Chasing the rainbow A survey of South Africa April 8th 2006

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Chasing the rainbow Also in this section

From to evolution The ANC is becoming a more ordinary party. Page 3

Africa’s hegemon ’s many foreign-policy successes, and his one big failure. Page 4

Righting the wrongs of But armative action has its limitations. Page 6

Ladders out of poverty No education, no future. Page 7

The view from the shacks Since the end of apartheid, South Africa has moved closer to Miserable but not quite hopeless. Page 8 becoming the rainbow nation of Nelson Mandela’s vision. But not nearly close enough yet, says Richard Cockett All together now N THE 12 years since the African National leviate the poverty and degradation of the Public-private partnerships have worked ICongress (ANC) party triumphantly victims of apartheid without resorting to wonders in ghting crime. Page 9 took power in South Africa’s rst multi- counterproductive populism. Despite racial democratic election, there have been inheriting an economic mess from the out- plenty of reasons to be disappointed, even going National Party in 1994, the post- Keep chasing disillusioned, with Africa. The aid dar- apartheid government has managed to If South Africa pursues its rainbow vigorously lings of the West have come and gone. build 1.9m new homes, connect 4.5m enough, it may nd a pot of . Page 10 Yoweri Museveni of Uganda changed his households to electricity and provide 11m constitution to win a third presidential homes with running water. Its targets for term in dubious circumstances, and Meles raising the living standards of its people Exchange rates Zenawi, Ethiopia’s prime minister, ruined are the most ambitious on the continent. South African rand, March 27th 2006 his reputation when his police shot dead Yet a drive from Cape Town airport into scores of opposition supporters last year. the city’s almost exclusively white suburbs US$1= 6.25 ¤1= 5.20 , the last of the original big at the foot of Table Mountain demon- ¥100= 5.37 £1= 10.93 men of Africa, seems bent on impover- strates that South Africa is still deeply ishing what was once one of the conti- scarred by the legacy of apartheid. Here nent’s most prosperous countries, and the the cars rush through miles of shanty Acknowledgments government of continues with its towns and townships on the Cape Flats, The author would like to thank all those who gave gener- ously of their time, ideas and hospitality in the preparation genocidal military campaigns against its the geography of apartheid very much in- of this survey. Particular gratitude is due to the following: own people. Nor has the continent yet tact. It is a similar story throughout South Heidi Holland, John Battersby, Antony Altbeker, Karen conquered famine: in the Horn of Africa, Africa. Yes, the shacks in Cape Town now Borcher, Alfonso Botha, Richard Pithouse, Lawrence Schlemmer, William Gumede, Nikhil Bramdaw, Joel Net- parts of Kenya, Somalia and Ethiopia are have electricity. But what else has really shitenzhe, Adam Habib, Ashwin Desai, Elizabeth Sidiro- currently facing critical food shortages. changed? Yes, the giant township of So- poulos, Steven Gruzd, Rick Dillon, Aubrey Matshiqi and Tara But through all this, South Africa has weto, ashpoint of apartheid, now also O’Connor plotted its own course to relative stability, has electricity and smart paved roads. But A list of sources can be found online and prosperity. It has even has its upgrading not further entrenched been trying to nudge the rest of Africa to- the separation of 3m blacks from the city www.economist.com/surveys wards emulating its own success. In that of Johannesburg, from which many were An audio interview with the author is at sense, South Africa is beginning to lead the forcibly removed 50 years ago? www.economist.com/audio continent in an entirely new way. When the apartheid regime fell apart in Why are we waiting? A city guide to Johannesburg is at 1990, South Africa, remarkably, did not There is now a sense of impatience over www.economist.com/johannesburg erupt in ames. That it did not was due the pace of change in South Africa. For largely to the leadership of Nelson Man- many, the country’s advance towards Mr A country guide to South Africa is at dela. No less remarkable since then has Mandela’s vision of a rainbow nation www.economist.com/South Africa been the ANC’s relentless campaign to al- has slowed to a crawl. The government is1 2 A survey of South Africa The Economist April 8th 2006

