‘Mandela saved a trapped economy’

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Nelson Mandela, before giving a speech at Davos at the World Economic Forum's annual meeting in 1999, changed his economic stance from one supporting nationalisation to one supporting a free market economy. This shift, together with his leadership, has been praised for putting the economy on a solid footing. File photo: Mike Hutchings

Nelson Mandela understood that South Africa’s economy had to grow to correct the inequality of apartheid, writes Donwald Pressly.

Johannesburg - Economic analysts and trade unionists alike are allied in their praise of the political legacy of Nelson Mandela, but the business community is effusive in its appreciation for his retreat from radical economic restructuring, including nationalisation.

A key driver of nationalisation of mining and the financial services sector, National Union of Mineworkers general secretary Irvin Jim said workers in his union “really admired him”. When he got out of prison “they gave him a car”.

Pressed on whether Numsa supported Mandela’s tacit support for a move away from nationalisation to a more free market system as characterised by Gear, the growth, employment and redistribution policy implemented by then finance minister Trevor Manuel, Jim said it was not appropriate to subject Mandela’s memory “at the current moment for that debate and discussion”.

Jim said unionists would focus on Mandela’s determination to fight apartheid and his readiness to die to defeat racial capitalism. Workers would now continue their fight for a socialist, egalitarian society.

Former Standing Committee on Public Accounts (Scopa) chairman and former IFP finance spokesman Gavin Woods said that when Mandela became president in 1994 he had already recognised that the international markets “were on edge”. He moved swiftly, using his internationally recognised political credibility, to put investors’ fears at rest.

Woods, who is now a member of the Public Service Commission, said: “The fact that Madiba employed a [former ruling] National Party member as the first finance minister [Derek Keys] at a critical stage when the economy was very volatile was of incalculable value to fiscal and financial stability in the country.”

He noted that later in 1994, Mandela had appointed an internationally renowned businessman, Chris Liebenberg, as an independent MP to follow in Keys’ shoes.

A former senior ranking politician in the Mandela unity government, who did not wish to be named, said it was owing to Mandela’s international standing that what had been “an outflow of capital turned into an inflow of capital” in South Africa.

“That provided the stability and the basis for the economy which was sorely needed,” he said.

Under Mandela’s presidency, he said, there had been agreement that the budget deficit should be tackled and the import replacement policy should be replaced with an export promotion policy.

“For a leader of a party that was shouting and screaming for nationalisation… to do just the opposite shows the quality of his leadership,” the retired politician said.

Ken Andrew, who was chairman of fiscal watchdog committee Scopa during Mandela’s five-year term from 1994 to 1999, noted that it was a report on an unauthorised west African trip by then deputy minister Winnie Madikizela-Mandela that had contributed to her being removed from the executive when her ex-husband was president.

Although Gear was much despised today in certain ANC circles, Andrew said it had been successful in promoting economic growth and had increased prosperity. Without Madiba’s backing it was unlikely that it would ever have seen the light of day. The fact that it had not been entirely successful was because it had only been implemented in part.

Pan-African Capital chief executive Iraj Abedian said that Madiba’s legacy in economic terms was “the same as [his contribution] in reconciliation terms”.

When he became head of state, the economy had been paralysed by years of sanctions, fiscal mismanagement and constrained policy options.

The country was effectively bankrupt and was “not rated fit to borrow overseas”. The country had no foreign reserves and had $23 billion (R240bn at current rates) in liabilities.

His “sheer personal credibility” broke the capital market embargo on South Africa. “All of that in economic terms is as significant as his critical role in social reconciliation… and that reconciliation, without a doubt, prevented civil war.”

Meganomics chief economist Collen Garrow said it appeared that Mandela had changed his views on economic issues when he went to Davos. There he was persuaded to turn ANC policy “on its head… creating a decent platform for political and economic confidence in South Africa”.

There was also little hint of corruptive practice in the government, something that today “invades everything”.

Nedbank Group chief economist Dennis Dykes said Mandela initially supported Freedom Charter stances, including nationalisation. When he went to Davos he had encountered top business people who had no direct financial interest in South Africa at the time who persuaded him to follow a market-based approach.

“He understood that we had to grow the economy to correct the inequality and the legacies… he had the vision to see that… you needed to bring the private sector along with you.” - Business Report

* Donwald Pressly is the Cape Editor/Bureau Chief of Business Report.

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