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The price
of freedom
A special report on
South Africa
June 5th 2010
The Economist June 5th 2010
A special report on South Africa 1
The price of freedom
Also in this section
Your friendly monolith
The ANC remains all-powerful. Page 2
Colour me South African
Learning to live in a rainbow society. Page 4
Jobless growth
The economy is doing nicely‹but at least
one person in three is out of work. Page 5
A new kind of inequality
Black economic empowerment has had
unintended consequences. Page 7
Hold your nose
The smell of corruption. Page 8
A black middle class is emerging, but poverty
and crime blight millions of lives. Page 9
Since embracing full democracy 16 years ago, South Africa has made
huge strides. But, says Diana Geddes, not everything has changed for
the better
Last in class
S
The great scourges
Education needs to take a giant leap. Page 11
Don’t get ill
Or if you do, go private. Page 12
Still everything to play for
The case for optimism‹and the many
caveats. Page 13
Exchange rates
May 25th 2010
10 rand =
$
£
¤
1.25
0.88
1.03
Acknowledgments
In addition to those mentioned in the text, the author
would like to give special thanks to: Antony Altbeker,
Kader Asmal, Ed Cameron, Frans Cronje, Adrian Gore, Paul
Graham, William Gumede, Adam Habib, Alan Hirsch, Adele
Kirsten, Russel Loubser, Leon Louw, Justice Malala, Temba
Masilela, Sue Möller, Johannes Ndebele, Temba
Nolutshungu, Cheryl de la Rey, Michael Spicer, Dave
Steward, Gaba Tabane, Athol Trollip, Linky Tsotetsi and
David Welsh.
A list of sources is at
Economist.com/specialreports
An audio interview with the author is at
Economist.com/audiovideo/specialreports
PORT matters in South Africa. In his
new year’s address to the nation, President Jacob Zuma described 2010 as Œthe
most important year in our country since
1994. To outsiders, playing host to this
year’s football World Cup seemed perhaps
a less momentous event than holding the
country’s †rst fully democratic elections
that established a black-majority government 16 years ago‹especially when the national team, Bafana Bafana, may be
knocked out in the †rst round. But with the
kick-o… on June 11th, just days after the
country’s 100th birthday on May 31st, the
world’s eyes will be on Africa’s leading
economy for the next few weeks.
Can the Œmiracle nation, which won
plaudits around the world for its peaceful
transition to democracy after centuries of
white-supremacist rule, conquer the bitter
divisions of its past to turn itself into the
Œrainbow nation of Nelson Mandela’s
dreams? Or will it become ever more
mired in bad governance, racial tension,
poverty, corruption, violence and decay to
turn into yet another African failed state?
With Zimbabwe, its neighbour to the
north, an ever-present reminder of what
can happen after just a couple of decades
of post-liberation single-party rule, many
South Africans, black and white, worry
that their country may be reaching a tipping point.
Western fans arriving in South Africa
for the World Cup could be forgiven for
thinking that they were still in the rich
world. Much of the infrastructure is as
good as you will †nd anywhere‹particularly those parts that have been given
multi-million-dollar facelifts in preparation for the tournament. Ten spectacular
stadiums have been newly built or upgraded at a cost of 15 billion rand (see box, left,
for currency conversions). Visitors arriving
at O.R. Tambo, the main international airport, will be whisked into Johannesburg
by the Gautrain, Africa’s †rst high-speed
rail link (pictured above). And many of the
country’s hotels and restaurants are worldclass, including Bushmans Kloof hotel,
three hours’ drive from Cape Town, recently voted the world’s best by Travel + Leisure
website, and Cape Town’s La Colombe,
ranked 12th in this year’s S.Pellegrino list of
the best restaurants.
Not as rich as it looks
But in reality South Africa is no more than
a middle-income developing country with
a GDP per person of around $10,000 (at
purchasing-power parity), a quarter of the
American †gure. On a per-head basis, it is
the seventh-richest country in Africa by
some measures. The average hides huge
disparities. Under apartheid, whites were
encouraged to believe they were part of
the Western world. It was only when they
had to start sharing their streets, goods and
services with their darker-skinned compatriots that they began to wonder whether 1
2 A special report on South Africa
The Economist June 5th 2010
2 they really were. Many now complain
about falling standards. Yet most whites
have done rather well since apartheid ended‹better, in fact, than most blacks. They
still enjoy a good life, helped by cheap domestic help and †rst-class private medical
care and schools.
For the majority of South Africa’s
blacks, however, the living is not so easy.
Although many of the poorest now get
some kind of government support, it is
only a pittance. Most blacks still live in
shoddy shacks or bungalows without
proper sanitation in poor crime-ridden
townships outside the main cities. Their
schools and hospitals are often in a dire
state. And, in a country where there is little
public transport, most blacks do not own a
car. Although it has the world’s 24th-biggest economy, South Africa ranks a dismal
129th out of 182 on the UN’s Human Development Index (and 12th in Africa).
The country’s constitution, adopted in
1996, is one of the most progressive in the
world. It enshrines a wide range of social
and economic rights as well as the more
usual civil and political freedoms. Discrimination is banned not only on the grounds
of race, gender, age and belief, but also of
pregnancy, marital status, sexual orientation and culture. Every one of the country’s 49m people‹79% black, 9% white, 9%
coloured (mixed race) and 3% Asian/Indian‹is guaranteed equal protection under
the law. Freedom House, a Washingtonbased research foundation, gives South Africa a respectable rating of 2 in its Œfreedom
the †rst country to perform a heart transplant, and some of its doctors are still
among the best anywhere; yet its people’s
health record is among the world’s worst.
And, leaving aside war zones, it is one of
the most violent and crime-ridden countries on the planet. This special report will
look at South Africa the way that most of
its people see it. The results are often harsh.
in the world index, where 1 is completely
free and 7 totally unfree.
South Africa is a land of contrasts. It has
fabulous mineral wealth, with 90% of the
world’s known platinum reserves, 80% of
its manganese, 70% of its chrome and 40%
of its gold, as well as rich coal deposits; yet
43% of its population live on less than $2 a
day. It has just announced plans to develop
a satellite programme (with India and Brazil) and is the leading candidate to host the
world’s biggest science project, the Square
Kilometre Array radio telescope; yet in international maths, science and reading
tests it performs abysmally. It has sky-high
unemployment yet at the same time suffers from crippling skills shortages. It was
The bright side
Yet there are some encouraging signs that
the contrasts are getting less stark. South
Africa has recently cut its murder rate in
half; virtually eradicated severe malnutrition among the under-†ves; increased the
enrolment in schools of children aged seven to 15 to nearly 100%; provided welfare
bene†ts for 15m people; and set up the
world’s biggest antiretroviral treatment
programme for HIV/AIDs.
What about race? South Africa remains
obsessed by it. That is hardly surprising
after 350 years of racial polarisation, including nearly half a century of apartheid,
when inter-racial sex was a criminal offence and non-whites were even banned
from using the pavements. The subject
waxes and wanes. Only last August Mr
Zuma was warning his compatriots
against reviving the race debate. But the
murder in April of Eugene Terre’Blanche,
leader of a white-supremacist group, and
the racist outbursts by Julius Malema, the
leader of the powerful Youth League of the
ruling African National Congress (ANC),
have brought it to the fore again. 7
Your friendly monolith
The ANC remains all-powerful
ŒP
OLITICAL division based on colour
is entirely arti†cial, and when it disappears, so will the domination of one colour group by another, said Nelson Mandela at his trial in 1964. ŒThe ANC has spent
half a century †ghting against racialism.
When it triumphs, as it certainly must, it
will not change that policy.
By and large the ANC has remained
true to that promise (apart from a slight Africanist wobble under Thabo Mbeki, Mr
Mandela’s successor as president). Yet
many whites no longer feel entirely at
home in a country ruled for the past 16
years by a single all-powerful black-majority party that looks likely to remain in of-
†ce for the foreseeable future‹Œuntil Jesus
comes, as Mr Zuma puts it, not altogether
reassuringly.
The ANC claims to be a non-racial
party. In government it has been scrupulous about maintaining the correct racial
balance. Of the present 35 cabinet ministers, four are white; of the 99 provincial
premiers and ministers, nine are white. But
it was not until 1969 that whites were permitted to join the party, and only in 1985
that they were allowed onto its national
executive committee.
