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What
Went Wrong in the “New” South Africa?
“Free
Trade” and Water Mostly
by
Andrew Nowicki
Dissident
Voice
November 11, 2003
In
1994, Nelson Mandela was elected the first black leader of what was hailed as a
new multiracial, multicultural and democratic South Africa. Now in 2003 in
Soweto, one of the central battlegrounds in the anti-apartheid struggle, people
get their electricity cut off and no longer have ready access to water Private
security firms evict them from their inadequate housing. Through 1999 and 2000,
protests grew against unemployment and privatization of basic services.
Crackdowns by the ruling African National Congress (ANC) became increasingly
repressive.
In
2002, private security guards fired live ammunition to disperse around one
hundred people demonstrating over electricity cutoffs in Soweto outside the
home of Johannesburg's Executive Mayor, Amos Masondo in the swank Jo'burg
suburb of Kensington. The ANC, aiming to make an example, arrested the
demonstrators, denied them bail and held them in Sun City, a notorious maximum
security prison near Johannesburg which formerly held anti-apartheid activists.
The “new” South Africa has rapidly regressed into the South Africa of old.
However,
in the 'new' South Africa the repression is not to enforce a rigid racial
hierarchy. Now, the ANC is suppressing opposition to its policies which have
led to a marked stagnation in economic development. Annual total gross domestic
product (GDP) has stagnated at about one to three percent since the early
1990s. Unemployment figures in most of the country's provinces have hovered
near the 50% mark since the late 1990s.
Social services have suffered massive cuts despite South Africa's
national health emergency due to AIDS.
The
usual suspects - enter the IMF and the World Bank
The
promises of a free, democratic, prosperous and peaceful South Africa which
appeared so close to fruition after the demise of apartheid have disappeared
fast. Tears and pain have rapidly supplanted hope. The forces of
neo-mercantilist globalization responsible for South Africa's continuing
economic and social chaos were entrenched years before apartheid collapsed.
Indeed, when the apartheid government was clearly doomed, faced with
overwhelming international protests and a strong sanctions regime at the climax
of the Cold War in 1989, the international financial institutions (IFIs)
stepped in. They were determined to influence the forces of social and economic
change in the interests of international finance and business. In the early
1990s, the World Bank sent advisors to South Africa to recommend neo-liberal
ideology and policies promising economic growth. In 1993, the International
Monetary Fund (IMF) granted South Africa a $750 million loan conditioned on the
adoption of neo-liberal policies.
Although
it is currently in vogue to label the policies of the IFIs as 'neo-liberal'
these policies are purely neo-mercantilist. They emphasize centralized
corporate control over under-developed economies through 'free' trade
agreements while only allowing liberalization in areas which the developed
economies and their multinational corporations already dominate, such as
international capital flows. The globalization currently being imposed through
the World Trade Organization (WTO), regional trade agreements and IFI
Structural Adjustment Programs (SAPs) throughout the under-developed world
really hark back to the age of nineteenth century imperialism. Now, as then,
the resources of the imperial possessions in the periphery are directed towards
the core developed economies - these days Europe, North America and Japan.
Free trade - the dream and the reality
Indeed,
a liberalized global economy was merely a theoretical pipe dream of nineteenth
century liberal economists such as Adam Smith and David Ricardo. "Free
trade" is a theoretical ideal with no basis whatsoever in reality.
Unfortunately, Nelson Mandela and the new ANC establishment in South Africa
adopted elements of the neo-mercantilist agenda enthusiastically in the first
post-apartheid national economic program called the "Reconstruction and
Development Program (RDP). The RDP did retain some redistributive elements but
was rapidly abandoned in favor of a purely neo-liberal program called the
Growth, Employment and Redistribution (GEAR) program in 1996 due to the growing
influence of the neo-liberals in the ANC.
GEAR
was drawn up almost solely by fifteen 'neo-liberal' economists picked from the
World Bank, 'neo-liberal' think tanks and various African Development Banks. The
GEAR program emphasized commercializing and then privatizing all of South
Africa's public companies and services. It drastically cut government spending,
and secondary taxes on corporate profits. It meant substantially and
prematurely reducing tariffs designed to protect South Africa's key infant
economic sectors including textiles and value-added manufactured agricultural
goods.
GEAR
also liberalized capital controls and foreign exchange rates which left the
value of South Africa's national currency, the Rand and South Africa's import
and export economic activity highly susceptible to the volatile and rapidly
changing nature of international capital markets. Thus South Africa, a newly
emerging semi-developed economy was forced to adopt economic standards of
liberalization which no developed economy including the United States has been
able to implement successfully.
