The price of freedom A special report on South Africa June 5th 2010

SouthAfrica.indd 1 25/05/2010 12:06 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

The great scourges Since embracing full democracy 16 years ago, South Africa has made A black middle class is emerging, but poverty huge strides. But, says Diana Geddes, not everything has changed for and crime blight millions of lives. Page 9 the better PORT matters in South Africa. In his thinking that they were still in the rich Last in class Snew year’s address to the nation, Presi• world. Much of the infrastructure is as Education needs to take a giant leap. Page 11 dent Jacob Zuma described 2010 as Œthe good as you will †nd anywhere‹particu• most important year in our country since larly those parts that have been given 1994. To outsiders, playing host to this multi•million•dollar facelifts in prepara• Don’t get ill year’s football World Cup seemed perhaps tion for the tournament. Ten spectacular Or if you do, go private. Page 12 a less momentous event than holding the stadiums have been newly built or upgrad• country’s †rst fully democratic elections ed at a cost of 15 billion rand (see box, left, that established a black•majority govern• for currency conversions). Visitors arriving Still everything to play for ment 16 years ago‹especially when the na• at O.R. Tambo, the main international air• The case for optimism‹and the many tional team, Bafana Bafana, may be port, will be whisked into Johannesburg caveats. Page 13 knocked out in the †rst round. But with the by the Gautrain, Africa’s †rst high•speed kick•o on June 11th, just days after the rail link (pictured above). And many of the country’s 100th birthday on May 31st, the country’s hotels and restaurants are world• world’s eyes will be on Africa’s leading class, including Bushmans Kloof hotel, Exchange rates economy for the next few weeks. three hours’ drive from Cape Town, recent• May 25th 2010 Can the Œmiracle nation, which won ly voted the world’s best by Travel + Leisure $ £ ¤ plaudits around the world for its peaceful website, and Cape Town’s La Colombe, 10 rand = 1.25 0.88 1.03 transition to democracy after centuries of ranked 12th in this year’s S.Pellegrino list of white•supremacist rule, conquer the bitter the best restaurants. divisions of its past to turn itself into the Acknowledgments Œrainbow nation of Nelson Mandela’s Not as rich as it looks In addition to those mentioned in the text, the author dreams? Or will it become ever more But in reality South Africa is no more than would like to give special thanks to: Antony Altbeker, Kader Asmal, Ed Cameron, Frans Cronje, Adrian Gore, Paul mired in bad governance, racial tension, a middle•income developing country with Graham, William Gumede, Adam Habib, Alan Hirsch, Adele poverty, corruption, violence and decay to a GDP per person of around $10,000 (at Kirsten, Russel Loubser, Leon Louw, Justice Malala, Temba turn into yet another African failed state? purchasing•power parity), a quarter of the Masilela, Sue Möller, Johannes Ndebele, Temba Nolutshungu, Cheryl de la Rey, Michael Spicer, Dave With Zimbabwe, its neighbour to the American †gure. On a per•head basis, it is Steward, Gaba Tabane, Athol Trollip, Linky Tsotetsi and north, an ever•present reminder of what the seventh•richest country in Africa by David Welsh. can happen after just a couple of decades some measures. The average hides huge of post•liberation single•party rule, many disparities. Under apartheid, whites were A list of sources is at South Africans, black and white, worry encouraged to believe they were part of Economist.com/specialreports that their country may be reaching a tip• the Western world. It was only when they ping point. had to start sharing their streets, goods and An audio interview with the author is at Western fans arriving in South Africa services with their darker•skinned compa• Economist.com/audiovideo/specialreports for the World Cup could be forgiven for triots 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 the †rst country to perform a heart trans• about falling standards. Yet most whites plant, and some of its doctors are still have done rather well since apartheid end• among the best anywhere; yet its people’s ed‹better, in fact, than most blacks. They health record is among the world’s worst. still enjoy a good life, helped by cheap do• And, leaving aside war zones, it is one of mestic help and †rst•class private medical the most violent and crime•ridden coun• care and schools. tries on the planet. This special report will For the majority of South Africa’s look at South Africa the way that most of blacks, however, the living is not so easy. its people see it. The results are often harsh. Although many of the poorest now get some kind of government support, it is The bright side only a pittance. Most blacks still live in Yet there are some encouraging signs that shoddy shacks or bungalows without the contrasts are getting less stark. South proper sanitation in poor crime•ridden Africa has recently cut its murder rate in townships outside the main cities. Their half; virtually eradicated severe malnutri• schools and hospitals are often in a dire tion among the under•†ves; increased the state. And, in a country where there is little enrolment in schools of children aged sev• public transport, most blacks do not own a en to 15 to nearly 100%; provided welfare car. Although it has the world’s 24th•big• bene†ts for 15m people; and set up the gest economy, South Africa ranks a dismal world’s biggest antiretroviral treatment 129th out of 182 on the UN’s Human Devel• in the world index, where 1 is completely programme for HIV/AIDs. opment Index (and 12th in Africa). free and 7 totally unfree. What about race? South Africa remains The country’s constitution, adopted in South Africa is a land of contrasts. It has obsessed by it. That is hardly surprising 1996, is one of the most progressive in the fabulous mineral wealth, with 90% of the after 350 years of racial polarisation, in• world. It enshrines a wide range of social world’s known platinum reserves, 80% of cluding nearly half a century of apartheid, and economic rights as well as the more its manganese, 70% of its chrome and 40% when inter•racial sex was a criminal of• usual civil and political freedoms. Discrim• of its gold, as well as rich coal deposits; yet fence and non•whites were even banned ination is banned not only on the grounds 43% of its population live on less than $2 a from using the pavements. The subject of race, gender, age and belief, but also of day. It has just announced plans to develop waxes and wanes. Only last August Mr pregnancy, marital status, sexual orienta• a satellite programme (with India and Bra• Zuma was warning his compatriots tion and culture. Every one of the coun• zil) and is the leading candidate to host the against reviving the race debate. But the try’s 49m people‹79% black, 9% white, 9% world’s biggest science project, the Square murder in April of Eugene Terre’Blanche, coloured (mixed race) and 3% Asian/Indi• Kilometre Array radio telescope; yet in in• leader of a white•supremacist group, and an‹is guaranteed equal protection under ternational maths, science and reading the racist outbursts by Julius Malema, the the law. Freedom House, a Washington• tests it performs abysmally. It has sky•high leader of the powerful Youth League of the based research foundation, gives South Af• unemployment yet at the same time suf• ruling African National Congress (ANC), rica a respectable rating of 2 in its Œfreedom fers from crippling skills shortages. It was have brought it to the fore again. 7 Your friendly monolith