Whites can hardly complain, however,
if the ANC’s support continues to be overwhelmingly black. Although many claim
to have been anti-apartheid activists, only
3% chose to vote for the ANC in 1994,
whereas 60% voted for the ruling National
Party, the architects of apartheid. Today
just 4% of whites say they support the
ANC, compared with 92% of blacks. Most
opt for the Democratic Alliance, led by Helen Zille, the white premier of the Western
Cape‹the only one of nine provinces not
ruled by the ANC. Thanks to massive support by coloureds in the Western Cape, the
DA scooped up a record 16.7% nationwide
in last year’s election. But analysts doubt
that it will be able to go much beyond that
unless it alters its racial complexion. Few
blacks will vote for a party they still asso- 1
The Economist June 5th 2010
A special report on South Africa 3
2 ciate with their former oppressors.
With a Zulu now in the presidency, the
Zulu-dominated Inkatha Freedom Party,
led by the ageing Chief Mangosuthu Buthelezi, seems to be fading away. Its share of
the vote fell from over 10% in 1994 to less
than 5% last year.
After Mr Mbeki was squeezed out in
2008, a disgruntled group of his followers
set up the Congress of the People (COPE) in
a bid to break the ANC’s dominance. Although more racially balanced than other
parties, it has been beset by leadership
struggles and the lack of a clear identity. It
won just 7% of the votes in last year’s election and now looks set to †zzle out entirely,
though it may try to join forces with the DA
in next year’s local-government elections.
Former liberation parties throughout
the African continent have tended to overstay their welcome. Could the same thing
happen in South Africa? The Institute for
Democracy in South Africa reckons that
prolonged dominant-party rule by the
ANC is already eroding many of the checks
and balances enshrined in South Africa’s
constitution, including the separation of
powers. Accountability is being weakened, public watchdogs are being undermined and party and state are becoming
increasingly con‡ated, it says. Yet of all African liberation parties, the ANC has made
the most progress towards a stable constitutional democracy. It also has the advantage of not being dominated by a single
megalomaniac †gure.
The agony after the ecstasy
Everyone loved Mr Mandela, whites as
well as blacks, for his calm dignity and generous spirit of reconciliation. But he was
more of an idealised †gurehead than a
leader and chose to go after just one †veyear term. Over the past 16 years South Africa has had four presidents (including
Kgalema Motlanthe, who served for a brief
interim period) and four elections. All
have been judged free and fair‹a rarity in
Africa. Even when the ANC came within a
whisker of winning the two-thirds majority required to change the constitution last
year, no one tried to †ddle the results. And
although some democratic institutions
may have been weakened, usually
through appointing incompetent people,
others, such as the press, the judiciary, the
trade unions and the NGOs, are proving remarkably robust and independent. The
country is also blessed with a strong and
dynamic private-business sector.
Mr Zuma has been in power for a year,
and inevitably voices of discontent and
1
The one and almost only
Election results, % of vote
African National
Congress
National Party
Democratic
Alliance
Congress of
the People
Inkatha
Freedom
Party
70
60
50
40
30
20
10
0
1994
1999
2004
2009
Source: IEC
disillusionment have begun to be heard.
But on the whole he seems to have done
much better than some apocalyptic predictions before his election suggested. Despite pressure from allies on the left, he has
largely stuck to his predecessors’ marketfriendly economic policies. His appointments, with one or two glaring exceptions,
have been good, some excellent.
He is trying to deal with rampant corruption at all levels of government and
putting more emphasis on accountability
throughout the public sector. He has set up
an independent National Planning Committee to advise on complex long-term issues such as water management, energy
and the environment. He is drawing up
plans to reform the failing education and
health systems. And he is showing much
more interest in the plight of the poor. By
the end of last year he seemed to be on a
Time for Zuma to show his hand
roll, with 77% of South Africans saying he
was doing a good job.
But at the beginning of this year he had
a bad few months. First came the revelation that he had fathered a love-child (his
20th o…spring), born barely three months
before his marriage to his third concurrent
wife (and †fth overall), with another two
†ancées waiting in the wings. In February
he made an abysmally platitudinous stateof-the-nation speech, full of the old promises without a hint of how he was going to
ful†l them. There followed condemnation
of his failure to disclose his business interests and to achieve a breakthrough in the
political stalemate in Zimbabwe, and ever
louder squabbling within the ANC’s ruling
alliance with the trade unions and the
Communists. By April his approval rating
had slumped to 43%. Mr Zuma appeared to
have lost his grip.
Over the past couple of months he has
sought to reassert his authority. He has
even attempted, for the †rst time, to rein in
the incendiary Mr Malema, though with
only partial success. His is not an easy task.
Unlike many liberation movements, the
ANC is a very broad church, ranging from
out-and-out free-marketeers to dyed-inthe-wool Marxists. In the apartheid days
all were united in their struggle for freedom. But once in government, the party
had to start making hard choices, triggering
†erce factional †ghting over both policy
and power. Mr Zuma, catapulted into the
presidency without a clear mandate or a
strong power base of his own, has tended
to fudge and procrastinate to keep everyone happy. He must now start showing
some leadership. 7
4 A special report on South Africa
The Economist June 5th 2010
Colour me South African
Learning to live in a rainbow society
G
ENERATIONS of Afrikaners (whites
mostly of Dutch, French and German
descent, but often with a good dose of indigenous Khoikhoi blood, too) were
brought up to believe that God had created
blacks inferior to whites. Blacks were the
descendants of Noah’s son, Ham, they
were taught, cursed for ever more to be the
Œservant[s] of servants. The material deprivations su…ered by blacks under apartheid were bad enough. But the psychological damage is much deeper and more
diˆcult to eradicate. Robbed of their dignity and sense of self-worth, many‹even
some of those who have made it to the
very top‹remain hypersensitive and
acutely wary of the white man.
In September 2007, when still president, Mr Mbeki spoke bitterly of the Œchallenge to defeat the centuries-old attempt to
dwarf the signi†cance of our manhood, to
treat us as children, to de†ne us as subhumans whom nature has condemned to be
inferior to white people, an animal-like
species characterised by limited intellectual capacity, bestiality, lasciviousness and
moral depravity, obliged in our own interest to accept that the white segment of humanity should, in perpetuity, serve as our
lord and master.
Mr Zuma has a much more relaxed approach to race, constantly stressing his
commitment to the principle of Œnon-racialism enshrined in the 1955 Freedom
Charter. ŒWe, the people of South Africa,
declare, the charter begins, echoing
America’s Declaration of Independence,
Œthat South Africa belongs to all who live
in it, black and white. What exactly Œnonracialism means is not clear, though it
seems to suggest that people will be
treated on their individual merits, not the
colour of their skin. Yet the racial categories laid down under apartheid are still
widely used, the only di…erence being that
people now choose their own classi†cation rather than having it foisted on them.
Under the 1950 Population Registration
Act, South Africans were divided into four
groups: whites, Asians/Indians, coloureds
and Œnatives or blacks‹in that order. The
system was always a farce, relying on super†cial physical characteristics and social
traits‹where the individual lived, what
South Africa united their fellow black and
white countrymen in a rapturous outpouring of national pride. But 15 years on, says
Lesiba Te…o of the Human Science Research Council, Œwe are retreating back
into the dark days. Many blacks are resorting to the very racism that had been used
against them, he claims. ŒWhite used to
come in varying shades of black, says a
white former colleague, Ivor Chipkin:
ŒNow it’s just white. The black friends he
had at school in the 1980s no longer seem
to want to know him: ŒIt’s as if they’re saying: ‘You’ve had your time, now it’s ours’.
Malema stirs it
job he had, who his friends were and so
on. In borderline cases the Œpencil test
was used to judge the kinkiness of the individual’s hair. If the pencil fell out, he was
classi†ed as white; if it stayed in, he was
coloured and condemned to inferior
schools, separate beaches and a whole lot
of other indignities.
Nowadays, what used to be known as
Œblack is often labelled ŒAfrican. This upsets many whites, who insist that they are
Africans, too. To confuse matters further,
Œblack is now often used to refer to Indians and coloureds as well as blacks, because the term Œnon-whites, as they used
to be called, o…ends many blacks. But this
special report will stick to the old terms because they are clearer.
Educated blacks are alarmed at the way
that some of their fellows play the race
card whenever anything displeases them.
Mr Malema is a past master at this. For him,
all whites, whatever their struggle credentials, are the Œchildren of cowards and
oppressors. He castigates the Democratic
Alliance’s Helen Zille, a former anti-apartheid activist, as Œa racist little girl and her
party’s youth wing as Œgarden boys. Her
black deputy, he says, Œjust smiles at the
madam. Moves to oust the poorly performing black boss of Eskom, the stateowned power utility, were condemned as
Œhideous attempts to undermine African
leadership in the economy.
In 1995 the victory of South Africa’s national team in the rugby World Cup in
The Afrikaners’ lament
And the whites? ŒThese blacks are way behind us, an elderly white woman said indignantly, pointing to a joyful ululating
crowd of onlookers from the local black
township who had come to celebrate Mr
Terre’Blanche’s funeral in Ventersdorp in
the North West. ŒWe are trying to be civil
and calm, but we can only do so much.
