Speech by the
Leader of the Opposition
Parliament in South Africa
Council on Foreign Relations
July 21, 2004
Note: Remarks as prepared for delivery
I would like to begin by thanking the Council on Foreign Relations for hosting this event. In particular, I would like to acknowledge the role of Dr. Princeton Lyman in making it possible.
Dr. Lyman served his country with distinction as the U.S. Ambassador to South Africa from 1992 to 1995, during the critical years of our country's transition to democracy. He is a champion of Africa's cause and a devoted friend to our nation.
Another American who remains important to many South Africans is Dr. Martin Luther King, Jr. Dr. King's vision of a future in which his children would be judged "not by the color of their skin, but by the content of their character" was shared by the many South Africans who fought against apartheid.
By the late 1960s, Dr King began to shift his focus away from civil rights and towards the problem of poverty, which he believed was directly linked to the problem of urban violence. It was this new cause that consumed Dr. King's efforts until his life was taken by an assassin's bullet on April 4th, 1968.
The struggle against poverty continues. It continues here in the United States. And it certainly continues in South Africa, and across the African continent.
Ten years ago, our first democratically elected President, Nelson Mandela, told us at his inauguration:
"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."
With that mission in mind, South Africa began a new journey. And we have indeed come a long way.
We created a new Constitution with an ambitious Bill of Rights that protects communities and individuals and sets goals for socioeconomic progress.
We built a stable economy, and we supported it with responsible fiscal policies that have reduced our national debt and cut inflation.
We extended basic services— such as housing, electricity, water and sanitation— to millions of people who did not have them before.
We are proud of these achievements. They are a credit to the government and to the people of our nation.
We have also just recently held our third successful democratic elections. And while the results revealed that South Africans still vote largely along racial lines, the major political parties made sincere efforts to appeal to voters in all communities.
Yet the people of South Africa are not yet truly free. We are still suffering from the great evils of poverty and inequality, which have actually grown worse over the past decade.
Eight million South Africans are out of work. Five million South Africans are infected with HIV and a million have already died of Aids. Millions of South Africans have been victims of violent crime.
These are not just South African problems. Most of them are present throughout the African continent.
Of course, there have been some notable African successes in recent years. South Africa, Senegal, Ghana, and Kenya have all witnessed peaceful and democratic transfers of power.
Botswana's economy is growing rapidly, at close to eight percent per annum; Uganda has made astonishing progress in the fight against HIV/Aids; Mozambique and Angola have ended their civil wars; and Tanzania has proved that a multiethnic state can succeed in Africa.
Yet twenty million people have been killed by Aids across the continent, and thirty million more are infected with HIV. The gains in average life expectancy in Africa since the 1960s have been almost completely eroded.
According to a report released yesterday by the United Nations Industrial Development Organization (UNIDO), Sub-Saharan Africa is the only region in the world where the proportion of people living in extreme poverty has continued to grow for 20 years. Nearly half of the population of our region lives in a state of absolute poverty, subsisting on less than $1 per day.
Of the fifty nations classified by the UN as least developed countries (LDCs), thirty-four are from sub-Saharan Africa. Five of the ten states which Francis Fukuyama recently identified as failing states in his major new work State Building: Governance and World Order in the Twenty-First Century are in Africa.
Sub-Saharan Africa is also disconnected from the global economy, accounting for only about one percent of world trade and less than two percent of inward foreign direct investment (FDI).
Many Africans continue to suffer from conflict, civil war, and political repression. As we speak, a massive campaign of ethnic cleansing is unfolding in Darfur, Sudan. In Zimbabwe, Robert Mugabe has brought his formerly free and prosperous country to ruin.
This past April, at the same time that Africa commemorated the tenth anniversary of South Africa's first democratic elections, we also commemorated the tenth anniversary of the Rwandan genocide. These two events continue to symbolize Africa's potential to fulfill the best hopes, and the worst fears, of humanity.
Our challenge, as Africans, is to work to ensure that hope prevails and fear subsides. Today I wish to share with you some of my thoughts on how we can succeed.