The ANC remains all•powerful

OLITICAL division based on colour †ce for the foreseeable future‹Œuntil Jesus to have been anti•apartheid activists, only ŒPis entirely arti†cial, and when it dis• comes, as Mr Zuma puts it, not altogether 3% chose to vote for the ANC in 1994, appears, so will the domination of one col• reassuringly. whereas 60% voted for the ruling National our group by another, said Nelson Man• The ANC claims to be a non•racial Party, the architects of apartheid. Today dela at his trial in 1964. ŒThe ANC has spent party. In government it has been scrupu• just 4% of whites say they support the half a century †ghting against racialism. lous about maintaining the correct racial ANC, compared with 92% of blacks. Most When it triumphs, as it certainly must, it balance. Of the present 35 cabinet minis• opt for the Democratic Alliance, led by Hel• will not change that policy. ters, four are white; of the 99 provincial en Zille, the white premier of the Western By and large the ANC has remained premiers and ministers, nine are white. But Cape‹the only one of nine provinces not true to that promise (apart from a slight Af• it was not until 1969 that whites were per• ruled by the ANC. Thanks to massive sup• ricanist wobble under Thabo Mbeki, Mr mitted to join the party, and only in 1985 port by coloureds in the Western Cape, the Mandela’s successor as president). Yet that they were allowed onto its national DA scooped up a record 16.7% nationwide many whites no longer feel entirely at executive committee. in last year’s election. But analysts doubt home in a country ruled for the past 16 Whites can hardly complain, however, that it will be able to go much beyond that years by a single all•powerful black•major• if the ANC’s support continues to be over• unless it alters its racial complexion. Few ity party that looks likely to remain in of• whelmingly black. Although many claim 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. roll, with 77% of South Africans saying he With a Zulu now in the presidency, the The one and almost only 1 was doing a good job. Zulu•dominated Inkatha Freedom Party, Election results, % of vote But at the beginning of this year he had led by the ageing Chief Mangosuthu Buth• African National Democratic Inkatha a bad few months. First came the revela• elezi, seems to be fading away. Its share of Congress Alliance Freedom tion that he had fathered a love•child (his National Party Congress of Party the vote fell from over 10% in 1994 to less the People 20th o spring), born barely three months than 5% last year. 70 before his marriage to his third concurrent After Mr Mbeki was squeezed out in 60 wife (and †fth overall), with another two 2008, a disgruntled group of his followers †ancées waiting in the wings. In February set up the Congress of the People (COPE) in 50 he made an abysmally platitudinous state• a bid to break the ANC’s dominance. Al• 40 of•the•nation speech, full of the old prom• though more racially balanced than other 30 ises without a hint of how he was going to parties, it has been beset by leadership 20 ful†l them. There followed condemnation struggles and the lack of a clear identity. It of his failure to disclose his business inter• 10 won just 7% of the votes in last year’s elec• ests and to achieve a breakthrough in the tion and now looks set to †zzle out entirely, 0 political stalemate in Zimbabwe, and ever 1994 1999 2004 2009 though it may try to join forces with the DA louder squabbling within the ANC’s ruling Source: IEC in next year’s local•government elections. alliance with the trade unions and the Former liberation parties throughout Communists. By April his approval rating the African continent have tended to over• disillusionment have begun to be heard. had slumped to 43%. Mr Zuma appeared to stay their welcome. Could the same thing But on the whole he seems to have done have lost his grip. happen in South Africa? The Institute for much better than some apocalyptic pre• Over the past couple of months he has Democracy in South Africa reckons that dictions before his election suggested. De• sought to reassert his authority. He has prolonged dominant•party rule by the spite pressure from allies on the left, he has even attempted, for the †rst time, to rein in ANC is already eroding many of the checks largely stuck to his predecessors’ market• the incendiary Mr Malema, though with and balances enshrined in South Africa’s friendly economic policies. His appoint• only partial success. His is not an easy task. constitution, including the separation of ments, with one or two glaring exceptions, Unlike many liberation movements, the powers. Accountability is being weak• have been good, some excellent. ANC is a very broad church, ranging from ened, public watchdogs are being under• He is trying to deal with rampant cor• out•and•out free•marketeers to dyed•in• mined and party and state are becoming ruption at all levels of government and the•wool Marxists. In the apartheid days increasingly con‡ated, it says. Yet of all Af• putting more emphasis on accountability all were united in their struggle for free• rican liberation parties, the ANC has made throughout the public sector. He has set up dom. But once in government, the party the most progress towards a stable consti• an independent National Planning Com• had to start making hard choices, triggering tutional democracy. It also has the advan• mittee to advise on complex long•term is• †erce factional †ghting over both policy tage of not being dominated by a single sues such as water management, energy and power. Mr Zuma, catapulted into the megalomaniac †gure. and the environment. He is drawing up presidency without a clear mandate or a plans to reform the failing education and strong power base of his own, has tended The agony after the ecstasy health systems. And he is showing much to fudge and procrastinate to keep every• Everyone loved Mr Mandela, whites as more interest in the plight of the poor. By one happy. He must now start showing well as blacks, for his calm dignity and gen• the end of last year he seemed to be on a some leadership. 7 erous spirit of reconciliation. But he was more of an idealised †gurehead than a leader and chose to go after just one †ve• year term. Over the past 16 years South Af• rica 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 major• ity 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 re• markably 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 Time for Zuma to show his hand 4 A special report on South Africa The Economist June 5th 2010

Colour me South African

Learning to live in a rainbow society

ENERATIONS of Afrikaners (whites South Africa united their fellow black and Gmostly of Dutch, French and German white countrymen in a rapturous outpour• descent, but often with a good dose of in• ing of national pride. But 15 years on, says digenous Khoikhoi blood, too) were Lesiba Te o of the Human Science Re• brought up to believe that God had created search Council, Œwe are retreating back blacks inferior to whites. Blacks were the into the dark days. Many blacks are resort• descendants of Noah’s son, Ham, they ing to the very racism that had been used were taught, cursed for ever more to be the against them, he claims. ŒWhite used to Œservant[s] of servants. The material de• come in varying shades of black, says a privations su ered by blacks under apart• white former colleague, Ivor Chipkin: heid were bad enough. But the psycholog• ŒNow it’s just white. The black friends he ical damage is much deeper and more had at school in the 1980s no longer seem diˆcult to eradicate. Robbed of their digni• to want to know him: ŒIt’s as if they’re say• ty and sense of self•worth, many‹even ing: ‘You’ve had your time, now it’s ours’. some of those who have made it to the very top‹remain hypersensitive and The Afrikaners’ lament acutely wary of the white man. Malema stirs it And the whites? ŒThese blacks are way be• In September 2007, when still presi• hind us, an elderly white woman said in• dent, Mr Mbeki spoke bitterly of the Œchal• job he had, who his friends were and so dignantly, pointing to a joyful ululating lenge to defeat the centuries•old attempt to on. In borderline cases the Œpencil test crowd of onlookers from the local black dwarf the signi†cance of our manhood, to was used to judge the kinkiness of the indi• township who had come to celebrate Mr treat us as children, to de†ne us as subhu• vidual’s hair. If the pencil fell out, he was Terre’Blanche’s funeral in Ventersdorp in mans whom nature has condemned to be classi†ed as white; if it stayed in, he was the North West. ŒWe are trying to be civil inferior to white people, an animal•like coloured and condemned to inferior and calm, but we can only do so much. species characterised by limited intellectu• schools, separate beaches and a whole lot God is with us, not them. Afrikaners, ex• al capacity, bestiality, lasciviousness and of other indignities. plained another mourner, Œwant to be free, moral depravity, obliged in our own inter• Nowadays, what used to be known as not ruled by savages. Today, many would est to accept that the white segment of hu• Œblack is often labelled ŒAfrican. This up• dismiss such crudely racist views as be• manity should, in perpetuity, serve as our sets many whites, who insist that they are longing to a tiny right•wing lunatic fringe. lord and master. Africans, too. To confuse matters further, Even so, lots of whites, especially Afrika• Mr Zuma has a much more relaxed ap• Œblack is now often used to refer to Indi• ners, are beginning to feel that they have proach to race, constantly stressing his ans and coloureds as well as blacks, be• su ered in silence for too long. commitment to the principle of Œnon•ra• cause the term Œnon•whites, as they used Of South Africa’s 4.5m whites, about cialism enshrined in the 1955 Freedom to be called, o ends many blacks. But this 3m are Afrikaners. Most supported the Charter. ŒWe, the people of South Africa, special report will stick to the old terms be• apartheid National Party, which ruled declare, the charter begins, echoing cause they are clearer. South Africa for nearly half a century, from America’s Declaration of Independence, Educated blacks are alarmed at the way 1948 to 1994. As in Nazi Germany, many Œthat South Africa belongs to all who live that some of their fellows play the race whites claim they never really knew what in it, black and white. What exactly Œnon• card whenever anything displeases them. was going on. They are fed up with being racialism means is not clear, though it Mr Malema is a past master at this. For him, collectively demonised as nasty racists seems to suggest that people will be all whites, whatever their struggle creden• with a shameful history and resent being treated on their individual merits, not the tials, are the Œchildren of cowards and told that whites who Œwhinge about colour of their skin. Yet the racial catego• oppressors. He castigates the Democratic crime are free to leave the country. After ries laid down under apartheid are still Alliance’s Helen Zille, a former anti•apart• all, it is their country, too, where their an• widely used, the only di erence being that heid activist, as Œa racist little girl and her cestors have lived and toiled for hundreds people now choose their own classi†ca• party’s youth wing as Œgarden boys. Her of years. Unlike many of their English• tion rather than having it foisted on them. black deputy, he says, Œjust smiles at the speaking compatriots, they have no other. Under the 1950 Population Registration madam. Moves to oust the poorly per• Many also feel they have never been Act, South Africans were divided into four forming black boss of Eskom, the state• given suˆcient credit for helping to ensure groups: whites, Asians/Indians, coloureds owned power utility, were condemned as a peaceful transition to black•majority and Œnatives or blacks‹in that order. The Œhideous attempts to undermine African rule. In the whites•only 1992 referendum system was always a farce, relying on su• leadership in the economy. on whether the apartheid government per†cial physical characteristics and social In 1995 the victory of South Africa’s na• should continue to pursue a negotiated traits‹where the individual lived, what tional team in the rugby World Cup in settlement with the ANC, more than two•1 The Economist June 5th 2010 A special report on South Africa 5