God is with us, not them. Afrikaners, explained another mourner, Œwant to be free,
not ruled by savages. Today, many would
dismiss such crudely racist views as belonging to a tiny right-wing lunatic fringe.
Even so, lots of whites, especially Afrikaners, are beginning to feel that they have
su…ered in silence for too long.
Of South Africa’s 4.5m whites, about
3m are Afrikaners. Most supported the
apartheid National Party, which ruled
South Africa for nearly half a century, from
1948 to 1994. As in Nazi Germany, many
whites claim they never really knew what
was going on. They are fed up with being
collectively demonised as nasty racists
with a shameful history and resent being
told that whites who Œwhinge about
crime are free to leave the country. After
all, it is their country, too, where their ancestors have lived and toiled for hundreds
of years. Unlike many of their Englishspeaking compatriots, they have no other.
Many also feel they have never been
given suˆcient credit for helping to ensure
a peaceful transition to black-majority
rule. In the whites-only 1992 referendum
on whether the apartheid government
should continue to pursue a negotiated
settlement with the ANC, more than two- 1
The Economist June 5th 2010
2 thirds of whites voted yes. However, that
was not so much out of magnanimity as
because they thought that the then president, F.W. de Klerk, would seek a powersharing deal in which the white minority
would have some kind of veto. He had
also warned them that a no vote would
mean continuing economic sanctions and
worsening chaos, perhaps even civil war.
Many now feel betrayed: the constitution o…ers no special deal for political minorities. Convinced that they no longer
have any in‡uence, a good number have
lost all interest in politics. But they still enjoy a good moan‹about crime, reverse discrimination, potholed streets, power cuts
and so on. Afrikaners, in particular, feel
disgruntled about having lost their status,
‡ag, party, geographical place-names and
most of their schools. Many fear they are
losing their language, too. Afrikaans, once
one of the country’s two oˆcial languages
(along with English), is now just one
among 11, all supposedly enjoying equal
protection under the constitution. In practice, however, English, the mother tongue
of only 8% of South Africans, has taken
over as the lingua franca.
Long before the ANC came to power,
fearful whites had begun to leave the country in droves. Net white ‡ight since 1996 is
thought to be around 500,000, which includes many of the country’s best and
brightest‹doctors, teachers, business
managers, accountants, engineers‹all
with skills desperately needed at home. As
the global recession bit, some began to return, but not nearly as many as those,
black and white, who continue to say tot-
A special report on South Africa 5
siens (farewell). Surveys suggest that as
many as 14% of whites and 12% of blacks
are still thinking of leaving.
Flip Buys, the leader of Solidarity, a centre-right, predominantly Afrikaner, trade
union, insists that few Afrikaners are outright racists any more, but many feel increasingly unhappy about the way things
are going in their country. ŒHowever unequal society was before 1994, things
worked, he says. ŒNow nothing does. Afrikaners knew they had to adapt, but now
they feel the price is too high. Their guilt
has given way to anger.
In the tense days after Mr Terre’Blanche
was hacked to death by two of his black
farm workers, Mr Buys rushed out a statement claiming that racial tensions had
reached Œboiling point. Mr Zuma was suf†ciently alarmed to go on television to appeal for calm. Some whites charged the
ANC’s Mr Malema with contributing to Mr
Terre’Blanche’s death by singing a black
struggle song, enjoining listeners to Œkill
the Boer (Afrikaner farmer), despite a
court order banning it as hate speech. Since
1994 some 1,000 white farmers, along with
more than 2,000 of their family members
and other white rural dwellers, have been
murdered.
A fortnight later Mr Buys put out a more
considered statement. Although racist attacks on Solidarity members had been
growing by Œleaps and bounds, he said,
members should not Πght racism with
racism. The vast majority of white farmers had good relations with their workers,
he noted. Anyone who exploited or maltreated their black employees should be
roundly condemned. ŒLook at what is right
and wrong, he urged, Œnot at who belongs
to what race.
As it happens, race relations are surprisingly good, given that it is less than two decades since the end of one of the world’s
most racist regimes. The loud-mouthed
Malemas and Terre’Blanches are in a tiny
minority. In their day-to-day lives most
people of all hues seem to get along †ne,
treating each other with courtesy if not total trust. More than 60% of South Africans
say they have con†dence in a Œhappy future for all races. Around half put their
identity as South Africans before their racial or ethnic group.
Blacks against blacks
South Africa has seen political protests
against apartheid, but not the sort of race
riots and pogroms America’s South suffered from. What racial violence there has
been has come from black South Africans
and been directed at fellow blacks from
outside the country. Solidarity puts the
number of illegal immigrants in South Africa at 8m-9m, including some 3m from
Zimbabwe. That may be too high, but there
are certainly a lot of them, all competing
with South Africans for jobs, housing,
health care and other public services. They
are also accused of engaging in crime. In
May 2008 a series of horri†c xenophobic
attacks across South Africa left 62 dead and
670 injured, and there have been sporadic
attacks since, though none so serious. A
study by the University of Cape Town last
year found xenophobia to be Œprobably
rife in the country’s workplaces. 7
Jobless growth
The economy is doing nicely‹but at least one person in three is out of work
W
HEN the ANC took over in 1994, it inherited an economy that was virtually bankrupt, following decades of mismanagement, international sanctions and
violent protests. Since then exports have
doubled in real terms to reach $91 billion in
2008, accounting for 33% of GDP; output
per person has risen by more than a quarter, having fallen throughout the previous
two decades; public debt has halved, to
23% of GDP in 2008; in‡ation, in double
digits throughout the 1980s, has shrunk to
5.1%, well within the government’s target
range of 3-6%; and interest rates charged on
bank loans are at their lowest level in nearly three decades. The economy as a whole,
which had been growing by less than 1% a
year in the decade up to 1994, expanded by
nearly 5% a year in the †ve years to 2008
(see chart 2, next page).
Not a bad record, but modest compared
with growth rates in other emerging markets, which started from a much lower
base. Last year South Africa’s economy
slipped into recession for the †rst time in 17
years, shrinking by 1.8%. Thanks to successive ANC governments’ prudent †scal and
monetary policies and a remarkably
sound banking sector, it seems to have
avoided the worst of the global storms and
now, buoyed by the World Cup, it is already bouncing back. Most forecasters are
predicting growth of around 3% this year
(well above the government’s own budget
forecast in February of 2.3%), rising to
3.5-4% next year. But that is still not nearly
enough to create jobs on the scale needed
to absorb the legions of the unemployed.
Oˆcially, South Africa has an unemployment rate of 25%, the highest in the
world. At its peak, in March 2003, it
reached 31%. Last year a net 870,000 jobs 1
6 A special report on South Africa
The Economist June 5th 2010
2 were lost. The racial divide is again stark:
30% of blacks are oˆcially unemployed,
compared with just 6% of whites. Fully
half of those aged 15-24 are without jobs. If
those too discouraged to look for work are
included, the adult unemployment rate
jumps to 35%‹more than one worker in
three. The Bureau for Market Research
thinks the true †gure could be as high as
40%. And South Africa does not have a
thriving informal economy where the jobless can take refuge. OECD estimates put
employment in the shadow economy at
only 15% of the total, compared with
around half in Brazil and India and nearly
three-quarters in Indonesia.
Many of the unskilled used to work in
mining and agriculture, but both these sectors have been shedding jobs. Mining now
accounts for a mere 2.3% of employment
and 3% of GDP, down from around 14% in
the 1980s. Having been the world’s biggest
gold producer for more than a century,
South Africa has fallen behind China, Australia and America. Some of its mines are
nearing the end of their productive lives.
But gold continues to be an important contributor to the economy, earning 49 billion
rand in foreign exchange last year. That
makes it the country’s second-biggest export after platinum, where South Africa is
the global leader. It is also the world’s largest producer of manganese, chrome and
vanadium as well as the fourth for diamonds and †fth for coal. The world’s biggest diamond company, De Beers, is South
African, and two of the world’s biggest
mining companies, BHP Billiton and Anglo
American, originated there.
Agriculture makes up 5.1% of formal
jobs and a mere 2.2% of GDP. Manufacturing is relatively small, providing just 13.3%
of jobs and 15% of GDP. Labour costs are
low, but not nearly as low as in most other
emerging markets, and the cost of transport, communications and general living
is much higher. Services are much the biggest part of the economy, accounting for
around two-thirds of GDP. The government is keen to promote tourism, another
potential source of unskilled jobs. The
number of foreigners visiting the country
has leapt from 3.7m in 1994 to nearly 10m
last year. The World Cup should help boost
numbers further.