Renewed interest in Africa
One positive sign of progress is the renewed global interest in Africa. The world is waking up to Africa— not just because it is moved by our tragedies, but also because it is inspired by our triumphs.
One area of renewed interest is economic. Africa still possesses great mineral wealth, and the rate of return on investments in Africa is higher than in any other region in the world. Average economic growth across African countries is moderate, but positive overall, at 3.6 percent per annum. In addition, recent debates about globalization have brought Africa's enduring poverty to the world's attention.
The other area of interest in Africa is strategic. Since the bombings at U.S. embassies in Tanzania and Kenya in 1998, and especially since the attacks of September 11th, 2001, Africa has become one of the key arenas in the war against terror.
In addition, the Atlantic coast of Africa has grown in importance as a source of fossil fuels for Western markets. The Royal Institute of International Affairs has calculated that, by 2014, African oil will meet 30 percent of US demand.
These two areas of interest, economic and strategic, are linked. Africa's new strategic importance could help jump-start the continent's economic development.
Conversely, Africa's enduring problems may allow new strategic threats to emerge. Africa's problems cannot be ring-fenced off from the rest of the world; they can and will export themselves.
For example, failed African states provide prime environments for the flourishing of international crime syndicates and global terror organizations. During the civil war in Sierra Leone, for example, terror groups such as Hizbollah were actively involved in the illegal diamond trade, which helped fuel the conflict even futher.
U.S. President George W. Bush clearly recognizes the connection between geopolitics and economic development. His policies towards Africa have been both positive and far-reaching.
Picking up where President Bill Clinton— another friend of Africa— left off, President Bush has sought meetings with African leaders and given his support to new African institutions. He has increased official development assistance (ODA) for sub-Saharan Africa to its highest level in U.S. history, boosted U.S. spending to fight HIV/Aids, and supported African peacekeeping activites.
It is gratifying to see that Senator John Kerry has pledged to support and extend these efforts, as part of his campaign platform. Regardless of who wins the U.S. presidential election this November, Africa will have a friend in the White House.
Of course, U.S. interest in Africa remains primarily strategic. Yet the U.S. understands well that the upliftment of Africa is a strategic necessity.
Just this month, the Africa Advisory Panel of the Center for Strategic and International Studies released its report, "Rising U.S. Stakes in Africa" and delivered it to Secretary of State Colin L. Powell.
The report made seven proposals for U.S. policy in Africa. Four of these deal directly or indirectly with strategic concerns, including oil; the other three deal with capital investment, HIV/Aids and environmental conservation.
These positive and useful proposals suggest that U.S. interest in Africa is holistic, and not simply focused on self-interest.
The AU and Nepad: credibility and capability gaps
Six weeks ago today, in this very forum, South African President Thabo Mbeki described Africa's own efforts to tackle the problems facing our continent.
President Mbeki devoted particular attention to the peacekeeping efforts undertaken by the new African Union (AU) through its Peace and Security Council, which South Africa now chairs. He also spoke at length about the role that the New Partnership for Africa's Development (Nepad) is playing in building a new relationship between Africa and the developed world in economic affairs.
These efforts are commendable. However, Africa's new institutions face both a credibility gap and a capability gap.
The credibility of the AU and Nepad remains in doubt because of Africa's continued reluctance to act against states that violate principles of human rights, democracy and good governance.
There has been some progress recently, but not enough. At its third ordinary session earlier this month in Addis Ababa, Ethiopia, the AU committed to sending 300 soldiers to assist military observers in Darfur. However, it postponed discussion among African heads of state of a report that documented and condemned human rights abuses in Zimbabwe.
In addition, the capability of the AU and Nepad to carry out their extremely ambitious mandates is also in doubt. The AU, for example, has to date failed to raise funds to cover even half of its operating budget.
As for Nepad, its twenty flagship infrastructure projects have failed to attract significant private investment. Its much-celebrated African Peer Review Mechanism (APRM) lacks the capacity to carry out serious investigations or to enforce its findings.