2 thirds of whites voted yes. However, that siens (farewell). Surveys suggest that as roundly condemned. ŒLook at what is right was not so much out of magnanimity as many as 14% of whites and 12% of blacks and wrong, he urged, Œnot at who belongs because they thought that the then presi• are still thinking of leaving. to what race. dent, F.W. de Klerk, would seek a power• Flip Buys, the leader of Solidarity, a cen• As it happens, race relations are surpris• sharing deal in which the white minority tre•right, predominantly Afrikaner, trade ingly good, given that it is less than two de• would have some kind of veto. He had union, insists that few Afrikaners are out• cades since the end of one of the world’s also warned them that a no vote would right racists any more, but many feel in• most racist regimes. The loud•mouthed mean continuing economic sanctions and creasingly unhappy about the way things Malemas and Terre’Blanches are in a tiny worsening chaos, perhaps even civil war. are going in their country. ŒHowever un• minority. In their day•to•day lives most Many now feel betrayed: the constitu• equal society was before 1994, things people of all hues seem to get along †ne, tion o ers no special deal for political mi• worked, he says. ŒNow nothing does. Af• treating each other with courtesy if not to• norities. Convinced that they no longer rikaners knew they had to adapt, but now tal trust. More than 60% of South Africans have any in‡uence, a good number have they feel the price is too high. Their guilt say they have con†dence in a Œhappy fu• lost all interest in politics. But they still en• has given way to anger. ture for all races. Around half put their joy a good moan‹about crime, reverse dis• In the tense days after Mr Terre’Blanche identity as South Africans before their ra• crimination, potholed streets, power cuts was hacked to death by two of his black cial or ethnic group. and so on. Afrikaners, in particular, feel farm workers, Mr Buys rushed out a state• disgruntled about having lost their status, ment claiming that racial tensions had Blacks against blacks ‡ag, party, geographical place•names and reached Œboiling point. Mr Zuma was suf• South Africa has seen political protests most of their schools. Many fear they are †ciently alarmed to go on television to ap• against apartheid, but not the sort of race losing their language, too. Afrikaans, once peal for calm. Some whites charged the riots and pogroms America’s South suf• one of the country’s two oˆcial languages ANC’s Mr Malema with contributing to Mr fered from. What racial violence there has (along with English), is now just one Terre’Blanche’s death by singing a black been has come from black South Africans among 11, all supposedly enjoying equal struggle song, enjoining listeners to Œkill and been directed at fellow blacks from protection under the constitution. In prac• the Boer (Afrikaner farmer), despite a outside the country. Solidarity puts the tice, however, English, the mother tongue court order banning it as hate speech. Since number of illegal immigrants in South Af• of only 8% of South Africans, has taken 1994 some 1,000 white farmers, along with rica at 8m•9m, including some 3m from over as the lingua franca. more than 2,000 of their family members Zimbabwe. That may be too high, but there Long before the ANC came to power, and other white rural dwellers, have been are certainly a lot of them, all competing fearful whites had begun to leave the coun• murdered. with South Africans for jobs, housing, try in droves. Net white ‡ight since 1996 is A fortnight later Mr Buys put out a more health care and other public services. They thought to be around 500,000, which in• considered statement. Although racist at• are also accused of engaging in crime. In cludes many of the country’s best and tacks on Solidarity members had been May 2008 a series of horri†c xenophobic brightest‹doctors, teachers, business growing by Œleaps and bounds, he said, attacks across South Africa left 62 dead and managers, accountants, engineers‹all members should not Œ†ght racism with 670 injured, and there have been sporadic with skills desperately needed at home. As racism. The vast majority of white farm• attacks since, though none so serious. A the global recession bit, some began to re• ers had good relations with their workers, study by the University of Cape Town last turn, but not nearly as many as those, he noted. Anyone who exploited or mal• year found xenophobia to be Œprobably black and white, who continue to say tot• treated their black employees should be 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

HEN the ANC took over in 1994, it in• bank loans are at their lowest level in near• sound banking sector, it seems to have Wherited an economy that was virtual• ly three decades. The economy as a whole, avoided the worst of the global storms and ly bankrupt, following decades of mis• which had been growing by less than 1% a now, buoyed by the World Cup, it is al• management, international sanctions and year in the decade up to 1994, expanded by ready bouncing back. Most forecasters are violent protests. Since then exports have nearly 5% a year in the †ve years to 2008 predicting growth of around 3% this year doubled in real terms to reach $91billion in (see chart 2, next page). (well above the government’s own budget 2008, accounting for 33% of GDP; output Not a bad record, but modest compared forecast in February of 2.3%), rising to per person has risen by more than a quar• with growth rates in other emerging mar• 3.5•4% next year. But that is still not nearly ter, having fallen throughout the previous kets, which started from a much lower enough to create jobs on the scale needed two decades; public debt has halved, to base. Last year South Africa’s economy to absorb the legions of the unemployed. 23% of GDP in 2008; in‡ation, in double slipped into recession for the †rst time in 17 Oˆcially, South Africa has an unem• digits throughout the 1980s, has shrunk to years, shrinking by 1.8%. Thanks to succes• ployment rate of 25%, the highest in the 5.1%, well within the government’s target sive ANC governments’ prudent †scal and world. At its peak, in March 2003, it range of 3•6%; and interest rates charged on monetary policies and a remarkably 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: ports less competitive. Fifth, its infrastruc• 30% of blacks are oˆcially unemployed, Below potential 2 ture, though far better than in the rest of compared with just 6% of whites. Fully South Africa’s: Africa, su ers from severe bottlenecks, in• half of those aged 15•24 are without jobs. If 35 cluding power shortages, and urgently official unemployment rate, % those too discouraged to look for work are 30 needs upgrading. included, the adult unemployment rate When the ANC †rst took over, Eskom, 25 jumps to 35%‹more than one worker in the state•owned power utility, had excess three. The Bureau for Market Research 20 capacity of 20%. Now, because of underin• 15 thinks the true †gure could be as high as consumer prices* vestment, mismanagement and rapidly 40%. And South Africa does not have a 10 expanding demand, it is seriously short of 5 thriving informal economy where the job• + generating capacity. For the past three less can take refuge. OECD estimates put 0 years South Africans have struggled with GDP* – employment in the shadow economy at 5 repeated power cuts and rolling blackouts. only 15% of the total, compared with 199495 96 97 98 99 2000 01 0302 05 04 07 06 08 09 In January 2008 the entire grid came close around half in Brazil and India and nearly *% change on year earlier; to collapse, forcing mines and other busi• 2009 estimate three•quarters in Indonesia. Sources: IMF; SAIRR nesses to shut down. Last year’s recession Many of the unskilled used to work in helped to ease the pressure, but shortages mining and agriculture, but both these sec• cost sugar producer; Alexander Forbes, a are likely to continue at least until 2013•14, tors have been shedding jobs. Mining now risk and bene†t consultant; Nampak, Afri• when two new clean•coal power plants accounts for a mere 2.3% of employment ca’s biggest packaging manufacturer; Sa• are due to come on stream. and 3% of GDP, down from around 14% in sol, a petrochemical company; MTN, a mo• the 1980s. Having been the world’s biggest bile•phone operator; Rembrandt, a tobacco Powering up gold producer for more than a century, and industrial holdings group; and Inves• Eskom is now pushing ahead with a mas• South Africa has fallen behind China, Aus• tec, a †nancial•services †rm. sive 385 billion rand expansion pro• tralia and America. Some of its mines are But in the economy, as in so much else, gramme. To help †nance it, it has been nearing the end of their productive lives. South Africa is a country of extremes. The granted permission to raise tari s by an an• But gold continues to be an important con• World Economic Forum’s latest Global nual 25% this year, next year and in 2012, tributor to the economy, earning 49 billion Competitiveness Report ranks it among having already almost doubled them over rand in foreign exchange last year. That the top ten (of 133 countries) for the sophis• the previous †ve years. In April the World makes it the country’s second•biggest ex• tication of its †nancial markets, investor Bank agreed to lend it $3.75 billion, the port after platinum, where South Africa is protection, the strength of its auditing and bank’s †rst loan to South Africa since 1994. the global leader. It is also the world’s larg• reporting standards, the eˆcacy of its cor• But Eskom is still seeking †nance of nearly est producer of manganese, chrome and porate boards, the soundness of its banks 200 billion rand over the next seven years. vanadium as well as the fourth for dia• and the regulation of its securities and ex• More than ever before, South Africa’s monds and †fth for coal. The world’s big• changes. But it is among the bottom ten for fortunes depend on what happens in the gest diamond company, De Beers, is South the rigidity of its labour market, its maths rest of the world, particularly in India and African, and two of the world’s biggest and science education, the cost to business China. Last year China overtook America, mining companies, BHP Billiton and Anglo of crime and the availability of engineers Japan, Germany and Britain to become American, originated there. and scientists. Overall, it comes a middling South Africa’s biggest trading partner, with Agriculture makes up 5.1% of formal 45th for global competitiveness but attracts bilateral trade reaching about 120 billion jobs and a mere 2.2% of GDP. Manufactur• relatively low foreign direct investment. rand, over ten times what it was in 1998, ing is relatively small, providing just 13.3% There are many reasons why the re• when formal diplomatic relations were es• of jobs and 15% of GDP. Labour costs are gion’s leading economy, so rich in mineral tablished. Chinese investments in South low, but not nearly as low as in most other resources, is failing to keep up with other Africa totalled $7 billion over the period. emerging markets, and the cost of tran• emerging markets such as India or China. South Africa hopes that China, and others, sport, communications and general living First, South Africa is a relatively small will see it as the gateway to around 170m is much higher. Services are much the big• country without the advantage of a huge consumers in the Southern Africa Devel• gest part of the economy, accounting for domestic customer base. Although the Af• opment Community (SADC), a 15•country around two•thirds of GDP. The govern• rican continent contains a billion potential regional group. ment is keen to promote tourism, another consumers, they are locked away in sover• As South Africa emerges from the reces• potential source of unskilled jobs. The eign states with myriad di erent curren• sion, business con†dence has reached a number of foreigners visiting the country cies, regulations and policies along with three•year high. But government debt has has leapt from 3.7m in 1994 to nearly 10m poor infrastructure and transport systems. started rising sharply again and is expected last year. The World Cup should help boost Distances are vast, making trade diˆcult. to reach 40% of GDP by 2013, nearly double numbers further. Second, South Africa has for decades its level in 2008, as the government keeps Two decades ago South African compa• had an unusually low rate of saving and in• spending on education, welfare, service nies were largely restricted to their nation• vestment, partly because of political un• delivery and cutting crime. It has also al base, but as trade and exchange controls certainties. Third, it has long had an inade• pledged to spend 846 billion rand on pub• were eased after 1990 they began to com• quate education system, resulting in an lic infrastructure over the next three years, pete internationally. Today the country has acute shortage of skilled manpower. though some scepticism is in order. Febru• a cluster of world•class companies, such as Fourth, it has a strong and volatile curren• ary’s budget envisaged no tax increases, SABMiller, a brewer; Illovo Sugar, a low• cy, which deters investors and makes its ex• 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

