Wednesday, 20 May 2020

Economic inequality in post-apartheid South Africa has deepened. This is not what was expected.

Firstly, the African National Congress (ANC) won an overwhelming victory in the 1994 elections and promised to significantly reduce inequality in the world’s most unequal country. Secondly, the country’s constitution, adopted in May 1996, foregrounds the promotion of social and economic rights.

This paradoxical outcome has led to a ferocious political-economic debate on the nature of South Africa’s transition to democracy.

On the one hand, there are those who argue that in the 1994 settlement the leaders of the liberation movement sold out their socialist commitments to the white minority, in particular, international and local capital. This conserved the pillars of the apartheid economy, the minerals-energy complex.

On the other hand, there are those who argue that the ANC had no alternative to the Washington consensus approach to the economy in the 1990s. They say it was always a party of a mixed economy, the right to trade freely and the growth of a black business class.

Among the exponents of this view are Thabo Mbeki, the key figure in shaping ANC economic policy as deputy president from 1994 to 1999, and Trevor Manuel, finance minister at the time.

Simply put, the Mbeki camp maintains that a fundamental continuity exists in the economic and social policies developed after 1994. Critics say there has been a policy reversal in post-apartheid South Africa.

Former South African President Thabo Mbeki. AMISOM Photo / Ilyas Ahmed

A new book, Shadow of Liberation, by Vishnu Padayachee and Robert Van Niekerk, respectively Distinguished Professor of Development Economics and Professor of Public Governance at the University of the Witwatersrand, challenges both approaches. It revisits how economic and social policies were made from the late 1980s to the mid-1990s. The authors draw on 35 in-depth interviews with participants in the policy process. This pool of original data is complemented by a rich archive of primary and secondary sources. Together, these data sets reveal a fascinating story about who shaped these policies and how.

The book is the first attempt to comprehensively document and interpret the origins and evolution of the ANC’s economic and social polices.

Evolution of ANC economic policy

The authors argue that the ANC lacked economic expertise – and spurned what little it had. In particular, it rejected the evidence-based analysis and recommendations of the MacroEconomic Research Group, which it had commissioned. They argue that it was less a case of the ANC “selling out” and more one of being outmanoeuvred. Policy makers were, Padayachee and Van Niekerk conclude (p. 135),

Intellectually seduced in comfortable surroundings and eventually outmanoeuvred by the well-resourced apartheid state and by international and local pro-market friendly actors.

The story of the evolution of the ANC’s economic policy is a complex one. The authors take us on a long journey that begins in the 1940s. The rest of the journey is spread over nine chapters. Chapter 2 shows how the party’s economic and social roots lie in social democratic policies. These ideals can be found in the bill of rights in African Claims, developed in 1943.

African Claims was a document with a recognisably social democratic impetus. It argued for state intervention to secure social rights to health, education and welfare for all. This was to be based on universal political and social citizenship. These aspirations can also be traced to what the authors call the “Keynesian, social democratic welfare state, based on the social rights of citizenship” in the Freedom Charter adopted in 1955 (p. 22).

The next chapter connects the past to the dawn of democracy and the formation of the ANC’s economic planning department. The authors argue this consisted of a small group – Trevor Manuel, Alec Erwin, Maria Ramos, Neil Morrison, Moss Ngoasheng, Leslie Maasdorp – who came to believe that there

was no alternative to neo-liberal globalisation (p. 67).

The pace quickens in chapters 4, 5 and 6 – the empirical heart of the book. The authors show how the ANC distanced itself from the post-Keynesian MacroEconomic Research Group in December 1993, and then abruptly dropped the popular “growth through redistribution” Reconstruction and Development Programme in April 1996.

At the centre of the book is a powerful critique, not only of the policy outcomes, but also of the way in which the policies were made. Yet the critiques sometimes feel incomplete.

There is a substantial body of literature on the “politics of economic reform” that could have been drawn on to deepen Padayachee and Van Niekerk’s argument that widespread consultation and negotiation is vital for successful economic reform. In fairness, the refusal to negotiate the Growth, Employment and Redistribution macroeconomic strategy for South Africa in the National Economic Development and Labour Council is rightly criticised and the authors show admirable awareness of the issue.

The late post-Keynesian American economist Hyman Minsky’s famous observation, made over 30 years ago and rightly quoted by the authors, makes the point:

Economic issues must become a serious public matter and the subject of debate if new directions are to be undertaken. Meaningful reforms cannot be put over by an advisory and administrative elite that is itself the architect of the existing situation (quoted on p. xi of the book under review).

Tragically, it is precisely what unfolded in South Africa in the 1990s.

Speaking to the present

Although the book examines events nearly three decades ago, it speaks to the present where the demand for rapid economic reform has become widespread.

