Johannesburg - In February 1992, Nelson Mandela made a pivotal decision on the type of economic policy the ANC would promote.
It was a decision that ensured the stability of South Africa’s financial markets and determined the course of the country’s economic development after the ANC came to power in 1994.
Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, Mandela made a last-minute change to his prepared text, which was already publicly available.
He spoke of “a private sector [which] would play a central and critical role to ensure the creation of wealth and jobs”. Reports at the time quoted him saying: “We would like to create conditions for investors to invest without any fear of their properties being nationalised.”
He also promised investors could be sure of getting a “safe return” and would be allowed to repatriate their profits.
For the two years after his release from Pollsmoor prison in February 1990, Mandela had repeatedly advocated nationalisation as a policy platform, to the dismay of South Africa’s business community and potential investors abroad.
But Mandela was famously pragmatic and despite his emotional commitment to socialism he understood the need to work with the companies that were creating South Africa’s wealth.
The Davos speech was described as a watershed in the relations between the ANC and the international investor community. The party had historically favoured a central planning approach, a standpoint reflected in the original text of Mandela’s Davos speech.
Former Reserve Bank governor Tito Mboweni, who was an aide to Mandela at the time, recounted events in a letter published late last year in the Sunday Independent.
He explained that Mandela was scheduled to debate South Africa’s future direction with former president FW De Klerk and Inkatha Freedom Party leader Mangosuthu Buthelezi at the Davos plenary.
“We were presented with a speech prepared by some well meaning folks at the ANC office in Joburg, which focused on nationalisation as ANC policy. We discussed this at some length and decided that the content was inappropriate for a Davos audience. Basically, we tore the draft apart and decided on a new speech.”
The speech was a signal to global investors that South Africa was open for business. And capitalists were not the only observers who approved of the change. Mandela’s shift from socialism was endorsed by the leaders of communist China and Vietnam, according to Mboweni.
He noted: “Madiba then had some very interesting meetings with the leaders of the communist parties of China and Vietnam. They told him frankly: ‘we are currently striving to privatise state enterprises and invite private enterprise into our economies. Why are you talking about nationalisation?’ It was those decisive moments that made him think about the need for our movement to seriously rethink the issue.”
Mboweni was refuting the suggestion that Mandela had bowed to pressure from “Western capitalists”.
Mandela’s new line was not wholly welcome within the ANC and not reflected in all subsequent policy documents. And schisms still persist within the ruling party, which continues to create episodes of great uncertainty among international investors. However, Mandela’s change of economic direction set the tone for sound policy practices.
And it allowed former finance minister Trevor Manuel to restore order to the chaotic finances inherited from the National Party. Fiscal reforms, starting in 1996, which led to a surplus in government’s kitty in 2007/08, provided a valuable buffer for the bad times that lay ahead. - Business Report