Reconstruction in South Africa: Reflections on the 2021 State of the Nation Address and Budget

This month’s State of the Nation Address (SONA) by President Cyril Ramaphosa and Wednesday’s budget statement by Tito Mboweni (Minister of Finance) have together highlighted the urgent need for reconstruction in South Africa. This week, students on my undergraduate module ‘South African Politics: from Apartheid to Democracy’ are looking at reconstruction in post-apartheid South Africa and therefore I decided to post some thoughts on what lessons we might draw from these recent announcements.

The latest government strategy is the Economic Reconstruction and Recovery Plan (ERRP), which was published in October 2020. This plan fits comfortably within a much longer trend in policymaking that I identified in an article published in Capital & Class in 2017. An approach based on creating an investor-friendly environment to try and generate economic growth, has been at the core of the ANC government’s macroeconomic strategy, ever since it launched its Growth, Employment and Redistribution (GEAR) plan in 1996.

It is strikingly clear, however, that such an approach has failed to deliver human development for the majority of South Africans. Before the Covid-19 pandemic hit South Africa, it was already facing serious development challenges. The legacies of apartheid have remained visible in the period since the first multi-racial election was held in April 1994. A key explanation for this is the bargain struck in the early 1990s by the African National Congress (ANC) during the negotiated transition. Patrick Bond’s analysis of the series of compromises reached during this period remains instructive for understanding the contemporary situation. Bond argues that “ANC leaders were not ‘constrained’ in the 1990s by a desire for economic stability but entered into a pact with Afrikaner nationalists and big business”.

As a result, the structural legacies of apartheid endure. The Covid-19 pandemic has deepened the pre-existing dual economy. For the final quarter of 2020, South Africa’s unemployment rate is reported as 42.6 per cent (using the expanded definition that includes people who are discouraged from seeking work). To put this into context, concerns were recently expressed in the media that the UK’s unemployment rate has risen to 5 per cent for the first time in nearly five years. South Africa also has staggering levels of wealth inequality when compared to other countries. A recent report by Aroop Chatterjee, Léo Czajka and Amory Gethin on inequality, concluded that in South Africa “the top 10 per cent own more than 85 per cent of wealth, and the top 0.1 per cent at least 25 per cent”. The report also notes that there has been no discernible decrease in inequality since the end of apartheid.

At the heart of the SONA speech was a reinforcement of the centrality of the ERRP in addressing South Africa’s economic challenges. Ramaphosa is not oblivious to the challenges facing the country and he acknowledged the need to overcome poverty, hunger, joblessness and inequality. He went on to outline the four central elements of the government’s recovery plan:

  1. A huge rollout of infrastructure projects focused on areas such as water and improvements to the road network.
  2. A focus on local production based on a commitment to buy local and a boost to exports .
  3. A government stimulus package to create jobs combined with measures to make it easier for the private sector to do business.
  4. Measures to address the capacity problems in the domestic energy sector and in particular a restructuring of Eskom, which is the state-owned electricity provider.
President Cyril Ramaphosa delivers the SONA, 11 February 2021 [Photo GCIS, Creative Commons License CC BY-ND 2.0]

This ‘new’ development strategy draws on discussion papers that were produced by the Treasury before the impact of the pandemic in August and October 2019. In turn, these built on the analysis at the heart of the National Development Plan, which was launched in 2012. The message outlined by Ramaphosa appears to be a renewed focus on implementation, rather than a radically different strategy. The aim is to create the conditions in South Africa that are conducive to the needs of capital, which it is argued will generate higher levels of economic growth that will in turn begin to resolve the economic divide. In July 2020, South Africa made a successful request to the IMF for emergency financing worth US$ 4.3 billion. In the letter of intent to the IMF the Minister of Finance and Governor of the Reserve Bank made it clear that South Africa will focus on fiscal consolidation to ensure its debt is stabilised. This was evident in the budget, which saw a real-terms cut in social grants. At the same time, it was announced that the corporate tax rate will be reduced from 28 per cent to 27 per cent in April 2022.

