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Contributor: James Ogunleye
Mandela Performs A Balancing Act

The South African economy is a study in paradox. On one hand, says Thabo Mbeki, the deputy president, it ?demonstrates levels of development which may be compared with those of developed western countries.? And on the other hand, it ?has the trappings of under development.? Since April 27 1994, the task of smoothing out that paradox had been the main pre-occupation of Nelson Mandela and his Government of National Unity (GNU).
His administration came to power against the background of an economy deep in recession. For instance, in the three years to December 1993, the gross domestic product (GDP) declined by (average) 0.63 per cent, while consumer price index, a measure of inflation, averaged 13 per cent. Unemployment, especially within the Black population, was a disturbing 35 per cent.
So, for Nelson Mandela, the task was not only to arrest the decline in the economy, but also to demonstrate to his constituency - the majority Blacks - that the future was bright after decades of white repressive rule and aggravated poverty. Three years to the month, and going by the latest social and economic indicators of South Africa, Mandela seems to have squared up to the challenge. The first thing his government did in 1994 was to launch the Reconstruction and Development Programme (RDP), as a channel through which the state hoped to bring the social and economy-supporting infrastructures to the mass of Black South Africans living in rural areas and countryside. To this end, the RDP was to focus on jobs, land redistribution, housing, water, electricity, telecommunications, health and education.
With more than R19 billion ($5.4) spent or allocated to date, the RDP has been a mixed-bag of success. According to a government internal briefing paper, over 700,000 Black South Africans have been supplied with water, and it is estimated that some 5 million people would have access to clean water by 1999. On the delivery of housing, about 14,000 low-cost housing units were completed in 1995 and, Housing Minister Sankie Mthembi-Mahanyele, has predicted that additional 190,000 housing units would be completed by the end of this year. So confident was Sankie of his prediction, that he had declared 1997 as the ?year of delivery?. And in order to help people on low income ? defined as those who earn R3,500 or less per month - the government has approved housing subsidies to assist them in building their own houses. ?It is only a matter of weeks until half a million housing subsidies will have been issued,? said a pleased Mandela, in April.
Mandela would also be pleased with his government?s achievement in health care delivery. In 1996, reports say over 400,000 clinics ?were either built or upgraded,? while a further 500 were programmed for 1997. Also, the government immunisation campaign has reached some 3 million children in the past year. Some success was also achieved in the supply of electricity. Since the launch of the RDP in 1994, more than 1.3million houses have been connected to the electricity grid. ?By the end of the year (1997) the number of electricity connection will have reached well over one and a half million,? Mandela announced.
Other core RDP sectors have also been turned around. Take the government?s R500 million food security and nutrition programme, for instance. By the end of 1996, the programme had reached 12,300 schools, benefiting well over 3 million children. The programme is expected to reach a further 2 million school children in the fiscal year 1997/98.
The GNU has not only done reasonably well on the social services delivery, its economic recovery programme, too, has yielded dividend. For instance, the average growth rate was 3.03 per cent between 1994 to 1996, compared to -0.63 in the three years to 1993. And local analysts say the country should expect another bumper growth of 3.5 per cent in 1997, a slight increase from 3.1 per cent recorded in 1996. Also in 1996, real GDP per capita rose 1.6 per cent. In simple language, this means the average South African is about 5 per cent better off in 1996 than in 1993. The government is also winning its battle against inflation. Average consumer price inflation in 1996 was 7.4 per cent, the lowest average rate since 1972.
Equally successful were the government?s measures to attract foreign direct investment (FDI) into the economy. Since the all-party election in 1994, foreign businesses and institutions have been literally falling over themselves to invest in South Africa. One of the leading investors in South Africa is the International Finance Corporation, IFC, an arm of the World Bank. The IFC led the way in 1994 with R53.6 million investment in South African Franchise Capital Fund and African Life Assurance, to ?help bridge the gap between the first and third world parts of the economy,? said the IFC. And in the recent months, the IFC has announced a further $17 million of new investment in the country. All in all, government figures showed that, after 4 years of negative growth and stagnation, gross domestic fixed investment is firming up: it grew by 8.7 per cent in 1994, 10.3 per cent in 1995 and 6.8 per cent in 1996.
To boost representation of Black people in the upper end of the domestic economy, government is affirming the Black business class. For instance, the National Empowerment Consortium (NEC) has been set up to empower the Black professional and business classes. NEC currently has some 50 corporate members. Among the influential members of NEC is New African Investment Limited (NAIL) whose deputy chairman is Cryril Ramaphosa, former secretary-general of the ANC and the man who is smoothing NEC?s path to the capital market. Recently, jaws dropped on the floor of the Johannesburg Stock Exchange when NEC acquired a 20 per cent stake ($325 million shares) in Johannesburg Consolidation Investment, a subsidiary of Anglo-American Corporation.
Commendable as Mandela?s government?s achievements have been, local analysts say the tasks ahead are still daunting. Prime amongst these tasks is how the government would achieve its objective of fulfilling the yearnings of millions of South African Blacks without upsetting economic fundamentals like inflation and money supply, by means of cost over run.
Perhaps the most immediate challenge facing the GNU is the mass unemployment, especially among Black South Africans. According to the South African Central Statistical Service, unemployment rate is currently 32.6 per cent - of which 66 per cent are classified as long-term unemployed. At least 400,000 school leavers enter the job market annually, compared to less than 20,000 the economy absorbs per annum. Experts say South African needs a sustainable minimum 8 per cent GDP per annum to be able to absorb its mammoth jobless rate, and, also to be able to feed its 41 million mouths. The present 3.5 per cent growth rate, and the projected 6 per cent by the year 2000, is a far cry from the 8 per cent the economy really requires.
Another major problem facing the government is deficit spending. At the moment fiscal deficit is over 5 per cent of the GDP and expert say this figure cannot be sustained over a long period. The implication is that unless the government reins back on its spending, its policy on inflation would be in jeopardy.
Another challenge for the government is the growing incidence of violent crime in the country. In the first four months of this year alone, armed gangs have struck commercial banks in Johannesburg financial districts no less than 43 times, making off with some R5 million. And last October, the business community was outraged when Eric Ellmer, a 48-year old financial manager of South African AEG, a German conglomerate, was shot outside his home in Johannesburg. The situation became so worrisome that BMW, another German company, said it would withhold some R1 billion planned investment unless the government addresses the crime problem. The government has since announced a R700 package to combat the menace. Among the new measures are: increased power for judges to impose tougher and longer jail sentences for violent criminals and a clamp-down on people carrying firearms in public.
Another important problem for the government is the urgent need to stem the tide of corruption and embezzlement of public funds. ?The problem of corruption is a very serious one, especially where it concerns members of an organisation [the ANC] which has declared cleansing the government and dealing with all forms of corruption to be one of its fundamental policies,? said Nelson Mandela. Unless the president acts quickly on the issue, many fear South Africa may soon join the league of countries in Sub-Saharan Africa, where corruption has become a national pastime.
For most Black South Africans, however, the bone of contention is the slow pace of the RDP delivery. Critics say the RDP is being crippled by financial crisis at the municipal (local) government level. Happy Mahlangu, the South African deputy high commissioner to the United Kingdom, in an interview with Black Perspective, conceded that the RDP has been facing capacity problems at the local government level, but he promised that this problem was being resolved.
South Africa has indeed come of age. But as Nelson Mandela marked the third anniversary of his historic election last April, the question that comes to mind is: for how long will he maintain his balancing act? Only time will tell.
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