Two decades ago South African companies were largely restricted to their national base, but as trade and exchange controls
were eased after 1990 they began to compete internationally. Today the country has
a cluster of world-class companies, such as
SABMiller, a brewer; Illovo Sugar, a low-
2
Below potential
South Africa’s:
35
official unemployment rate, %
30
25
20
consumer prices*
15
10
5
+
GDP*
199495 9697 9899 2000
01 03
02 05
04 0706
Sources: IMF; SAIRR
0
–
5
08 09
*% change on year earlier;
2009 estimate
cost sugar producer; Alexander Forbes, a
risk and bene†t consultant; Nampak, Africa’s biggest packaging manufacturer; Sasol, a petrochemical company; MTN, a mobile-phone operator; Rembrandt, a tobacco
and industrial holdings group; and Investec, a †nancial-services †rm.
But in the economy, as in so much else,
South Africa is a country of extremes. The
World Economic Forum’s latest Global
Competitiveness Report ranks it among
the top ten (of 133 countries) for the sophistication of its †nancial markets, investor
protection, the strength of its auditing and
reporting standards, the eˆcacy of its corporate boards, the soundness of its banks
and the regulation of its securities and exchanges. But it is among the bottom ten for
the rigidity of its labour market, its maths
and science education, the cost to business
of crime and the availability of engineers
and scientists. Overall, it comes a middling
45th for global competitiveness but attracts
relatively low foreign direct investment.
There are many reasons why the region’s leading economy, so rich in mineral
resources, is failing to keep up with other
emerging markets such as India or China.
First, South Africa is a relatively small
country without the advantage of a huge
domestic customer base. Although the African continent contains a billion potential
consumers, they are locked away in sovereign states with myriad di…erent currencies, regulations and policies along with
poor infrastructure and transport systems.
Distances are vast, making trade diˆcult.
Second, South Africa has for decades
had an unusually low rate of saving and investment, partly because of political uncertainties. Third, it has long had an inadequate education system, resulting in an
acute shortage of skilled manpower.
Fourth, it has a strong and volatile currency, which deters investors and makes its ex-
ports less competitive. Fifth, its infrastructure, though far better than in the rest of
Africa, su…ers from severe bottlenecks, including power shortages, and urgently
needs upgrading.
When the ANC †rst took over, Eskom,
the state-owned power utility, had excess
capacity of 20%. Now, because of underinvestment, mismanagement and rapidly
expanding demand, it is seriously short of
generating capacity. For the past three
years South Africans have struggled with
repeated power cuts and rolling blackouts.
In January 2008 the entire grid came close
to collapse, forcing mines and other businesses to shut down. Last year’s recession
helped to ease the pressure, but shortages
are likely to continue at least until 2013-14,
when two new clean-coal power plants
are due to come on stream.
Powering up
Eskom is now pushing ahead with a massive 385 billion rand expansion programme. To help †nance it, it has been
granted permission to raise tari…s by an annual 25% this year, next year and in 2012,
having already almost doubled them over
the previous †ve years. In April the World
Bank agreed to lend it $3.75 billion, the
bank’s †rst loan to South Africa since 1994.
But Eskom is still seeking †nance of nearly
200 billion rand over the next seven years.
More than ever before, South Africa’s
fortunes depend on what happens in the
rest of the world, particularly in India and
China. Last year China overtook America,
Japan, Germany and Britain to become
South Africa’s biggest trading partner, with
bilateral trade reaching about 120 billion
rand, over ten times what it was in 1998,
when formal diplomatic relations were established. Chinese investments in South
Africa totalled $7 billion over the period.
South Africa hopes that China, and others,
will see it as the gateway to around 170m
consumers in the Southern Africa Development Community (SADC), a 15-country
regional group.
As South Africa emerges from the recession, business con†dence has reached a
three-year high. But government debt has
started rising sharply again and is expected
to reach 40% of GDP by 2013, nearly double
its level in 2008, as the government keeps
spending on education, welfare, service
delivery and cutting crime. It has also
pledged to spend 846 billion rand on public infrastructure over the next three years,
though some scepticism is in order. February’s budget envisaged no tax increases,
but they may yet prove necessary. 7
The Economist June 5th 2010
A special report on South Africa 7
A new kind of inequality
Black economic empowerment has had unintended consequences
F
OR centuries white South Africans had
held all the country’s assets almost exclusively in their own hands. It was in order to spread this wealth a little more evenly that the ANC introduced black
economic empowerment (BEE). But instead of bene†ting the mass of poor
blacks, as intended, the policy has resulted
in Œa few individuals bene†ting a lot, as
Mr Zuma admitted earlier this year. He
should know; he and many of his family
members are among the lucky few. He has
now vowed to make the scheme much
broader-based.
Under BEE laws white-owned companies with more than 50 employees and
revenues of at least 5m rand a year are given a rating based on criteria such as how
much of their equity is owned by blacks,
how many of the top posts they hold, what
training opportunities are open to them
and so on. BEE targets are laid down by the
government for each sector. The better a
company’s level of compliance, the higher
its overall rating and thus its chances of
winning lucrative public contracts.
With that carrot dangling in front of
them, many white companies were happy
to sell their shares to blacks at cut-rate
prices or even give them away. Their new
partners were expected to pay o… their
debts from rising share prices and dividends. As long as markets were rising, this
worked well. Some black businessmen,
such as Cyril Ramaphosa, a former trade
union leader, Tokyo Sexwale, the current
housing minister, and Patrice Motsepe, a
lawyer turned mining magnate and South
Africa’s †rst black dollar billionaire, made
fortunes. But when the global economy
crashed and share prices plummeted,
many BEE companies went to the wall.
This has made new black investors wary.
Last year there were just 13 BEE deals,
worth 20 billion rand, with companies listed on the Johannesburg Stock Exchange
(JSE), compared with 111 deals, worth a record 105 billion rand, in 2007.
The original idea for BEE actually came
from white business leaders. Though some
genuinely wanted to make the system a bit
fairer, most saw it as a good way to ward o…
any attempt at nationalisation by the new
black government. In that sense BEE has
been a roaring success. Whites still hold
the bulk of the country’s wealth. And
though there have recently been renewed
calls for the nationalisation of the mines
and banks, in particular from Mr Malema’s
Youth League, Mr Zuma still insists that this
is not on the government’s agenda.
For the poor black masses, however,
the scheme has been a dismal failure. Moeletsi Mbeki, an analyst and entrepreneur
(and brother of the former president), says
that BEE has proved a Œparasitic drag on
economic growth, having struck a Œfatal
blow against the emergence of black entrepreneurship by creating a small class of
unproductive but wealthy black crony
capitalists. John Kane-Berman, head of
the South African Institute for Race Relations, argues that the scheme has discouraged self-reliance and encouraged a debilitating sense of entitlement among blacks,
as well as putting o… foreign investors. It
has also led to a lot of public tenders being
awarded, often at in‡ated prices, to family
and friends of politicians and oˆcials.
Terence Nombembe, the country’s †rst
black auditor-general, recently reported
†nding 49 Œpublic servants who were directors or owners of companies doing
business with national-government departments. Almost all had failed to dis-
It worked for Motsepe
close their business interests or to declare
that they were public employees when
submitting their tenders. Barbara Hogan,
minister of public enterprises, the department that hands out many of the juiciest
tenders, has called for a new law to regulate such blatant con‡icts of interest.
Yet the scheme is not without its merits.
If nothing else, the rapid creation of a small
black middle class has meant that black
South Africans have not been left to languish in an undi…erentiated lower class. It
has also created role models for aspiring
blacks. Most leading white businessmen
believe that BEE is vital for the country’s future, though they would like it to be more
broadly based and better implemented.
Whose land?
Land reform is another high-minded
black-empowerment project that has gone
awry. Under the 1913 Land Act blacks were
not allowed to own, or even rent, land outside special black reserves. By 1994 some
87% of agricultural land was in white
hands. The new black majority promptly
announced plans to redistribute 30% of
white-owned land to poor blacks within
†ve years. This was to be acquired by the
state on a Œwilling seller, willing buyer basis, at a Œfair market price. So far, barely 6%
has been handed over, and the government has already run out of money. Many
of the new owners have neither the skills
nor the funds to run big farms, so fertile
land often lies fallow.
Mr Zuma has called for big changes to
the Œwilling seller, willing buyer model to
enable the state to acquire land more
quickly and cheaply. At one point it looked
as if full-blown nationalisation might be
on the cards, but the government now insists that this is not an option. However,
there is talk of making white farmers transfer 40% of their farms by value to black
shareholders, and possibly capping the
amount of land an individual farmer can
own. The minister for land reform recently
warned white farmers that they should
Œco-operate if they wanted to avoid creating a situation Œworse than Zimbabwe.