2 well aware of this, and is now intervening foreign investment that some thought usually amounted to the same thing. Its in more and more areas of national life to would never come. Barclays, a big British answer was the GEAR (Growth, Employ- try to speed up change. bank that withdrew from South Africa in ment and Redistribution) programme, Yet those interventions could do more 1986 under pressure from anti-apartheid launched in 1995, which committed the harm than good. As this survey will argue, campaigners, has just bought its way back government to an orthodox, prudent South Africa has some good stories to tell into South Africa with the $4.5 billion pur- economic package. about change, but few of them are entirely chase of a majority stakeholding in Absa That prudence paid o, bringing econ- the ANC’s doing. From education to for- bank, the country’s biggest retail lender. omic stability and launching a consumer eign policy to crime-ghting, the South Af- That is the largest foreign direct investment boom. But as the government has con- rican people have found creative solutions ever made in South Africa. And Britain’s ceded, GEAR did not create enough jobs, to many of their problems. That creativity Vodafone has recently made a substantial nor did it produce the hoped-for invest- is South Africa’s most impressive asset, investment in Vodacom, a South African ment, domestic or foreign, that might have and increasingly comes from the poorest mobile operator. generated more of them. So now the ANC and historically most disadvantaged of Yet for all the good economic news, the leadership is looking more over its left South Africa’s communities, who are now government is looking politically more shoulder, at the disgruntled activists who building their own ladders out of poverty. vulnerable than at any time since 1994, for feel let down by the government. a simple reason: little of this growth has Since the early 2000s, the scal stance The frustrating economy beneted its own core supporters, who are began to move into a more expansionary By rights, the government should be bask- overwhelmingly poor and black (a term phase, as Alan Hirsch, the head of the ing in the glow of an outstandingly suc- used in this survey to describe people of president’s economic policy unit, puts it. cessful economic performance over the black African descent only, whereas the That meant, in the rst instance, more past decade. Having inherited a pile of ANC applies it to all people of African, In- money for a programme of social grants, trouble from the disintegrating apartheid dian and mixed-race origin). The problem mainly for child support and pensions, government, the government has since is summed up by the unemployment rate, which go to about 10m people (out of a presided over an impressive 87 straight which even on the narrowest ocial de- population of 47m). But now Mr Mbeki is months of growth (currently running at nition stands at about 27%, a slight increase embarking on a more ambitious pro- about 5% a year), low budget decits and on a year earlier, despite the 5% GDP gramme to nd the jobs that have so far low ination. growth (see charts 1 and 2). The economy is eluded him: the Accelerated and Shared The Johannesburg Stock Exchange, rid- generating jobs, but not enough to keep Growth Initiative for South Africa (AS- ing the wave of the boom, pace with the number of new entrants into GISA). According to Joel Netshitenzhe, the has been making record gains. Consumer the labour market. government’s chief spokesman, this is demand has been buoyant, with the signs The government’s other big problem is very Keynesian, with a bit of Roosevelt’s of conspicuous consumption all around, rising inequality. There is a lot of talk . It will involve spending 370 from the gaudy new gated housing estates about a growing black , but billion rand over the next three years on to the increasing numbers of sleek Euro- the number of people living on the pov- public works, mainly infrastructure, to pean sports cars on the roads. House prices erty line may actually be rising. Thabo boost jobs and create more demand that rose by 21% in 2005 (a welcome slowdown Mbeki, the country’s president, has spo- will also be spread more evenly. Some sec- from 32% in 2004), and new-car sales in ken of the gaping divide between South tors, such as tourism, will be specially tar- January this year were 22% up on a year Africa’s rst economy and second econ- geted. The longer-term aims are to raise the earlier. For 2006 as a whole, the National omy, echoing Benjamin Disraeli’s analy- growth rate to 6% by 2010 and to halve un- Association of Automobile Manufacturers sis of early industrial Manchester. employment and poverty by 2014. of South Africa expects them to be even The ANC has always pledged itself to Alec Erwin, the minister of public en- higher than last year’s 617,500. work for the poor and the disadvantaged, terprises, argues that the country can well Buoyant domestic demand has re- so its grassroots supporters are particularly aord this, given its excellent economic re- cently been accompanied by the sort of unhappy. Their discontent surfaced in the cord and low budget decit; there will be1 local elections on March 1st, at which the ANC faced a genuine challenge for the rst The good news... 1 time in its brief democratic history. It did ...and the bad 2 South Africa’s: better than expected, but still saw its vote Unemployment rate Years ending September 30th, % 10 fall in some areas. Last year, in the absence consumer-price of any elections, there were about 880 ille- inflation, % 32 8 gal street protests, mostly about the lack of 31 basic services and housing. ANC 30 6 In the years after 1994, the had to 29 GDP, % increase reassure the international nancial com- on a year earlier 28 4 munity and the money markets that in- 27 vestments in South Africa were safe and 26 2 that the government was not going to na- tionalise everything in sight. Thus the new 25 0 leadership spent most of its time looking 2000 01 02 03 04 05 1994 96 98 2000 02 04 05 over its right shoulder, wondering how to Source: Statistics South Africa reassure capitalists and whiteswhich Source: Statistics South Africa The Economist April 8th 2006 A survey of South Africa 3

2 no new taxes or borrowing. The govern- that have already caused much trouble in cruit skilled workers that they cannot nd ment has also promised to continue with the new South Africa: a severe skills short- at home. There is a plan, the Joint Initiative its supply-side reforms, such as cutting red age and a failure to deliver services at the for Priority Skills Acquisition, to develop tape for small and medium-sized rms. local level. In 2002, a bank estimated that the skills base as ASGISA unfolds, but it So will ASGISA deliver the goods? Un- 300,000-500,000 vacancies remained un- will probably be too little, too late. doubtedly some jobs will be created, and lled because there were not enough The proposal to spend a lot of the there is even a neat deadline for getting skilled people to recruit. The proposed in- money at the municipal level is fraught things done: South Africa is due to host the frastructure projects will call for large with risks too. The provincial govern- football World Cup in 2010, and plans to numbers of the engineers, technicians and ments work quite well now, but the local build ve new stadiums and renovate an- other skilled professionals that South Af- ones less so. With more money owing other ve. But as likely as not, the project rica lacks. Already there are stories of state- through them, ineciency and will get caught up in the twin bottlenecks owned companies looking abroad to re- could simply become more entrenched. 7 From revolution to evolution

