There have been disturbing noises coming from South Africa that while apartheid may be officially dead, it continues to live on at social and cultural levels. There have been reports that whites, who were able to pick and choose the best jobs going – whether or not they were qualified – are now feeling miffed because blacks are being promoted above their heads through Black Economic Empowerment (BEE) schemes. Blacks, on the other hand, say that apartheid has only gone underground and that there is little genuine mixing of the races.

We were sufficiently worried about the situation to make it our February cover story (S Africa: Still shackled by apartheid?). A few weeks later, Archbishop Desmond Tutu – anything but a radical firebrand – said he felt whites had failed to appreciate the inclusiveness offered to them by blacks through such instruments as the Truth and Reconciliation Commission. Archbishop Tutu asked: Is apartheid still alive and kicking in South Africa?

While it is easy for people to adjust to better standards of living and higher status, it is difficult to accept that one’s former dominant position may have been either lost or is in the process of being lost. In such situations, we tend to withdraw into our shells, yearn for the good old days, find incessant fault with the new ‘top dogs’, weep into our whiskies and often cut ourselves away from the mainstream.

Is this the case with disgruntled white South Africa? Some acknowledge that such human factors do play a significant part as citizens, both white, black and brown make adjustments to the new reality. Others however maintain their main concern is that the economy is being run down through an excessive application of BEE.

For such people, I have news: The following item appeared in the UK Financial Times: “South Africa’s drive to bring the long excluded majority of its people into the mainstream of its economic life is paying healthy dividends. It is pushing the growth rate – nearly 5% in 2005 – on to a higher trajectory. It has helped the 12-year-old democracy move ahead of India as a destination for foreign direct investment. It was a factor in the 47% total return on equities traded on the Johannesburg Stock Exchange last year.” This is part of an article written by Jim Sutcliffe, the chief executive of Old Mutual, one of South Africa’s oldest and biggest companies and the last word in what we might call the “establishment”.
Sutcliffe goes on to say: “Broadly speaking, the BEE strategy… is helping fuel an economic and social revolution as millions start to enjoy disposable incomes and upward mobility for the first time. This is making South Africa an exciting place to do business and one that holds the promise of long-term stability.”

Sutcliffe then expounds on his argument. He says the number of black people in the upper income bracket has grown by 30% and the proportion of blacks in the top income bracket is now 20%, up from close to zero a decade ago. “The rise of black consumers can be seen in surging sales of consumer goods, financial services, property, cars and tourism. This is strongly tied to empowerment. Factors driving it include the rapid increase of black people in white-collar public and private jobs and the growth of black-owned businesses,” he writes.

Sutcliffe gives an apposite example of the changing consumer patterns in South Africa. He says that 20 years ago, the Rand Daily Mail, the country’s most famous newspaper, was forced to close because its readership was increasingly black and of no use to advertisers. Today, the most successful paper is the Daily Sun, which began life only three years ago and aimed specifically at the black working class. It circulation is over 450,000 “and advertisers are clamouring for space”.

Wider spread of wealth
Comments like these from hard-nosed business executives, plus growth figures, plus the visible evidence of a more prosperous black middle class, give the lie to the notion that BEE is driving the economy into the ground; it is proof positive that the inclusion of the country’s majority into the economic mainstream is not only generating growth but distributing wealth across a far, far wider spectrum than ever before in South Africa’s history.

But why should this be a surprise? The first condition for economic growth is based on how many people have how much disposable income. Those who live at subsistence levels have no disposable incomes and if these form the majority, you can never have real growth. The concentration of wealth in a few hands does not lead to growth; it merely redistributes wealth among a small circle. Spread disposable income among many and you spread effective demand among many. This leads to the production of more goods and services, more jobs leading to more disposable income and on and on in a virtuous circle. This is the theory – the proof that it works lies in the developed economies of the world, the emerging giants like China and India and now South Africa.

The irony is that even in South Africa, some of the people who have benefited most from the ending of apartheid (and here I exclude the blacks) are the same people who keep sniffing at the very causes of their new-found prosperity. Fortunately it is to be hoped that South Africa has a full complement of sane people in high positions whose pragmatic approaches will ensure the pessimists can still afford their whiskies into which to weep. g