Fundamentally, the problem with both the AU and Nepad is that they place great responsibility in the hands of African states, when in many cases African states are themselves the source of the problems at hand.
Nepad and the AU also put a great deal of faith in centralized planning. Yet the bureaucracies they have created in Pretoria and Addis Ababa, respectively, cannot possibly carry out the tasks assigned to them.
Simply put, the AU and Nepad have both established a positive and constructive set of goals, but they lack the means to achieve them.
There is certainly more that the developed world can do to help. As President Mbeki suggested six weeks ago, the G-8 needs to live up to its commitments in the G-8 Africa Action Plan to increase aid and investment.
I met yesterday with Constance Berry Newman, the newly-appointed Assistant Secretary of State for African Affairs. She indicated strongly that her intention is to help build the capacity of African institutions— particularly the AU and Nepad, and also regional organizations such as the Southern African Development Community (SADC) and the Economic Community of West African States (ECOWAS).
The Bush Administration has pledged to assist her by giving practical and material assistance to these bodies so that they can carry out their planning responsibilities and execute their policies. That is a clear indication of positive commitment by the U.S., and other developed countries should match these contributions.
In addition, developed countries need to work harder to reduce the debt burden of the poorest countries, which remains at $145 billion, excluding the debt owed by Iraq. Developed nations should also increase their contributions to the fight against HIV/Aids, and live up to their commitment at the 1992 Rio Summit of providing aid equivalent to 0.7 percent of GDP.
There is also a pressing need for developed countries to drop their trade-distorting agricultural subsidies and import tariffs. These cost developing countries hundreds of billions of dollars per year in lost economic opportunities, and they hurt consumers in developed countries as well.
Yet even if these actions are carried out to their fullest, they will not be enough. UNIDO's report concludes that the only way to tackle poverty and underdevelopment in Africa is through rapid and sustained economic growth, particularly in the private sector.
The economic growth Africa needs cannot be granted by developed countries. Nor can it be generated by African states, or created by fiat by pan-African institutions. Something else is needed, an engine that can drive the process of African integration and economic development forward.
The South African engine
That engine is the South African economy. Not only is it the largest economy in Africa by far, with a gross domestic product (GDP) of $456.7 billion in 2003, but over the past decade South Africa has become the single largest source of FDI in Africa, at $1.4 billion per annum.
Much of South Africa's foreign investment— 63 percent— is directed outside of South Africa's regional trading bloc, the Southern African Customs Union (SACU), and extends into Francophone and North Africa as well.
The positive effects of this investment are profound. Countries such as Mozambique, for example, which has one of the fastest-growing economies in the world, have been helped along by high levels of inward South African investment.
South African companies are helping to diversify African economies and reduce their dependence on primary sector industries. While most FDI from outside Africa focuses on oil and gas, South African firms are branching out, moving beyond mining and brewing to a diverse range of activities including telecommunications, retail, shipping and banking services. ,
As South African companies spread across the continent, they are not only entering markets, but creating them. They are building infrastructure, transferring skills and technology, and prompting foreign governments to enforce laws and strengthen democratic institutions.
There are some concerns that South African investment represents a kind of "neo-colonialism" in Africa. These concerns are partly driven by lingering resentment over the destructive role that South Africa played in the last decades of the apartheid era in destabilizing its African neighbors.
The "neo-colonial" argument is given added weight by South Africa's huge trade surplus with the rest of the continent. Exports from South Africa to the rest of Africa in 2002 were worth R43 billion (roughly $7 billion at today's exchange rates); imports amounted to only R5 billion (less than $1 billion), most of which involved oil purchases from Nigeria.
That imbalance is at least partially offset by the benefit to African consumers of South African goods and services. Cellular telephones, for example, have become a hugely popular alternative to the inadequate state-run telephone networks in many African countries.
South African companies are also working hard to integrate themselves into local economies by training local employees and buying raw materials from local producers. And the peacemaking efforts of the South African government have helped to restore goodwill towards the country in other parts of Africa.