So, what alternative measures could be adopted to help close the inequality gap and create jobs that are compatible with the challenge of climate change?

In response to the pandemic, the government introduced a temporary Social Relief of Distress Grant for those not already in receipt of any other social grant. Recipients receive R350 per month and this scheme has recently been extended until the end of April 2021. The decision to provide this grant, which it should be noted is below the level of the national food poverty line of R585 per month, has re-opened a debate in South Africa about a Basic Income Grant (BIG). This was something that a coalition of social movements campaigned for in the early 2000s. There are compelling arguments in favour of introducing a BIG to provide economic security for all. It was rebuked by government in the past on the grounds that it would create dependency and reduce the incentives to work. However, as Dawson and Fouksman have argued, it makes no sense to “keep expecting the poor to receive money through work only, when work is unavailable, or unstable and badly paid”.

However, the introduction of a BIG in isolation from other radical measures would only help to reduce the more extreme levels of poverty in South Africa. Inequality will persist without a significant redistribution of wealth and changes to land ownership. Chatterjee, Czajka and Gethin’s work on wealth – not income – inequality leads them to conclude there is a need for a wealth tax. They propose a progressive tax on the top 1 per cent of South Africans, which they estimate would raise R143 billion. To put this figure into context, in the budget this week, total government revenue for 2020-21 is estimated at R1,363 billion. South Africa also needs to move away from its reliance on extractive industries to begin a just transition towards a low carbon economy. Proposals published by the Million Climate Jobs Campaign and Alternative Information and Development Centre provide an interesting roadmap for how this might be achieved.

During the SONA, Ramaphosa made frequent reference to the recovery plan being based on a social compact. Within the National Economic Development and Labour Council (NEDLAC), social partners (business, labour and community) were reported to have agreed upon a Social Compact on Economic Recovery in September 2020. NEDLAC is a corporatist bargaining forum that is often bypassed in the policymaking process. However, the government have claimed that on this occasion the Social Compact has directly informed the ERRP. The problem is that with such high levels of unemployment coupled with those who are in casualised or informal work, established trade unions are not representative of the interests of the poor majority in South Africa. Despite the Social Compact, the Minister of Finance still felt the need to tell ‘social partners’, on more than one occasion during his budget speech, that he was not delivering an austerity budget. In an attempt to raise the wider issues at play, the South African Federation of Trade Unions (SAFTU), which is a group of unions that has broken away from the ANC-aligned Congress of South African Trade Unions (COSATU), organised a general strike on budget day. SAFTU was formed in 2017 but remains outside of discussions within NEDLAC.

A society with such stark levels of poverty, inequality and unemployment is not a ‘good society’. It breeds crime, resentment and fear. Ultimately, it remains an ongoing tragedy that the aspiration of freedom, which was at the heart of the liberation struggle against apartheid, remains out of reach for millions of South Africans due to entrenched economic divisions.

Global Britain? UK-Africa Relations Damaged by Visa System

Last week I travelled down to Westminster to attend the launch of a new report entitled ‘Visa Problems for African Visitors to the UK’. It is the product of seven months of evidence collection and has been jointly produced by three All-Party Parliamentary Groups (the APPG for Africa, the APPG for Diaspora, Development & Migration and the APPG for Malawi).

The report provides a damning critique of the experience of Africans seeking short-term visit visas to the UK. The headline data is that for a two-year period from September 2016, the refusal rate for African visitors to the UK was 27%, compared with an average across the board of 12% (page 8 of the report). Of course, this does not include data on how many people have been put off even applying in the first place, given a system which the report concludes “does not afford quality decision-making…and is doing tremendous damage to the image and interests of Global Britain” (page 43).

The evidence base for the report also includes a series of personal testimonies from a range of individuals and organisations. During the meeting last week, some audience members in their questions to the Minister for Immigration, Caroline Nokes, recounted their own traumatic experiences with the UK visa system. An online appendix to the report, available here, catalogues these and remains open for further submissions.