The lesson I draw from the book is that economic reform cannot be undertaken by a small group of people. Instead, policies must be formulated and implemented through negotiation and consultation of a social compact beyond the state and parliament to include unions, employers and other interest groups.

What I argued in 1998 remains true today:

Labour retains the power to block the imposition of economic reform – both at the national and workplace level. Any attempt to impose neo-liberal solutions unilaterally is likely to take the country down the path of ungovernability and civil war – it will ensure rather than avert chaos. If, at the same time, socialist solutions seem unfeasible, this conclusion points towards a class compromise between capital and the labouring poor: a Southern version of social democracy.

The insights in Shadow of Liberation complement this claim, while developing new interpretations based on evidence from face-to-face interviews with the key actors as well as new archival material. It is a necessary read for a new generation of policymakers as they confront the challenge of economic reform. Above all, this book is a major contribution to the growing body of literature on the appropriate policies required to reduce inequality in the global South.

This is an edited version of a longer article published in the June issue of the African Review of Economics and Finance.The Conversation

Edward Webster, Distinguished Reserach Professor, Southern Centre for Inequality Studies, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy

Lesotho Prime Minister Thomas Thabane has formally resigned more than a week after his coalition government fell apart, in a move that could help end a long-running political crisis in the country.

"I come before you today to announce that the work that you assigned me may not be over but the time to retire from the great theatre of action, take leave from public life and office has finally arrived," the 80-year-old said in a televised address on Tuesday.

"I plead with the entire nation and leadership to give my successor utmost support and on my part I wish to assure him of my support at all material times," he added.

Al Jazeera's Haru Mutasa reported that Thabane had formally handed in his resignation to King Letsie III, the top traditional leader of the tiny mountainous kingdom.

Thabane, the leader of All Basotho Convention (ABC) party, was facing mounting pressure to step down over a case in which he and his current wife are suspected of involvement in the 2017 murder of his previous, estranged wife. They both deny this.

The embattled prime minister had promised in January to retire due to old age but had been dragging his feet on when to do so.

Thabane's ruling coalition collapsed on May 11, and he had been expected to resign by May 22 when a new government is due to be installed.

Finance Minister Moeketsi Majoro, 58, is expected to replace him. Among his immediate tasks as prime minister will be to pass the budget and revive the economy. Despite confirming only one coronavirus case, Lesotho has taken a big economic hit due to the global slowdown brought about by the pandemic.

The 59-year-old Majoro is an economist who was once a director of the IMF.

He was nominated as prime minister after Thabane's four-party coalition collapsed, relegating Thabane to the position of caretaker prime minister.

In an interview with Eyewitness News last week, Majoro said that he had no choice but to make the COVID-19 response his first priority when he took over, saying that said COVID-19 and food security would be his main priorities.

Majoro is well aware of the health service challenges facing Lesotho.

He has always maintained he doesn’t believe that the country does not have any COVID-19 cases but the first one is now confirmed.

“We have to double our efforts to know how much infection is in our community. We moved in with lockdown too early and the impact on the economy was immense, but we have a little bit more capacity.”

Majoro said to achieve this, he wanted politicians who also have technical knowledge in his Cabinet.

“You cannot provide a solution unless you understand in-depth what the problem is. You cannot provide a superficial solution, you cannot brainstorm a solution. It’s not enough to sit down as Cabinet ministers and speak with passion, solutions are not created like that. We need to bring in knowledge but it’s a political process. It’s a game of balancing interests.”



Published in Economy

Chinese leader Xi Jinping made preserving diplomatic ties in Africa a centerpiece of his opening address at the World Health Assembly earlier this week, as Beijing faces a backlash among some Western democracies for its role in the coronavirus pandemic.

With the traditional big donors to Africa, such as Europe and the United States, focused on containing the continued spread of the virus, Xi moved to position China, which has its own outbreak largely under control, as the global leader in health.

At the gathering of World Health Organization (WHO) member states, Xi pledged to give $2 billion to the WHO over the next two years to assist developing economies -- and reminded Africa that its long relationship with Beijing had seen Chinese aid help treat 200 million Africans over the past seven decades.

Xi committed to helping 30 hospitals in Africa, setting up a pan-African health authority on the continent and supporting an affordable vaccine there, once one has been found.

But Xi's offerings weren't just about taking the lead in Africa: they were about securing support at a critical and precarious juncture in Beijing's relationship with the continent.

While no African head of state has yet publicly criticized China's response to the virus, earlier this week the African group backed a European Union-drafted resolution co-signed by more than 100 countries calling for an independent inquiry into the coronavirus pandemic.

That comes after African ambassadors last month wrote an unprecedented joint letter to Beijing demanding answers for the mistreatment of African residents in China during the coronavirus crisis.