GEAR turns the screw
South
Africa's next President, Thabo Mbeki, elected in 1999, was an even more
enthusiastic advocate of neo-liberal policies than Nelson Mandela and was one
of the main political forces behind the adoption of GEAR. The GEAR program has
accomplished the exact opposite of their stated aims. While the International
Monetary Fund (IMF) praises the fact that the GEAR programs have resulted in an
economic growth rate of around three percent for 2003, the Congress of South
Africa Trade Unions (COSATU) and the ANC itself estimates that South Africa
will need an economic growth rate of at least six to eight percent to achieve
even minimal reductions in unemployment.
Although
GEAR promised 120,000 new formal sector jobs in its first year of
implementation South Africa lost more than 100,000 formal sector jobs by the
end of GEAR's first year. For the remaining eleven million employed people in
South Africa in 2003 at least four million are employed in the volatile, low
wage informal sector and engage in temporary, subcontracted economic activity
ranging in everything from prostitution to street hawking. There has been an
enormous wealth polarization under the ANC. South Africa has the dubious
distinction in 2003 of having a larger income gap between the rich and poor
than any other country in the world except Guatemala.
The
most surprising aspect of South Africa's post-apartheid economic programs was
that the programs were embraced so wholeheartedly by the ANC. South Africa,
with its comparatively low foreign debt of only around five percent of its
total budget deficit in the 1990s, was under no pressure from the IFIs. While
highly indebted states throughout Africa were having neo-liberal programs
imposed on them through SAPs, South Africa adopted them willingly.
Water water everywhere - at a price
Patrick
Bond, a professor at Witwatersrand University in Johannesburg termed these ANC
policies 'homegrown structural adjustment'. This is the most saddening and
sickening aspect of all, the fact that the effects of these programs could have
been almost entirely avoided. South Africans are now forced to deal with
self-imposed corporate-controlled globalization in increasingly desperate ways
which meet with increasing repression. Even though all South African citizens
are constitutionally guaranteed "sufficient food and water" in South
Africa's Bill of Rights, the ANC, encouraged by World Bank advisors, embarked
on a nation-wide campaign to privatize South Africa's public-owned and operated
water systems. They contracted out the management of water systems to large
multinational bidders such as the French water-multinational Suez whose sole raison
de'etre, needless to say, is profit.
The
ANC completely ignored more realistic, viable and legal methods of ensuring
water access to South African citizens. They might easily have funded
small-scale local service providers and maintained overall regulation of the
national water system to ensure water access to the low-income groups that
would not be able to afford the new privatized water rates. Nor did the ANC
contractually obligate the water-MNCs to provide water to the poor. The results
of this rapid privatization without corporate accountability in a country in
which the majority of the workforce is unemployed was disastrous.
Public health jeopardised
By
2001 there was a massive cholera outbreak that had spread from rural areas in
Kwa-Zulu Natal Province to the outskirts of Johannesburg. It sickened hundreds
of thousands of people and killed at least three hundred people who had to turn
to polluted, cholera infected water systems after they could no longer afford
the water charges of the new privately owned water companies. The cholera
epidemic cost the South African government millions of dollars as it sought to
contain the outbreak and treat infected people and contaminated river systems.
In
the Eastern Cape Province water prices increased by 300 percent in the town of
Fort-Beaufort and to similar heights in other urban areas throughout South
Africa. Now, in 2003, village, town and city councils
throughout
South Africa are trying to cancel the contracts with the water multinationals
(MNCs). The urban councils are contractually obligated to pay the debts to the
MNCs which the poor and unemployed can't obviously afford. Nevertheless, the
ANC continues to illegally restrict access to water despite the constitutional
right of all South Africans to water.
Protest
and resistance suppressed
The
government continues to arrest individual citizens and members of community
organizations. Prominent among these are the Anti-Privatization Forum (APF) and
the Soweto Electricity Crisis Committee (SECC). In addition anti-housing
eviction campaigns risk arrest and detention as they try to restore electricity
to residences, prevent housing evictions from taking place and destroy prepaid
water meters, installed so water can only be accessed by those who can pay.
The
chairperson for the APF, Trevor Ngwane, is a former ANC member who was expelled
from the party for opposing its privatization policies. He was arrested and
held without bail in 2002 for protesting outside Jo'burg Mayor Masondo's
property. Ngwane has said, 'Corporations seeking profit from a natural resource
will never create a product or system that will benefit the disadvantaged'.