The report convincingly argues that the disparities experienced by African applicants are caused by underlying structural barriers. Decisions are perceived to lack fairness, with the evidence collected for the report demonstrating that in some cases applicants are being asked to go beyond the procedural guidelines. Applications are also costly and time-consuming. The UK currently has thirty-two Visa Application Centres (VACs) across the entire continent, which means that the residents of twenty-four African countries have to travel to a neighbouring country to submit their application (page 18). One example, cited in the report, is Mauritania, whose citizens have to apply for a visa to visit Morocco and travel over 4000 km, just to submit a UK visa application (page 20). There is also a lack of accountability in the system with no right of appeal to challenge refusals. Apart from pursuing a judicial review, the only option is to submit a brand new application.

Of course, the findings of this report exist within a wider context that has seen the UK Government employ its ‘hostile environment’ policy in an attempt to appear tough on immigration. More recently, the revelations around the Windrush scandal have highlighted the failings of the Home Office. A recent leak of a draft report of the ongoing investigation into this affair, suggests the “Home Office failed in its legal duty to counter racial discrimination when it implemented its anti-immigration hostile environment programme” (Guardian 27.06.19).

The impact of austerity and outsourcing is also an important backdrop. At the launch meeting, John Vine (former Independent Chief Inspector for Borders & Immigration (ICIBI)) reminded everyone that the Home Office has not been a ring-fenced Department during the years of austerity. He argued that as a result the volume of visa applications was not being matched by sufficient resources. This is despite the fact that applicants for a standard visitor visa to the UK have to pay £95 regardless of whether or not their application is successful (page 19). The report notes that there are now only two Decision Making Centres (DMCs) (in Pretoria and Croydon) for applications from the whole of Africa (page 17). The contract for running these DMCs, along with the VACs, was awarded to a private company (Teleperformance UK Ltd) in 2014. With staff being expected to assess 40-60 applications per day (according to John Vine) it is maybe no surprise that the use of an algorithm has been adopted, which labels applications ‘green’, ‘amber’ or ‘red’. The current ICIBI has raised concerns that as a result “decisions were not being made on the merits of the individual case but on a set of generalised and detached indicators” (page 21).

The report also identifies a number of recommendations. These cover measures to improve both the process of applying for visas and the decision-making procedures. At the launch of the report, John Vine reminded the audience that, during his time as ICIBI, he made very similar suggestions in his annual reports to the Home Office. Another panellist, Dr Robtel Neajai Pailey, suggested that things were so problematic that Africans should consider boycotting the UK visa system to engender effective changes.

In summary, the UK visa system will be a central part of our future relationship with Africa. I have visited both South Africa (on a number of occasions) and Kenya for work and my experience couldn’t be more of a contrast with those who seek to travel in the opposite direction. The APPGs involved in producing this report should be commended for cataloguing the ways in which the current system is failing our partners in Africa and the subsequent damage this is doing to their view of the UK. The full report is available to download here and if you are a UK citizen please do write to your local MP and urge them to read the report and ask questions in parliament on the issues raised.

Brexit, Democracy and UK Trade Policy

Last week the UK government published its Trade Bill, which formally starts the process of moving towards an independent trade policy. Member states of the European Union (EU) are part of a customs union. This means they operate a unified trade policy, which includes common external tariffs on imports from outside the EU. The UK government has already made it clear it intends to leave the customs union as part of the Brexit process. Prior to the start of the legislative process, the Department for International Trade published a Trade White Paper on 9 October 2017, which set out the principles guiding the UK’s future trade policy. This included numerous references to stakeholder engagement and as part of a consultation exercise it included an invitation for submissions on all aspects of the developing approach set out in the White Paper.

