Articles
Rainbow Nation, no more?
22 years after apartheid, South Africans must grapple with ongoing inequality to save their economy, writes Thorne Godinho
In recent months, South Africa’s public conscience has been gripped by various public incidents of racism, with the African National Congress (ANC), South Africa’s governing party, calling for the extension of new hate crime laws to include the criminalisation of racism and the glorification of apartheid. But the signs of continuing racial inequality extend beyond incidents of brazen racism in public and private: 22 years after the end of apartheid, South Africa remains a society which is markedly stratified along class and colour lines.
In this context, it is perhaps unsurprising that, according to the Institute for Justice and Reconciliation − a South African think tank − close to 70 percent of South Africans remain mistrustful of people of other races. These racial tensions have permeated all aspects of South African life, reflecting a growing impatience with delayed transformation following the end of apartheid. For example, in the first televised political debate for South Africa’s 2016 much anticipated local government elections (LGE), politicians veered away from the debate’s employment theme and instead sparred over the source of ongoing racial tensions in the country. This focus on racism and racial inequality will likely set the tone for the rest of the election cycle, and highlights the shift in public mood in South Africa, where many are questioning whether the united, multicultural ‘rainbow nation’ they were promised has really materialised.
Transformation of the Economy
Despite the dismantling of apartheid’s political system, its legacy is still reflected in the country’s economic and commercial dynamics. The modern, multiracial South African workplace continues to highlight the close correlation between economic and racial inequality in South Africa. For example, white South Africans still occupy 70 percent of top management positions in the workplace according to a 2014/15 report by the Commission for Employment Equity, a government body.
This inequality, and the demographic crisis it creates in business leadership, has spurred the government into championing a range of legislative provisions aimed at hastening transformation in the country. In recent years, the government has promoted Black Economic Empowerment (BEE) – a complex morass of regulations, ratings systems, and incentives – in business. BEE legislation encourages black ownership, management, and skills development and requires larger companies to comply with empowerment targets set by the government. The related Employment Equity legislation encourages (and in certain instances, even requires) affirmative action in the workplace, allowing for employers to be called to account for a failure to ensure equitable representation of gender and race at all levels of the corporate hierarchy.
Despite these measures however, recent estimates indicate that black ownership of the top 100 companies listed on the Johannesburg Stock Exchange (JSE) stands at only 23 percent of share capital. And the country’s unemployment statistics further call into question the efficacy of current measures: Statistics South Africa estimates that the unemployment rate amongst black South Africans with formal tertiary education has actually increased since the country’s first multiracial elections in 1994. In contrast, white people still have the lowest unemployment rate across all skill-levels.
As a result, critics deride BEE as a programme which merely co-opts a few politically-connected individuals into a system of enrichment and privilege, whilst continuing to exclude the majority of poor black South Africans from actively participating in – and owning – the economy.
Challenging ‘White Monopoly Capital’
The continued dominance of what detractors call ‘white monopoly capital’ over South Africa’s economic system has given rise to numerous new political movements. These movements criticise the free market as a system of narrow interests, one which they believe is incapable of transforming South Africa’s economy. The Economic Freedom Fighters (EFF), a far-left black nationalist political party led by disgruntled former ANC members, gained traction in the 2014 general election, by promising mass redistribution of land without compensation, an end to BEE, and the nationalisation of key industries such as the banking and mining sectors. The party, which claims to support Venezuela’s Chavista approach to economics and politics, received six percent of the vote in 2014, and notably rallied tens of thousands of protestors outside the JSE in 2015. The EFF is likely to increase their share of the vote in the LGE, and in doing so, reduce the stability of the ANC in various municipalities.
The EFF’s growth thus coincides with a significant shift in public and investor confidence in the country’s ANC government. Ironically, the EFF’s populist politics may further dampen investor confidence if it cements itself as a political force following this year’s LGE.
The EFF’s opposition to ‘white monopoly capital’ has also been echoed by the various pro-black student movements which have protested the slow pace of transformation at South African universities in the past year. After a student-led campaign to remove the statue of prominent colonial figure, Cecil John Rhodes, at the University of Cape Town in 2015, gained nationwide media attention, the protests evolved into a broader campaign to end tuition fee increases across various campuses. These student protestors were violently dispersed by police at South Africa’s Parliament in October 2015, following a slow response by government to their concerns. These student movements have also successfully lobbied some universities to end labour outsourcing, distancing themselves further from South Africa’s business community.
Salvaging the Rainbow – And the economy?
Both business and the ANC have come under increased pressure to respond to the growth of these movements and the associated suspicion of a united ‘rainbow nation’. In the face of growing unemployment and a declining economic growth rate – which is predicted to fall to 0.8 percent this year – the ANC has shown a willingness to appeal to racial nationalism in its campaigning to stem the growth of political opposition to its government.
As many South Africans grow impatient with continued public incidents of racism, and an economy which is perceived to exclude the majority of the population, racial tensions are further heightened by a political climate which increasingly trades on nationalism and blame.
