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SA grew economy while integrating homelands

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Nelson Mandela was the most important leader in South Africa’s history and one of the global giants of his time. What people often overlook, however, is the role Mandela played in building up Africa’s largest economy.

Nearly as consequential as Mandela’s moral example was his skill in managing the shift from apartheid without widespread violence, repression or economic collapse. He believed strongly in the link between economic and political progress.

Soon after his release from prison, Mandela argued that there must be “a fundamental restructuring of our political and economic systems to ensure that the inequalities of apartheid are addressed”.

At the core of white minority rule had been the so-called homelands: a system that kept almost half the population confined to semi-independent or supposedly sovereign states without the freedom to move or look for jobs in the rest of the country.

The collapse of apartheid meant the end of those restrictions. The myriad legal restraints that prevented blacks and coloureds from gaining promotions – or access to jobs at all – were removed as well. From a state made up of 11 “countries” and three legally distinct racial groups – all with different rights to move, work and invest – South Africa became one economy.

Think of it as opening borders to mass migration under the worst possible circumstances. The dismantling of the homelands, however, was by no means a certainty in the early days of Mandela’s rule.

The supposedly “sovereign” homeland of Bophuthatswana and semi-autonomous KwaZulu both threatened civil war over the dismantling of the homelands. But national unity and economic stability were both preserved, largely as a result of negotiation and compromise.

South Africa’s economic growth, meanwhile, picked up considerably under Mandela. Annual growth rose from less than 1.5 percent between 1980 and 1994 to slightly less than 3 percent from 1995 to 2003. Despite the sudden influx of internal migrants to compete for jobs, average incomes for white South Africans rose by 62 percent between 1993 and 2008, according to UCT economist Murray Leibbrandt. Average incomes for Africans rose even faster – by 93 percent over the same period.

As educational opportunities expanded, secondary enrolment rates increased from 50 percent in 1994 to 70 percent in 2005. The government also rolled out a range of infrastructure services: the proportion of people that cooked using electricity from the grid climbed from 45 percent in 1993 to 73 percent by 2011, for example.

South Africa has become an increasingly important source of economic opportunity for its neighbours. South African investment accounts for about 70 percent of intra-regional investment flows. Imports from the Southern African Development Community (SADC) rose from $16.3 billion (R168bn at current rates) in 1993 to $68.7bn in 2006.

The number of migrants in South Africa – mostly from other countries in the region – increased from 3.3 percent of the population in 1990 to 3.7 percent in 2010. There are now about 3.3 million SADC nationals living in South Africa.

Mandela and his successors did make some tragic mistakes. The HIV/Aids crisis and the government’s late and sporadic response shaved years off life expectancy. In 1993, 4 percent of pregnant women in the country were HIV-positive. That rose to 28 percent 10 years later before finally levelling out. Today, a little more than one in 10 of the population is HIV-positive.

Unemployment has remained stubbornly high and the gap between rich and poor is still wide. In 1993, the average white had an income more than nine times the average African. By 2008 that had dropped – but only to a little less than an eightfold gap, according to analysis by Leibbrandt.

Progress against poverty was even slower than these figures might suggest. That is because inequality within the African population grew rapidly for the first decade of independence.

Some may be disappointed that Mandela failed to create an African lion to challenge the east Asian tigers in terms of growth and poverty reduction.

But the non-violent absorption of a considerable majority of the population into an economy from which they had previously been excluded, all while incomes and access to services improved and civil rights were respected, was an incredible accomplishment – one that owes much to Mandela’s leadership.

Let’s hope his successors preserve that legacy. – Bloomberg

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