In this post I outline the major points of my submission to this consultation process. The deadline was Monday 6 November 2017 and it was therefore with some surprise that I discovered the following morning that the government was publishing its Trade Bill in parliament. This led to criticism from trade unions and NGOs who had also contributed to the consultation. For example, War on Want argued that given the timing of the publication of the bill it was clear that ‘the input of thousands of responses from members of the public could not have been considered’.

Given my long-standing research interest in the EU’s trade and development policy to African, Caribbean and Pacific (ACP) states, my response focused in the main on the fourth of the five principles outlined in the White Paper, namely ‘supporting developing countries to reduce poverty’. In doing so, I also explored some of the tensions between this ambition and the other four principles (‘trade that is transparent and inclusive’, ‘supporting a rules-based global trading environment’, ‘boosting our trade relationships’ and ‘ensuring a level playing field’).

My criticism of the White Paper ultimately rests on some of the problematic assumptions it makes about the relationship between trade and development. These assumptions were also demonstrated in an important speech made by Liam Fox, the Secretary of State for International Trade, in Manchester on 29 September 2016, where he suggested that ‘free trade is often a ladder to the top’. A similar claim was made by former International Development Secretary, Priti Patel, in her speech at the Conservative Party conference on 3 October 2017, when she boldly claimed that ‘trade, investment and free markets provide the route out of poverty’.

These claims are advanced in the first half of the White Paper where the role of trade in the global economy is discussed. The conclusion one is supposed to draw from this is that free trade was at the heart of the historical development of the British economy and hence this is something that should be recommended to developing countries today. However, as respected economist Ha-Joon Chang has convincingly demonstrated, Britain employed tariffs for a significant period before it was able to adopt a regime of free trade during the nineteenth century. Chang notes that ‘the overall liberalization of the British economy … of which trade liberalization was just a part, was a highly controlled affair overseen by the state, and not achieved through a laissez-faire approach’ (Ha-Joon Chang, Kicking Away the Ladder, p.24). Hence, what the White Paper suggests are protectionist measures (such as subsidies for domestic industry) could conversely be understood as legitimate development strategies.

The section of the White Paper on UK trade policy and how it can support developing countries includes a commitment that as the UK leaves the EU it ‘will maintain current access for the world’s Least Developed Countries (LDCs) to UK markets and aim to maintain preferential access of other (non-LDC) developing countries’ (p.32). This is to be welcomed. However, the aim of replicating the EU’s existing Economic Partnership Agreements (EPAs) is much more problematic. It is clear to anyone who has followed the EU’s negotiation of EPAs with ACP countries, that they met significant resistance from both many ACP governments, and civil society organisations (CSOs) across Europe and regions within the ACP. In part, their concerns relate directly to the assumptions noted above about the ‘policy space’ needed for development. Both the Tanzanian and Nigerian governments have indicated that they are concerned that signing an EPA will undermine their ability to adopt government policies to support industrialization. In Nigeria, the Manufacturers Association of Nigeria has been particularly effective in lobbying against the EPA, arguing that it will harm the domestic industrial sector.

Moreover, they have also voiced concerns over attempts by the EU to introduce the so-called ‘Singapore Issues’ (competition policy, transparency in government procurement, equal treatment for foreign investors, and trade facilitation measures) that were rejected at the World Trade Organisation (WTO) in 2003 at the Cancún Ministerial. There is therefore a potential conflict of principles in the White Paper between the expressed concern for developing countries and the suggestion that the ‘UK will look to secure greater access to overseas markets for UK goods exports as well as push for greater liberalisation of global services, investment and procurement markets’ (p.27). These are precisely the issues that African states and CSOs have identified as problematic because they would constrain the ability of ACP states to seek to diversify their exports and support the development of an industrial sector.

The White Paper’s strong support for the conclusion of the Trade in Services Agreement (TiSA) also undermines the claim to be supporting developing countries. TiSA has emerged as a separate arrangement after talks on services stalled within the WTO due to resistance from developing countries. They have expressed concerns that it would allow transnational corporations to turn essential public services into commodities that can be traded.