The ANC is becoming a more ordinary party

HE violence that marred the local elec- There is growing resentment of the way ample has been Mr Mbeki’s well-docu- Ttions in March, with burning tyres, the party imposes its politics from the cen- mented response to the HIV/AIDS crisis. tear-gas and improvised barricades, was tre, often by forcing candidates for munici- For a long time, Mr Mbeki stood out reminiscent of the apartheid-era images pal or provincial elections on its local against the combined weight of world from Soweto. This time, though, the de- branches. In last month’s local elections, medical opinion on the causes and treat- monstrators’ ire was directed not at racial hundreds of local ANC members prot- ment of AIDS, and particularly on the use segregation but at the more mundane mat- ested by standing as independent candi- of anti-retroviral drugs. ter of municipal boundaries. That these dates, and much of the rioting was about The main group campaigning for their protests got so badly out of hand says a lot the government’s redrawing of provincial use, the Treatment Action Campaign, was about the ANC’s diculties in turning it- boundaries with little or no consultation. made up almost entirely of ANC mem- self into a modern, democratic party. But the greatest weakness of the ANC’s bers, and Mr Mbeki seems to have resisted Almost a century old now, the party top-down system is that the party is in- their arguments as much because he felt has for most of its life been a revolutionary clined to dismiss ideas from outside its they were breaking party ranks as for their liberation movement ghting a quasi-fas- own bureaucracy. The most obvious ex- prescriptions on AIDS (with which he dis- cist regime in the midst of the cold war. agreed). In 2003, the government eventu- Many of its exiled leaders, including Mr ally caved in to domestic and international Mbeki, went to school or university in Brit- pressure and gracelessly introduced a com- ain or America, but also trained in the So- prehensive management regime involving viet Union to win their armed struggle. anti-retroviral drugs to combat HIV/AIDS. The ANC still has a top-down, authori- This may have signalled a change of tarian structure where loyalty to the politi- policy by the government, but not, it cal cause is prized above almost every- seems, much of a change of mind. In a thing else, including competence. There is country with 5.2m HIV-positive people on endless debate within the party, but once record, the largest number in the world, an internal consensus is reached, every- there is almost no public acknowledgment one has their orders. As one diplomat and of the problem or public education about long-time observer of the party says, Peo- it. Taking their cue from the top, ministers ple are deployed to do jobs that they are (with a few honourable exceptions) still not t to do, and the ‘consensus’ means a seem loth to talk about the illness, which loyalty to people who do not work, or who kills about 900 people a day and under- are not eectiveclientism hinders ratio- mines much else that the country is trying nal distribution of resources. to achieve. It handicaps the army, with an Professor Lawrence Schlemmer, an in- infection rate said to be up to 40%, breaks dependent consultant, argues that ANC up families and kills much-needed teach- people never learn the nuts and bolts of ers. Chillingly, the Actuarial Society of administration as they move from one job South Africa estimates that it will be an- to another: There are not enough people other ten years before the pandemic peaks. who worry about paperclips. This short- The tardiness with which the govern- coming is most obvious at the local level, ment responded to the HIV/AIDS crisis, to- where incompetence and ineectiveness gether with Mr Mbeki’s own strange take are widespread. Too much electoral passion on the underlying science, has tarnished1 4 A survey of South Africa The Economist April 8th 2006

2 his own reputation, as well as that of the However, in one vital sense the ANC is SATU and the SACP have been unhappy ANC. Critics argue that the government re- very much not an ordinary party: it faces for several years about what they see as mains ambivalent about its commitment no serious competition. The nearest thing the government’s unduly neoliberal econ- to ghting the pandemic with anti-retrovi- to a formal opposition is the Democratic omic policies. Given the rising levels of ral drugs. The government’s plan to com- Alliance, largely an amalgam of old white discontent amongst the ANC’s largely bat HIV/AIDS may be a model of its kind in parties, led by the very combative (and poor and black voters, there has been talk intent, but it is already falling behind. By white) Tony Leon. It got 12% of the vote in about a new block emerging on its left. But the end of this year about 225,000 patients the 2004 elections, against the ANC’s 70%. ultimately COSATU and the rest know will be receiving anti-retroviral drugs, well But only 3% of its voters are black, so in an that short of setting up a whole new politi- short of the plan’s target of 380,000 by overwhelmingly black country it has a cal organisation with money they do not 2005-06. very long way to go. have, the ANC is their only option. Mr Mbeki’s unorthodox views on the It remains true, then, that the real de- Discontent on the left might have come causes and cures of HIV/AIDS undoubt- bates about the future of South Africa take to a head last year with the sacking of Ja- edly have something to do with his agenda place within the governing alliance of the cob Zuma, Mr Mbeki’s deputy, after allega- of nding African solutions (rather than ANC and its partners in the Congress of tions of corruption. He is everything that expensive Western ones) to Africa’s pro- South African Trade Unions (COSATU) Mr Mbeki is not: charismatic, populist and blems, of which more later. But the AIDS and the once-mighty South African Com- at ease with ordinary ANC supporters. For saga, together with the ANC’s unrespon- munist Party (SACP), rather than between a moment, it looked as if he might become siveness to its own supporters and its fail- the ANC and other political parties. CO- a rallying point for opposition to the lead- ure to deliver on its promises, has dimin- ership. But the discipline honed over de- ished the aura of moral authority the party cades quickly reasserted itself. had earned during the long struggle It’s that bad 3 So, halfway through his second (and, against apartheid. South Africa’s HIV-prevalence rate constitutionally, last) term of oce, Mr William Gumede, a political analyst, % of population infected Mbeki, the technocrats’ technocrat, is still ANC ANC says that the moral basis of the is in 12 in tight control. But the ’s style and decline, and that it is well on the way to be- structure risk becoming anachronistic in ing judged as just an ordinary party. He 11 the new South Africa, where society is also points to growing signs of petty cor- 10 evolving in a more plural, liberal and ruption, such as MPs ddling their ex- FORECAST democratic direction. Next year the party penses. Indeed, some argue that the local 9 is due to pick a leader to contest the presi- elections on March 1st were a watershed 8 dential election due in 2009. It needs for the party because they were the rst someone who can, as one ANC insider elections since 1994 that it actually had to 7 puts it, mobilise its supporters again. work at winning. It could no longer just With Mr Zuma now probably out of the 2000 02 04 06 08 10 13 crush opposition by the sheer weight of its running, the eld of possible successors is past success. Source: Actuarial Society of South Africa unusually wide open. 7 Africa’s hegemon