As the coronavirus leaves China increasingly isolated on the world stage, Xi's speech made it clear how vital the support of African nations is to Beijing.

Important diplomatic allies

China's diplomatic ties with African nations stretch back to the mid-20th century when Beijing befriended newly independent countries as it tried to position itself as leader of the developing world, and counter US and USSR influence during the Cold War era.

Since then, Africa has proved to be a critical diplomatic bloc for Beijing -- the bid by the People's Republic of China (PRC) bid to expel the Republic of China (Taiwan) from the United Nations Security Council in 1971 succeeded largely because of the support of Africa, which provided 26 of the 76 votes it needed to win. That move allowed the PRC to take Taiwan's position both on the General Assembly and as one of the five permanent members of the Security Council.

In subsequent decades, when China has faced fierce criticism from the West, African countries have continued to stand beside Beijing.

After the Tiananmen Square crackdown, China succeeding in persuading several African countries to sign an agreement saying the clashes, in which Chinese troops fired on and killed civilians, "permitted no foreign interference.

As Western nations threatened to boycott Beijing's 2008 Olympic Games over concerns of human rights abuses in China, African countries continued to support the event.

And more recently, as the US applied pressure on telecommunications company Huawei, accusing it of being a Trojan horse for the Chinese government, key African economies including Kenya and South Africa have welcomed its presence.

"Each time the US or the West ramps up its criticism of China, the Chinese government turns back to its long-time, all-weather friendship in Africa," says Lina Benabdallah, assistant professor in politics at Wake Forest University, specializing in China-Africa relations.

"Beijing needs its African partners to boost its image that China is not isolated or without any friends on the international arena."

As the United States in particular pushes the narrative that Beijing is to blame for the spread of Covid-19, Africa's support is once again vital as Beijing pushes the counter-narrative that after beating the virus it is now a leader in global health.

In March and April, China exported 71 billion yuan ($10 billion) in medical supplies around the world, including about 28 billion masks, to help fight coronavirus.

But Beijng's so-called mask diplomacy has received a mixed reception in the West -- in March, the European Union's foreign policy chief Josep Borrell warned about the "struggle for influence through spinning and the 'politics of generosity.'"

In Africa, governments have welcome the aid.

"Africa is home to a plethora of developing countries desperate for support to combat the health and economic impact of Covid-19," says Ovigwe Eguegu, a Nigerian international affairs analyst.

This is not the first time China has showed up to help Africa during a public health crisis. By November 2014, China had given 750 million yuan (then $123 million) in aid to the global Ebola response. While that was Beijing's largest ever response to an international humanitarian crisis it was still no match for Western donors. The US, UK, and Germany donated more than $3.6 billion by December 2015.

But with the US and parts of Europe among the world's worst coronavirus-hit countries in terms of case numbers, US President Donald Trump's public call for a cut to WHO funding, and both Europe and the US suffering economically, some African states arguably have little option but to be welcome China's assistance.

An early rupture in relations

Despite Beijing's continued publicity drive, the pandemic affects African lives directly -- and from the beginning of the crisis there were signs that the virus could fracture the China-Africa relationship.

In late February, there was uproar in Kenya when a China Southern Airlines landed in Nairobi from mainland China, which was still in the throes of the pandemic, and 239 passengers were allowed to disembark without testing

That sparked calls in the country for flights between China and Africa to be suspended while China got its outbreak under control.

In April, African ministers asked the G20 for an urgent $100 billion package, including $44 billion of debt relief. China, which is believed to hold about a fifth of African debt, according to the London-based Jubilee Debt Campaign, replied that it would act in line with other G20 nations, offering no preferential treatment to its long-time partner.

But the biggest threat to the relationship came in April when shocking images started pouring out of the southern city of Guangzhou, in China, of Africans there newly homeless, after being evicted by landlords and turned away from hotels due to fears Africans were to blame for a local coronavirus outbreak. The city began testing and quarantining all Africans, regardless of their travel history.

That prompted the unprecedented letter to Beijing from a collective described as "the African group of Ambassadors." While the Chinese government quickly moved to put out the crisis on a diplomatic level, outrage in Africa continues to simmer, and in Nigeria government ministers have proposed retaliatory measures, such as investigating the legal status of all Chinese in that country.

"The maltreatment of Africans in Guangzhou is a stain on the Africa-China relationship," says Eguegu, the Nigeria-based international affairs analyst. "By focusing on Africa (at the WHA), President Xi appears to be signaling to Africans that Africa is a priority for China.

"That might reassure many African leaders, but (the) majority of Africans who were offended by the videos and pictures from Guangzhou won't hear this speech."

Before the crisis

Before the Covid-19 crisis hit, China's investment in Africa seemed to be entering a new, more cautious phase.

