Max du Preez

Mandela didn't betray the people of SA

2015-12-29 12:31

Max du Preez

I hope those who have been shouting so loudly recently about Nelson Mandela and his negotiating team selling the country out in 1994 are taking note of the impact of the recent blunders around the appointment of the finance minister.

This is the message: it does not matter how strong your political power and your legitimacy is, if you scare the markets enough your economy will suffer. The South African economy is not an ANC-owned island.

Mandela, Thabo Mbeki, Alec Erwin, Tito Mboweni, Trevor Manuel, Pravin Gordhan, Maria Ramos and others that had to formulate an economic policy for the ANC leading up to 1994 would surely have wanted to follow their liberation movement instincts and lean toward a more socialist approach. In fact, the first proposals after 1990 were indeed for “growth through redistribution”.

But the business sector, international corporations, the International Monetary Fund and several influential think tanks went out of their way to warn the ANC of the importance of macro-economic stability, fiscal discipline, liberalization and internal and external confidence.

Nationalising the mines, banks, industries and agricultural land would have been a severe shock to national and international markets. The ANC would have had little chance to maintain stability and growth with the resulting economic collapse, the argument went.

The ANC leadership was brave enough to chuck the old liberation movement orthodoxy and rather opt for “redistribution through growth”. A critical building block of the approach was Section 25 of the Constitution that protected property rights. Eventually the economic policy was formulated in GEAR: Growth, Employment and Redistribution.

It had become fashionable – and not only among populist politicians – to call thee decisions a betrayal of the black majority. That, these voices say, was why most black people are still poor and most white people still wealthy.

If the ANC had launched a radical redistribution programme in 1994, there would have been much more equality and much less poverty and unemployment today, is the argument.

Yes, it would probably have brought more equality – we would all have been dirt poor today.

But we would definitely not have had less poverty and unemployment. We would not have had two decades of stability.

South Africa would not have seen nearly as much foreign investment as we did after 1994. Much more capital would have flowed from our shores. There would not have been a tourism industry to speak of.

The integrity of our financial institutions and the productivity of our agricultural sector, two of our great positives of the last two decades, would have been seriously undermined.

Our inflation rate would have been in the region of 200%, the real inflation rate in Venezuela today, mostly because of the late Hugo Chavez’s “socialism of the 21st century” experiment.

We’re again in a place now where politicians and others talk about nationalization and radical redistribution; where the Chavez model is seen as desirable.

The choices are not much different than in 1994: do that and the economy collapses. Our economy is today even more entangled with that of the rest of the world as in 1994. The sharp, negative reaction to the sacking of Nhlanhla Nene was an expensive lesson.

Nationalisation would make the masses rejoice for a short period, but then they will suffer more than ever before. There simply won’t be jobs and social spending will be cut to the bone. Education, health, policing, the judicial system and the provision of housing, water and electricity would be severely affected.

I believe Mandela and his team had little choice in 1994 and adopted the right model that did give us stability and growth.

But in hindsight, the ANC administrations since then should have applied their minds much more on steps within this mixed economy model to fight inequality and poverty.

Small business and entrepreneurs should have had real support right from the start; black empowerment should have benefited many more people; the creation of workers’ share schemes should have been actively encouraged; there should have been an ambitious industrial policy right from the start; the civil service should have been more effective; provincial and local government should have been better controlled; state-owned enterprises should have been shaped to play a leading role in the growth of the economy; etcetera – all steps that would have been welcomed by the private sector and the international community.

Instead of a classic neo-liberal model, the ANC should have developed an indigenous social democratic model back in the Mandela and Mbeki days. 

But most of all, education and training should have been the first priority.

No, Mandela did not betray the people of South Africa in 1994. The betrayal came after that.

- Follow Max on Twitter.

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