Thabo Mbeki’s many foreign-policy successes, and his one big failure

N FOREIGN policy, Mr Mbeki has man- cans has been the ceaseless ow of world essential African nationalist. This is his Iaged to develop a vision of post-colonial sporting events that their country has main intellectual and emotional inheri- Africa with an energy and eectiveness hosted since 1994, including rugby and tance from the liberation struggle, and has that has often eluded him at home. His ad- cricket world cups, with the football equiv- driven his desire to emancipate his own mirers like to call him a foreign-policy pres- alent to come in 2010. country, and hence Africa as a whole, from ident; his political opponents jibe that he A lot of this re-engagement was inev- racial oppression and colonialism. His spends more time abroad than he does in itable, given that South Africa remained, principal aim has thus been to establish South Africa. even through the worst of the apartheid the new South Africa as, rst and foremost, The transformation in the country’s years, Africa’s leading economy. But Mr a black African countryrather than, as Pe- relationship with the rest of the world Mbeki has added his own distinctive twist ter Kagwanja of the International Crisis since 1990 has been remarkable. South Af- to this natural resurgence with a foreign Group puts it, a white, exceptional coun- rica has moved from being an interna- policy based on African solutions to Afri- try. Mr Mbeki’s other ambition has been tional pariah under apartheid, boycotted can problems. It is likely to prove his most to persuade Africa to set up its own institu- and cut o, to become one of the most en- important legacy. tions and mechanisms for solving its pro- gaged, open and connected countries in Adam Habib, a professor of politics at blems, thus ending the constant, humiliat- the world. The most obvious and pleasur- the Human Sciences Research Council in ing requests for aid to the West’s former able sign of this for sports-mad South Afri- Pretoria, describes Mr Mbeki as the quint- colonial powers. 1 The Economist April 8th 2006 A survey of South Africa 5

lomatic engagement beyond its borders. Companies such as MTN and Vodacom, two mobile-phone operators, Protea, a ho- tel chain, and Standard and Absa, two banks, have all successfully expanded into other African countries recently. MTN’s chief executive, Phuthuma Nhleko, says the South African government is seen as a constructive force for good on the conti- nent, and that has helped South African business a great deal. But for all the work that it does in its continent, South Africa is almost paranoi- cally careful not to throw its economic and diplomatic weight around or to act out of Mbeki says nothing, Mugabe hears nothing step with its African partners. It is often jokingly tagged as the America of Africa 2 Mr Mbeki has led South African inter- by a UN force. So far, only four countries by other Africans, and takes the dig seri- ventions all over the continent to prove his have submitted themselves to the Nepad ously. It knows that there is a lot of resent- country’s African-ness and show its com- peer-review procedure, and none of the ment of its size, its relative success and, mitment to the continent’s problems. In country reports has been made public. still, its whiteness. Burundi, Mr Mbeki’s government fol- But there have been successes too. The Moreover, other countries, such as Ni- lowed up on Mr Mandela’s earlier work to AU acted quickly in Togo last year to re- geria, Kenya, and Ethiopia, like to get all the parties to the negotiating table to verse a coup; and in January this year think that they have claims to leadership end a civil war. In the Democratic Republic South Africa led successful diplomatic ef- too. South Africa has been cautious about of Congo, one of the continent’s most war- forts to stop Sudan getting the chairman- pushing for an African seat (or two) on the ravaged states, South Africa has been ship of the AU, in protest against the Suda- UN’s Security Council, despite its obvious heavily engaged in the complex negotia- nese government’s policies in Darfur. The qualications. In the eyes of the rest of the tions that produced a successful referen- African Commission on Human and Peo- world, a South Africa personied by Mr dum on a new constitution last year. South ples’ Rights, meanwhile, has issued a re- Mandela may have a claim to moral lead- Africa has also played a part in ending con- port saying that the Zimbabwean govern- ership. But within Africa, South Africa was icts in Sudan and . Mr Mbeki was ment should be investigated for gross the last former colony to claim its , less successful in his personal eorts to me- human-rights abuses. and knows its place in the continental diate in Côte d’Ivoire, but that is probably But South Africa is not just being altru- pecking order. the continent’s most intractable conict istic: its involvement in the rest of the con- now. South Africa has also sent thousands tinent is closely bound up with its own Inaudible diplomacy of troops as peacekeepers and observers to economic prospects. As Aziz Pahad, the All these sensitivities collide with each these countries once the ghting was over. country’s deputy foreign minister, argues, other on the subject of . Here, However, Mr Mbeki has been at his We cannot sustain our economic growth Mr Mbeki’s Africanist credentials trump most creative in trying to set up permanent if Africa continues in poverty, so it is in our his Nepad ambitions that African coun- institutions to serve Africa. The New Part- own self-interest. You can’t have develop- tries should help each other uphold stan- nership for Africa’s Development (Nepad) ment without conict resolution. dards of good governance, human rights was very much his own idea, launched in It is no coincidence that South African and democracy, none of which Robert 2001. Headquartered in South Africa, Ne- investment in other African countries has Mugabe, Zimbabwe’s president, seems to pad is designed to make African countries boomed in the past few years, reecting care much about. For blacks throughout themselves responsible for upholding the country’s deepening political and dip- Africa Mr Mugabe remains a revered icon standards of democracy and good gover- of the liberation struggle, the man who ANC nance through the African Peer Review 500 km ZIMBABWE helped to fund the in exile, and South Mechanism. Mr Mbeki also played an im- MOZAM- Africa will not break with the general Afri- portant part in turning the old, useless BOTSWANA BIQUE can consensus on this. Organisation of African Unity into the LIMPOPO MPUMALANGA Behind the scenes, there is Mr Mbeki’s new (AU), under whose GAUTENG quiet diplomacy, a campaign to per- Pretoria auspices South Africa now hosts the new Maputo suade the opposing sides in Zimbabwe to NAMIBIA NORTH-WEST Johannesburg Pan-African Parliament; and he is also in- Soweto accept the sort of compromises and recon- EE volved in the new African Commission on FR ciliations that worked in South Africa. But GE N TE KWAZULU/ A TA Human and Peoples’ Rights. R S NATAL SWAZILAND so far, Mr Mugabe has shown no signs of NORTHERN CAPE O Africa-pessimists are quick to belittle Durban listening. Indeed, it looks as if South Africa SOUTH EASTERN CAPE all this pan-African institution-building, E has already exhausted the means of quiet AFRICA AP C LESOTHO and it is easy to point to the failures. The RN diplomacy, yet Mr Mbeki proudly refuses EASTE AU’s only military force to be deployed Cape WESTERN to say anything louder. By any standard, Town CAPE has been so ineectual in the Darfur re- INDIAN OCEAN Zimbabwe has been Mr Mbeki’s biggest gion of Sudan that it might yet be replaced foreign-policy failure. 7 6 A survey of South Africa The Economist April 8th 2006 Righting the wrongs of apartheid