South African fitted with "free trade" straitjackets
Instead
of taking South Africa's status as a low-income country and the needs of its
impoverished majority into account, the ANC governments embarked on a system of
complete privatization of its essential services. This centralized
corporate-mercantilist control of South Africa's resources will become even
more entrenched under 'free' trade agreements wither already completed or on
the table with the United States and the European Union (EU). The World Trade
Organization (WTO) recognizes that semi-developed economies like South Africa
need "special" and "differential" terms permitting trade
tariffs and other trade protections to shield their developing economies. But
the current bilateral negotiations have undermined those WTO prescriptions as
well as South Africa's industry, agriculture and labor force.
For
example, the 'free' trade agreement with the EU forces South Africa to open 90
percent of its trade to
the
EU. The EU in return only allows the South African economy access to 50 percent
of its market. The EU has also enacted further non-tariff barriers (NTBs) to
trade with South Africa such as strictly enforcing health and safety
regulations which block many South African goods from entering the huge market
of Europe.
The
EU trade agreement also only encourages South Africa to export cheap raw
materials instead of more value added goods, such as manufactured goods which
reinforces South Africa's position as a dependent, periphery economy. South
Africa has also entered into 'free' trade negotiations with the United States
along with the other semi-developed southern African states that belong to the
Southern African Customs Union (SACU) such as Namibia and Swaziland. These
negotiations are due to conclude at the end of 2004.
This
trade agreement with the US will also increase corporate control of southern
Africa's economies, resources and labor. Indeed, in order for southern Africa
to qualify for 'free' trade with the United States, all southern African states
must liberalize all sectors of their economies, including social services.
Corporate taxes have to be reduced or eliminated. Corporations must be allowed
to purchase social services, land and resources wholesale from African
governments. At the same time duties and tariffs on manufactured goods from the
US must be substantially reduced.
Concentrated
wealth distorting national development
The
US, the EU and the large multinationals aim to gain as many concessions as
possible from South Africa through these trade agreements while simultaneously
seeking to avoid even limited concessions and access to markets in return.
South Africa cannot even begin to compete with the developed economies. So
economic development within South Africa has collapsed. While there is economic
growth in assets such as stocks and property, these assets are concentrated
among the wealthy minority.
Unfortunately,
the ANC government remains unenthusiastic about national development strategies
designed to lift the poor black majority out of wrenching poverty. According to
the Landless People's Movement (LPM) of South Africa, the government, although
constitutionally obligated to do so, has not initiated even small-scale land
redistribution to impoverished black South Africans. In 2003, eighty six
percent of land in South Africa remains under the ownership of around 120,000
white farmers and the central government.
Government
economic policy has favored rigid, narrow growth strategies designed only to
increase corporate profit and roll back the state. South Africa's economy
depends overwhelmingly on the economies of the developed countries. This means
South Africa's infant industry remains stunted and its impoverished black
majority marginalized. The extreme concentration of wealth, the collapse of
social services, the explosion in social problems like prostitution, crime,
urban terrorism and gang warfare and the rapid spread of AIDS mean the end of
hopes for a better future. The dreams of millions of South Africans which rose
to such heights after the collapse of apartheid have turned into a national
nightmare with no end in sight.
Andrew
Nowicki is a social justice advocate based in
Washington D.C. He can be reached at: nowicki_andrew@yahoo.com.
Sources:
*US-South
Africa Business Council Business Report, July 2003, www.nftc.org
*Southern
African Regional Poverty Network (SARPN), www.sarpn.org.za
*
Landless People’s Movement (LPM), www.nlc.co.za
*
The Third World Network, Malaysia, www.twnside.org.sg
*
The Anti-Privatisation Forum (APF), www.apf.org.za
APF can be
contacted at: drdalet@metroweb.co.za
*
South Africa Bill of Rights (Chapter 2), www.polity.org.za
*
Action for Southern Africa (ACTSA), www.actsa.org/Trade/growing_hop.htm
*
Global Issues, www.globalissues.org
*
'The Great Jobs Gap', The Sunday Times, Aug. 10, 2002, www.suntimes.co.za
*
Trevor Ngwane & George Dor. 'IMF Can Only Bring Misery to SA,' The Sowetan,
July 12, 2000.
*
Paul Kingsnorth. 'Globalization Made Them Do It,' www.paulkingsnorth.net/madethem.htm
*
The Shop Steward, www.cosatu.org.za
*
The Environmental News Network (ENN), www.enn.com
*Independent
Media Centre-South Africa, www.southafrica.indymedia.org
*
The Center for Pubic Integrity, www.icij.org/water/
*
Desai, Ashwin. We are the Poors (Monthly Review Press, 2002).
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