It is therefore highly likely that the UK will meet significant resistance if it seeks to simply replicate EPAs. African states have been able to demonstrate significant agency in the EPA negotiations and there would be greater scope for this in negotiations with the UK. They have made it clear that rather than deep and comprehensive trade liberalisation, what they want is a gradual process of engagement with global markets, which if it is to be developmental, needs to be facilitated by state support. Therefore, a much better alternative would be for the UK to introduce an improved Generalised System of Preferences that goes above and beyond the EU’s current ‘Everything but Arms’ agreement with LDCs. Hence, I would support the recommendations made by Traidcraft in its February 2017 report for the adoption of ‘a preference scheme offering duty-free, quota-free market access to imports from economically vulnerable countries, including but not limited to the least developed countries’ (p.16).

My final concerns relate to the democratic accountability of any future UK trade policymaking. These were reinforced by the superficial nature of the process of consultation on the White Paper itself. While it is reassuring to note in the White Paper that there is a plan for regular engagement with stakeholders, it is unclear what is meant by the phrase ‘we will ensure that Parliament, the devolved administrations, devolved legislatures, business and civil society are engaged throughout’ (p.29). Prior to this there is reference to the need for a legislative framework that allows for the quick negotiation and ratification of trade agreements. Trade negotiations are notoriously long and difficult to conclude and this desire for speed should not come at the cost of democratic accountability. As I, and 54 other academics have argued in a recent letter published in The Telegraph on 20 October 2017, modern trade agreements cover a wide range of policy areas. It is therefore vital that government makes a clear and unequivocal commitment that parliament and the devolved administrations/legislatures will have a say in both formulating negotiating mandates and ratifying any future trade agreements agreed by the UK. Moreover, information related to trade negotiations should be made public so that stakeholders are able to provide proper democratic input into the process.

Reflections on ‘the left’ in South Africa

In recent years the electoral superiority of the ANC has begun to face its first real test since we entered the post-apartheid era in 1994. As the limitations of its neoliberal development strategy have become increasingly apparent, the question arises as to whether there is an effective leftist formation that could offer an alternative vision for the country. If so, who might constitute any such leftist formation?

The answer to this question has become ever more complicated in recent years. The domestic and global political terrain has moved significantly since I first conducted some research interviews on these issues in Cape Town back in 2011. Most notably, we have witnessed the so-called ‘NUMSA moment‘ when it was felt (maybe more in hope than reality) that the left had made a real breakthrough in South Africa. After a number of false dawns in recent years, the National Union of Metalworkers of South Africa (NUMSA) has recently announced that it is planning to launch a new political party of the left.

This blog post is a summary of a much longer academic article, entitled ‘What’s left of ‘the left’ in post-apartheid South Africa?’, which was recently published in the journal Capital & Class. Free access to the full article is available here until the end of this month.

The article starts from the normative premise that there is an objective need for a revival and renewal of progressive forces in South Africa. It then seeks to assess the state of ‘the left’ in two complementary senses. First, it evaluates the health of a range of self-identified leftist social forces and then it passes judgement on the extent to which they can be genuinely considered ‘left’ in any meaningful sense. The overall conclusion is that at present, although there are a range of different ‘left’ actors, an effective political formation is not present in South Africa. There is some evidence of attempts at co-operation between a range of different groups. However, at present the challenge remains of how to connect these groups to the masses, which are instead engaged in localised protest and struggle that lacks co-ordination, direction and leadership.

The first half of the article, sets out what I call ‘the realities of post-apartheid South Africa’. What was clear from the research I did for this project is that those who self-identify as part of ‘the left’ in South Africa all tend to agree on what the central problems are: poverty, inequality and unemployment. Far less of a consensus is apparent on what the obstacles are to overcoming these challenges. While members of the South African Communist Party (SACP), who hold key positions in the government, argue that a shift in the growth path engendered by changes in government policy will address these concerns, others in the left outside of the Alliance, see the continued hegemony of the ANC as the main concern.