But armative action has its limitations

S PART of the historic deal struck in away the best people, thus exacerbating A1994 to ease the way for democracy, Colour code 4 the skills crisis in government. At the same South Africa’s whites ceded political South Africa’s population by race time white skilled workers have been emi- power to the ANC. In turn, the ANC ac- 2005, m(% of total) grating because positive discrimination in cepted that (mainly white-run) Black White favour of blacks prevents them from get- would continue. But the new government 37.2(79.3) 4.4(9.3) ting jobs at home. In a U-turn, the govern- also vowed to take action to redress the in- Asian ment is now calling some of them back. justices and inequalities that had de- 1.2(2.5) Current policies also discourage well- veloped over 40-odd years of apartheid, Total: qualied blacks from becoming entrepre- not to mention centuries of colonial rule. 46.9m Coloured neurs. Why take the risk of starting up their 4.1(8.8) The Truth and Reconciliation Commis- own business when they can name their sion was part of that eort. Trading am- salary to join a company desperate to meet nesty for truth, people from both sides of Source: Statistics South Africa the BEE criteria? The big hole in the South the struggle came forward to give testi- African economy is its relative lack of mony about the brutality of the apartheid The big question is whether all this small and medium-sized enterprises. Cur- regime. The work of that commission is meddling will have the desired eect: to rently they create only 30% of new jobs. now nished, and attention has shifted to create a black middle class that reects the One business consultant estimates that of the two other pillars of redress, black econ- share of blacks in the population as a the serious new business start-ups in omic empowerment (BEE) and land re- whole, around 80%. This would be proof 2003-04, only 10% were black. But a better form. Both cause fear and alarm among that the rewards of the rst economy are way to spread black empowerment would foreign investors. being fairly spread around. But so far it has be to make life easier for start-ups and In fact, as originally conceived, both not happened. The government is justify- small businesses. policies are more benign than their detrac- ing its ever more complicated interven- Land reform is an even more emotional tors make out. Formulated in the spirit of tions in the economy by the need to hurry and sensitive issue than BEE, partly be- compromise and pragmatism that has the process along. Many in the ANC argue cause apartheid was founded on denying characterised the best of the ANC since that by leaving things largely to the market, blacks access to their own historic lands in 1994, they involve hardly any direct gov- all that has been achieved is the creation of 1913, and partly because of Robert Mu- ernment coercion. Supporters such as Les- a small elite of rich, politically well-con- gabe’s conscatory land policies next door lie Maasdorp, an ANC activist, nancier nected black businessmen, whereas the in Zimbabwe. Yet, paradoxically, it is less and former adviser to , ar- rest have missed out. important. Like BEE, the land-reform pro- gues that BEE is aimed at nothing more gramme has been conceived in a thor- scary than the normalisation of South Af- That elusive black middle class oughly pragmatic way. But as with BEE, the rica by de-racialising the capitalist class. The evidence on this is contradictory. De- process has been slow, too slow for many All the same, there are concerns that the pending on how it is measured, and by activists. According to Jerey McCarthy, a government’s quest for historical redress is whom, estimates of the proportion of land expert for CDE, a think-tank, govern- becoming ever more intrusive. The most blacks in the middle class range from 22% ment has the right policies, but they are onerous innovation has been the Broad- to 40%. Whatever it is, it has probably dou- not being executed with sucient vigour Based Black Economic Empowerment Act bled since 2000. Certainly, impressive or renement. The government has prob- of 2004. This imposes a host of obligations growth in the housing and car markets ably not set aside enough money for its on companies that want to do business seems to be fuelled by an increasingly af- land bank, which helps black would-be with government. This goes far beyond the uent black middle class, especially in cit- farmers to buy land from whites. But then previous rules about equity ownership, ies such as Pretoria and Johannesburg. land is not as big an issue in South Africa as under which companies had to transfer a But Neva Makgetla, a policy adviser for it is in Zimbabwe, where farming still dom- proportion of their shares (normally COSATU, points to something that ex- inates the economy. In South Africa agri- about a quarter) to black ownership. Now, plains a lot of the unease about the growth culture now accounts for only 3% of GDP, to be BEE-compliant, companies have to of the black middle class. Most of that and the pressure on land is all in the cities. meet seven dierent criteria, which in- growth has come from rising numbers of Land redistribution can work well, clude having a designated share of blacks blacks in public-sector jobs, where they sometimes with the former white owners in upper and middle management, paying have been politically more able to get helping to manage the farm. But as with for skills development and buying a pro- jobs. By contrast, the proportion of blacks BEE, there is pressure from within the ANC portion of their materials or expertise in senior jobs in the private sector or the to speed things up. There were worries from other BEE companies. professions has moved up only slightly when the government said it would re-ex- But being a BEE-compliant company since 1995, to about 25%. The government amine the current mechanism for redistri- has become a legal mineeld. A growing has concluded that the private sector is not bution, based on agreement between a army of lawyers, consultants and accoun- doing its bit, hence the more rigorous ar- willing seller and a willing buyer, which tants now specialise in BEE equity deals, mative action in the 2004 BEE legislation. raised comparisons with Zimbabwe. But adding considerably to the cost of doing Yet already the BEE project is causing a all the government has to do is to put more business. Reg Rumney, director of the Busi- host of new problems. To meet their em- money into its existing schemes to meet nessMap Foundation, a business-research ployment equity targets, companies are the limited demand. As Mr McCarthy says, organisation, argues that in eect, the gov- now raiding the only place where they can the government is unequivocally uphold- ernment has created a whole new indus- nd trained black managers: the public ing property rights, and most people ex- try of racial auditing. sector. They are paying top money to lure pect it to go on doing so. 7 The Economist April 8th 2006 A survey of South Africa 7 Ladders out of poverty

