After Mandela, South African Economy In The Balance
JOHANNESBURG – When Nelson Mandela was sworn in as president 19 years ago, he proclaimed that South Africa was entering "a covenant" to create a society that guaranteed human rights for both blacks and whites, "a rainbow nation at peace with itself and the world.”
Mandela, who died on Thursday at the age of 95, believed throughout his life that such a society was possible. He helped to lay its foundations, which remain solid despite all current and future problems. South Africa now has a diversified economy, an impressive infrastructure in its large cities, a functioning justice system and a free press.
Nonetheless, it still faces many challenges. Until his last days Mandela used his foundation to fight against the poverty, youth unemployment and uneven distribution of wealth that continue to divide the country.
In the coming weeks, South Africa will mourn the man who brought the nation together, as Mandela in death once again is uniting the country. But the future will depend on how well politics, trade unions, civil society and ordinary citizens come together to tackle its most pressing problems. The major divide in South Africa is no longer between different ethnic groups, but between rich and poor.
The golden years are over
As it has stronger links to the international financial markets, South Africa was more deeply affected by the global financial crisis in 2008 than any other African country.
And now, President Jacob Zuma must admit that he cannot deliver on his promises of economic recovery. When he took on the presidency in 2009, while South Africa’s economy shrank by an unprecedented 6%, he promised to create 550,000 new jobs within a few months. But hope is fading of a return to the golden years between 2004 and 2007, when South Africa profited from economic stability, the global boom on raw materials markets and high credit-driven spending.
Instead, a million jobs were lost and the country had to deal with the consequences of the euro crisis. As the destination for 27% of the country’s exports, the European Union represents South Africa’s most important market. Since 2007, the percentage of exports going to China tripled to 15%, but China’s slowing growth and the shrinking automobile market in Europe both contributed to South Africa’s economic difficulties.
Freedom and joblessness
While the ANC party organizes events each year to commemorate the fight for freedom, it has failed to resolve the issue of widespread unemployment that is contributing to the growing frustration among South Africans. The official unemployment rate stands at 25%, but when you add in those who have given up looking for work, it rises to 36%. Since the arrival of democracy, 3.5 million new jobs have been created, but the number of working-age citizens has risen by twice that.
The troubled education system is partly to blame, but so is South Africa’s corporate structure. Employment laws are more rigid than in competing countries like Brazil or Chile, and dismissals often result in long court battles.
The last few months have seen the introduction of an investment program designed to renew South Africa’s industrial infrastructure, an area that was long neglected as the early years of democracy saw public money dedicated to the fight against poverty. The ANC was under pressure to achieve quick results and invested massively in housing, transport and social welfare. This certainly led to considerable improvements: the average income of a black family has risen by a third since the introduction of democracy. Around 85% of households have an electricity supply (as opposed to 50% in 1994) and 85% of all six-year-olds attend school (35% in 1994).
However, the health system’s resources continue to be stretched by the high number of citizens living with HIV. South Africa only has 0.6% of the world population, but 17% of the people infected with the virus that causes AIDS. The government spends around 9% of its gross domestic product on health, twice as much as most developed countries.
In the long term, South Africa’s efforts to build its service sector will depend on improvements to its education system. According to international studies, 12-year-old children in South Africa achieve below-average results in mathematics and literacy compared to the rest of the continent, although the country invests more in education than any other African nation. The number of those completing high school is rising, but this is because the standard is being lowered.
The population’s confidence that their government is able to overcome these challenges is low, especially since the incident in Marikana, where the police shot 34 miners out on strike.
Nineteen years on from the end of apartheid, South Africa still faces as many challenges as ever before. As Nelson Mandela himself said, “After climbing a great hill, one only finds that there are many more hills to climb.” Now South Africa will have to climb them without the help of its iconic leader.