OR centuries white South Africans had been a roaring success. Whites still hold close their business interests or to declare Fheld all the country’s assets almost ex• the bulk of the country’s wealth. And that they were public employees when clusively in their own hands. It was in or• though there have recently been renewed submitting their tenders. Barbara Hogan, der to spread this wealth a little more even• calls for the nationalisation of the mines minister of public enterprises, the depart• ly that the ANC introduced black and banks, in particular from Mr Malema’s ment that hands out many of the juiciest economic empowerment (BEE). But in• Youth League, Mr Zuma still insists that this tenders, has called for a new law to regu• stead of bene†ting the mass of poor is not on the government’s agenda. late such blatant con‡icts of interest. blacks, as intended, the policy has resulted For the poor black masses, however, Yet the scheme is not without its merits. in Œa few individuals bene†ting a lot, as the scheme has been a dismal failure. Moe• If nothing else, the rapid creation of a small Mr Zuma admitted earlier this year. He letsi Mbeki, an analyst and entrepreneur black middle class has meant that black should know; he and many of his family (and brother of the former president), says South Africans have not been left to lan• members are among the lucky few. He has that BEE has proved a Œparasitic drag on guish in an undi erentiated lower class. It now vowed to make the scheme much economic growth, having struck a Œfatal has also created role models for aspiring broader•based. blow against the emergence of black entre• blacks. Most leading white businessmen Under BEE laws white•owned compa• preneurship by creating a small class of believe that BEE is vital for the country’s fu• nies with more than 50 employees and unproductive but wealthy black crony ture, though they would like it to be more revenues of at least 5m rand a year are giv• capitalists. John Kane•Berman, head of broadly based and better implemented. en a rating based on criteria such as how the South African Institute for Race Rela• much of their equity is owned by blacks, tions, argues that the scheme has discour• Whose land? how many of the top posts they hold, what aged self•reliance and encouraged a debil• Land reform is another high•minded training opportunities are open to them itating sense of entitlement among blacks, black•empowerment project that has gone and so on. BEE targets are laid down by the as well as putting o foreign investors. It awry. Under the 1913 Land Act blacks were government for each sector. The better a has also led to a lot of public tenders being not allowed to own, or even rent, land out• company’s level of compliance, the higher awarded, often at in‡ated prices, to family side special black reserves. By 1994 some its overall rating and thus its chances of and friends of politicians and oˆcials. 87% of agricultural land was in white winning lucrative public contracts. Terence Nombembe, the country’s †rst hands. The new black majority promptly With that carrot dangling in front of black auditor•general, recently reported announced plans to redistribute 30% of them, many white companies were happy †nding 49 Œpublic servants who were di• white•owned land to poor blacks within to sell their shares to blacks at cut•rate rectors or owners of companies doing †ve years. This was to be acquired by the prices or even give them away. Their new business with national•government de• state on a Œwilling seller, willing buyer ba• partners were expected to pay o their partments. Almost all had failed to dis• sis, at a Œfair market price. So far, barely 6% debts from rising share prices and divi• has been handed over, and the govern• dends. As long as markets were rising, this ment has already run out of money. Many worked well. Some black businessmen, of the new owners have neither the skills such as Cyril Ramaphosa, a former trade nor the funds to run big farms, so fertile union leader, Tokyo Sexwale, the current land often lies fallow. housing minister, and Patrice Motsepe, a Mr Zuma has called for big changes to lawyer turned mining magnate and South the Œwilling seller, willing buyer model to Africa’s †rst black dollar billionaire, made enable the state to acquire land more fortunes. But when the global economy quickly and cheaply. At one point it looked crashed and share prices plummeted, as if full•blown nationalisation might be many BEE companies went to the wall. on the cards, but the government now in• This has made new black investors wary. sists that this is not an option. However, Last year there were just 13 BEE deals, there is talk of making white farmers trans• worth 20 billion rand, with companies list• fer 40% of their farms by value to black ed on the Johannesburg Stock Exchange shareholders, and possibly capping the (JSE), compared with 111 deals, worth a re• amount of land an individual farmer can cord 105 billion rand, in 2007. own. The minister for land reform recently The original idea for BEE actually came warned white farmers that they should from white business leaders. Though some Œco•operate if they wanted to avoid creat• genuinely wanted to make the system a bit ing a situation Œworse than Zimbabwe. fairer, most saw it as a good way to ward o Mr Zuma has since promised that there any attempt at nationalisation by the new will be no violent land invasions, but fears black government. In that sense BEE has It worked for Motsepe 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

