The American political scientist Harold Lasswell famously said: “Politics is who gets what, when, and how. ” The economy is the wealth and resources of a country in terms of the production and consumption of goods and services, and the distribution of those goods and services. Politics during the Mandela presidency were dominated by Black/White racial issues, and to a lesser extent the conflict between the ANC and the IFP. The political parties shared many of the same ideas, but had little love or respect for each other. Mandela’s statesmanship played a large role in limiting the harmful effect of such negativity on the economy.
He lived up to the following quote from his statement at his inauguration as President: “The time for the healing of the wounds has come. The moment to bridge the chasms that divide us has come. ” As is the case in general, the impact of politics on the economy was considerably less than the impact of the policy decisions of the Government on the economy. The policy decisions by the Government South Africa was politically isolated, and the main international level policy decision was that South Africa must re-enter the family of nations as soon as possible.
At home, the Mandela Government faced serious economic challenges, including lack of economic growth, high and rising unemployment, high inequality between and within the different race groups, and widespread poverty. In 1994 the ANC and its alliance partners adopted a socio-economic policy framework called the Reconstruction and Development Programme (RDP).
The five key programmes of the RDP are: • Meeting basic needs, such as employment, housing and health care • Developing our human resources, such as Education and training • Democratising the state and society Building the economy • Implementing the RDP The Growth, Employment and Redistribution strategy (GEAR) was nominated in parliament on 14 June 1996. GEAR was a 5 year macroeconomic strategy aimed at strengthening economic development, broadening of employment, and redistribution of income and socioeconomic opportunities in favour of the poor. How the policy decisions directly impacted on the economy The status of Mandela as a world icon facilitated the ending of South Africa’s isolation.
Within a short period of time South Africa regularised its position as a member of the United Nations Organisation, the Commonwealth, and the Southern African Development Community, and all embargos and sanctions against South Africa were dismantled. This had a very positive impact on the economy, and opened up the world for South Africa to resume normal business and trade relations. South Africa attracted foreign aid for reconstruction, and direct foreign investment.
South African business expanded aggressively into Africa, and to a lesser extent into developed countries. The RDP was not such a success story. Its laudatory goals were only moderately been achieved. Its main aim is to grow the economy through redistribution, which has turned out to be contradictory. The RDP did achieve redistribution. The government soon established an extensive welfare system, catering for the aged, disabled, children in need, foster parents and many others too poor to meet their basic social requirements.
The transfer of shares in business to Black persons under Black Economic Empowerment has also redistributed wealth. All of this was achieved at great cost. Regrettably the RDP did not contribute much to economic growth. GEAR was more of a success story, although it was unpopular with, for instance COSATU. In theory GEAR built upon (rather than revised) the RDP. Yet, it committed Government to specific macro targets, and including a phased fiscal deficit reduction plan The Government limited overspending, and kept inflation under control. The Government also relaxed exchange control.
All of this helped to make South Africa a respected destination for foreign direct investment and contributed to many local business succeeding. Mandela tried to live up to the following quote from his statement at his inauguration as President: “The time to build is upon us. We have, at last, achieved our political emancipation. We pledge ourselves to liberate all our people from the continuing bondage of poverty, deprivation, suffering, gender and other discrimination. ” However, the economic building of a nation and escape from poverty can only be achieved through peace and education, and that will take at least another lifetime.
The economic realities of the time for citizens South Africa is a country divided along financial lines. For the poor, the period under discussion was tough. Unemployment was rife. Many poor people lack education, and without formal education one cannot easily work in a modern economy. However, the RDP (as softened by GEAR) did provide some relief: During the period almost a million cheap RDP houses were built, and almost a million people in rural areas received access to safe water.
During the period about one and a half million homes were connected to the national electricity grid, and the proportion of rural homes with electricity increased threefold. For the wealthy, it was a time of bloom. Despite high unemployment, South Africa had a skill shortage, and salaries for skilled workers increased significantly. However, the economic plight of the many and the general lawlessness in South Africa caused rich and poor alike to suffer under crime and violence.