In this section of the article, I highlight in particular the persistently high level of unemployment, how the top 10% of the population continue to enjoy more than a 50% share of total income, and how the trajectory of the post-apartheid economy continues to rely on finance, mining and retail, whilst the industrial sector has become even less significant since 1994.

These realities have endured during a period when the ANC government has, despite the numerous new macroeconomic policy launches, pursued a consistently neoliberal strategy ever since it adopted the Growth, Employment and Redistribution (GEAR) plan in 1996. In 2010 with the adoption of the New Growth Path (NGP) it did appear that maybe a change of direction was afoot. However, as I argue in the paper, there remain significant continuities in approach and moreover, the NGP has been largely superseded by the National Development Plan, which was published by the government in 2012.

The second half of the article then outlines three distinct, but not mutually exclusive, categories of the contemporary left in South Africa. In the analysis of each category I seek to evaluate both their significance and their leftist credentials. The three groups are as follows:

  1. The left within the tripartite alliance. Here I assess all three partners within the Alliance: the ANC, the SACP and the Congress of South African Trade Unions (COSATU). Of these, COSATU has represented a more leftist stance compared to its  Alliance partners. However, it is constrained by its strategic political alliance with the ANC and SACP. As a result, COSATU has evolved from an organisation that pursued wider social transformation (social movement unionism) to one that increasingly prioritises collective bargaining within the parameters prescribed by post-apartheid labour legislation (political unionism). NUMSA (South Africa’s largest trade union) has been aware of such dilemmas and has long questioned the leftist credentials of the ANC government. It has now split from COSATU and is involved in the process of forming a new trade union federation. These developments may result in a more influential leftist formation that is independent of the ANC. However, NUMSA still tends to refer rather exclusively to the ‘organised working class’ and there seems only limited appreciation of the need to broaden its focus beyond those who are employed in the formal sector.
  2. The left outside the alliance. During the late 1990s in South Africa we began to see the emergence of what were then called ‘new social movements’. This marked a clear rupture in the South African left as a whole. Their significance lies in the fact that they operate independently of the structures of the ANC. Since the turn of the century we have also witnessed the rapid growth in so-called ‘service delivery protests’. What they demonstrate is that there is a level of resistance, however spontaneous and uncoordinated, to the neoliberal policies of the government.

    dlf-image-by-meraj-chhaya
    Image by Meraj Chhaya

    The formation of the Democratic Left Front (DLF) in 2011 was an attempt at coordination. The split of NUMSA from COSATU then culminated in the announcement on 2 March 2014 of plans for the formation of a broader leftist movement known as the ‘United Front and Movement for Socialism’. Ultimately it remains to be seen whether the impetus given to the United Front by NUMSA, will allow it to more effectively realise the kinds of linkages envisaged by the DLF.

  3. The remnants of a revolutionary socialist left. A number of small groups in South Africa are still following a revolutionary socialist agenda. The political position of these groups remains based on a complete rejection of reformism of any kind. As a result, most of these groups eschew working with organisations that fall within the other two categories of the left. While a new left project in South Africa clearly needs to offer an alternative to the largely rhetorical stance adopted by the ANC and SACP, given the failures of vanguardism, it also needs to adopt a strategy that is likely to attract widespread support.

The article concludes by noting that the dangers of the continued absence of an effective leftist mass movement are clear. These are most evident in the populist politics of Julius Malema, leader of the Economic Freedom Fighters (EFF), a new political party formed in 2013. Malema skilfully uses leftist rhetoric in speaking to precisely those people in society, the young and underemployed, who remain marginalised and disconnected from current leftist formations in South Africa.

In sum, I argue that efforts should be continued in the task of co-ordinating leftist formations outside of the Alliance. However this alone, without clear links to the mass base, will not lead to meaningful socioeconomic progress for the majority of South Africans.