DIDN’T join the struggle to be poor, ŒIprotested Smuts Ngonyama, then the ANC’s spokesman, in 2007. His comment epitomised a prevailing culture of entitle• ment in the ruling party. Paul Ho man of the Institute for Accountability in South• ern Africa reckons that corruption is en• demic 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 execu• tive committee have been investigated for fraud or other criminal activities‹includ• ing the president himself. Every day some new scandal seems to emerge. The head of Armscor, the state arms• procurement agency, was recently †red for Local government is not working dishonesty, dereliction of his duties and Œdisgraceful, unbecoming conduct. The to be charging wildly in‡ated prices. Corruption is particularly bad in local boss of Transnet Freight Rail, the state The ANC is worried. The Œscourge is far government, where most of the money is freight•rail company, has been suspended, worse than anyone imagines, Mr Mot• spent. Hundreds of protesters have been accused of not following tender rules. The lanthe, the country’s vice•president, ad• taking to the streets to express their anger former chief executive of South African mitted recently. Too many Œcomrades re• over the graft, nepotism, maladministra• Airways, the state airline, was sacked last garded election to public oˆce simply as a tion and sheer incompetence of their local year over alleged †nancial wrongdoing. chance to get rich, says Gwede Mantashe, councillors as well as over the lack of basic South Africa’s former police chief and one• the ANC’s (communist) secretary•general. services. Last year there were more than time head of Interpol, Jackie Selebi, is on ŒWe must move away from a culture of 100 so•called Œservice•delivery protests, trial for corruption. The former head of the greed and self•enrichment to one of trans• four times as many as in 2008. This year Social Security Agency has been †red over parent accountability, urges the ANC’s the rate has been even higher. The current allegations of †nancial impropriety. One treasurer, Mathews Phosa. Mr Zuma has model of local government is simply Œnot of the country’s leading barristers, Seth vowed to take action. Many may sco . working, says Yunus Carrim, deputy min• Nthai, was recently accused of soliciting a After all, the president was himself em• ister for local government. Mr Zuma bribe and forced to step down as vice•pres• broiled in corruption charges for years, es• agrees. He recently described South Afri• ident of the South African Bar. The list goes caping trial only when they were dropped ca’s civil service as the worst in the world. on and on. on a legal technicality just before last Willie Hofmeyr, head of the Special In• year’s general election. But Mr Zuma Can’t get the sta vestigating Unit, the country’s main cor• seems to mean it. Apart from graft and patronage, an acute ruption•†ghting body, told parliament ear• An interministerial task team has been skills shortage is also to blame. When the lier this year that at least 400,000 civil set up to tackle corruption, chaired by Col• ANC †rst took over, it cleared out most of servants were receiving state bene†ts to lins Chabane, minister for performance, the white civil servants, especially those in which they were not entitled. A further monitoring and evaluation, a new post in senior positions, by o ering them gener• 6,000 government oˆcials had failed to the president’s oˆce. All ministers are be• ous early•retirement deals. Within the †rst declare their private business interests, as ing asked to sign Œperformance agree• †ve years the proportion of whites in the required by law. In the department of pri• ments on which they will be judged. Pub• civil service dropped from 44% to 18%. sons, ten oˆcials, including its former lic•procurement procedures are being Their posts were generally †lled by young, head, and ten prison doctors had been centralised in the Treasury, and a team that inexperienced and often poorly quali†ed charged with corruption. A further 423 em• includes the tax authorities and the audi• ANC people. According to Solidarity, ployees had been disciplined. His unit is tor•general has been set up to check for any blacks now hold 61% of all top government now investigating more skulduggery at the irregularities. ŒIf any oˆcials are found jobs, whites 21%. ŒTransformation has tak• department of public works, where sup• guilty, they must be †red on the spot, not en place too quickly and at too high a cost, pliers, in cahoots with oˆcials, were found just redeployed, says Mr Zuma. says the union’s Mr Buys. 1 The Economist June 5th 2010 A special report on South Africa 9

2 Matters have been made worse by the move forward, says Azar Jammine, head transformation targets. ANC’s system of Œcadre deployment, the of Econometrix, a consultancy. A study by In the public sector transformation has appointment of loyal party members to the Centre for Development and Enter• nevertheless proceeded apace, with blacks well•paid public posts for which they are prise at the end of 2006 found more than now holding more than 80% of posts in not necessarily suited or quali†ed. Mr 300,000 un†lled posts in national and pro• some government departments. In the Zuma has vowed to put a stop to the sys• vincial government, an average vacancy private sector, however, they have fared tem. Whether this will happen is another rate of 24%. At senior management level less well. A survey of some 300 JSE•listed question, but at least the problem has been 35% of posts were un†lled, rising to 59% at companies by Business Unity South Afri• acknowledged. deputy director•general level. But it is not ca, a lobby, found that blacks account for The removal of the apartheid•era old just the shortage of skilled manpower that only 4% of chief executives, 2% of chief †• guard was understandable, but it has had is to blame, or even the ravages of HIV/ nancial oˆcers and 15% of other senior disastrous consequences. A 2007 study AIDs. Posts are sometimes left vacant posts. On non•executive boards they do a found a mere 1,400 civil engineers left in lo• when there is a perfectly suitable candi• bit better, accounting for 24% of chairmen cal government, just three for every date available who happens to be white. and 29% of board members, but the †gures 100,000 inhabitants, compared with 21 Under the government’s Œtransforma• are still way o target. two decades ago. One•third of local au• tion policies, each racial group is sup• In some of the state•owned companies thorities had no engineers at all. Just 7% of posed to be broadly represented in every another problem has arisen: too many sewage•treatment plants meet internation• sector, private and public, and at every lev• blacks, often with good political connec• al standards. Quali†ed †nancial oˆcers el, to re‡ect its share of the population. tions, have been deployed above their ca• too are in desperately short supply, as are However, with blacks accounting for just pabilities. Some have fallen by the way• chartered accountants, statisticians, doc• 44% of university graduates (but 80% of side. At the end of last year no fewer than tors, nurses, teachers, managers, forensic the population), there are often not †ve big state•owned companies found scientists and detectives. enough suitably quali†ed ones to go themselves without a chief executive after ŒThe terrible shortage of human capital around in the public sector‹especially as their black bosses were sacked or forced to is now the single most important reason the best get snapped up by private compa• resign amid allegations of mismanage• for questioning South Africa’s ability to nies, who have to comply with the same ment, corruption or both. 7 The great scourges

A black middle class is emerging, but poverty and crime blight millions of lives

EBOGO, aged 25, is a security guard in looks after. Having inherited her parents’ south of Johannesburg. TJohannesburg, earning just 11.38 rand home, she pays no rent, but spends around Tebogo and Lindiwe are poor, but at an hour. Improperly classi†ed as Œself•em• 55 rand a month on electricity, 30 rand on least they have a regular job; many don’t. ployed, he gets no paid holiday, sick leave water and 300 rand a month on her one• In 2008 three•quarters of South Africans or other bene†ts. By dint of working a 12• hour bus journey to work. During apart• had incomes below 50,000 rand a year. Of hour day, 25 days a month, he manages to heid, she used to work as a domestic ser• these, 83% were black (who make up 75% of earn 3,400 rand a month. Out of this he has vant for a white family, living in a one• the workforce) and just 6.5% white (13% of to pay 250 rand rent to a friend who allows room shack at the bottom of the garden the workforce). Only 0.6% of South Afri• him to live in a one•room shack in his yard, and working 13 hours a day, seven days a cans earned over 750,000 rand, of whom next to seven others. Their 15 occupants week. On her one weekend o a month three•quarters were white and 16% (or share a single pit•latrine and outside water she would try to visit her two children about 30,000 individuals) black (see table tap. Tebogo pays his employer 390 rand a who were being brought up by her mother 3). A further 265,000 blacks were earning month for transport and 98 rand for the in Soweto, a sprawling black township 300,000•750,000 rand, and 1.6m were get•1 uniform he is obliged to wear. Another 350 rand a month goes on maintenance for his six•year•old daughter. He also gives about All right for some 3 800 rand a month to his parents, who have Total working population aged 16 and above by income group and race, 2008, % no other source of income. In a good month that leaves Tebogo with about 1,500 Total Up to R50,000 - R100,000 - R300,000 - R500,000 - Above rand for himself and his studies. He would workforce R50,000 100,000 300,000 500,000 750,000 R750,000 like to become a radio journalist one day. Black 75.3 83.0 65.9 47.1 29.9 20.3 16.3 Lindiwe is a 58•year•old cleaner for a Coloured 8.8 8.3 14.3 9.0 5.6 3.0 2.1 block of oˆces. For an eight•hour day, †ve Indian/Asian 2.8 2.2 4.0 5.4 5.1 8.4 4.3 days a week, she earns a basic 1,500 rand a White 13.0 6.5 15.7 38.5 59.5 68.4 77.4 month, which tips bring up to 2,100 rand Total workforce 100.0 75.5 10.1 10.7 2.3 0.8 0.6 That has to keep her, her unemployed hus• Source: SAIRR band and two grandchildren whom she 10 A special report on South Africa The Economist June 5th 2010

