It’s not normal for analysts to write obituaries. But normally past leaders’ shadows over a country fade, and normally they are not wound up into the fabric of a country and its outlook.
Not so for Nelson Mandela. He gave his life to achieve a simple, yet at the time distant, dream. His legacy is one of the most liberal and well-rounded constitutions in the world and a vision of a post-racial society, of forgiveness and solid institutional foundation for the country. His leadership casts a long shadow over his successors.
Mandela’s job while he was president was to build a nation, unite its people and secure its foundations. In this he was successful. In matters economic he took a number of key decisions before entering power, such as the rejection of the previous ANC policy of nationalisation of industry. He realised the need for a more pragmatic social-democratic, liberal form of economic policy as opposed to the more hardline socialism (or even communism) promoted by many in the ANC.
One of the areas where there is a question mark, however, is around the decision to create a cadre of rich black empowerment businessmen who were not industrialists or really (if we are honest) job creators. The choice here was complex, and based partly on the need to create at least the perceptions of rapid sharing of wealth, even if Mandela knew it would be impossible to create true equality more widely. Loyalty to the party, which pushed hard on this issue, was also partly to blame.
In our view a more widespread form of empowerment through families of workers and the local community would probably be more appropriate.
During his term in office, however, inequality did fall and key policy decisions were taken which reduced absolute poverty quite sharply. This legacy is now at risk. Inequality and unemployment have risen since, education standards stagnated after an initial surge and underlying growth has been very weak, which has held back development.
More important is that the quality of leadership, and in particular its adherence to and respect for constitutional democracy, is now well short of Mandela’s legacy. This has been seen most recently in the ugly racial language used by the ANC in the current election campaign – language we believe reflects an ongoing seam of real belief in the ANC of black domination and not simply election rhetoric.
Does it affect the political scene? We think the quality of the debate in South Africa is vibrant enough and Mandela’s presence felt strongly enough during his later years that South Africans are already well aware of the issues and where their country is at. While there may have been a marginal fear among the electorate of voting against the party of which Mandela, when alive, was still a member, such fear should now pass and we expect this to feed into the end of the “struggle debt” supposedly owed electorally to the ANC.
What of the markets and wider sentiment from investors with Mandela’s passing? The rand’s lack of reaction has been notable – the Zimbabwe scenario doomsayers have been silent so far. However, there is a disturbing minority in the South African finance community who push this line to varying degrees. We have not always had the most bullish view on South Africa but we have always firmly rejected this line.
South Africa’s institutions have stood many assaults in recent times (and their strength is a core part of the investment grade rating), and the media is alert enough to the threats to the country. This is not to say that Mandela’s legacy is not fragile – it should be protected, watched over and fought for – but for those of a more structurally bearish bent, we think the ANC is a broad church still firmly anchored in “rational” policy, and we note the rise of opposition parties and vibrant civil society and all-important protections.
The reaction of markets, foreign direct investment (or the withholding thereof) and considerable need for foreign funding are also important restraining factors. We recognise how far South Africa has come, even if we zoom in on the issues at stake.
Mandela’s vision for South Africa has always been crystal clear in those I’ve met in the many years I’ve been travelling to South Africa and particularly in the youth, who he helped to be born free. As such, his legacy is secure in the long run, even if it may well be a bumpy road to get there.
* Peter Attard Montalto is an executive director and emerging markets economist at Japanese investment bank Nomura.
** The views expressed here do not necessarily represent those of Independent Newspapers.