In addition, companies in other African states have begun to return the favour by investing in South Africa. The media sector in particular has seen new investments by foreign, African investors. South Africa's weekly Mail & Guardian newspaper is now owned by the Zimbabwean journalist and entrepreneur Trevor Ncube, and last year the Nigerian media group ThisDay launched a new national daily newspaper of the same name in South Africa.
On the whole, South African investment is good for African economies. And so, too, is growth in South Africa's own domestic economy.
A recent study carried out by researchers at the International Monetary Fund concluded that "[a] 1 percentage point increase in South Africa's per capita GDP growth, sustained over five years, is correlated with a 0.4 – 0.7 percentage point increase in growth in the rest of Africa".
Clearly, South Africa is the best and most important engine of economic growth and development across the African continent.
South African economic policy: using the engine?
The question then becomes how best to use the South African engine to promote economic growth so that South Africa and other African countries can begin to address the needs of ordinary Africans and to achieve the goals of the AU and Nepad.
In the late 1990s, the South African government adopted an ambitious economic policy— named Growth, Employment and Redistribution (GEAR)--that aimed to achieve growth rates of six percent per yearor higher. The government pledged to privatize state-owned enterprises (SOEs) and enact labor market reforms that would encourage new investment and job creation.
While the government is still nominally committed to these reforms, it has begun to abandon them. It now favours a policy of state-centered development that aims to achieve economic growth and redistribution through policies of black economic empowerment (BEE), affirmative action and what is generally referred to as "transformation".
There is certainly a need for programs in both the public and private sectors to help those people who were disadvantaged by apartheid. The goal of these initiatives should be to create new opportunities by improving education, expanding property ownership, and encouraging new investment, particularly in labor-intensive industries.
Instead, the government is committed to an approach that seeks to engineer particular social outcomes according to demographic targets of racial "representivity".
For companies, this takes the form of "empowerment charters" within each industry, in which firms commit to divest and sell a certain percentage of their equity to black shareholders. It also means adhering to strict new regulations on hiring and promotion, such as the Employment Equity Act of 1998.
Thus far, the outcome of these policies has been rather disappointing. Not only have they failed to create economic growth and to expand employment, but they have also failed to benefit the overwhelming majority of black South Africans.
The lion's share of BEE transactions has been taken up by a few players, all of whom have close ties to the ruling party. The public sector has extended new services to the poor, but has suffered enormous backlogs, particularly in housing.
The costs of the government's policies are being borne by the poor, who must deal with the consequences of slow economic growth and inadequate public services.
The creation of a new black elite does have the political and social benefit of defusing racial tensions. Yet it does nothing to solve the underlying problem of widespread poverty which "transformation" theoretically hopes to address. Black unemployment continues to rise, and the gap between the multiracial rich and the overwhelmingly black poor continues to grow.
Again, I must stress that there is a great need for programs that uplift those who have been the victims of racial discrimination in South Africa's not-too-distant past. The problem is that once race becomes the all-important criterion in these policies, we lose sight of the poor, who were not only marginalized in the past, who but remain so today.
The poor are best served by a rapidly growing economy and an efficient public service. We are hurting the poor, not helping them, if we sacrifice these goals for policies that promote only a few well-placed individuals who stand in as proxies for a larger group.
We also need to take the concerns of foreign investors into account. Foreign investors admire and appreciate the South African government's success in macroeconomic reform, but they are also expressing growing concern about some of the government's empowerment policies.
Many foreign companies are quite eager to train and hire black employees, to work with new black business leaders, and to contribute in other ways to the upliftment of previously disadvantaged South Africans.
Most, however, are uncomfortable with equity divestiture. They feel that a foreign government should not tell them, as foreign investors, how to invest their assets.
The issue of equity divestiture remains a great challenge, and I trust that the South African government will be wise enough to deal with it in a way that resolves concerns about our country's commitment to private ownership and, indeed, the market economy.
Whatever the political merits of the government's current approach, it is quite clear that our domestic economy has not grown at a rate that can reverse our high unemployment rate of over 30 percent— or over 40 percent, according to the expanded definition, which includes those who have given up seeking work.
