Old ills haunt new S Africa
Thursday 23 February 1995
At the top of his crowded priority list for the new South Africa is an imperative to create jobs, jobs and more jobs. Unemployment is estimated at about 45 per cent. Most of the unemployed people are black township dwellers and many are wondering what happened to the rosy future they imagined when they elected Mr Mandela's African National Congress to lead the government of national unity last April.
Housing is another daunting problem. Hundreds of thousands of new homes were promised to a people often forced to live crowded into shacks made of corrugated iron or wooden debris. But the government minister in charge of the centrepiece Reconstruction and Development Plan said he did not know how many houses had been built in its first nine months. An insider gave the answer for the main Johannesburg area - just one new house.
"Hundreds of by-laws are preventing us from giving fast-track delivery," said Jay Naidoo, the fast-talking ex-trade unionist in charge of the reconstruction plan. "We call it the Nimby effect - not in my backyard."
One planner sympathetic to Mr Naidoo's predicament said it was not surprising that efforts to supply the basics had run into trouble, beginning with the fact that all ministers inherited budgets drawn up before last year's April elections.
"Information systems were not in place and were basically only geared to reporting on whites. Even our population figure of 40 million is really a guess. Institutional frameworks were in tatters," the planner said.
The task of South African planners is not made easier by the sluggish performance of the economy. Gross domestic production shrunk by an average 1.7 per cent between 1985 and 1991. Even now, it is only registering growth of about 3 per cent, just slightly ahead of a 2.7 per cent population growth.
"The upsurge is wide," said the governor of the Reserve Bank, Chris Stals. But he noted downturns in two of the country's biggest employers, gold mines and farms. Agriculture did well in 1994 but low rainfall this year has caused 17 per cent of the country's surface area to be declared a drought disaster area.
Dr Stals saw the need for high, long-term growth rates to counter a "major worry" that total employment had dropped in the past two years. Nevertheless, he has acted quickly to prevent that growth riding on the back of a recent boom in bank credit to consumers and the private sector.
As part of measures to curtail new loans, he raised the discount interest rate by one point to 14 per cent, citing fears that the monetary expansion would put pressure on a respectable 9.9 per cent inflation rate achieved last year
The government hopes that such monetary responsibility will fuel the interest of foreign investors, which could become a rush once exchange controls are lifted. But officials are wary of the Mexican experience of boom and bust. Even the perception that South Africa is in the same basket of developing countries had already added nearly 1 percentage point to the cost of its new international loan issues.
"Mexico has had an impact," said Finance Minister Chris Liebenberg. "But there is a cycle of swings in that country. What investors are going to realise is that South Africa is not just another emerging market. We have checks and balances and good management."
Mr Liebenberg said that the government of national unity had come "within spitting distance" of its budgetary goals for 1994/95, including the finding - with "blood, sweat and tears" - of 5bn rand (£900m) for the reconstruction programme.
Innovative ministries say new competition and small business promotion is vital to break the stranglehold of the powerful South African triangle of government, big, white-owned business and black labour unions.
Zavareh Rustomjee, director-general of the Ministry of Trade and Industry, said South Africa had to dismantle inefficient, cosy ways of the past. "Although we sit on the most valuable piece of real estate on earth, the industries that have greatest potential to make employment are unable to benefit," he said.
"The concentration of ownership is a problem. Unless you have sanctions against anti-competitive behaviour, this economy will remain strangled."
Many of the new planners and ministers are talented and dedicated, and, for all its vagueness, the reconstruction and development plan is remarkable for providing consensus to which all political parties subscribe.
"This country has never had a unity of vision. Now it has it," one economist said. "The difficulty is translating this into practice."
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