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South Africa: From Hero To Zero…And Back Again?

Event hosted by Henley Business School Africa, where questions were once again raised about the extent of state capture, possible solutions, and whether there should be optimism about SA’s future.

Setting aside the Gupta fiasco in South Africa, details may soon emerge of the extent that South Africa is now a Russian client-state if investigations into the Russian nuclear deal ever emerge.

This was a message at the ‘South Africa from Hero to Zero …. And Back Again? event hosted by Henley Business School Africa, where questions were once again raised about the extent of state capture, possible solutions and whether there should be optimism about SA’s future.

Henley Africa dean, Jon Foster-Pedley, opened the event saying that the country is facing a dilemma. “How do we, in the face of enormous business and personal temptations and challenge, maintain our personal and professional integrity?”

“Can we, as corporate and organisational leaders, be activists to stand against the influences of state capture and corruption to ensure that South Africa grows in such a way as to lift our people out of poverty and give all real opportunities,” he said.

The panel discussion was led by Tim Modise, chairperson of Ga-rankuwa Forum of Excellence with panelists Lord Peter Hain, former British anti-apartheid leader and UK cabinet minister; Bonang Mohale, CEO of Business Leadership South Africa; and Lindiwe Mazibuko, political leader and writer.

Lord Hain opened the discussion saying that it seems any South African business which has anything to do with the Gupta empire or Zuma elite is now irredeemably contaminated.  “With serious consequences for its own survival: look at the demise of Bell Pottinger and the damage to KPMG.  Salutary warnings for everyone,” he said. “Every business leader is involved in the fight for the future of the country, willingly or not.”

“In 2012, South Africa still ranked 35th in the World Bank’s Ease of Doing Business Index, ahead of Spain and Italy. That has been since squandered but there is still enormous business potential,” he said.

“However, remember that in just 23 years, the ANC government has built more than three million new homes.  It has created four million jobs. Millions more South Africans now have running water and electricity. Some economists say that income per capita, in real terms, has risen by almost a third.”

“Massive state bursaries have opened up the country’s universities to 400,000 new students: mostly black. And, as a result of innovative health programmes (particularly those focusing on HIV and TB) life expectancy has improved and child mortality has been dramatically reduced.”

Corruption, cronyism and incompetence

“But it is painful that corruption is now flourishing on an industrial scale which poses a huge and cancerous threat.  It seems to me that with cronyism replacing merit, the state – including the parastatals – is becoming increasingly dysfunctional, which is lethal for economic prosperity,” he said.

“Some are arguing that the problem is rooted in the way the country was transformed.  And they have a case. Under apartheid, government and big business were run exclusively by the white minority.  When white rule finally came to an end, the fear was that white businesses and investors would flee.”

“Instead a deal was struck, and compromises were made for the sake of a peaceful and economically stable transition.  A black majority now ran the government but the white minority still ran the economy.”

“In retrospect, I cannot see how any other course could have been adopted by Mandela and the ANC leadership, without triggering a flight of investment and a collapse in the currency, endangering political stability.”

“'But that things went so badly wrong afterwards is not just because of the ideological trajectory.  It is about a chronic failure of political leadership. Perhaps the only option for future governance in South Africa is to develop a new social compact, where privilege and reward are renegotiated in favour of a more equal dispensation.”

“The alternative could be to face a revolution of rising expectations and frustration, in which South Africa could once again become as ungovernable as it was during the darkest years of apartheid.”

Lord Hain believes there are still grounds for optimism

“A vigorous political opposition which has made advances especially at city and municipal government and a vibrant civil society, forged originally during the anti-apartheid struggle, continues to challenge any attempt by the ruling party to undermine democratic structures and processes.”

“'Vigorously independent media: outspoken talk radio stations; respected online publications such as Daily Maveric and Alec Hogg’s BizNews and good newspapers like Business Day, Mail & Guardia and City Press should be supported to ensure an independent press

Lord Hain noted that the South African judiciary has powers envied by most other democracies; and the Constitutional Court can (and does) annul statutes of parliament which are deemed to contravene the country’s Bill of Rights and rule against the President.

“The country has a solid framework of law, financial regulation, and corporate governance. Basic infrastructure is comparable with many so-called developed nations, and was certainly the best in Africa.”

You still have a wealthy economy accounting for fully a fifth of total GDP for Africa – with a population of 55 million in a continent of one thousand million. There is great business entrepreneurialism – though not enough of an entrepreneurial culture.”

Lord Hain sends a question for corporate leaders; “Will you join the struggle?  And if you do, will you also encourage economic transformation? Because I don’t think you can anymore credibly do the first without also doing the second.”

A ‘rainbow’ future?

“Perhaps longstanding ANC supporters like me expected too much of the rainbow nation. Perhaps it was naïve to think that any party – for all the ANC’s moral and constitutionalist traditions – could be immune to human frailty, especially in the face of such immense social inequalities.”

He asks: Could any political party anywhere (including Britain) have done any better?  “I served for 12 years in Labour’s social democratic government and we found it tough, even when supported by a highly competent merit-based civil service to advance social justice whilst delivering economic success in a world gripped by the inequality-increasing, growth-stifling economics of neoliberalism.”

He said that outside observers have never been able to view post-apartheid South Africa in a nuanced way – either been romanticised as ‘Mandela’s miracle’, or cynically dismissed as ‘going down the pan’.

“But neither of these perceptions is accurate – and they never were.  After the relatively painless transition from apartheid under Mandela, it was always going to be bumpy road.”

“South Africa is still a very young democracy.  Just look at Britain – the so-called ‘mother of parliamentary democracy’. We’re in a mess with a dysfunctional Prime Minister, a divided government, a weak economy and a Brexit disaster posing the biggest historic challenge to the country since the Second World War. And I’m not even dwelling on President-by-tweet Trump.”

“South Africa is a beautiful country which remains an inspiration to me: marvelous to visit, and joyously transformed from the evil days of apartheid when I left as a teenager in 1966.”

“Perhaps the “Born Frees” – those young South Africans who never knew apartheid, and who already comprise over 40 per cent of the population – will reclaim Mandela’s legacy for the 21st century.”

“It was a legacy for which a generation of South Africans sacrificed their lives. Tens of thousands suffered imprisonment, torture and exile in the process, my parents I’m proud to say amongst them, setting me on a long journey from Pretoria, to exile in London.”


Lord Peter Hain is a Visiting Professor at Wits Business School and a member of the house of Lords.

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