2 ting 100,000•300,000. That means nearly country as soon as they can. become. These are not Mr Mbeki’s hyster• 2m black individuals (and probably three Those young people are increasingly ical white whingers. They just want their times as many if immediate family mem• taking to the streets to vent their anger, country to rid itself of this evil. bers are included) are now members of the looting stores, blocking highways and The World Competitiveness Survey newly emerging black middle class. Like attacking the police with petrol bombs and rates South Africa worst out of 133 coun• their white counterparts, these so•called rocks. The police retaliate with tear gas, tries for crime. A staggering 50 murders, Œblack diamonds tend to live in secure rubber bullets, water cannon and, some 100 rapes, 330 armed robberies and 550 gated communities, send their children to claim, live ammunition, adding to the violent assaults are recorded every day. private schools, take out private health in• sense of insecurity in the townships. More than the level of crime, it is the sheer surance, work out in air•conditioned When it comes to tackling crime, though, gratuitousness of the violence that is gyms, dine in fancy restaurants and buy the police, poorly paid, inadequately shocking. A 12•month•old baby is beaten to expensive cars. It is at this level that most sta ed and often corrupt, are regarded as a pulp by house burglars in an upmarket racial mixing and a few interracial mar• pretty hopeless, and the poor cannot af• Johannesburg suburb. A shopkeeper riages take place. ford to pay for their own protection. pleads with robbers to take everything he Thanks to a massive increase in welfare The middle classes, on the other hand, has but spare his life; they shoot him any• spending, millions have been lifted out of black as much as white, barricade them• way. A man mowing his lawn in Cape the worst poverty. Since 1996 average black selves behind layer upon layer of security: Town is shot dead for the sake of his mo• income per person has more than tripled high perimeter walls topped with electric bile phone. Under apartheid most crime in real terms, to nearly 20,000 rand. But av• fencing, guard dogs, barred doors and win• was contained within the poor black erage white income per person over the townships. Now it is everywhere. It is not same period has risen almost as fast, to only whites who complain; everyone is 136,000 rand‹seven times as much as that Home comforts 4 afraid. In one recent poll, nearly two•thirds for blacks. South Africa, always among the Living conditions, % of households of South Africans said they would feel world’s most unequal societies, has be• Œvery unsafe walking alone in their come even more so. Those in the middle, 1994 2009 neighbourhood after dark. Another study too well•o to qualify for welfare grants Formal dwelling 64* 75 in 2007 found that 22% had had personal but too poor to have joined the black mid• Access to clean piped water 62 89 experience of crime in the preceding year. dle class, feel particularly aggrieved. Flush lavatories 51 60 Six in ten South Africans believe that Black living conditions have neverthe• Telephone in dwelling/ 29 85 crime has risen since 1994. Yet, if the oˆcial less improved in other ways. Three•quar• use of cellular phone statistics are to be believed, the crime rate ters of all South African families now live Electricity for lighting 51 83 for the 21 most serious o ences has actual• in a Œformal home (usually a concrete or Electricity for cooking 47* 71 ly fallen by 17%. The rate of murder and at• brick bungalow instead of a rough shack Refuse removal by local authority 53* 53 tempted murder has almost halved; that of or thatched mud hut), up from just under violent assault is down by a quarter; and Source: SAIRR *1996 two•thirds in 1996. The vast majority now that of burglary of residential properties have electricity and access to clean piped has dropped by 15%. However, a new study water (see table 4). Half of black families dows and alarm systems linked to one of by the Centre for the Study of Violence and have ‡ushing loos, compared with barely a the many armed private security forces. Reconciliation †nds a Œpervasive pattern third in 1996; three•quarters have a televi• Many go to live in one of the increasingly of (police) manipulation of the statistics, sion; and eight in ten have access to a popular fortress•like gated communities, particularly since the government an• phone, usually a mobile. Many municipal• protected around the clock by armed nounced in 2004 that it aimed to cut crime ities provide a basic amount of water, elec• guards. South Africa now has 300,000 by 7•10% a year. That could account for tricity and sanitation free to poor families. private security guards, almost double the much of the apparent reduction in crime. Expectations soared when the ANC number of police. Since 1996 the govern• The murder statistics are probably †rst swept into power promising Œa better ment has almost tripled its spending on pretty accurate, though. These show that life for all. Yet many see little improve• tackling crime. But private•sector spending the murder rate dropped from 66.9 per ment in their own lives, †nding them• has risen even faster. 100,000 people in 1994•95 (when a virtual selves without a job in the same rickety civil war was raging in KwaZulu•Natal) to shacks as before. They feel trapped. A Victims all 37.3 in 2008•09. This still leaves South Afri• study by the Medical Research Council ŒThe crime situation in South Africa has ca among the world’s ten most murderous highlights the deep unhappiness and become so severe that the sad reality is that countries. America has a rate of 5.4 per growing sense of alienation among the it’s not if, but when, you will become a vic• 100,000, England and Wales 1.2 and Japan young in particular. One in †ve teenagers tim, said a Durban magistrate when sen• 0.4. Rape, on the other hand, is usually aged 15•17 had tried to commit suicide dur• tencing three men for throwing a teacher vastly underreported. The police say that ing the preceding six months; 29% had o a high bridge after hijacking her car last sexual o ences have risen by nearly half been binge•drinking at least once in the November. ŒWe are scared to the point since 1994, to more than 70,000, about half previous month; 19% had become preg• where we are no longer free. Max Price, of them rape. But the real †gure for rape is nant or fathered a child; 20% were over• the normally un‡appable vice•chancellor probably nine times as high, says the Medi• weight. According to another study, four of the University of Cape Town, said after cal Research Council. In a recent study of out of ten black and three out of ten white the murder in March of yet another mem• men aged 18•49, 28% admitted at least one and Indian youngsters aged 13•15 feel so dis• ber of the university’s sta : ŒWe no longer rape. Four in ten women say their †rst ex• illusioned that they want to get out of the trust strangers and we hate what we have perience of sex was rape. 1 The Economist June 5th 2010 A special report on South Africa 11

2 Sexual violence seems to be less shock• 183,000 to 205,000 over three years, up• accounts for a third of the prison popula• ing to black communities than to white grade their training and make it easier for tion. Some 234,000 cases are awaiting trial. ones. According to another CSVR study, them to use lethal force. Not everyone is At the present rate of hearings it would most black women believe that a man has happy. A total of 568 people were shot take ten years to clear the backlog, the gov• a right to have sex with his wife whenever dead by police in 2008•09, including 32 in• ernment admits. he wants. A majority of teenage boys and nocent bystanders. Over the same period South Africans constantly debate why girls say it is not sexual violence to force 107 police oˆcers were killed. their country is plagued by so much viol• sex on someone you know or who has ac• Harsher punishment has been tried, ent crime. The blame is variously put on cepted a drink from you. Human Rights with tough minimum sentences intro• the brutal legacy of apartheid, widespread Watch, a New York•based lobby, thinks the duced in 1997, but seems to have had little poverty, appalling levels of unemploy• level of violence against women in South e ect. It did, however, push up the prison ment, the absence of a father in two out of Africa is Œshockingly high. population by 40% to 165,000, proportion• three black homes, high alcohol and drug Mr Zuma takes anxieties over crime ately one of the highest in the world. Al• abuse, and extremes of inequality. All may more seriously than Mr Mbeki did. South most half of all convicts are now serving play a part. But the UN says that there is Africa’s citizens have been allowed Œto live sentences of ten years or more, compared Œno easy correlation between poverty, de• in fear for too long, he says. He has prom• with under 2% in 1995. The number of in• velopment levels, inequality and crime, so ised to boost target police numbers from mates on remand has doubled and now it cannot be the whole answer. 7 Last in class