After years of largesse, which saw $140 billion in loans extended to Africa between 2000 and 2018 for everything from new roads and ports to football stadiums and parliamentary buildings, Beijing had put the breaks on some infrastructure projects, and began adding firmer terms to others.

Most noticeably, after lending Kenya $3.6 billion for the first section of a railway line envisaged to connect to a yet-to-be-realized East African Railway Master Plan, Beijing has refused to finance the $3.5 billion next part of the line, saying the project was not economically viable due to debt concerns.

In Tanzania, President John Magufuli, rejected the Chinese conditions of financing for a port, which stipulated a ban on port development elsewhere in the country.

And while the 2018 Forum for China Africa Cooperation (FOCAC), a triennial summit of African heads of state with China, saw China pledge $60 billion in aid, investment and loans to Africa, that number was a flattening of the curve of upwards Chinese investment.

Generally, Beijing had made a bigger pledge to Africa at each summit since FOCAC began in 2000. The pledge in 2015, for example, was three times the figure announced at the 2012 forum.

At the time, Jeremy Stevens, international economist for the Standard Bank Group, said many felt it would not be "politically appropriate" to pledge huge loans given the huge criticism China has faced from Western observers for allegedly overloading Africa with debt.

Next year, China and African states will reconvene for the next FOCAC, this time in Senegal, social distancing allowing, and no doubt the figure Beijing commits to will be closely analyzed, as African nations try to bring their economies through the havoc wreaked by the virus.

So far, the African continent itself does not appear to have been as severely hit by the coronavirus pandemic as the US, and its former colonial powers, such as the UK, France and Italy.

But as the virus rages in pockets of the continent -- the vice-president of South Sudan now has the virus -- it remains to be seen what the coronavirus toll will be there.

A true coronavirus crisis in Africa might not only test China's performance as a world leader in health, but also how deep the equal friendship Beijing has repeatedly claimed to share with Africa truly runs.


This story was first published on "As China faces a backlash in the West, Xi needs Africa more than ever"

Published in World

In the past month coronavirus cases in Africa have doubled roughly every two weeks.

By comparison American cases, until recently, were doubling about every three days.

It’s the reason the World Health Organisation suggests the virus is spreading more slowly in Africa than other places.

The continent has less than two per cent of the world’s COVID-19 cases despite accounting for 17 per cent of its population.

Africa has recorded 84,634 cases and 2766 deaths.

But “the true number of infections is likely to be much greater than currently known”, according to The Partnership for Evidence-Based Response to COVID-19, a public-health consortium.

Doctors Without Borders nurse Bhelekazi Mdlalose prepares herself to perform a swab test for coronavirus on health workers in Johannesburg. Picture: Michele Spatari/AFP

Doctors Without Borders nurse Bhelekazi Mdlalose prepares herself to perform a swab test for coronavirus on health workers in Johannesburg. Picture: Michele Spatari/AFPSource:AFP

Experts say the reason the continent’s tally isn’t as high as it could be is because of insufficient testing and undercounting.

Despite a donation of more than one million coronavirus testing kits by Chinese billionaire Jack Ma, most African countries lack the equipment needed to detect the disease.

While officials in Wuhan were testing a million a people a day, Africa has checked about as many in total.

Nearly half of those tests have come from South Africa and Ghana.

Another crucial reason for the slower spread was Africa’s quick containment measures.

Lockdowns were put in place in most African countries much earlier than others.

At least 42 had locked down by the end of April and 38 had the measures in place for at least three weeks.

A growing number of mosques are reopening across West Africa even as confirmed coronavirus cases rise, as governments find it increasingly difficult to keep them closed during the holy month of Ramadan. Picture: Sylvain Cherkaoui/AP Photo

A growing number of mosques are reopening across West Africa even as confirmed coronavirus cases rise, as governments find it increasingly difficult to keep them closed during the holy month of Ramadan. Picture: Sylvain Cherkaoui/AP PhotoSource:AP

Matshidiso Moeti, the director for the WHO in Africa, predicts the continent will have a slower, longer pandemic.

“While COVID-19 likely won’t spread as exponentially in Africa as it has elsewhere in the world, it likely will smoulder in transmission hot spots,” she said.

A research paper she wrote with WHO colleagues also outlines Africa’s slower spread is due to the fact Africans travel less, because of sparse road networks.

The researchers believe without the containment measures countries put in place, between 16 and 26 per cent of people would be infected in the first year, and between 29 and 44 million would be symptomatic.

They also say there would be between 83,000 and 190,000 deaths.

Nevertheless, Michel Yao, WHO Africa's emergency response program manager, said some countries may face a huge peak “very soon”.



Published in Opinion & Analysis
  1. Opinions and Analysis


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