No education, no future

AMA, Brian, Comfort and Gloria are all 2002, the latest year for which gures are Z13 or 14 years of age, as young as their available, only 4,637 of the 19,765 students country’s new democracy, and have ambi- who got higher-grade passes in maths in tions to match those of the new South Af- the matric exam were black. Another rica. They all want to go to university; then study showed that of those who gained Comfort wants to be a doctor, Zama an ac- matric passes good enough to get them tress, Gloria a teacher and Brian a lawyer. into university in 2003, only 5% were Children the world over dream about black, compared with 7% coloured, 41% In- those sorts of jobs, so there is nothing un- dian and 36% whitea breakdown barely usual about that. But if those four and their changed from ten years earlier. peers do go on to realise them, they will In short, even though the government have achieved something remarkable: it now spends about 20% of the national will be the rst time that anyone in their budget on education, the old government families will have risen out of the degrada- schools attended by the vast majority of tion and poverty imposed by apartheid. black students are still letting them down. These young blacks come from the bot- To give them a better chance, many poor tom of the pile, from Johannesburg’s parents will go to great lengths to get their townships and shantytowns. Their fa- children into schools like Sekolo Sa Bo- thers, if they are around, are waiters and rokgo, even though it means paying fees. taxi drivers, but many of the children Sekolo Sa Borokgo is an independent come from single-parent homes, and that school, founded in 1993. Its fees are mod- single parent is often unemployed. Zama’s est, about 6,900 rand a year, but that is still mother moved from the North-West Prov- a lot for someone from Soweto. The school ince to Johannesburg last year in search of is not-for-prot and receives a government domestic work, and the only place they subsidy of about 500,000 rand a year (all could nd to live was a squatter camp ap- schools that are teaching disadvantaged propriately called Diepsloot, or deep Seat of learning children can get government support). The hole. They are lucky to have a one-bed- private sector also makes a contribution. room government-built house rather than erty and the second economy. Mixed funding of this sort is increas- a shack. Zama describes her area as very Mr Mbeki refers to the present time as ingly the model for the independent sector dangerous, with lots of criminals. When South Africa’s age of hope. The students in South Africa. It is thriving, reecting you are sleeping, you can hear gunshots. at Sekolo Sa Borokgo give ample cause for strong demand for better schools than the Nonetheless, these children have good hope, but sadly their experience is the ex- state can provide. The number of indepen- reason to aim high, for they all go to an ex- ception rather than the rule. By and large, dent schools has grown from 517 in 1994 to traordinary school called Sekolo Sa Bo- South Africa’s education system delivers about 2,000 today, accounting for about rokgo, in the northern suburbs of Johan- less than it should, often by an alarmingly 4% of students. Jane Hofmeyr, the head of nesburg. In a few bare classrooms grouped large margin. The resulting skills crisis is the Independent Schools Association of around a tiny courtyard, the 25 teachers in- the single most important thing holding South Africa, points out that the majority spire their almost exclusively black learn- back the country’s development. of these schools charge fees at the lower ers to remarkable academic progress. Last Nearly all South African children now end of the scale, below 6,000 rand a year, year the school achieved a 100% pass rate attend primary school, which for a de- because many of them were set up by local in the matric examination usually taken veloping country is good going. The qual- black communities to cater for their own by 18-year-olds, and nearly two-thirds of ity of the education is another matter. children. The proportion of blacks in the them went on to university. The headmas- South Africa compares badly even with independent sector has risen from 36% in ter, David Roussouw, proudly recalls his other African countries. In an interna- 1990 to almost 60% today. This sector is top performer, a girl who lived in a one- tional study in 2003 of young teenagers’ now the most racially integrated part of bedroom house in Soweto with her prociency in maths and science, South the country’s school system. mother, who has gone on to the University Africa came last of 50 countries. Parents are increasingly becoming edu- of Witwatersrand to study medicine. The The most important statistic, however, cational entrepreneurs, creating their own school provides a real ladder out of pov- concerns the colour of the students. In avenues of economic and social mobility. They realise that education is vitally im- portant and are ready to make large sacri- Too monochrome 5 ces to ensure that their children get the Highest level of education by race among 20+ year-old South Africans, 2003, % best on oer. But those who benet still No Some/ Some Completed secondary make up only a small minority of the age Race schooling completed primary secondary (“matric”) Higher group. How can the rest of the school sys- Black 22.3 25.4 30.4 16.8 5.2 tem be improved? Coloured 8.3 28.2 40.1 18.5 4.9 The formerly white state schools still do Asian 5.3 11.9 33.0 34.9 14.9 comparatively well. They have a degree of White 1.4 2.0 25.9 40.9 29.8 autonomy, charge some fees and get de- cent results. But between 59% and 77% of Source: Statistics South Africa the children who attend them are still1 8 A survey of South Africa The Economist April 8th 2006

2 white, so the best-performing state schools sent or wholly unqualied teachers relatively free to tailor their oerings to suit are hardly wide open to blacks. abound. Indeed, the proportion of un- their particular students. Every state The majority of the black state schools qualied teachers in the system, especially school can charge fees; at the same time, still perform badly, despite lots of govern- in maths and science, is higher today than the government willingly subsidises the ment spending on everything from class- it was in 1975. The government has tried to best in the independent sector for the over- rooms to textbooks. The hardest part is to recruit and retain better teachers by oer- all good of the country. Private business improve the quality of the teachers, which ing incentives such as performance bo- also gets involved in funding initiatives every expert agrees makes the crucial dif- nuses. But, as in richer countries, these re- across the board. If South Africa can apply ference. The learning outcomes will only forms have been contested or undermined the same mix of private initiative and state be as good as the qualications of the by the teaching unions. resources to training a new generation of teachers, says Linda Chisholm, an educa- Still, South Africa has one big advan- qualied teachers, there is no reason why tion expert at the Human Sciences Re- tage over many rich countries: its school the country cannot produce many more search Council. Yet stories of drunk, ab- system is very exible, and its schools are Zamas, Brians, Comforts and Glorias. 7