Education needs to take a giant leap

OUTH AFRICA spends 6.1% of its GDP much worse than whites. Almost 13% of ately kept down, given a vastly inferior Son education, a bigger chunk than most black adults are functionally illiterate, education and banned from most skilled other countries, yet its results are among compared with 0.4% of whites. Fewer than jobs. Explaining the government’s new the worst. In the World Economic Forum’s 2% of black adults have a degree, com• Bantu (black) education policies to the latest Global Competitive Index it ranks pared with 17% of whites (which is still low Senate in 1954, Hendrik Verwoerd, then bottom (out of 133 countries) in both maths by international standards). Barely a third minister for native a airs, famously asked: and science education. In the 2006 Pro• of black pupils pass their matric, whereas ŒWhat is the use of teaching a Bantu child gress in International Reading and Literacy almost all whites do. And only around one mathematics when it cannot use it in prac• Study it also came bottom (out of 40 coun• in 20 black students ends up with a degree, tice? By the end of Verwoerd’s decade as tries), as it did in the 2003 Trends in Interna• compared with almost one in two whites. prime minister in 1968 the government tional Maths and Science Study (out of 48 It is not that the blacks are any less bright; was spending 16 times more on the educa• countries). Humiliated, it withdrew from some perform brilliantly. They are just tion of a white child than a black one. the next TIMSS in 2007. The diˆculty with massively disadvantaged. Spending per pupil is now the same for such studies is that they re‡ect averages. At Under apartheid blacks were deliber• black and white, yet black children gener•1 the top, South African students do as well as anyone, but the great majority are per• forming 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 quali• fy for university. Of those who do, most are found to be functionally illiterate and in• numerate when they get there, requiring intensive †rst•year remedial classes to bring them up to scratch. A third of stu• dents drop out in their †rst year at universi• ty. After †ve years only one in three has ob• tained a (three•year) degree. Even then, employers say that many graduates emerge inarticulate, unable to think criti• cally and barely able to read or write. Black South Africans generally do More snakes than ladders in South Africa’s schools 12 A special report on South Africa The Economist June 5th 2010

2 ally continue to fare worse than whites be• school, or to one of the burgeoning private and threaten to secure that piece of paper. cause most of them continue to attend schools. Fees for day pupils range between According to Mr Jansen, South Africa vastly inferior schools. Although public 5,000 and 80,000 rand a year. But with has no Œgreat universities, only six or sev• education was desegregated in 1994, most class sizes generally half those in state en Œgood ones. One of them is the Univer• former black schools remain overwhelm• schools and an average matric pass rate of sity of Cape Town, the only African uni• ingly black because they are generally in 97%, compared with just 30% at state versity to be ranked among the world’s top deprived black areas, whereas the former schools, even some relatively poor parents 200 by the Times Higher Education Supple• white schools tend to have a good racial think they are worth paying for. Under ment. Under the leadership of Max Price, mix because middle•class blacks have apartheid few white parents bothered to UCT has introduced a controversial new moved into their catchment areas. Cater• send their children to private school be• entrance scheme that makes it easier for ing for just 10% of all pupils, the former cause the state schools for whites were of non•whites to get in. This can mean that white schools are usually much better en• such high standard. Now nearly 400,000 white students have to get a matric mark dowed, better run and far more disciplined pupils (3% of the total) attend private some 20•30 percentage points higher than than former black schools. schools, more than double the number in their black peers. Mr Price, who is white, Angie Motshekga, the schools minister, 1995. Six out of ten of them are black. admits that the system is not perfect, but at admits that black schools are Œin crisis. least it takes account of the huge handicap Fewer than 10% have libraries or laborato• Positive discrimination su ered by most black applicants. ries. Very few o er extracurricular activi• At university level black students have Mr Zuma has vowed to make education ties. Most of their teachers are not properly made similar strides. In 1994 half of South his government’s Œpriority number one. quali†ed. Black schools tend to lack leader• Africa’s 528,000 university students were In speech after speech he insists that teach• ship and are often plagued by drugs, alco• black; now two•thirds out of 800,000 are; ers and pupils must be Œin school, in class, hol and sex abuse (by teachers as well as a quarter are white. But university stan• on time, learning and teaching for seven older boys). Their pupils generally come dards vary hugely. Jonathan Jansen, the hours a day. It might seem obvious from poor, often broken homes. And, un• †rst non•white vice•chancellor of the Uni• enough, but in South Africa it will require a like white pupils, they are usually taught in versity of the Free State, says that at least small revolution to achieve. Mr Zuma also a language (English) that is not their own, three•quarters of South Africa’s 23 higher• plans to bring back the apartheid•era’s hat• by teachers who themselves cannot speak education establishments are Œfraudulent ed schools inspectors, but in future they it properly. and bad, not really universities at all. He will be called Œassessors and required to It often seems a miracle that black pu• cites exam standards being lowered to cut support teachers as well as criticise them. pils make it to university at all. Most of failure rates; students who Œregularly trade Independently monitored tests are being those who do will probably have been ei• their bodies to pass their exams; others introduced for pupils aged nine, 12 and 15, ther to one of the top 10% of black schools who blame their poor marks on Œracist doubtless as much to spot the incompetent that do perform well, or to a former white teachers; and those who blatantly cheat teachers as the failing pupils. 7 Don’t get ill

Or if you do, go private

N TAKING over as minister of health a practitioners have left the country, fed up ‡at•rate basic premium, set by the govern• Oyear ago, Aaron Motsoaledi declared with the poor pay and appalling condi• ment, is 800 rand per month for an indi• himself Œshocked by the state of the pub• tions. Others have gone into the rapidly ex• vidual and 2,000 rand for a family, regard• lic health•care system. Media horror sto• panding private sector. A study in 2007 less of age or state of health. A further 20% ries about dirty and overcrowded hospi• found that one•third of public medical of South Africans use the private sector oc• tals, long waiting times, lack of medicines posts were un†lled. In some hospitals the casionally and pay as they go. In all, South and a shortage of medical sta were large• vacancy rate for nurses is as high as 60%. Africa spends some 8.6% of its GDP on ly true, he admitted: ŒI don’t think it will be The public sector now has just one doctor health, close to the international average. an exaggeration to say that some of our for every 4,570 inhabitants, against one for But the public sector accounts for only 41% hospitals are death traps. every 600 in private medicine. For special• of that total, compared with 82% in Britain, Money is not the main reason. The gov• ists the disparity is even greater. 79% in France and 46% even in America. ernment is pumping over 100 billion rand Under apartheid, public health•care for In an attempt to bridge the gulf be• into the system this year, which amounts whites, like education, was generally so tween public and private health care, the to 12% of its budget and 3.7% of GDP‹not good that there was little need for private government has proposed introducing a massive, but more than most provincial medicine. Even health services for blacks national health•insurance scheme. This governments (who are responsible for were often a lot better than they are now. has sent private health•care users into a tiz• health care) know how to spend. The main The service has deteriorated so much that zy, especially when a purported draft pro• problem is once again an acute shortage of more than 8m South Africans (17% of the posal seemed to suggest that 85% of their quali†ed sta . Many thousands of public• population) have taken out private medi• health•insurance premiums would be in• sector doctors, nurses and other medical cal insurance. Half of them are black. The corporated in the new scheme, and that 1 The Economist June 5th 2010 A special report on South Africa 13

