South Africa: Between Two Worlds
The Challenges
This shift has a lot to do with how South Africa sees itself today, the challenges it is grappling with and the role it sees for itself in future. It’s a rainbow nation with whites, blacks, Asians all living together. But a vast majority of its 49 million people — about 80 percent — comprise blacks. Nowhere in the world is the contrast between a minority rich and majority poor as stark as in South Africa. Not even in India, the land of inherent contradictions. In India, a vast middle class cushions the inequality effect; here, the middle class is small.
After 1994 with the end of apartheid, the South African government has been working hard to bridge the divide between blacks and whites. It launched a slew of schemes. Its affirmative action plan, called Black Economic Empowerment (BEE), gives black workers and entrepreneurs (the definition includes Africans, mixed-race people and Indians) preferential treatment in government jobs and tenders. To push for wider enterprise ownership, it also gives extra credit to companies on how blacks are represented on their boards, in senior positions, and on employees’ ownership stake. This has helped, but has also created a small band of black elites, called “tender-preneurs”. Widespread black empowerment is still a distant dream. “Policy documents are all very good. Problem is execution, implementation,” says Stephen Gelb, director, Edge Institute, South Africa.
The official unemployment rate in South Africa is among the highest at 25 percent. And this is a conservative estimate, most experts say. Many blacks, out of a job for a long time, no longer show up in official statistics. The flood of refugees — thousands from Zimbabwe alone — only makes things worse. Not surprising that the crime rate is among the highest in the world. The security business in South Africa is said to be its biggest industry; most well off South Africans invest heavily in securing their cars and homes.
Fifteen years after the end of apartheid, extreme poverty persists, shanties dot the landscape, child mortality is high, and so is the number of children out of school. All this, despite the fact that the South African government is putting a lot of resources behind fixing these issues.
Amid economic crisis, the government has let the fiscal deficit expand to 7.6 percent of the GDP to continue funding its social and infrastructure programmes. Spending on social grants has more than quadrupled over the past 10 years, now reaching almost 4 percent of its national income — more than nearly any other developing country, says Michael Samson, research director, Economic Policy Research Institute. Over 12 million children, for example, receive grants that support their nutrition, education, health and well-being. Ten years ago this was less than a million.
South Africa’s substantive welfare agenda makes it lean naturally towards other emerging markets. In policy and spending, it might feel closer to countries like India and Brazil. It realises that the answers will come from other nations with similar issues. 
Infographic by Malay Karmakar
For example, its ambitious social grants policy is working but is not as effective. “It leans on “means testing” (to vet eligible citizens) which is a Western idea,” says Julian May, professor, School of development studies, University of KwaZulu-Natal. One has to first get his or her income tested before he/she becomes eligible for any grant. “Often it costs so much more to do the testing,” says May. The country is looking to learn from the experiences of Brazil and Mexico on this.
Economic Realities
The shift in reference point is also driven by serious economic considerations. While in absolute numbers the US and Europe dominate Africa as trading partners, trade with Asia is rising exponentially. Asia’s exports to Africa have been rising annually by 18 percent; African imports have roughly doubled since 2000. “Asia is set to become the dominant economic presence in Africa,” says Habib. The future national footprints with the most lasting legacy in Africa are likely to be those of the United States, China and India, he says. South Africa, the de facto leader in the African continent, is keenly aware of this big shift in global economic sweepstakes and wants deeper relationships with the emerging markets.
Single Page View