Mr Zuma has since promised that there
will be no violent land invasions, but fears
remain, sti‡ing new farm investment. 7
8 A special report on South Africa
The Economist June 5th 2010
Hold your nose
The smell of corruption
ŒI
DIDN’T join the struggle to be poor,
protested Smuts Ngonyama, then the
ANC’s spokesman, in 2007. His comment
epitomised a prevailing culture of entitlement in the ruling party. Paul Ho…man of
the Institute for Accountability in Southern Africa reckons that corruption is endemic throughout the public sector. This is
at least in part because it is so easy to get
away with, he says. ŒFrom top to bottom,
the attitude seems to be: if everyone else is
able to act with impunity, why shouldn’t
I? He estimates that about a third of the
ANC’s current 83-member national executive committee have been investigated for
fraud or other criminal activities‹including the president himself. Every day some
new scandal seems to emerge.
The head of Armscor, the state armsprocurement agency, was recently †red for
dishonesty, dereliction of his duties and
Œdisgraceful, unbecoming conduct. The
boss of Transnet Freight Rail, the state
freight-rail company, has been suspended,
accused of not following tender rules. The
former chief executive of South African
Airways, the state airline, was sacked last
year over alleged †nancial wrongdoing.
South Africa’s former police chief and onetime head of Interpol, Jackie Selebi, is on
trial for corruption. The former head of the
Social Security Agency has been †red over
allegations of †nancial impropriety. One
of the country’s leading barristers, Seth
Nthai, was recently accused of soliciting a
bribe and forced to step down as vice-president of the South African Bar. The list goes
on and on.
Willie Hofmeyr, head of the Special Investigating Unit, the country’s main corruption-†ghting body, told parliament earlier this year that at least 400,000 civil
servants were receiving state bene†ts to
which they were not entitled. A further
6,000 government oˆcials had failed to
declare their private business interests, as
required by law. In the department of prisons, ten oˆcials, including its former
head, and ten prison doctors had been
charged with corruption. A further 423 employees had been disciplined. His unit is
now investigating more skulduggery at the
department of public works, where suppliers, in cahoots with oˆcials, were found
Local government is not working
to be charging wildly in‡ated prices.
The ANC is worried. The Œscourge is far
worse than anyone imagines, Mr Motlanthe, the country’s vice-president, admitted recently. Too many Œcomrades regarded election to public oˆce simply as a
chance to get rich, says Gwede Mantashe,
the ANC’s (communist) secretary-general.
ŒWe must move away from a culture of
greed and self-enrichment to one of transparent accountability, urges the ANC’s
treasurer, Mathews Phosa. Mr Zuma has
vowed to take action. Many may sco….
After all, the president was himself embroiled in corruption charges for years, escaping trial only when they were dropped
on a legal technicality just before last
year’s general election. But Mr Zuma
seems to mean it.
An interministerial task team has been
set up to tackle corruption, chaired by Collins Chabane, minister for performance,
monitoring and evaluation, a new post in
the president’s oˆce. All ministers are being asked to sign Œperformance agreements on which they will be judged. Public-procurement procedures are being
centralised in the Treasury, and a team that
includes the tax authorities and the auditor-general has been set up to check for any
irregularities. ŒIf any oˆcials are found
guilty, they must be †red on the spot, not
just redeployed, says Mr Zuma.
Corruption is particularly bad in local
government, where most of the money is
spent. Hundreds of protesters have been
taking to the streets to express their anger
over the graft, nepotism, maladministration and sheer incompetence of their local
councillors as well as over the lack of basic
services. Last year there were more than
100 so-called Œservice-delivery protests,
four times as many as in 2008. This year
the rate has been even higher. The current
model of local government is simply Œnot
working, says Yunus Carrim, deputy minister for local government. Mr Zuma
agrees. He recently described South Africa’s civil service as the worst in the world.
Can’t get the sta…
Apart from graft and patronage, an acute
skills shortage is also to blame. When the
ANC †rst took over, it cleared out most of
the white civil servants, especially those in
senior positions, by o…ering them generous early-retirement deals. Within the †rst
†ve years the proportion of whites in the
civil service dropped from 44% to 18%.
Their posts were generally †lled by young,
inexperienced and often poorly quali†ed
ANC people. According to Solidarity,
blacks now hold 61% of all top government
jobs, whites 21%. ŒTransformation has taken place too quickly and at too high a cost,
1
says the union’s Mr Buys.
The Economist June 5th 2010
2
Matters have been made worse by the
ANC’s system of Œcadre deployment, the
appointment of loyal party members to
well-paid public posts for which they are
not necessarily suited or quali†ed. Mr
Zuma has vowed to put a stop to the system. Whether this will happen is another
question, but at least the problem has been
acknowledged.
The removal of the apartheid-era old
guard was understandable, but it has had
disastrous consequences. A 2007 study
found a mere 1,400 civil engineers left in local government, just three for every
100,000 inhabitants, compared with 21
two decades ago. One-third of local authorities had no engineers at all. Just 7% of
sewage-treatment plants meet international standards. Quali†ed †nancial oˆcers
too are in desperately short supply, as are
chartered accountants, statisticians, doctors, nurses, teachers, managers, forensic
scientists and detectives.
ŒThe terrible shortage of human capital
is now the single most important reason
for questioning South Africa’s ability to
A special report on South Africa 9
move forward, says Azar Jammine, head
of Econometrix, a consultancy. A study by
the Centre for Development and Enterprise at the end of 2006 found more than
300,000 un†lled posts in national and provincial government, an average vacancy
rate of 24%. At senior management level
35% of posts were un†lled, rising to 59% at
deputy director-general level. But it is not
just the shortage of skilled manpower that
is to blame, or even the ravages of HIV/
AIDs. Posts are sometimes left vacant
when there is a perfectly suitable candidate available who happens to be white.
Under the government’s Œtransformation policies, each racial group is supposed to be broadly represented in every
sector, private and public, and at every level, to re‡ect its share of the population.
However, with blacks accounting for just
44% of university graduates (but 80% of
the population), there are often not
enough suitably quali†ed ones to go
around in the public sector‹especially as
the best get snapped up by private companies, who have to comply with the same
transformation targets.
In the public sector transformation has
nevertheless proceeded apace, with blacks
now holding more than 80% of posts in
some government departments. In the
private sector, however, they have fared
less well. A survey of some 300 JSE-listed
companies by Business Unity South Africa, a lobby, found that blacks account for
only 4% of chief executives, 2% of chief †nancial oˆcers and 15% of other senior
posts. On non-executive boards they do a
bit better, accounting for 24% of chairmen
and 29% of board members, but the †gures
are still way o… target.
In some of the state-owned companies
another problem has arisen: too many
blacks, often with good political connections, have been deployed above their capabilities. Some have fallen by the wayside. At the end of last year no fewer than
†ve big state-owned companies found
themselves without a chief executive after
their black bosses were sacked or forced to
resign amid allegations of mismanagement, corruption or both. 7
The great scourges
A black middle class is emerging, but poverty and crime blight millions of lives
T
EBOGO, aged 25, is a security guard in
Johannesburg, earning just 11.38 rand
an hour. Improperly classi†ed as Œself-employed, he gets no paid holiday, sick leave
or other bene†ts. By dint of working a 12hour day, 25 days a month, he manages to
earn 3,400 rand a month. Out of this he has
to pay 250 rand rent to a friend who allows
him to live in a one-room shack in his yard,
next to seven others. Their 15 occupants
share a single pit-latrine and outside water
tap. Tebogo pays his employer 390 rand a
month for transport and 98 rand for the
uniform he is obliged to wear. Another 350
rand a month goes on maintenance for his
six-year-old daughter. He also gives about
800 rand a month to his parents, who have
no other source of income. In a good
month that leaves Tebogo with about 1,500
rand for himself and his studies. He would
like to become a radio journalist one day.
Lindiwe is a 58-year-old cleaner for a
block of oˆces. For an eight-hour day, †ve
days a week, she earns a basic 1,500 rand a
month, which tips bring up to 2,100 rand
That has to keep her, her unemployed husband and two grandchildren whom she
looks after. Having inherited her parents’
home, she pays no rent, but spends around
55 rand a month on electricity, 30 rand on
water and 300 rand a month on her onehour bus journey to work. During apartheid, she used to work as a domestic servant for a white family, living in a oneroom shack at the bottom of the garden
and working 13 hours a day, seven days a
week. On her one weekend o… a month
she would try to visit her two children
who were being brought up by her mother
in Soweto, a sprawling black township
south of Johannesburg.