The view from the shacks Miserable but not quite hopeless

GOOD place to view South Africa’s clashes between residents and police. working hard to move from the second Aeconomic development from an- In Foreman Road, people feel betrayed economy to the rst economy, as Mr other angle is the Foreman Road shanty- by the ANC and ignored by the local lead- Mbeki wants. The shacks may be putrid town in the middle of Durban. Here, ers. They say they were promised proper and dangerous, but they are also much in perhaps a thousand makeshift shacks, low-cost housing ve years ago, but noth- demand. When one becomes vacant, a thrown together with whatever came to ing has happened, so last year they organ- family will scrape together up to 500 rand handpieces of wood, corrugated iron, ised themselves into a Shack-Dwellers to buy it and get the chance of a job and bits of cardboardcling precariously to Movement. Their leader, S’bu Zikode, perhaps even a decent education. the muddy side of a steep hill. They are says that they have been waiting pa- Eighteen-year-old Philani, for in- home to 7,000 people. tiently, but our leaders have betrayed us. stance, has lived in Foreman Road for The number of people living in Our children will die from res and dis- seven years and has gained his matric shantytowns has grown hugely in the ease. We are living like wild animals. exam. He is applying for jobs in sales and past few years. In a relatively prosperous The ANC has accused the shack-dwell- marketing. Philani and his peers are just city such as Durban, the largest city in ers of being politically motivated. Yet the sort of entrepreneurial people the KwaZulu-Natal, shacks are now crammed they have endured their dreadful living ANC needs to encourage. Instead, they onto almost every bit of vacant land. Un- conditions precisely because they are all feel that they are being turned away. like townships such as Soweto, which were designated areas for blacks to live in under apartheid, the shantytowns are spontaneous settlements set up by peo- ple eeing the poverty and lack of oppor- tunity in rural South Africa. With the decline of the old industries such as min- ing and agriculture, the shack-dwellers come to the big cities in search of jobs. The rapid, unplanned inux into the shantytowns has caused living condi- tions to deteriorate. In Foreman Road, res- idents say there are just ve toilets between 7,000 of them, and only four water standpipes provided by the local council. There is no electricity, so the main hazard in Foreman Road is re, caused by accidents with paran lamps. Residents suer a lot of health problems, mainly stomach and respiratory ail- ments. Last year the accumulated griev- ances of the shack-dwellers erupted into protests throughout the country, with The price of jobs and education The Economist April 8th 2006 A survey of South Africa 9

All together now

Public-private partnerships have worked wonders in ghting crime

VERY day, high up in the Carlton build- pede, was torn down and destroyed by the tistics look encouraging. The overall mur- Eing, a prestigious 50-storey tower block rampaging gangs. der rate for the country is down by over in the middle of Johannesburg’s Central But around 2003 the tide started to turn. 40% from its peak in the mid-1990s, and Business District (CBD), dozens of men Alfonso Botha was one of an intrepid few the rate in Soweto by as much as 60%. Viol- and women sit hunched over banks of TV property developers who decided to move ent crime in general has fallen by 8% in the screens, monitoring images coming in back into the CBD. He founded a company two years to 2004-05 (see chart 6) and from 200 surveillance cameras covering called Urban Ocean, bought up the empty, property crimes by 11%. The number of car the CBD’s entire 30 square kilometres. This boarded-up buildings cheaply, spruced thefts in 2004-05 was the lowest on record. is the control room of Cueincident, the them up and started converting them into But there are still areas of concern. brainchild of a consortium called Business ats, loft apartments and oces. He reck- Cash-in-transit robberies are on the in- Against Crime (BAC). It was set up to co-or- oned that once the CBD was safe again, crease, and there are still huge numbers of dinate the Johannesburg business com- young professionals would ock back to rearms in circulation, a legacy of South munity’s response to the 1990s crime live there to avoid long commutes. His Africa’s apartheid-era wars with its neigh- wave that central government seemed gamble has paid o. Like others who in- bours. The number of licensed rearms in powerless to stop, and now has revenues vested early, he is now a rich man. 2004 was almost 4m, with probably a fur- of about 40m rand a year. The model that BAC has pioneered in ther 500,000-1m unlicensed weapons on In the late 1990s, Johannesburg’s CBD Johannesburgmaking use of private-sec- top. According to a report by the Human deserved its moniker as crime capital of know-how to combat crime with a Sciences Research Council, rearms held the world. Indeed, when Cueincident’s mixture of public and private moneyis by civilians outnumber those held by the people moved into the Carlton in 2000, now being applied to all parts of the crimi- state security agencies by a factor of six. they found the building empty. All the nal-justice system. One bottleneck has al- other tenants had ed to the suburbs, pur- ways been the slow processing of criminal 400,000 guardian angels sued by the muggers, carjackers and as- cases. BAC spent 31m rand over several At national level too, the private sector has sorted petty criminals who had made life years on getting outside experts to analyse energetically moved into crime prevention in the centre of the country’s business cap- the ow of cases, from the initial reporting to ll the void left by the state in the 1990s. ital unendurable. of an incident in a police station to the ar- Ocial gures show that 265,000 people But the past few years have seen a re- rival (or not) of the case in court. On the ba- are now working in the guarding busi- markable turnaround. BAC was invited to sis of this research, the government spent ness, almost twice as many as in the regu- set up its cameras in the CBD after a similar about 2 billion rand on reforming the lar police force. Including people in related scheme had worked well in Cape Town, whole system. Perhaps partly as a result, occupations, such as private investigators and Cueincident’s Neville Huxham says conviction ratesa dismal 8% in 2000are and in-house security guards, the total that within 18 months of the arrival of the beginning to creep up. may be as much as 400,000. closed-circuit TV cameras, street crime had The turnaround in Johannesburg may With that sort of investment, it would dropped by 80%. Bank robberies, once also have helped to bring down crime in be astonishing if crime had not come common in the CBD, have become rare. South Africa as a whole. Government sta- down in the past few years. Yet Antony Alt- And whereas only a couple of years ago beker, a researcher on crime and justice at people avoided using their mobile phones the Institute for Security Studies, argues in the streets to avoid attracting muggers, Calming down 6 that government has played a part in the they now talk into them with gusto. Recorded serious crime in South Africa improvement as well. In the mid-1990s the The most obvious result of the dra- Years ending March 31st, ’000 incidents state police force suddenly had to trans- matic reduction in crime in Johannesburg Property crime Violent crime form itself from an instrument of political has been the swift regeneration of the city 1,200 repression into a crime-ghting force. centre. Beginning with the Johannesburg Many (mainly white) ocers left and num- Stock Exchange, by the end of the 1990s 1,000 bers dropped, but with better pay they much of the business community had have since risen again, to about 150,000. 800 moved out of the CBD to the suburb of The government has also provided Sandton, a few miles to the north. The CBD 600 some 10m people with pensions and child ended up with whole blocks of support. Mr Altbeker, pointing to research boarded-up buildings, rubbish piling up 400 showing that about half of all crimes take and few people in the streets. The big min- 200 place between people who know each ing houses stuck it out, but at considerable other, thinks that these grants may have cost. Even the landmark giant bronze 0 moderated some of the petty squabbling statue that used to adorn the entrance to 1995 97 99 2001 03 05 and inter-personal violence within fam- Anglo American’s oces, Impala Stam- Source: South African Police Service ilies, including murders. 7 10 A survey of South Africa The Economist April 8th 2006 Keep chasing

