Most blessed are the rich

Posted in Other , Africa | 15-Apr-04 | Author: Robert Guest| Source: International Herald Tribune

South Africa

LONDON - Apartheid was beyond parody. Black and white South Africans were ordered by law to live separately, but whites employed millions of blacks to clean their houses, cut their lawns and nurse their children. Inequality before the law produced cruel absurdities. On one occasion, a black woman was convicted of the heinous crime of interracial sex and jailed, while her white lover was acquitted because the only evidence against him was the black woman's confession.

It is now 10 years since the old white racist regime surrendered power, and South Africa is a freer, happier place for its passing. The country held its third proper election on Wednesday, at which all adults were allowed to vote, regardless of skin color. The vote passed with little violence, and exit polls showed the ruling African National Congress (ANC) on course for another huge majority.

Democracy is thriving in South Africa. The ANC wins elections because it is genuinely popular, thanks partly to its history as a liberation movement and partly to its efforts to provide piped water, better housing and other benefits for the poor.

Though it faces no serious parliamentary opposition, there are other checks and balances: a critical press, vociferous single-issue campaigners such as those who recently shamed the government into distributing anti-AIDS drugs, and an impartial judiciary whose rulings are obeyed. Ten years ago, many thought South Africa would collapse into civil war. Now it is so stable that Western countries no longer bother to send monitors to assess its elections.

But the fruits of freedom have not been equally shared. The richest quarter of blacks have seen their incomes jump by 30 percent in the last decade, as the government and private firms have rushed to hire the brightest and best-educated. But the bottom 45 percent of blacks are some 10 percent poorer than they were 10 years ago, largely because they are more likely to be jobless. The unemployment rate among black South Africans is a staggering 50 percent.

What the country needs is rapid growth, of the sort that has made life so much better in East Asia. That is not the government's priority, however; it is more interested in redistribution. And not of the conventional type, from rich to poor, but from white to black. Given South Africa's history, that might sound like the same thing, but it is not.

Under President Thabo Mbeki, who took over from Nelson Mandela five years ago and is likely to remain in charge until 2009, the country now has the most extreme "affirmative action" program anywhere. Firms are obliged to try to make their workforce look like South Africa: i.e., 75 percent black, 50 percent female, and so on, at all levels, from floorsweeper to director. Given the desperate shortage of black skills - only one chartered accountant in 80 is black - this is difficult. To attract blacks with sought-after skills, firms have to pay them substantially more than similarly qualified whites.

Black-owned firms are given a leg up when tendering for government contracts: They can charge more and still get the job. This is great for blacks who own construction firms, but it means that the government's public-works budget does not stretch as far as it should. Because it pays contractors more than it has to, it ends up providing fewer homes, water pipes and clinics for the needy.

Mbeki is also trying to promote black share ownership. Different plans are mooted for different industries, but the general aim is that about a quarter of South African shares should be in black hands by 2010. Firms figure they have no choice but to cooperate, so they are handing over large chunks of their operations, at deep discounts, usually to senior members of the ruling party or their relatives.

A handful of well-connected black tycoons has grown startlingly wealthy with minimal effort. Most other people are losing out, because the process makes South Africa a far less appealing place to do business. Investors stay away for fear of what practically amounts to expropriation, and the people they might have employed stay jobless. The president's outspoken brother, Moeletsi Mbeki, frets, "We are taking politically connected people and giving them assets which, in the first instance, they don't know how to manage."

In many African countries, the richest man is the president. South Africa is different: there is no hint of sleaze about its head of state. But he has created a system where it is perfectly legal to leverage political influence into wealth. Elsewhere, this would be called corruption. In South Africa, it is called "black empowerment," but it is mostly the already-powerful who are empowered.

Robert Guest is The Economist's Africa editor. His new book, "The Shackled Continent: Africa's Past, Present and Future," will be published by Macmillan this week.