Tebogo and Lindiwe are poor, but at
least they have a regular job; many don’t.
In 2008 three-quarters of South Africans
had incomes below 50,000 rand a year. Of
these, 83% were black (who make up 75% of
the workforce) and just 6.5% white (13% of
the workforce). Only 0.6% of South Africans earned over 750,000 rand, of whom
three-quarters were white and 16% (or
about 30,000 individuals) black (see table
3). A further 265,000 blacks were earning
300,000-750,000 rand, and 1.6m were get- 1
3
All right for some
Total working population aged 16 and above by income group and race, 2008, %
Total
workforce
Up to
R50,000
R50,000 100,000
R100,000 300,000
R300,000 500,000
R500,000 750,000
Above
R750,000
Black
75.3
83.0
65.9
47.1
29.9
20.3
16.3
Coloured
8.8
8.3
14.3
9.0
5.6
3.0
2.1
Indian/Asian
2.8
2.2
4.0
5.4
5.1
8.4
4.3
White
Total workforce
Source: SAIRR
13.0
6.5
15.7
38.5
59.5
68.4
77.4
100.0
75.5
10.1
10.7
2.3
0.8
0.6
10 A special report on South Africa
2 ting 100,000-300,000. That means nearly
2m black individuals (and probably three
times as many if immediate family members are included) are now members of the
newly emerging black middle class. Like
their white counterparts, these so-called
Œblack diamonds tend to live in secure
gated communities, send their children to
private schools, take out private health insurance, work out in air-conditioned
gyms, dine in fancy restaurants and buy
expensive cars. It is at this level that most
racial mixing and a few interracial marriages take place.
Thanks to a massive increase in welfare
spending, millions have been lifted out of
the worst poverty. Since 1996 average black
income per person has more than tripled
in real terms, to nearly 20,000 rand. But average white income per person over the
same period has risen almost as fast, to
136,000 rand‹seven times as much as that
for blacks. South Africa, always among the
world’s most unequal societies, has become even more so. Those in the middle,
too well-o… to qualify for welfare grants
but too poor to have joined the black middle class, feel particularly aggrieved.
Black living conditions have nevertheless improved in other ways. Three-quarters of all South African families now live
in a Œformal home (usually a concrete or
brick bungalow instead of a rough shack
or thatched mud hut), up from just under
two-thirds in 1996. The vast majority now
have electricity and access to clean piped
water (see table 4). Half of black families
have ‡ushing loos, compared with barely a
third in 1996; three-quarters have a television; and eight in ten have access to a
phone, usually a mobile. Many municipalities provide a basic amount of water, electricity and sanitation free to poor families.
Expectations soared when the ANC
†rst swept into power promising Œa better
life for all. Yet many see little improvement in their own lives, †nding themselves without a job in the same rickety
shacks as before. They feel trapped. A
study by the Medical Research Council
highlights the deep unhappiness and
growing sense of alienation among the
young in particular. One in †ve teenagers
aged 15-17 had tried to commit suicide during the preceding six months; 29% had
been binge-drinking at least once in the
previous month; 19% had become pregnant or fathered a child; 20% were overweight. According to another study, four
out of ten black and three out of ten white
and Indian youngsters aged 13-15 feel so disillusioned that they want to get out of the
The Economist June 5th 2010
country as soon as they can.
Those young people are increasingly
taking to the streets to vent their anger,
looting stores, blocking highways and
attacking the police with petrol bombs and
rocks. The police retaliate with tear gas,
rubber bullets, water cannon and, some
claim, live ammunition, adding to the
sense of insecurity in the townships.
When it comes to tackling crime, though,
the police, poorly paid, inadequately
sta…ed and often corrupt, are regarded as
pretty hopeless, and the poor cannot afford to pay for their own protection.
The middle classes, on the other hand,
black as much as white, barricade themselves behind layer upon layer of security:
high perimeter walls topped with electric
fencing, guard dogs, barred doors and win4
Home comforts
Living conditions, % of households
1994
2009
Formal dwelling
64*
75
Access to clean piped water
62
89
Flush lavatories
51
60
Telephone in dwelling/
use of cellular phone
29
85
Electricity for lighting
51
83
Electricity for cooking
47*
71
Refuse removal by local authority
53*
Source: SAIRR
53
*1996
dows and alarm systems linked to one of
the many armed private security forces.
Many go to live in one of the increasingly
popular fortress-like gated communities,
protected around the clock by armed
guards. South Africa now has 300,000
private security guards, almost double the
number of police. Since 1996 the government has almost tripled its spending on
tackling crime. But private-sector spending
has risen even faster.
Victims all
ŒThe crime situation in South Africa has
become so severe that the sad reality is that
it’s not if, but when, you will become a victim, said a Durban magistrate when sentencing three men for throwing a teacher
o… a high bridge after hijacking her car last
November. ŒWe are scared to the point
where we are no longer free. Max Price,
the normally un‡appable vice-chancellor
of the University of Cape Town, said after
the murder in March of yet another member of the university’s sta…: ŒWe no longer
trust strangers and we hate what we have
become. These are not Mr Mbeki’s hysterical white whingers. They just want their
country to rid itself of this evil.
The World Competitiveness Survey
rates South Africa worst out of 133 countries for crime. A staggering 50 murders,
100 rapes, 330 armed robberies and 550
violent assaults are recorded every day.
More than the level of crime, it is the sheer
gratuitousness of the violence that is
shocking. A 12-month-old baby is beaten to
a pulp by house burglars in an upmarket
Johannesburg suburb. A shopkeeper
pleads with robbers to take everything he
has but spare his life; they shoot him anyway. A man mowing his lawn in Cape
Town is shot dead for the sake of his mobile phone. Under apartheid most crime
was contained within the poor black
townships. Now it is everywhere. It is not
only whites who complain; everyone is
afraid. In one recent poll, nearly two-thirds
of South Africans said they would feel
Œvery unsafe walking alone in their
neighbourhood after dark. Another study
in 2007 found that 22% had had personal
experience of crime in the preceding year.
Six in ten South Africans believe that
crime has risen since 1994. Yet, if the oˆcial
statistics are to be believed, the crime rate
for the 21 most serious o…ences has actually fallen by 17%. The rate of murder and attempted murder has almost halved; that of
violent assault is down by a quarter; and
that of burglary of residential properties
has dropped by 15%. However, a new study
by the Centre for the Study of Violence and
Reconciliation †nds a Œpervasive pattern
of (police) manipulation of the statistics,
particularly since the government announced in 2004 that it aimed to cut crime
by 7-10% a year. That could account for
much of the apparent reduction in crime.
The murder statistics are probably
pretty accurate, though. These show that
the murder rate dropped from 66.9 per
100,000 people in 1994-95 (when a virtual
civil war was raging in KwaZulu-Natal) to
37.3 in 2008-09. This still leaves South Africa among the world’s ten most murderous
countries. America has a rate of 5.4 per
100,000, England and Wales 1.2 and Japan
0.4. Rape, on the other hand, is usually
vastly underreported. The police say that
sexual o…ences have risen by nearly half
since 1994, to more than 70,000, about half
of them rape. But the real †gure for rape is
probably nine times as high, says the Medical Research Council. In a recent study of
men aged 18-49, 28% admitted at least one
rape. Four in ten women say their †rst ex1
perience of sex was rape.
The Economist June 5th 2010
2
Sexual violence seems to be less shocking to black communities than to white
ones. According to another CSVR study,
most black women believe that a man has
a right to have sex with his wife whenever
he wants. A majority of teenage boys and
girls say it is not sexual violence to force
sex on someone you know or who has accepted a drink from you. Human Rights
Watch, a New York-based lobby, thinks the
level of violence against women in South
Africa is Œshockingly high.
Mr Zuma takes anxieties over crime
more seriously than Mr Mbeki did. South
Africa’s citizens have been allowed Œto live
in fear for too long, he says. He has promised to boost target police numbers from
A special report on South Africa 11
183,000 to 205,000 over three years, upgrade their training and make it easier for
them to use lethal force. Not everyone is
happy. A total of 568 people were shot
dead by police in 2008-09, including 32 innocent bystanders. Over the same period
107 police oˆcers were killed.
Harsher punishment has been tried,
with tough minimum sentences introduced in 1997, but seems to have had little
e…ect. It did, however, push up the prison
population by 40% to 165,000, proportionately one of the highest in the world. Almost half of all convicts are now serving
sentences of ten years or more, compared
with under 2% in 1995. The number of inmates on remand has doubled and now
accounts for a third of the prison population. Some 234,000 cases are awaiting trial.
At the present rate of hearings it would
take ten years to clear the backlog, the government admits.