The ANC, which has long criticised the slow pace of transformation in the private sector, may end up shifting the onus for economic transformation onto business through its often slow and polarising responses to the critical problems facing the country. The effects of increased tensions on investor and consumer confidence are not yet clear, but without business’s proactive participation in making the economy inclusive, economic growth might also become a casualty of the heightened racial tensions in the country.
Business will have to do more to combat public perceptions; merely implementing BEE is not sufficient in a climate where the slow pace of transformation is blamed on the market. In light of this, investors may need to reconsider their efforts to transform their operations in South Africa, by seeing transformation as an opportunity – not an exercise in navigating the country’s red-tape and side-stepping its history of racial exclusion.
The 2016 Local Government Elections
South Africans will head to crucial local government election (LGE) polls in May/August, and numerous political contenders will be vying for a portion of the governing African National Congress (ANC) party’s declining electoral support. The Democratic Alliance (DA) has already entrenched itself as the majority party in the Western Cape Province, following a win at local government-level in 2006. Although much less prominent than the general elections, the LGE will see the ANC engaged in many thousands of localised political battles, and with so many local representatives’ jobs up for grabs, the stakes are much higher. This, coupled with growing public dissatisfaction with President Jacob Zuma’s administration and stagnant economic growth, will likely result in 2016 being South Africa’s most exciting poll since the symbolic 1994 general election.
What’s Up For Grabs?
In 2014, the ANC’s support slipped below 50 percent in Pretoria (Tshwane), the country’s executive capital, and Nelson Mandela Bay (NMB), the metropolitan municipality which includes Port Elizabeth. In Johannesburg, the country’s economic powerhouse, the governing party’s support also dropped 10 percent in the 2014 national polls. The ANC has since deployed popular 2010 FIFA World Cup-bid boss Danny Jordaan as the new mayor of NMB – where the ANC faces a serious challenge from the centrist DA – amongst other measures aimed at revitalising its support.
The Challenges Ahead
The ANC will be keen to stem the rise of both the DA and the far-left Economic Freedom Fighters (EFF) in the LGE, as both parties aim to make inroads in traditional ANC areas. The ANC will also face a potential challenge from its usual bedfellows – the unions, which have indicated that they may revoke their support following changes to the country’s pension laws. The country’s biggest union, the National Union of Metalworkers (NUMSA), withdrew its support from the ANC in 2013 and will likely contest the LGE under the banner of a left-wing workers party. Following a year of student protests, and the establishment of the ‘Zuma Must Fall’ protest movement, the ANC’s seasoned campaign machine will – for the first time in South Africa’s democratic history – face a total onslaught on various fronts, and will likely face defeat in at least one more major city.
In this context, it is perhaps unsurprising that, according to the Institute for Justice and Reconciliation − a South African think tank − close to 70 percent of South Africans remain mistrustful of people of other races. These racial tensions have permeated all aspects of South African life, reflecting a growing impatience with delayed transformation following the end of apartheid. For example, in the first televised political debate for South Africa’s 2016 much anticipated local government elections (LGE), politicians veered away from the debate’s employment theme and instead sparred over the source of ongoing racial tensions in the country. This focus on racism and racial inequality will likely set the tone for the rest of the election cycle, and highlights the shift in public mood in South Africa, where many are questioning whether the united, multicultural ‘rainbow nation’ they were promised has really materialised.
Transformation of the Economy
Despite the dismantling of apartheid’s political system, its legacy is still reflected in the country’s economic and commercial dynamics. The modern, multiracial South African workplace continues to highlight the close correlation between economic and racial inequality in South Africa. For example, white South Africans still occupy 70 percent of top management positions in the workplace according to a 2014/15 report by the Commission for Employment Equity, a government body.
This inequality, and the demographic crisis it creates in business leadership, has spurred the government into championing a range of legislative provisions aimed at hastening transformation in the country. In recent years, the government has promoted Black Economic Empowerment (BEE) – a complex morass of regulations, ratings systems, and incentives – in business. BEE legislation encourages black ownership, management, and skills development and requires larger companies to comply with empowerment targets set by the government. The related Employment Equity legislation encourages (and in certain instances, even requires) affirmative action in the workplace, allowing for employers to be called to account for a failure to ensure equitable representation of gender and race at all levels of the corporate hierarchy.
Despite these measures however, recent estimates indicate that black ownership of the top 100 companies listed on the Johannesburg Stock Exchange (JSE) stands at only 23 percent of share capital. And the country’s unemployment statistics further call into question the efficacy of current measures: Statistics South Africa estimates that the unemployment rate amongst black South Africans with formal tertiary education has actually increased since the country’s first multiracial elections in 1994. In contrast, white people still have the lowest unemployment rate across all skill-levels.
As a result, critics deride BEE as a programme which merely co-opts a few politically-connected individuals into a system of enrichment and privilege, whilst continuing to exclude the majority of poor black South Africans from actively participating in – and owning – the economy.