2 any service provided by the public sector their king, Goodwill Zwelithini, told them would no longer be covered by private Grim reaper 5 to forget the battle†eld. Mr Zuma, himself health schemes. If true, that would be a HIV/AIDSLife expectancy HIV/AIDS prevalence among a Zulu, announced last month that he had sure way to cause a massive further brain• years* 15-49 year olds†, % been circumcised some time ago. drain. However, as the scheme would cost 65 25 The HIV/AIDs epidemic has caused the anything between 165 billion and 244 bil• average life expectancy in South Africa to lion rand, it seems unlikely to be intro• 60 20 fall from over 60 years to below 50 in the duced in the near future. past two decades. Here again there are 55 15 huge racial di erences. Whereas a white The silent killer 50 10 South African can still expect to live for 72 South Africa’s HIV/AIDs epidemic, exacer• years, his black compatriot can look for• bated by a decade of AIDs Œdenialism un• 40 5 ward to only 47. South Africa also performs der Mr Mbeki, who claimed the disease 0 badly on infant and maternal mortality was not caused by HIV, is putting a huge 199495 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 ‡ and tuberculosis, for which it has one of extra strain on the public health system. Sources: Actuarial Society *2008-09 estimates the world’s highest infection rates. The number infected is now put at around of South Africa; Economist †2005-09 estimates Alcohol abuse is another big health Intelligence Unit ‡Forecast 6m, or one in eight South Africans. An esti• problem. Although 60% of South Africans mated 3m people have already died from (mainly women) claim not to drink at all, the disease and over 350,000 more are suc• sexual partners than other racial groups. those who do tend to go over the top. Di• cumbing every year. New infections run at In March the government announced a rectly or indirectly, alcohol is responsible about 1,350 a day, though the rate may have campaign to get 15m people‹one in three for 30% of all hospital admissions. Two• started to come down. Some 1m su erers, of the population‹tested for HIV/AIDs by thirds of domestic violence is alcohol•re• under two•thirds of those in need, are now June next year. Mr Zuma, not always the lated, as are three•quarters of knife mur• receiving antiretroviral treatment. The con• most careful in his own personal relations, ders and at least half of all road deaths. sequences of the epidemic have been dev• agreed to spearhead the campaign. Con• South Africans are also among the world’s astating. Countless families have lost their dom use has already been boosted by gov• highest users of various illegal drugs. Con• breadwinner; hundreds of thousands of ernment advertising campaigns. The gov• sumption of dagga (cannabis), cocaine and children have been orphaned; desperately ernment is also planning a large•scale tik (methamphetamine or speed) is two to needed skilled workers are being cut down male•circumcision programme because three times the world average, says the in their prime. studies have shown that circumcised men country’s Central Drug Authority. It is often said that HIV/AIDs knows no halve their chance of infection. A Johan• Drug and alcohol abuse are partly re• barriers, striking indiscriminately at rich nesburg medical centre has begun o ering sponsible for the carnage on South Africa’s and poor, young and old, men and wom• lunch•break Œquickies at 400 rand a snip. roads, where the death rate is 33 per en. But in South Africa there is a huge racial One in three black South African males 100,000 inhabitants‹almost double the disparity: 14% of the black population is in• already undergoes ritual circumcision, but world average. For the size of its popula• fected, against 1.7% of coloureds and only such operations are usually done by un• tion the country has relatively few vehi• 0.3% of whites and Indians. Poverty is a quali†ed people and cause hundreds of cles, fewer than 9m, yet last year some factor, but cultural di erences also play a deaths a year. Zulus have traditionally 16,000 people were killed on its roads‹vic• role. Research shows that black males in shunned the practice because it would tims of speeding, huge pot•holes and road South Africa tend to be more promiscuous keep them away from the battle†eld that rage, as well as the easy availability of a and have more sex and more concurrent called the warrior tribe. However, last year driving licence for a small bribe. 7 Still everything to play for

The case for optimism‹and the many caveats

WO decades ago South Africa was a back into the international community, is a economy and its values remain closely al• Tmess, economically, politically and member of the G20 group of important lied with those of the rich world. In Africa psychologically. The world treated it as a countries and is the biggest mover and it is an economic giant, yet, despite its pariah. A racial con‡agration seemed not shaker in Africa. black•led government, it remains a politi• only possible but likely. Since then it has Yet the new South Africa’s relations cal pygmy, unable‹or unwilling‹to solve come a long way, led by people who were with the world are often confused, almost problems even in its own backyard of Zim• completely new to running anything schizophrenic, as it struggles to understand babwe. Its foreign policy is a muddle. For much, let alone a big, sophisticated and what it is and what it wants to be. On the all his charm and bonhomie, Mr Zuma ap• highly complex country. It was inevitable one hand it likes to see itself as the hege• pears to have little interest in maintaining that mistakes would be made. Today mon of southern Africa and a global leader the globetrotting activism of his predeces• South Africa is a lot happier, wiser and of the emerging world, along with China, sor, Mr Mbeki. Besides, he has his hands more prosperous. It has been welcomed Brazil and India. On the other hand both its full at home. 1 14 A special report on South Africa The Economist June 5th 2010

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 bil• lion 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 You can do it if you try course, he growls, Œyet I love South Africa. I would not want to live anywhere else. 2 Freedom has yet to deliver on its pro• ually sliding into a corrupt third•world There’s a dynamism in this country, a resil• mise. Vast numbers of South Africans con• mess or making slow progress without ience. It’s already come through a lot of tinue to live in grinding poverty as the rich ever ful†lling its potential. But others re• ghastly experiences. It can do so again. get ever richer. Hundreds of thousands are main doggedly optimistic, despite the Today’s South Africa is not for the faint• scythed down by diseases such as HIV/ country’s obvious failings. hearted. Everything is in ‡ux and nothing AIDs and tuberculosis. Others succumb to One of them is Tembeka Ngcukaitobi, is certain. But a new, better•educated and criminal violence or the carnage on the aged 34, a former partner in one of South less racially obsessed generation is coming roads, robbing families of breadwinners Africa’s top commercial•law †rms and through. ŒIn the decade I’ve been in busi• and businesses of employees. The econ• now head of the Legal Resources Centre’s ness, I’ve never been more afraid or excited omy cries out for more skilled workers, yet Constitutional Litigation Unit, a public•in• at the same time, says Iqbal Survé, head millions remain unemployed and unem• terest law concern. Brought up in a village of Sekunjalo Investments, a Œblack priv• ployable. Universities dumb down their in the former homeland of the Transkei, ate•equity company: ŒAfraid because we courses to boost pass rates, only to turn out where his Xhosa•speaking mother (a do• don’t have the necessary skills and invest• graduates who are not much good to any• mestic worker) and father (a gold miner) ments to make the economy grow fast one. The government seeks to woo foreign were sent under apartheid, he attended enough to ensure political and social sta• investors, but people like Julius Malema the local village school when not looking bility. Excited because there are so many send shivers down their spines by insisting after the goats and cattle. Yet, through opportunities. that mines and banks will be nationalised sheer determination and hard work, he ŒThe price of freedom, Archbishop within the next few years. made it‹without the help of BEE, aˆrma• Desmond Tutu likes to remind his fellow Rising discontent in the poor black tive action, political connections, patron• countrymen, Œis eternal vigilance. That is townships threatens to boil over into re• age or graft. Though dismayed by the ob• what the opposition parties, the press, the newed violence. Revolutions, as de stacles facing his country, he believes they courts, the NGOs, some business and un• Tocqueville noted, tend to start with rising can be overcome. ŒCompared with what ion leaders and a few academics are all expectations, not when conditions are at my parents lived through, I have to feel in• striving to maintain. Together they make a their worst. Even if the government could spired by my country’s potential, he says. formidable group. Powerful forces are give the jobless everything they are de• Bobby Godsell, chairman of Business ranged against them, but Œthe fundamen• manding, which it cannot, that still might Leadership South Africa, a lobby repre• tals are there, insists Mr Ngcukaitobi. not be enough. senting the country’s 80 biggest compa• ŒOur future lies in our own hands. 7

The pessimists’ case O er to readers Laurie Schlemmer, director of MarkData, a Future special reports Reprints of this special report are available at a Human genome June 19th research †rm, thinks that social and politi• price of £3.50 plus postage and packing. Debt June 26th cal instability, a marginal concern since A minimum order of †ve copies is required. Gambling July 10th 1994, could become a determining factor in Egypt July 17th Corporate o er South Africa’s future. He fears that whites Latin America September 11th Customisation options on corporate orders of 100 Forests September 25th will become the scapegoats for the govern• or more are available. Please contact us to discuss ment’s failings. Once an optimist, he now your requirements. describes himself as a pessimist because Send all orders to: so little has been done to reduce inequal• ities. John Kane•Berman of the South Afri• The Rights and Syndication Department can Institute of Race Relations believes the 26 Red Lion Square WC1R 4HQ country is already irretrievably set on the London Tel +44 (0)20 7576 8148 path to becoming another failed African Fax +44 (0)20 7576 8492 state. Too many things, he says, are going e•mail: [email protected] wrong at the same time, mutually reinforc• ing each other. For more information and to order special reports Previous special reports and a list of Some, like Fanie du Toit of the Institute and reprints online, please visit our website forthcoming ones can be found online for Justice and Reconciliation, feel South Economist.com/rights Economist.com/specialreports Africa could still go either way, either grad•