South Africans constantly debate why
their country is plagued by so much violent crime. The blame is variously put on
the brutal legacy of apartheid, widespread
poverty, appalling levels of unemployment, the absence of a father in two out of
three black homes, high alcohol and drug
abuse, and extremes of inequality. All may
play a part. But the UN says that there is
Œno easy correlation between poverty, development levels, inequality and crime, so
it cannot be the whole answer. 7
Last in class
Education needs to take a giant leap
S
OUTH AFRICA spends 6.1% of its GDP
on education, a bigger chunk than most
other countries, yet its results are among
the worst. In the World Economic Forum’s
latest Global Competitive Index it ranks
bottom (out of 133 countries) in both maths
and science education. In the 2006 Progress in International Reading and Literacy
Study it also came bottom (out of 40 countries), as it did in the 2003 Trends in International Maths and Science Study (out of 48
countries). Humiliated, it withdrew from
the next TIMSS in 2007. The diˆculty with
such studies is that they re‡ect averages. At
the top, South African students do as well
as anyone, but the great majority are performing way below their capabilities.
Graeme Bloch of the Development
Bank of Southern Africa describes South
Africa’s education system as a Œnational
disaster. He reckons 80% of schools are
Œdysfunctional. Half of all pupils drop out
before taking their †nal Œmatric exams.
Barely 11% get a good enough pass to qualify for university. Of those who do, most are
found to be functionally illiterate and innumerate when they get there, requiring
intensive †rst-year remedial classes to
bring them up to scratch. A third of students drop out in their †rst year at university. After †ve years only one in three has obtained a (three-year) degree. Even then,
employers say that many graduates
emerge inarticulate, unable to think critically and barely able to read or write.
Black South Africans generally do
much worse than whites. Almost 13% of
black adults are functionally illiterate,
compared with 0.4% of whites. Fewer than
2% of black adults have a degree, compared with 17% of whites (which is still low
by international standards). Barely a third
of black pupils pass their matric, whereas
almost all whites do. And only around one
in 20 black students ends up with a degree,
compared with almost one in two whites.
It is not that the blacks are any less bright;
some perform brilliantly. They are just
massively disadvantaged.
Under apartheid blacks were deliber-
ately kept down, given a vastly inferior
education and banned from most skilled
jobs. Explaining the government’s new
Bantu (black) education policies to the
Senate in 1954, Hendrik Verwoerd, then
minister for native a…airs, famously asked:
ŒWhat is the use of teaching a Bantu child
mathematics when it cannot use it in practice? By the end of Verwoerd’s decade as
prime minister in 1968 the government
was spending 16 times more on the education of a white child than a black one.
Spending per pupil is now the same for
black and white, yet black children gener- 1
More snakes than ladders in South Africa’s schools
12 A special report on South Africa
2 ally continue to fare worse than whites be-
cause most of them continue to attend
vastly inferior schools. Although public
education was desegregated in 1994, most
former black schools remain overwhelmingly black because they are generally in
deprived black areas, whereas the former
white schools tend to have a good racial
mix because middle-class blacks have
moved into their catchment areas. Catering for just 10% of all pupils, the former
white schools are usually much better endowed, better run and far more disciplined
than former black schools.
Angie Motshekga, the schools minister,
admits that black schools are Œin crisis.
Fewer than 10% have libraries or laboratories. Very few o…er extracurricular activities. Most of their teachers are not properly
quali†ed. Black schools tend to lack leadership and are often plagued by drugs, alcohol and sex abuse (by teachers as well as
older boys). Their pupils generally come
from poor, often broken homes. And, unlike white pupils, they are usually taught in
a language (English) that is not their own,
by teachers who themselves cannot speak
it properly.
It often seems a miracle that black pupils make it to university at all. Most of
those who do will probably have been either to one of the top 10% of black schools
that do perform well, or to a former white
The Economist June 5th 2010
Positive discrimination
At university level black students have
made similar strides. In 1994 half of South
Africa’s 528,000 university students were
black; now two-thirds out of 800,000 are;
a quarter are white. But university standards vary hugely. Jonathan Jansen, the
†rst non-white vice-chancellor of the University of the Free State, says that at least
three-quarters of South Africa’s 23 highereducation establishments are Œfraudulent
and bad, not really universities at all. He
cites exam standards being lowered to cut
failure rates; students who Œregularly trade
their bodies to pass their exams; others
who blame their poor marks on Œracist
teachers; and those who blatantly cheat
and threaten to secure that piece of paper.
According to Mr Jansen, South Africa
has no Œgreat universities, only six or seven Œgood ones. One of them is the University of Cape Town, the only African university to be ranked among the world’s top
200 by the Times Higher Education Supplement. Under the leadership of Max Price,
UCT has introduced a controversial new
entrance scheme that makes it easier for
non-whites to get in. This can mean that
white students have to get a matric mark
some 20-30 percentage points higher than
their black peers. Mr Price, who is white,
admits that the system is not perfect, but at
least it takes account of the huge handicap
su…ered by most black applicants.
Mr Zuma has vowed to make education
his government’s Œpriority number one.
In speech after speech he insists that teachers and pupils must be Œin school, in class,
on time, learning and teaching for seven
hours a day. It might seem obvious
enough, but in South Africa it will require a
small revolution to achieve. Mr Zuma also
plans to bring back the apartheid-era’s hated schools inspectors, but in future they
will be called Œassessors and required to
support teachers as well as criticise them.
Independently monitored tests are being
introduced for pupils aged nine, 12 and 15,
doubtless as much to spot the incompetent
teachers as the failing pupils. 7
practitioners have left the country, fed up
with the poor pay and appalling conditions. Others have gone into the rapidly expanding private sector. A study in 2007
found that one-third of public medical
posts were un†lled. In some hospitals the
vacancy rate for nurses is as high as 60%.
The public sector now has just one doctor
for every 4,570 inhabitants, against one for
every 600 in private medicine. For specialists the disparity is even greater.
Under apartheid, public health-care for
whites, like education, was generally so
good that there was little need for private
medicine. Even health services for blacks
were often a lot better than they are now.
The service has deteriorated so much that
more than 8m South Africans (17% of the
population) have taken out private medical insurance. Half of them are black. The
‡at-rate basic premium, set by the government, is 800 rand per month for an individual and 2,000 rand for a family, regardless of age or state of health. A further 20%
of South Africans use the private sector occasionally and pay as they go. In all, South
Africa spends some 8.6% of its GDP on
health, close to the international average.
But the public sector accounts for only 41%
of that total, compared with 82% in Britain,
79% in France and 46% even in America.
In an attempt to bridge the gulf between public and private health care, the
government has proposed introducing a
national health-insurance scheme. This
has sent private health-care users into a tizzy, especially when a purported draft proposal seemed to suggest that 85% of their
health-insurance premiums would be incorporated in the new scheme, and that 1
school, or to one of the burgeoning private
schools. Fees for day pupils range between
5,000 and 80,000 rand a year. But with
class sizes generally half those in state
schools and an average matric pass rate of
97%, compared with just 30% at state
schools, even some relatively poor parents
think they are worth paying for. Under
apartheid few white parents bothered to
send their children to private school because the state schools for whites were of
such high standard. Now nearly 400,000
pupils (3% of the total) attend private
schools, more than double the number in
1995. Six out of ten of them are black.
Don’t get ill
Or if you do, go private
O
N TAKING over as minister of health a
year ago, Aaron Motsoaledi declared
himself Œshocked by the state of the public health-care system. Media horror stories about dirty and overcrowded hospitals, long waiting times, lack of medicines
and a shortage of medical sta… were largely true, he admitted: ŒI don’t think it will be
an exaggeration to say that some of our
hospitals are death traps.
Money is not the main reason. The government is pumping over 100 billion rand
into the system this year, which amounts
to 12% of its budget and 3.7% of GDP‹not
massive, but more than most provincial
governments (who are responsible for
health care) know how to spend. The main
problem is once again an acute shortage of
quali†ed sta…. Many thousands of publicsector doctors, nurses and other medical
The Economist June 5th 2010
A special report on South Africa 13
2 any service provided by the public sector
would no longer be covered by private
health schemes. If true, that would be a
sure way to cause a massive further braindrain. However, as the scheme would cost
anything between 165 billion and 244 billion rand, it seems unlikely to be introduced in the near future.
The silent killer
South Africa’s HIV/AIDs epidemic, exacerbated by a decade of AIDs Œdenialism under Mr Mbeki, who claimed the disease
was not caused by HIV, is putting a huge
extra strain on the public health system.
