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“Sustainable” South Africa?


 

In
South Africa, three interesting processes related to "sustainable
development"–that ghastly phrase, denoting an allegedly more eco-friendly
capitalism, often with a few "polluter-pays" regulations and social safety- net
provisions added to orthodox neoliberalism–are underway as we move to the
middle of 2001.


First, preparations are heating up for the Rio+10 extravaganza here next
September. That’s the tenth anniversary meeting of the "World Summit on
Sustainable Development" (http://www.johannesburgsummit.org)
which I’ve written about, cynically I must admit, on ZNet in January. Second,
the anniversary of the Growth, Employment and Redistribution Programme gives us
a chance to look at how well home- grown structural adjustment has worked in
South Africa.


Third, on July 1 the African National Congress is meant to be keeping its
municipal government campaign promise to give people a lifeline supply of free
water, sanitation and electricity, but if the case of South Africa’s fourth
largest city is anything to go by, it’s another broken promise. Let’s look at
each issue in turn.

The
most striking warm-up event for Rio+10 is the gentrification of Alexandra
township, which is next to Sandton, the luxurious suburb that will host the
conference. Mzonke Mayekiso is an organiser for one of the main community groups
in Alexandra, and he bewails the "forced removals" of hundreds of families to
Diepsloot, a township about 40 km away:

The
only thing that people were told was that the authorities want to "renew"
Alexandra. It’s just a lie. People were not properly consulted, and were given
no choice. In fact, residents have nicknamed the private company that is doing
the bulldozer demolitions of our houses "the red ants," because their overalls
are red. They are black workers but led by a few white bosses. Organised
resistance is still building.

The
fiscal context is crucial: the tiny proportion of the national and municipal
budget devoted to construction of proper housing. Only about a fifth as much is
being spent by government as is required to reduce the huge apartheid-era
backlog of three million houses. That in turn is a function of neoliberal
macroeconomic policy.


Second, then, it is time to revisit the so-called "Growth, Employment and
Redistribution" (Gear) strategy, which was announced with great fanfare five
years ago, on June 14, 1996. Then deputy president Thabo Mbeki joked, "Just call
me a Thatcherite." At the same time, finance minister Trevor Manuel immediately
commented that the strategy was "non-negotiable" in its broad outlines.

In
Britain two decades ago, exhibiting similar determination, Margaret Thatcher’s
policies slashed the public sector, lowered spending on key social programmes,
generated vast inequality, cut industrial jobs dramatically, allowed money to
flood out of the country, ran roughshod over democracy in policy formulation,
and left society more atomised and alienated than at any time in memory.

But
while Thatcher benefitted from North Sea oil and the phenomenal 1980s rise of
the City of London (not to mention the historic defeat of organised labour and
the Labour Party’s own principles), in contrast, South Africa has lost vast
socio-economic ground because of recent trends in international commodity and
financial markets. And so a comparison of the Gear model’s five- year
projections and what actually transpired is a very discouraging exercise,
especially for those who value economic justice. Did the Gear model fail because
of the unexpected 1997-99 East Asian crash? Some economists say so, yet all the
trends were off track before Thailand’s mid-1997 meltdown. For example, modelers
led by Andre Roux of the Development Bank of Southern Africa, consultant Iraj
Abedian and Richard Ketley of the World Bank, predicted massive job creation
halfway through 1996– 126,000 new formal, non-agricultural sector jobs– when
in reality 71,000 were being lost that year.


Instead of being charged with malpractice or being disbarred from the economics
profession, the three Gear leaders were rewarded with far higher salaries by,
respectively, Investec, Standard and Deutsche Banks, where they now work. And
perhaps that was actually Gear’s ultimate problem: it was a macroeconomic policy
for bankers, not for South African society. It is no surprise that the bankers’
two main ambitions–lowering the budget deficit and inflation–were amongst the
only projections which Gear met. The bias was confirmed, at the time, by Nick
Barnardt, an economist at BOE NatWest Securities: "It is a clear choice for the
market-related way of doing things and a defeat for the ANC left-wing."

The
Congress of South African Trade Unions reacted with "serious reservations." If
job hemorrhaging wasn’t convincing enough, by mid- 1998, the stock market
collapsed by half from April-September, money flooded out of the country and the
rand fell nearly 30% in a matter of weeks. Another major currency deterioration
last year showed that even if financiers enjoy Gear’s hardened monetary policy
and liberalised capital markets, that doesn’t mean that the combination
generates macroeconomic stability. Just the opposite, it is clear.

And
if the "hot money" roller coaster wasn’t destructive enough, the Gear era also
saw the largest South African producers and insurers voting with their feet,
establishing their primary listings on the London stock exchange: Anglo
American, Billiton, Old Mutual, South African Breweries (the world’s fourth
largest), Didata, and last month even the DeBeers diamond monolith (linked to
Anglo American through the Oppenheimer family).


Desperation about the huge hard-currency squeeze that results from the
profit/dividend outflow to London is witnessed in Pretoria’s recent decision to
reverse policy and apply for a World Bank loan–reportedly $200 million–for
hospital rehabilitation. Yet as argued in the campaign platform of the African
National Congress in 1994, "The RDP must use foreign debt financing only for
those elements of the programme that can potentially increase our capacity for
earning foreign exchange."