If South Africa pursues its rainbow vigorously enough, it may nd a pot of gold

MPALA STAMPEDE, the huge statue out- Iside the Johannesburg oces of Anglo American that fell victim to the gangs, is back now, looking as good as new. Anglo American tracked down the son of the original sculptor and commissioned him to produce a faithful replica. South Africa has come back, toonot only from the trauma of apartheid, but from the dicult years after 1994 when many of the institu- tions and services of the previous regime had to be reinvented, with all the uncer- tainty, disruption and job losses that en- tailed. The timing did not help: just as South Africa emerged from the deep freeze of the apartheid years, it was met by the gale of globalisation blowing through the world economy in the 1990s. The political change hurt the old economy of labour- intensive mining and agriculture, heavily protected under the apartheid regime, and hundreds of thousands of poor blacks lost It’s on the horizon their jobs just as majority rule began. Against this background, it would have growth of a black middle class and the And as in the rest of Africa, the great leaps been natural for the ANC to want to carry more equitable distribution of has in communications have been made by out its early Marxist promises to national- been largely conned to the public sector. the private mobile-telephone companies, ise everything and return to a state of econ- Empowerment has done little to stimu- not by Telkom, the largely state-owned omic autarky, turning its back on the late the private sector. One way of improv- xed-line operator. world. To its credit, it has not done so, but ing matters would be to relax the current With many of its leading politicians has largely stuck to free-market policies. As tight limits on immigration (imposed to discredited, the continent needs a strong this survey has shown, the government protect black job-seekers) and welcome in South Africa. But it also needs a South Af- has been refreshingly pragmatic and un- people with the skills to create good jobs rica that is prepared to go beyond its ideological, experimenting with, or allow- for the blacks to take up. strictly Africanist agenda, and to deliver on ing, a mix of solutions in dierent sectors The whole economy would also bene- its commitments to good governance, hu- of the economy. t from allowing private rms into sectors man rights and democracy enshrined in such as telecoms, power and transport, the new vision of the African Union and Things left to do currently each dominated by a single pro- Nepad. These are very much South Af- If only the ANC leadership could be as vider. The fastest-growing port in southern rica’s creations. It is time for Africa’s lead- exible and liberal when it comes to poli- Africa is not Durban but Maputo, in neigh- ing democracy to cast o its humility and tics. Over the past few years it has concen- bouring Mozambique, which prospers didenceand perhaps even to throw its trated more and more power in Pretoria, at mainly on the back of South African trade. weight around for these causes. 7 the expense of the municipalities and the provinces, at the same time as increasing the control it exerts over the lower ranks of Oer to readers Future surveys Reprints of this survey are available at a price of the party. This has begun to produce a £2.50 plus postage and packing. Countries and regions backlash among its own supporters, some A minimum order of ve copies is required. Poland May 13th of whom now feel alienated from the Pakistan July 8th party, and from politics in general. Corporate oer Business, nance and and ideas The party’s intolerance of the views of Customisation options on corporate orders of 500 New media April 22nd some of its supporters is matched by its or more are available. Please contact us to discuss International banking May 20th general intolerance of ideas from outside your requirements. Business in June 3rd Logistics June 17th its own ranks, for example from the Treat- Send all orders to: ment Action Campaign over AIDS/HIV. The environment July 15th ANC The Rights and Syndication Department The ’s next leader, who will take it 26 Red Lion Square into the presidential campaign of 2009, WC1r 4HQ will need to deal with these issues if the Tel +44 (0)20 7576 8000 party is to retain the support of a society Fax +44 (0)20 7576 8492 that now expects high levels of account- e-mail: [email protected] ability, openness and transparency. Previous surveys and a list of forthcoming In the longer term, more openness and surveys can be found online loosening of control may also lead to a true www.economist.com/surveys de-racialising of South Africa. For now, the