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ÒSustainable” South Africa?


Bond

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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