The
Reconstruction and Development Programme continued, "Above all, we must pursue
policies that enhance national self-sufficiency and enable us to reduce
dependence on international financial institutions." Instead, thanks to the 1995
abolition of the financial rand and further Gear liberalisation, George Soros
put it bluntly in a Davos interview in January: "South Africa is in the hands of
international capital." Manuel’s position as chair of the World Bank/IMF during
2000 didn’t change matters, nor does ex-radical activist Mamphela Ramphele’s
position as Bank managing director for social development herald any discernable
change.

The
logic behind Gear is, predictably, based on the hope that export-led growth will
boost South Africa into a globally-expansive economy. To this end, trade
minister Alec Erwin is arguing that Northern "dinosaur industries" (sic) like
agriculture and manufacturing should be penetrated by cheap Southern imports.
Given the hypocrisy of continuing Northern protectionism– like the Bush
Administration’s steel industry bonsala last month–it would appear that at
first blush Erwin has a point. (Erwin was mooted as potential secretary-general
of the World Trade Organisation, given his role in denuding the UN Conference on
Trade and Development of teeth from 1996-99, so be careful of this chap, folks.)

To
achieve export-led growth, the plan is to give huge subsidies of various
sorts–including the world’s cheapest electricity (which is why the US accuses
SA of "dumping") to large minerals- processing firms, so they can earn the hard
currency South Africa requires to service apartheid-era debt and pay for
imports. Not my definition of sustainable.

To
get to my third point, a couple of weeks ago, I visited the Eastern Cape city of
Mandela Metropole–formerly known as Port Elizabeth–to see this travesty for
myself. The proposed "Coega" deep-water port and Industrial Development Zone (IDZ)
are the major development initiatives in this most poorest of South African
provinces, and the largest single construction project proposed for South Africa
as a whole. State investments will be at least $200 million for a new port, to
be made by the state- owned company Portnet, and hundreds of millions more in
other incentives.

Last
week, hundreds of low-income people were resisting eviction from decades-long
residence at Coega. They have become symbols of failure by the public-private
Coega Development Corporation to follow rudimentary environmental and social
impact assessment, community participation and even standard cost-benefit
analysis.


Alongside a local economist, I’ve done a long, turgid critique of orthodox
cost-benefit analysis (http://www.queensu.ca/msp
under background research, by Hosking/Bond), so won’t dwell on that part of the
Coega story now (more is available at

http://www.coega.org
). The immediate human problems are too compelling.

The
victims are being moved from semi-rural villages north of Mandela Metropole into
a remarkably cramped set of choc-a-bloc little houses called Wells Estate. Their
cows and vegetable gardens are among the casualties. But most worrying for many,
is the prospect of paying urban rates and service charges on meagre pensions.
(Currently, the Wells Estate has no electricity and water but that is allegedly
a short- term problem.)

Last
week on national television, tears streamed from residents who were being
forcibly moved. Like the displacement in Alexandra last week, this was another
scene from the bad old days.

The
costs are mounting. Not only will national taxpayers be gouged to provide tax
benefits and offset the loss of customs revenue in the proposed duty-free zone.
In addition, low-income people like those displaced to Wells Estate will be
asked to sacrifice more, in the form of cheap water and electricity for incoming
IDZ tenants, that should rightfully be theirs instead.

The
contradiction is being heightened because of the Mandela Metropole’s decision to
cut off water and electricity services to those who cannot pay, at the same time
that free lifeline services are meant to be available, on July 1. During April
(the last month for which records exist), nearly 4,000 residents were
disconnected from electricity and 1,430 from water, with more tens of thousands
on the lists of people still to be cut. Rather than allow poor families to
remain connected to water and electricity, the city appears anxious to cut them
off.

In
fact, the city engineer reported to the metro council last month that those who
were cut off because of high arrears "are likely to demand their Free Basic
Services allocation each month" which "will lead to an unsupportable load on the
disconnection/reconnection service." Not only did he recommend against providing
services to impoverished households in arrears. For those in deep arrears, the
policy is to attach and sell household goods.

Yet
the reason for most arrears is the high price of existing services. This year,
most Mandela Metropole consumers pay 60% more per kiloWatt hour of electricity
than large businesses. The "free basic services" promised in Mandela Metropole
are miserly. For electricity, just 50 kWh per month will be free, which is less
than four days of consumption by an average low-income household. For water, a
family of eight will get 25 litres per person free each day, enough for just two
flushes of the loo.

The
solution for a large metropole like Mandela is not complicated. Policies should
be reversed so that the larger users subsidise the low-income users, through a
"rising block tariff" system that gives everyone sufficient to meet basic needs.
Surpluses raised from large-volume users can be plowed rapidly into new capital
investment in infrastructure. Social benefits would include job creation,
improved public health, higher labour productivity, microenterprise spinoffs and
gender equity.

But
precisely such a plan was proposed by renegade progressives in central
government’s Working for Water programme a few years ago. The response, by an
assistant city engineer was blunt: "If a rising block water tariff were to
implemented for industry, Coega would not go ahead." In other words, the
perceived need to pump more cheap water and electricity into the neoliberal
White Elephant means that poor people will not get an adequate subsidy for basic
needs.

Such
blatantly unsustainable development will be on show at Rio+10 next September.
Come visit and unite with locals whose resistance is growing daily.


(Patrick Bond, a Johannesburg-based activist and academic, is at [email protected])

 

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