Is South Africa Squandering Mandela's Legacy? Part One

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Global Trade, Macroeconomics

In the UK, one often assumes South Africa is as much a part of the west as Australia, New Zealand and possibly even Canada. An English speaking, resource rich country, firmly entrenched in democratic principals and as good a place to do business as any of those alternatives. Although firmly anchored to Africa, we assume its greater GDP, rule of law and multicultural political and business environment makes it Ëœnot of that continent’. In some ways Nelson Mandela’s decade has achieved so much that we can be excused for making those assumptions. From being the pariah of the international community in the 1980’s the country has become a beacon of hope for what much of the rest of Africa could become. Although he became president in 1994 and retired in 1999, Mandela’s influence remained strong well into the middle of the last decade driving compromise between the strongly socialist African National Congress ANC party of which he had been a leading part since the early Ëœ50’s and the business and economic necessities of a modern open economy. But it should not be forgotten that the ANC is a left wing political movement and rules in a tripartite alliance with the Congress of South African Trade Unions and the South African Communist Party. It could be argued such an alliance is culturally a polar opposite to free market economics yet they have achieved a surprising level of success in the last ten years. As Mandela’s influence has waned and the commendable drive to develop economic progress for the black majority has been given free reign, the opportunity for corruption and cronyism has been immense. It is to South Africa’s credit, aided by its free press and strong legal system, that it does not resemble some of its less attractive neighbors, but that is not to say we should assume all is well.

That free press has come under such pressure of late that according to a FT article, 37 editors of local publications (including Business Day and the Financial Mail, which are partly owned by the Financial Times) have felt the need to issue a joint statement against two pieces of legislation. The first is a proposal, currently being considered by the ruling ANC, to set up a Media Appeals Tribunal, accountable to parliament and with the power to judge complaints against the print media. The ANC complains that “fractions of the media continue to adopt an anti-transformation, anti-development and anti-ANC stance and that the print media’s dominant outlook is one of “neo-liberalism, a weak and passive state and over-emphasis on individual rights, market fundamentalism, etc. Well sorry but shouldn’t the press stand up for individual rights over the state? The second is a freedom of information act that would allow ministers to claim almost anything is a state secret and make release neigh on impossible for investigative journalists worse release of details considered to be secret would result in 3-15 years in jail whereas withholding information by ministers would be punishable by a fine or only up to 3 years in jail. The press has been at the forefront of reporting the kind of corruption in both government and business that has proved such a block to economic development in other parts of Africa.

Coming on top of oppression of the media two recent incidents in the mining and metals sector have given rise to such profound alarm that the government has felt the need to review laws and reverse ministerial decisions to calm foreign investors fears. A Financial Times article recently quoted Charles Kernot, a London-based mining analyst at Evolution Securities as saying “I think investors should be cautious there are a lot of issues facing mining companies to do with meeting black economic empowerment (BEE) requirements and more people are calling for nationalization [of mines], he said. “It increases uncertainty, especially abroad. The calls for nationalization are coming from the ANC’s youth league among others. As important backers of President Zuma’s election campaign last year they have some clout.

We will continue this story in a follow-up post later this afternoon.

–Stuart Burns

Comment (1)

  1. Rod says:

    Sir: Your first sentence makes no sense. Your definition of the “west” is curious. Australia, NZ are former colonies, English speaking and sharing many cultural traits with the UK. Do you infer that Canada does not?
    Having just spent 3 weeks in the UK I can definitely say that Canada does not hold the same romantic affection in a Brit’s heart that, for example, Australia does but this is neither wrong nor exceptional.
    Canada is like the big brother trying to do the right thing, while Australia is the brash little bro who likes to muck about.

    To the rest of your article, I think the RSA needs to politically evolve away from the one party state that it currently is. This will be difficult but that brave country has faced the abyss once, did the right thing so I hope the future is bright.

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