State and business in practice in post-apartheid South Africa
The other priority: Black Economic Empowerment
Some lessons for SBRs and pro-poor growth
1. The challenge of poverty
Poverty is widespread in post-apartheid SA
24% of population have per capita incomes < US$1/day taking into account purchasing power
Lower than rest of Africa, but high in relation to GDP per capita, and despite economic growth
Poverty rate = 50% in Kenya, 15% in Chile, 5% in Malaysia
GDP per capita in 1994 = > 6 times higher than in 1930
Due to severe inequality in distribution of income
Gini coefficient for distribution of income ≈ 0.7
Under apartheid, inequality was highly racialised
In 1994, average income per capita for ‘white’ people was 12 times that of ‘black’ people
Life expectancy at birth was approximately one decade longer for white people than for African people
Poverty rooted in landlessness and unemployment
Unemployment rate peaked at 40% (by broad measure) in early 2000s
But poverty is mitigated by highly redistributive welfare system
Social assistance programmes amount to 3.5% of GDP
Pro-poor growth requires expanding demand for unskilled labour
1. The challenge of poverty
The context was promising:
1994: first democratic elections
African National Congress (ANC) won votes of almost all poor citizens
ANC election slogan = “A Better Life For All”
ANC committed to mixed economy
Long period of sustained economic growth
Outcomes have been disappointing
Unemployment rates have risen
Poverty rates rose then fell (and are surely rising again now)
The main reason why poverty fell was increased public expenditure on social assistance, not pro-poor growth
2. The inheritance: SBRs under apartheid
Business at the end of apartheid:
Ownership and control concentrated in white South Africans
Highly concentrated:
1985 Anglo-American controlled >½ of capitalisation of Johannesburg Stock Exchange
Top 5 corporate groups controlled >80%
Harry Oppenheimer (top right): Anglo-American, based in mining
Anton Rupert (bottom right): Rembrandt, beneficiary of apartheid government patronage
= a “hierarchical market economy”: co-ordination problems solved through concentrated and hierarchical ownership (Schneider)?
No:
Underestimates roles, power and autonomy of state
Capital = largely reactive, operating within but not challenging constraints (with some capital subservient to state to benefit from patronage)
3. SBRs during the transition to democracy
In 1980s, capital defied the state and made overtures to ANC in exile
Consultative Business Forum worked with pro-ANC leaders inside SA, and after 1990 with the ANC
Facilitated Peace Accord between apartheid government and ANC
Institutionalisation of business-labour relationship
Negotiations over industrial disputes led to
National Economic Forum (NEF), which provided the basis for, after 1994, the
National Economic, Development and Labour Council (Nedlac) = tripartite and corporatist
Some ANC leaders began to appreciate the weaknesses of the state
Mandela at Davos, 1991
But resilient view within ANC that business needed to be ‘transformed’
4. State and business in practice after apartheid
Formally:
business appears well-organised:
Business South Africa; Business Unity South Africa
Bilateral institutions provide for state-business dialogue
Presidential ‘working groups’ with South African and global capital (under Mbeki)
Trilateral, corporatlist institutions provide for dialogue
Esp. Nedlac
In practice:
institutions and relationships are very uneven
Relationship good between business and National Treasury
Relationship bad between business and presidency (under Mbeki), business and labour department, etc
Institutionalised SBRs are focused on big business
Informal SBRs are uneven
The growth pathnot = a topic for substantive deliberation
1998 Jobs Summit and 2003 Growth and Development Summit = cosmetic
5. The other priority: Black Economic Empowerment (BEE)
Close links between political elite and new black economic elite
Patrice Motsepe (top right) = 2nd richest person in SA (after Nicky Oppenheimer)
wealth in mining primarily
net worth (after financial crash) of US$1.3 bn
One brother-in-law is a senior member of the government;
another brother-in-law is Cyril Ramaphosa (bottom right), former ANC general-secretary and himself a very wealthy businessman
BEE promoted through
preferential public sector procurement
Sectoral charters specify targets for transfer of ownership and control
E.g. mining houses must transfer 15% of shares by 2014 to retain mining rights
And sourcing from BEE companies
BEE deals
worth $15bn in 2007:
Black South Africans, through BEE deals and pension funds, now own approx. 20-25% of shares listed on the Johannesburg Stock Exchange, or approximately one-half of the share owned by white South Africans
Corruption is very widespread
6. Some lessons
Is SA an example of a strong or healthy SBR?
E.g. Taylor points to a state-business ‘growth coalition’ in SA
Not as strong or healthy as is generally argued
SBRs in SA are, in general, fragile and superficial
They are highly racialised: no embedded autonomy; social distance between state and economic elite
Little substantive deliberation between state and business, because state has not wanted to listen to white business elites
Strong SBR re ANC <> black businessmen.
Not pro-poor: a growth coalition (perhaps), but not a pro-poor growth coalition
Pro-poor growth requires reducing unemployment among mostly unskilled workers, i.e. a growth path that is more intensive of unskilled labour
ANC government has little incentive to challenge its ally, organised labour
The state pays some attention to growth, but little to pro-poor growth
ANC = party of (dependent) black business, also party of organised labour, also party of urban and rural poor
The state throws its weight around in terms of regulating some aspects of business (esp. employment relations and BEE)
Business = largely reactive to the ANC, just as before 1994 it was largely reactive to the National Party
Little likelihood of a sustainable, developmental or pro-poor growth coalition
