South Africa: Progress and challenges

As suggested in Elhanan Helpman’s Mystery of Economic Growth, there are many tasks that rest on the shoulders of a (developmental) state. The same line of thinking can be discerned also in Jeffery Sach’s End of Poverty.

In our context, for example, it is incontrovertible that the state, or its main agent (that is, the public services/sector), must do a lot to reverse, prevent and end poverty and tackle inequality; build the economy that benefits all South Africans; to build a cohesive nation premised on the principles of collective actions and collective responsibilities (assist in “bonding” and “bridging” social capital, to borrow from Robert Putnam); and to do the many things to which the Reconstruction and Development Programme committed.

Noreena Hertz’s The Silent Takeover — almost in the same paradigm as Hernado de Soto’s Mystery of Capital — argues that the business sector (or private sector, in our terminology) is taking over, or rather has taken over. She describes this “new” phenomenon as “a world in which corporate resources dwarf nations, and businessmen outrank politicians … that business has gained too much power over many aspects of [people’s] lives, and in which, despite the ever harder sell of party politics, fewer and fewer trouble to vote. Economics is now accorded greater respect than politics, the citizen has been abandoned and the consumer is all that matters …”

Though this analysis is focused on the broader North American and European societies, I think Hertz addresses an important global issue that is affecting all nations, some worse than others.

Last year, writing in the Service Delivery Review (vol 5, number 3, pp 48-51), I wondered: “Given the magnitude of the myriad challenges that we face as a country, can we confidently say that our civil service, especially its managers, is well placed to tackle them head-on?”

I also argued that “despite major challenges that the government still needs to overcome in the delivery of services, one can confidently conclude that South Africa is well on course to achieve targets set in the Millennium Declaration.

“For those that are remaining, the necessary foundation has been firmly put in place for their attainment. However, given other factors that compound the challenge of addressing challenges confronting speedy service delivery, do we fully believe that we are on course? For instance, the social distress ravaging our communities, families and compatriots could work against the noble programmes that government tirelessly and rigorously pursues.”

My conclusion was that in my view, the struggle against poverty should continue and intensify as we enter the mid-term of the current government. We remain challenged to ameliorate speedily the material conditions of the many and expedite nation building. This moment, a rare opportunity in our history, calls for resolution, boldness, courage and urgency. Otherwise, the immense and imminent possibilities of this great land of ours cannot, sadly and painfully, be realised.

Particularly leading up to Polokwane, many began loudly voicing their reading of the state of public services in South Africa. What was different about this “voicing out” was that many overwhelmingly argued that the current administration had failed. This argument has gained momentum, to the extent that many are making specific proposals about what to do to rescue the situation immediately. This remains a matter of debate. Let me try to highlight critical issues, ask relevant questions and provide proof that the current administration has done better than most argue — though many challenges remain.

As argued before, the context — which should be a standing backdrop of public discourse — in which the current administration has had to try to meet justifiably very high expectations is critical. This could be contested, however; it seems that the context in which the outgoing administration worked was excessively challenging in many respects. The incoming administration will perhaps face challenges of similar scale.

Among the critical issues is the transition itself, which brought the following: significant changes in demographic composition and household dynamics, migration trends, social organisation of public life, economic dynamics and so on (including bad decision-making at individual levels). It is in this context that some of us counter-argue that significant progress is being achieved in many social policy areas. Even in the economic sphere, there is much to write home about! For instance, the Development Indicators publication released by the Presidency’s policy unit last week shows that “the economy has been growing continuously since 1999 and accelerated towards the end of 2006. Whilst the economy grew by 5,1% in 2007, slightly lower than the 5,4% recorded in 2006, we are still above the Asgisa targets of 4,5% per annum. The foundation for future growth is being laid with increasing capital investment.”

It goes on to say that “positive and sustained growth trends are being challenged by the high inequality, meaning that fruits of growth are not being equitably shared, negative global economic conditions slightly ameliorated by the fact that government debt that has fallen from 43,5% in 1994 to 23% in 2007, negative and high current-account deficit, high inflation and high interest rates”. Its data also shows that, according to the Labour Force Survey, the “unemployment rate has decreased from 31,2% in March 2003 to 23% in September 2007”.

My recent piece on South Africa as a developmental state tried to demonstrate that the country indeed encapsulates most of the key features of a democratic developmental state. The notion of a developmental state, in simply terms, implies that the government puts people first — batho pele.

It is probably worth reminding those who seem to have conveniently forgotten that in 1994 the following backlogs, among others, were the case: people living in shacks were estimated at almost eight million; 60% of South Africans had no access to electricity; six million people had no access to water; 22-million people did not have access to adequate sanitation; and there was only 70% secondary school enrolment. These numbers will probably be contested as long as we live. They are, however, an indication of the magnitude of the challenge inherited in 1994. A telling case is Mamphela Ramphele and Francis Wilson’s Uprooting Poverty (1989), which documents various issues in relation to living standards in South Africa — drawing from the outcomes of the Second Carnegie Inquiry into Poverty and Development in Southern Africa.

Taking a cue from Noreena Hertz, among others, the question of how much our private sector, in particular, is doing is hardly raised. Given the challenges that the government keeps trying to address, there is surely something to learn from the East Asian experience. In last week’s City Press (July 13 2008, “South Africans to unite to realise their common destiny”), a colleague and I highlighted the approach that countries such as Sweden and South Korea adopted in dealing with the challenges they once went through.

We also drew lessons from the recent study by Izumi Ohno and Masumi Shimamura, in that East Asia was able to turn “crises into opportunities for reforms and broader institutional changes” when it was confronted by challenges similar to ours at present. The case of Malaysia is particularly instructive as the Malaysians decided never again to go down the path that was taken in the racial riot of 1969, and they crafted a shared sense of urgency towards creating a single united nation (a country of peoples ethnically integrated and living in harmony and partnership) — and that became the strongest driving force for the execution of successive reforms and institutional changes. Perhaps Malaysia was lucky to have a collective leadership that possessed a strong sense of commitment and dedication to overcoming all odds in times of challenges.

How come in our case it is only the government that should do everything? Why is the private sector, for instance, hardly questioned about its programmes that are aimed at bettering the lives of South Africans? Is the private sector doing enough? What about you and me?

The other set of critical questions that we are not answering relates to what our strategic posture would be going forward, given that some of the challenges remain unabated. This question becomes much more important if one thinks of Fidel Castro’s Cuba in the 1960s, as captured by Theodore Draper, among others, and most of Latin America around the 1980s.

New administrations, or rather the early years of independencies, seem inevitably to throw up a number of challenges. Leaders, political and otherwise, become even more important in steering the nation to intended outcomes and goals. The citizens become much more critical in ensuring that the envisaged transformational agenda is accomplished. Notwithstanding some questions, Cuba, for example, did it against all odds!