Challenging ‘White Monopoly Capital’
The continued dominance of what detractors call ‘white monopoly capital’ over South Africa’s economic system has given rise to numerous new political movements. These movements criticise the free market as a system of narrow interests, one which they believe is incapable of transforming South Africa’s economy. The Economic Freedom Fighters (EFF), a far-left black nationalist political party led by disgruntled former ANC members, gained traction in the 2014 general election, by promising mass redistribution of land without compensation, an end to BEE, and the nationalisation of key industries such as the banking and mining sectors. The party, which claims to support Venezuela’s Chavista approach to economics and politics, received six percent of the vote in 2014, and notably rallied tens of thousands of protestors outside the JSE in 2015. The EFF is likely to increase their share of the vote in the LGE, and in doing so, reduce the stability of the ANC in various municipalities.
The EFF’s growth thus coincides with a significant shift in public and investor confidence in the country’s ANC government. Ironically, the EFF’s populist politics may further dampen investor confidence if it cements itself as a political force following this year’s LGE.
The EFF’s opposition to ‘white monopoly capital’ has also been echoed by the various pro-black student movements which have protested the slow pace of transformation at South African universities in the past year. After a student-led campaign to remove the statue of prominent colonial figure, Cecil John Rhodes, at the University of Cape Town in 2015, gained nationwide media attention, the protests evolved into a broader campaign to end tuition fee increases across various campuses. These student protestors were violently dispersed by police at South Africa’s Parliament in October 2015, following a slow response by government to their concerns. These student movements have also successfully lobbied some universities to end labour outsourcing, distancing themselves further from South Africa’s business community.
Salvaging the Rainbow – And the economy?
Both business and the ANC have come under increased pressure to respond to the growth of these movements and the associated suspicion of a united ‘rainbow nation’. In the face of growing unemployment and a declining economic growth rate – which is predicted to fall to 0.8 percent this year – the ANC has shown a willingness to appeal to racial nationalism in its campaigning to stem the growth of political opposition to its government.
As many South Africans grow impatient with continued public incidents of racism, and an economy which is perceived to exclude the majority of the population, racial tensions are further heightened by a political climate which increasingly trades on nationalism and blame.
The ANC, which has long criticised the slow pace of transformation in the private sector, may end up shifting the onus for economic transformation onto business through its often slow and polarising responses to the critical problems facing the country. The effects of increased tensions on investor and consumer confidence are not yet clear, but without business’s proactive participation in making the economy inclusive, economic growth might also become a casualty of the heightened racial tensions in the country.
Business will have to do more to combat public perceptions; merely implementing BEE is not sufficient in a climate where the slow pace of transformation is blamed on the market. In light of this, investors may need to reconsider their efforts to transform their operations in South Africa, by seeing transformation as an opportunity – not an exercise in navigating the country’s red-tape and side-stepping its history of racial exclusion.
The 2016 Local Government Elections
South Africans will head to crucial local government election (LGE) polls in May/August, and numerous political contenders will be vying for a portion of the governing African National Congress (ANC) party’s declining electoral support. The Democratic Alliance (DA) has already entrenched itself as the majority party in the Western Cape Province, following a win at local government-level in 2006. Although much less prominent than the general elections, the LGE will see the ANC engaged in many thousands of localised political battles, and with so many local representatives’ jobs up for grabs, the stakes are much higher. This, coupled with growing public dissatisfaction with President Jacob Zuma’s administration and stagnant economic growth, will likely result in 2016 being South Africa’s most exciting poll since the symbolic 1994 general election.
What’s Up For Grabs?
In 2014, the ANC’s support slipped below 50 percent in Pretoria (Tshwane), the country’s executive capital, and Nelson Mandela Bay (NMB), the metropolitan municipality which includes Port Elizabeth. In Johannesburg, the country’s economic powerhouse, the governing party’s support also dropped 10 percent in the 2014 national polls. The ANC has since deployed popular 2010 FIFA World Cup-bid boss Danny Jordaan as the new mayor of NMB – where the ANC faces a serious challenge from the centrist DA – amongst other measures aimed at revitalising its support.
The Challenges Ahead
The ANC will be keen to stem the rise of both the DA and the far-left Economic Freedom Fighters (EFF) in the LGE, as both parties aim to make inroads in traditional ANC areas. The ANC will also face a potential challenge from its usual bedfellows – the unions, which have indicated that they may revoke their support following changes to the country’s pension laws. The country’s biggest union, the National Union of Metalworkers (NUMSA), withdrew its support from the ANC in 2013 and will likely contest the LGE under the banner of a left-wing workers party. Following a year of student protests, and the establishment of the ‘Zuma Must Fall’ protest movement, the ANC’s seasoned campaign machine will – for the first time in South Africa’s democratic history – face a total onslaught on various fronts, and will likely face defeat in at least one more major city.