Robert Morley
Despite the global boom, most South Africans were left behind. Fourteen years after the end of apartheid, widespread discontent is fueling communism, and economic collapse looms.
Apartheid was a terrible crime against humanity. It left people with deep scars, but I can assure you poverty is worse than that,” Rev. Faleni Mzukisi of the Presbyterian Church of Africa said last October.
“Mzukisi said that whilst apartheid denied rights and privileges, poverty meant people could neither meet their human needs nor attain proper dignity …,” said Fredrick Nzwili writing for Ecumenical News International. What good are human rights if people can’t live like humans? Mzukisi asked the participants of the 2008 World Association of Christian Communication Congress. “People do not eat human rights,” he said. “They want food on the table.”
Fourteen years after the end of apartheid, some people are longing to return to its relative prosperity. For millions of South Africans, the Mandela “rainbow” revolution has become a gloomy cloud. Segregation laws are no more, but conditions are much worse.
An astounding 40 percent of South Africans now live beneath the poverty line. And according to the Southern African Regional Poverty Network, since the official end of apartheid, “households living in poverty have sunk deeper into poverty and the gap between rich and poor has widened.”
The exact unemployment rate is contentious. Unions place it at around 40 percent, while official government statistics say it is “only” around 23 percent. Either way, it is horrendous. Unemployment in the U.S. during the Great Depression peaked at around 25 percent.
And, although government ministers claim that South Africa is still growing and will avoid “recession,” conditions on the ground indicate that “official” recession has already arrived. Investment bank Barclays warns that the economy is currently contracting. Over 200,000 jobs were lost during the last quarter of 2008—a very large number for a country with a population of only 44 million. The U.S. equivalent would be akin to losing 1.4 million jobs over that time frame.
“The growth picture has soured radically,” warns absa Capital economist Ian Marsberg, “we are in for a rough ride next year.”
For example, house prices fell by 4 percent last year. That may not sound like much, but since government statistics indicate inflation is running at approximately 11 percent, homes actually lost 15 percent of their value. And the real depreciation may have been even greater since governments characteristically underreport inflation numbers. That said, home prices may have much further to fall after the massive run-up experienced over the past few years.
Another clear indicator that the economy is in turmoil is the auto industry. New vehicle sales were down a massive 27 percent in December. That meant that for 2008, new vehicle sales fell 20.3 percent across all categories compared to the year before.
The metals and mining industry is also getting pummeled. Although gold prices have remained firm and even risen over the past year, the prices of virtually every other metal—including platinum, palladium, manganese and chrome—have plummeted. Platinum, for example, has plunged from over $2,000 per ounce to around $960 per ounce. Platinum makes up more than 14 percent of all South African exports.
Mining is the single most important employment sector for the South African economy. It is also the most important source of foreign revenue. But with commodity prices plummeting, revenues have fallen, and more job losses could be coming.
South Africa’s energy infrastructure is also old and decaying. Due to government corruption and lack of new investment, much of the country now suffers the same kind of widespread power outages that the rest of the continent has grown used to in the post-colonial era. Last year, the state introduced electricity rationing, with much of the mining industry and other heavy electricity users only receiving 90 to 95 percent of their power needs, after the national electrical grid almost collapsed. Eskom, the state power company, is attempting to borrow money to upgrade the grid, but with the global credit crunch in full swing, it is having difficulty finding lenders willing to take the risk.
And as things are getting darker, the cost of eating is skyrocketing. National food price inflation hit 17.1 percent in December. Coffee, tea and cocoa products registered an increase of more than 20 percent. Grain products were up 34.3 percent. Fats and cooking oils jumped 27.3 percent, while vegetables and dairy products were up between 13.4 and 16.2 percent. Meat prices climbed 8.4 percent.
No jobs, and higher-priced food: It is no wonder that social breakdown continues.
hiv infection rates remain high. About 29 percent of pregnant women visiting hospitals are infected, according to 2006 statistics.
Violence runs unchecked throughout much of the country. It was estimated, according to 2006 figures, that a woman is raped in South Africa once every 26 seconds. During that year, less than 1 percent of rapes led to a conviction.
Murderers run free too. About 19,000 people were murdered last year—more than 50 per day.
Rule of law has become the rule of organized crime. Just yesterday, 500 police in South Africa’s crime-ridden commercial capital, Johannesburg, went on strike, accusing authorities of failing to bring senior officers to task over corruption.
Last Friday, the government disbanded the country’s elite anti-crime investigating unit, known as the Scorpions. Why, especially when the Scorpions had a much better track record than the police at solving crime? According to Agence France Presse, it was because they fell afoul of the ruling African National Congress party for their corruption investigation of anc leader Jacob Zuma. Zuma is expected to become the country’s next president when elections are held, probably in April.
But as bad as conditions are in South Africa, they may be about to get dramatically worse.
South Africa’s government has shifted radically to the left, according to the Sunday Times. In a move to placate angry voters and cement power, the ruling anc party’s Jacob Zuma is pushing a manifesto largely dictated by the country’s Communist party. Zuma’s election promises, if adopted, could easily bankrupt the country.
The anc already promises a free allowance of water and electricity to all people and has introduced “the largest welfare state ever seen in a developing country,” according to the Times. More than 40 percent of the population currently receive state handouts.
But the state handouts are only beginning.
The possibly soon-to-be-published new state manifesto is said to call for universal health insurance, free education, increased child allowances, new maternity grants, wage subsidies, an old age savings scheme, subsidized housing for farm workers and military veterans, and free food handouts to all poor families.
But perhaps the bigger shock is the manifesto’s proposal to transform “the private sector through the development of cooperative financial institutions.” In other words, nationalize and communize the economy.
Zuma’s program also calls for the state to take over the South African central bank.
Economists are astounded.
Greta Steyn, a leading South African financial analyst, says that the markets are being set up for a massive crash and are “in denial.” Servaas van der Berg, professor of economics at Stellenbosch University, said that just the proposal for a basic income grant of R100 (us$10) would force up marginal income tax rates from 40 percent to 66 percent.
So where will South Africa get the money to finance all these reforms?
Jacob Zuma, whom the Times describes as knowing relatively little about economics, seems unconcerned.
But here is a hint: Zuma will get the money he needs the same way his pal Robert Mugabe gets the money he needs.
Lest we forget, Zimbabwe used to be even more prosperous than South Africa was at its peak. But then Robert Mugabe set off on his post-colonial reforms, his social programs, his government handouts, and the land grabs. And how did Mugabe pay for it all? First, he redistributed the land in order to fill his coffers and buy favors. When that wasn’t enough, he started nationalizing other sectors of the economy, including some of the world’s richest mines. But that wasn’t enough either. So eventually, he was forced to nationalize and assert complete control over the nation’s reserve bank—that way he could print whatever money he wanted to pay the bills. Unfortunately, that destroyed the value of Zimbabwe’s currency—completely wiping out what little savings his people had left. But Mugabe and his cronies got filthy rich in the process, moving assets offshore, or converting their devaluing dollars into gold or other currencies.
The anc’s supposed desire to nationalize South Africa’s central bank should be a clear indicator of what is headed in South Africa’s direction: Zimbabwe economics. And that means a Zimbabwe standard of living for the vast majority.
Things are about to get much tougher in South Africa.
Africa’s modern history is a continent filled with nation-states in various stages of post-colonial collapse. South Africa was a notable exception to this rule for several decades after becoming an independent republic. But now, that is changing—and rapidly.
February 3, 2009 From www.theTrumpet.com
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