The number infected is now put at around
6m, or one in eight South Africans. An estimated 3m people have already died from
the disease and over 350,000 more are succumbing every year. New infections run at
about 1,350 a day, though the rate may have
started to come down. Some 1m su…erers,
under two-thirds of those in need, are now
receiving antiretroviral treatment. The consequences of the epidemic have been devastating. Countless families have lost their
breadwinner; hundreds of thousands of
children have been orphaned; desperately
needed skilled workers are being cut down
in their prime.
It is often said that HIV/AIDs knows no
barriers, striking indiscriminately at rich
and poor, young and old, men and women. But in South Africa there is a huge racial
disparity: 14% of the black population is infected, against 1.7% of coloureds and only
0.3% of whites and Indians. Poverty is a
factor, but cultural di…erences also play a
role. Research shows that black males in
South Africa tend to be more promiscuous
and have more sex and more concurrent
5
Grim reaper
HIV/AIDS
Life expectancy
years*
HIV/AIDS prevalence among
15-49 year olds†, %
65
25
60
20
55
15
50
10
40
5
0
1994
9596979899
2000
01020304050607080910‡
Sources: Actuarial Society
of South Africa; Economist
Intelligence Unit
*2008-09 estimates
†2005-09 estimates
‡Forecast
sexual partners than other racial groups.
In March the government announced a
campaign to get 15m people‹one in three
of the population‹tested for HIV/AIDs by
June next year. Mr Zuma, not always the
most careful in his own personal relations,
agreed to spearhead the campaign. Condom use has already been boosted by government advertising campaigns. The government is also planning a large-scale
male-circumcision programme because
studies have shown that circumcised men
halve their chance of infection. A Johannesburg medical centre has begun o…ering
lunch-break Œquickies at 400 rand a snip.
One in three black South African males
already undergoes ritual circumcision, but
such operations are usually done by unquali†ed people and cause hundreds of
deaths a year. Zulus have traditionally
shunned the practice because it would
keep them away from the battle†eld that
called the warrior tribe. However, last year
their king, Goodwill Zwelithini, told them
to forget the battle†eld. Mr Zuma, himself
a Zulu, announced last month that he had
been circumcised some time ago.
The HIV/AIDs epidemic has caused the
average life expectancy in South Africa to
fall from over 60 years to below 50 in the
past two decades. Here again there are
huge racial di…erences. Whereas a white
South African can still expect to live for 72
years, his black compatriot can look forward to only 47. South Africa also performs
badly on infant and maternal mortality
and tuberculosis, for which it has one of
the world’s highest infection rates.
Alcohol abuse is another big health
problem. Although 60% of South Africans
(mainly women) claim not to drink at all,
those who do tend to go over the top. Directly or indirectly, alcohol is responsible
for 30% of all hospital admissions. Twothirds of domestic violence is alcohol-related, as are three-quarters of knife murders and at least half of all road deaths.
South Africans are also among the world’s
highest users of various illegal drugs. Consumption of dagga (cannabis), cocaine and
tik (methamphetamine or speed) is two to
three times the world average, says the
country’s Central Drug Authority.
Drug and alcohol abuse are partly responsible for the carnage on South Africa’s
roads, where the death rate is 33 per
100,000 inhabitants‹almost double the
world average. For the size of its population the country has relatively few vehicles, fewer than 9m, yet last year some
16,000 people were killed on its roads‹victims of speeding, huge pot-holes and road
rage, as well as the easy availability of a
driving licence for a small bribe. 7
Still everything to play for
The case for optimism‹and the many caveats
T
WO decades ago South Africa was a
mess, economically, politically and
psychologically. The world treated it as a
pariah. A racial con‡agration seemed not
only possible but likely. Since then it has
come a long way, led by people who were
completely new to running anything
much, let alone a big, sophisticated and
highly complex country. It was inevitable
that mistakes would be made. Today
South Africa is a lot happier, wiser and
more prosperous. It has been welcomed
back into the international community, is a
member of the G20 group of important
countries and is the biggest mover and
shaker in Africa.
Yet the new South Africa’s relations
with the world are often confused, almost
schizophrenic, as it struggles to understand
what it is and what it wants to be. On the
one hand it likes to see itself as the hegemon of southern Africa and a global leader
of the emerging world, along with China,
Brazil and India. On the other hand both its
economy and its values remain closely allied with those of the rich world. In Africa
it is an economic giant, yet, despite its
black-led government, it remains a political pygmy, unable‹or unwilling‹to solve
problems even in its own backyard of Zimbabwe. Its foreign policy is a muddle. For
all his charm and bonhomie, Mr Zuma appears to have little interest in maintaining
the globetrotting activism of his predecessor, Mr Mbeki. Besides, he has his hands
full at home.
1
14 A special report on South Africa
The Economist June 5th 2010
You can do it if you try
2
Freedom has yet to deliver on its promise. Vast numbers of South Africans continue to live in grinding poverty as the rich
get ever richer. Hundreds of thousands are
scythed down by diseases such as HIV/
AIDs and tuberculosis. Others succumb to
criminal violence or the carnage on the
roads, robbing families of breadwinners
and businesses of employees. The economy cries out for more skilled workers, yet
millions remain unemployed and unemployable. Universities dumb down their
courses to boost pass rates, only to turn out
graduates who are not much good to anyone. The government seeks to woo foreign
investors, but people like Julius Malema
send shivers down their spines by insisting
that mines and banks will be nationalised
within the next few years.
Rising discontent in the poor black
townships threatens to boil over into renewed violence. Revolutions, as de
Tocqueville noted, tend to start with rising
expectations, not when conditions are at
their worst. Even if the government could
give the jobless everything they are demanding, which it cannot, that still might
not be enough.
The pessimists’ case
Laurie Schlemmer, director of MarkData, a
research †rm, thinks that social and political instability, a marginal concern since
1994, could become a determining factor in
South Africa’s future. He fears that whites
will become the scapegoats for the government’s failings. Once an optimist, he now
describes himself as a pessimist because
so little has been done to reduce inequalities. John Kane-Berman of the South African Institute of Race Relations believes the
country is already irretrievably set on the
path to becoming another failed African
state. Too many things, he says, are going
wrong at the same time, mutually reinforcing each other.
Some, like Fanie du Toit of the Institute
for Justice and Reconciliation, feel South
Africa could still go either way, either grad-
ually sliding into a corrupt third-world
mess or making slow progress without
ever ful†lling its potential. But others remain doggedly optimistic, despite the
country’s obvious failings.
One of them is Tembeka Ngcukaitobi,
aged 34, a former partner in one of South
Africa’s top commercial-law †rms and
now head of the Legal Resources Centre’s
Constitutional Litigation Unit, a public-interest law concern. Brought up in a village
in the former homeland of the Transkei,
where his Xhosa-speaking mother (a domestic worker) and father (a gold miner)
were sent under apartheid, he attended
the local village school when not looking
after the goats and cattle. Yet, through
sheer determination and hard work, he
made it‹without the help of BEE, aˆrmative action, political connections, patronage or graft. Though dismayed by the obstacles facing his country, he believes they
can be overcome. ŒCompared with what
my parents lived through, I have to feel inspired by my country’s potential, he says.
Bobby Godsell, chairman of Business
Leadership South Africa, a lobby representing the country’s 80 biggest compaO…er to readers
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nies, and a member of the government’s
new National Planning Commission,
thinks South Africa could become to the
African continent what Japan was to Asia
in the 1950s and 1960s. ŒWe’re leading the
modernisation of a continent of one billion people with huge unmet needs, he
says. Even the usually relentlessly negative
Bill Johnson, a political analyst and former
Oxford don, admits there is hope. ŒThere’s
a complete failure of governance, of
course, he growls, Œyet I love South Africa.
I would not want to live anywhere else.
There’s a dynamism in this country, a resilience. It’s already come through a lot of
ghastly experiences. It can do so again.
Today’s South Africa is not for the fainthearted. Everything is in ‡ux and nothing
is certain. But a new, better-educated and
less racially obsessed generation is coming
through. ŒIn the decade I’ve been in business, I’ve never been more afraid or excited
at the same time, says Iqbal Survé, head
of Sekunjalo Investments, a Œblack private-equity company: ŒAfraid because we
don’t have the necessary skills and investments to make the economy grow fast
enough to ensure political and social stability. Excited because there are so many
opportunities.
ŒThe price of freedom, Archbishop
Desmond Tutu likes to remind his fellow
countrymen, Œis eternal vigilance. That is
what the opposition parties, the press, the
courts, the NGOs, some business and union leaders and a few academics are all
striving to maintain. Together they make a
formidable group. Powerful forces are
ranged against them, but Œthe fundamentals are there, insists Mr Ngcukaitobi.
ŒOur future lies in our own hands. 7
Future special reports
Human genome June 19th
Debt June 26th
Gambling July 10th
Egypt July 17th
Latin America September 11th
Forests September 25th
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