, needless to say, is profit.
The
ANC completely ignored more realistic, viable and
legal methods of ensuring water access to South African
citizens. They might easily have funded small-scale
local service providers and maintained overall regulation
of the national water system to ensure water access
to the low income groups that would not be able to
afford the new privatized water rates. Nor did the
ANC contractually obligate the water-MNCs to provide
water to the poor. The results of this rapid privatization
without corporate accountability in a country in which
the majority of the workforce is unemployed was disastrous.
Public
health jeopardised
By
2001 there was a massive cholera outbreak that had
spread from rural areas in Kwa-Zulu Natal Province
to the outskirts of Johannesburg. It sickened h undreds
of thousands of people and killed at least three hundred
people who had to turn to polluted, cholera infected
water systems after they could no longer afford the
water charges of the new privately owned water companies.
The cholera epidemic cost the South African government
millions of dollars as it sought to contain the outbreak
and treat infected people and contaminated river systems.
In
the Eastern Cape Province water prices increased by
300 percent in the town of Fort-Beaufort and to similar
heights in other urban areas throughout South Africa.
Now, in 2003, village, town and city councils throughout
South Africa are trying to cancel the contracts with
the water multinationals (MNCs). The urban councils
are contractually obligated to pay the debts to the
MNCs which the poor and unemployed can't obviously
afford. Nevertheless, the ANC continues to illegally
restrict access to water despite the constitutional
right of all South Africans to water.
Protest
and resistance suppressed
The
government continues to arrest individual citizens
and members of community organizations. Prominent
among these are the Anti-Privatization Forum (APF)
and the Soweto Electricity Crisis Comittee (SECC).
In addition anti-housing eviction campaigns risk arrest
and derention as they try to restore electricity to
residences, prevent housing evictions from taking
place and destroy prepaid water meters, installed
so water can only be accessed by those who can pay.
The
chairperson for the APF, Trevor Ngwane, is a former
ANC member who was expelled from the party for opposing
its privatization policies. He was arrested and held
without bail in 2002 for protesting outside Jo'burg
Mayor Masondo's property. Ngwane has said, 'Corporations
seeking profit from a natural resource will never
create a product or system that will benefit the disadvantaged'.
South
African fitted with "free trade" straitjackets
Instead
of taking South Africa's status as a low-income country
and the needs of its impoverished majority into account,
the ANC governments embarked on a system of complete
privatization of its essential services. This centralized
corporate-mercantilist control of South Africa's resources
will become even more entrenched under 'free' trade
agreements wither already completed or on the table
with the United States and the European Union (EU).
The World Trade Organization (WTO) recognizes that
semi-developed economies like South Africa need "special"
and "differential" terms permitting trade
tariffs and other trade protections to shield their
developing economies. But the current bilateral negotiations
have undermined those WTO prescriptions as well as
South Africa's industry, agriculture and labor force.
For
example, the 'free' trade agreement with the EU forces
South Africa to open 90 percent of its trade to the
EU. The EU in return only allows the South African
economy access to 50 percent of its market. The EU
has also enacted further non-tarriff barriers (NTBs)
to trade with South Africa such as strictly enforcing
health and safety regulations which block many South
African goods from entering the huge market of Europe.
The
EU trade agreement also only encourages South Africa
to export cheap raw materials instead of more value
added goods, such as manufactured goods which reinforces
South Africa's position as a dependent, periphery
economy. South Africa has also entered into 'free'
trade negotiations with the United States along with
the other semi-developed southern African states that
belong to the Southern African Customs Union (SACU)
such as Namibia and
Swaziland. These negotiations are due to conclude
at the end of 2004.
This
trade agreement with the US will also increase corporate
control of southern Africa's economies, resources
and labor. Indeed, in order for southern Africa to
qualify for 'free' trade with the United States, all
southern African states must liberalize all sectors
of their economies, including social services. Corporate
taxes have to be reduced or eliminated. Corporations
must be allowed to purchase social services, land
and resources wholesale from African governments.
At the same time duties and tariffs on manufactured
goods from the US must be substantially reduced.
Concentrated
wealth distorting national development
The
US, the EU and the large multinationals aim to gain
as many concessions as possible from South Africa
through these trade agreements while simultaneously
seeking to avoid even limited concessions and access
to markets in return. South Africa cannot even begin
to compete with the developed economies. So economic
development within South Africa has collapsed. While
there is economic growth in assets such as stocks
and property, these assets are concentrated among
the wealthy minority.
Unfortunately,
the ANC government remains unenthusiastic about national
development strategies designed to lift the poor black
majority out of wrenching poverty. According to the
Landless People's Movement(LPM) of South Africa, the
government, although constitutionally obligated to
do so, has not initiated even small-scale land redistribution
to impoverished black South Africans. In 2003, eighty
six percent of land in South Africa remains under
the ownership of around 120,000 white farmers and
the central government.
Government
economic policy has favored rigid, narrow growth strategies
designed only to increase corporate profit and roll
back the state. South Africa's economy depends overwhelmingly
on the economies of the developed countries. This
means South Africa's infant industry remains stunted
and its impoverished black majority marginalized.
The extreme concentration of wealth, the collapse
of social services, the explosion in social problems
like prostitution, crime, urban terrorism and gang
warfare and the rapid spread of AIDS mean the end
of hopes for a better future. The dreams of millions
of South Africans which rose to such heights after
the collapse of apartheid have turned into a national
nightmare with no end in sight.
Andrew
Nowicki is a social justice advocate based
in Washington D.C.
Information sourced from:
US-South
Africa Business Council Business Report, July 2003
Southern
African Regional Poverty Network (SARPN)
Landless
People's Movement (LPM)
The
Third World Network-Malaysia
The
Anti-Privatisation Forum (APF)
APF can be contacted at: drdalet@metroweb.co.za
South
Africa Bill of Rights (Chapter 2)
Action
for Southern Africa (ACTSA)
Global
Issues
'The
Great Jobs Gap', The
Sunday Times, Aug. 10, 2002
Trevor
Ngwane & George Dor. 'IMF Can Only Bring Misery
to SA,' The Sowetan, July 12, 2000.
Paul
Kingsnorth. 'Globalization
Made Them Do It'
The
Shop Steward
The
Environmental News Network (ENN)
Independent
Media Centre-South Africa
The
Center for Pubic Integrity
Desai,
Ashwin. We are the Poors. Monthly Review Press,
New York, NY, 2002.
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