Thursday, November 7, 2013

Beyond Apartheid I: Two Decades of Freedom

On Monday Goldman Sachs released a report “TWO DECADES OF FREEDOM: What South Africa is doing with it and what now needs to be done” which assessed South Africa’s progress over the period since the change from the Apartheid government of the National Party (now defunct) to the African National Congress.  Next April will be the twentieth anniversary of the election that changed everything for South Africa, moving us from a nation failed morally and starting to fail in every other way, to a country with massive opportunities but still with plenty of problems. 

Managing partner of Goldman Sachs Colin Coleman

While the report is business focused, it covers all aspects of the South African scene and how much it has changed while the population grew from 41 to 52 million.  It is substantially more than a twenty year retrospective; the report highlights issues, suggests targets and makes extrapolations. 
Finance Minister Pravin Gordhan
Much of it – in fact most of it – is good news and although carefully saying that “the government welcomes the report but does not endorse it,” the Minister of Finance was obviously pleased. He pointed to the recommendations and noted that "South Africa has the ability to rise to much greater heights than we have already."  

Of course the report has generated plenty of controversy from both the left and the right.  Stanley has pointed out on several occasions that South Africans – white and black – tend to grumble about what has happened over the last twenty years - not denying the necessity of the change of government and policies, but harping on how much more could and should have been done. 

So here are a few statistics that are highlighted in the report.  Perhaps you want to reflect on how other countries have fared in these areas:
  •  Employment increased from 9 million to 14 million;
  • Illiteracy decreased from 34% to 19%;
  •   Service provision increased significantly.  For example electricity provision increased from 58% to 85%;
  •  70% now use the facilities of public hospitals or clinics, up from 57%.  What is more, 70% of them said they were ‘satisfied’ or ‘very satisfied.’  (Conventional wisdom here is that public health is sicker than its patients.)
  • Gross domestic product (GDP) increased from US$80 billion to US$468 billion.  There’s a lot more financial good news (e.g. the Johannesburg Stock Exchange is the fifteenth largest in the world), but this stuff can get boring;
  •  Around 10 million South Africans have entered the “middle class” over the last decade.

So what’s the bad news?
  • 4.6 million people live with HIV (nearly 16% of the population), but ARVs are free and education and drugs are starting to make a difference;
  • 4.6 million are looking for jobs and another 2.2 million are no longer bothering to look.  That’s a real unemployment rate of 36%.  Unemployment is our huge challenge.  We are way out of line with our BRICS partners in this area; 
  • 15 million people live below the poverty line.  The government supplies them with welfare grants.  The poverty line is only $2 per day;
  •  Mining and manufacturing are falling as a percentage of GDP.  That means that “real” production is being replaced by services and the like.  This is bad for exports.  Also mining generates jobs.  Labor is more productive than in 1994, but productivity has not kept pace with wage increases.  Labor unrest and the public sector have both increased leaving the government in the uncomfortable position of being both employer and trade union;
  •  Infrastructure needs upgrading.  (So what else is new?)
The report contains a comparison with South Korea and comes to an interesting conclusion.  These are the worst areas where we fall short – internet access, personal computers and research and development.  This is in a context where the majority of our children are receiving only moderate education.  Indeed, our top problem is that 70% of young people aren’t adequately skilled and can’t find jobs.

Key Findings in the report from Goldman Sachs

There remains a huge disparity between rich and poor.  It used to be between white and black, but now is more an education divide.  The white population has declined overall and the percentage of it in the middle class has reduced.  The reason is that the people in the middle class have either emigrated or moved into the wealthy category.  For the rich things have never been so good.  But the huge group of poor people may be starting to lose patience despite a small improvement in their lot. 

Julius Malema

And there are always leaders ready to exploit that.  More about that in the next blog.

Michael - Thursday


  1. Great column, Michael! The quote that struck me was, "For the rich things have never been so good. But the huge group of poor people may be starting to lose patience despite a small improvement in their lot."

    I suspect that applies (and will continue to apply more and more) to not only South Africa, but much of the rest of the world. "Interesting times" ahead.

  2. Perhaps Goldman can take SA public? What I really want to know, though, is what's with the hot new photos on the sidebar? I like them both, especially the one of Michael Stanley's better half.

  3. Yes, Everett, the growing divide between rich and poor certainly isn't a South African exclusive. But here over 70% of the unemployed are aged 17-34. That's a lot of unhappy young people without a future.

    As to the better half, Jeff, you'll have to ask the other half...

  4. Michael, thank you for this. I do see hope in these numbers and am grateful to know them. You have also brought what worries me most: the power hungry who want to exploit the poor--not help them better their lot, but use them to stir up hatred, become their leaders, and then through corruption become disgustingly wealthy. Those who enjoy the widening gap between the rich and the poor never seem to consider the risks of such outcomes. And it is a world-wide phenomenon.

  5. The unemployment level of youth is horrible. And also the fact that 15 million out of 52 million live below the poverty line, and that line is set at $2 a day!

    The situation for millions of people, especially youth is so horrific, that there must be leaders who care deeply about the poor and unemployed and want to do something about it to improve their situations. There have to be jobs programs and much fairer distribution of income.

    In order to try to solve this huge economic disparity, some things have to be shaken up. Things can't continue as they are obviously. These statistics presumably tell the truth, and drastic measures need to be taken. Hope there are some good ideas and programs to do so.

  6. Hi Kathy,
    I agree with everything you say, but unfortunately the news isn't encouraging. For example, the trade unions managed to block a proposed "youth wage" (basically a government subsidy for employing new entrants to the workforce) because they thought companies would employ more young people rather than increase wages to existing wage earners.
    As to leaders, well, I'd like to believe it is a high priority with them, but I haven't seen a huge amount of evidence for that. But there have been some quite dramatic achievements over the last twenty years. That gives hope for the future.