That is well above the unemployment rate of about 25 percent that prevailed in the U.S. during the Great Depression. South Africa needs urgent, sweeping changes in its economic policies— changes that encourage economic growth in the private sector, changes that provide for as much market as possible and only as much state as necessary.
Regardless of whether the government's empowerment policies succeed or fail in reaching their demographic targets, what South Africa really needs is the emergence of new black entrepreneurs— people who create new goods and services, people who add value to the South African economy, people who are independent of government patronage and protection. That will only happen in an economy that has less state and more market— where the government intervenes to create opportunities but not to engineer outcomes.
Leading, or lagging?
The effect of South Africa's current economic policies has been slow, jobless growth. Our economy is creeping along at a snail's pace instead of opening up full throttle. It is growing at 1.9 percent per year, far behind the African average of 3.6 percent and well below the needed levels of 6 percent or higher.
In short, we are not using the South African engine to its fullest. South Africa's positive impact on African economic development as a whole is therefore much smaller than it could be, and should be.
There are two other areas of critical importance to African development in which South Africa should be leading, but in which we are lagging.
One is the South African government's stubborn refusal to intervene in Zimbabwe. Not only has this hurt the cause of human rights and democracy in Africa, but it has also had an enormous economic cost.
Quite simply, one of South Africa's most important trading partners has collapsed. The cost to the South African economy alone has been estimated at just under $1 billion per year.
In general, of course, South African foreign policy has been a tremendous boon for Africa. President Mbeki and his government deserve great accolades for their enthusiastic leadership in peace negotiations in Burundi and the Democratic Republic of Congo. The energy devoted to these cases, however, serves to highlight the government's inaction on Zimbabwe.
The second area in which the South African government is lagging is in its slow response to the HIV/Aids pandemic. Of all the countries on the continent, South Africa is best placed to deal with the epidemic. Though our health system faces great challenges, it has better resources and better infrastructure than health services in the rest of Africa.
Yet the South African government fought for several years to avoid dispensing anti-retroviral medicines to pregnant mothers with HIV. It is well behind schedule in rolling out anti-retroviral therapy to extremely ill Aids patients, despite the fact that the medicines are being made available at low prices.
This tragic policy also has a cost. An international investment bank recently estimated that the South African economy will be 17 percent smaller in 2010 than it might have been without the impact of HIV/Aids.
The long-term impact of the pandemic may even be greater. Our hospitals are filled with Aids patients and our schools and streets are filling with hundreds of thousands of Aids orphans, whose number is estimated at close to 700 000, and rising.
The U.N. reports that average life expectancy in South Africa has fallen from roughly seventy years to below fifty. That, in turn, has pushed our ranking on the U.N. Human Development Index down twenty-five places in just three years, from number 94 in 2001 to number 119 this year.
Clearly, a change is needed.
A new direction for South Africa
South Africa needs to move in a new direction. We must use our economic engine to the fullest, both to benefit the people of our own country and to promote development in the rest of Africa.
To do so, the South African government must enact two sets of reforms.
The first set of reforms deals with the domestic economy.
- South Africa must make economic growth the number one priority of economic policy. We must free our economy from the dead hand of state intervention and control.
- We must embrace affirmative action policies that consider race, but never allow race to trump merit.
- We must develop empowerment policies that expand ownership and encourage entrepreneurship among ordinary people.
- Companies should not be forced to divest their equity. Instead, empowerment should start with the privatization of South Africa's public assets, whose shares should be offered to the poor at a reduced price.
These reforms involve limiting the power and reach of the state. There are, however, several priority areas in which the South African government can and must intervene.
- We should improve our police force, for example— not just so that it is more effective, but so that it becomes one of the most effective police forces in the world.
- We must tackle HIV/Aids with far greater urgency and wisdom, so that our national programme is not only the most costly in the world, as it is today, but also the most effective.
- We must roll back our labour laws, not just so that they encourage employment, but also so that they become the global model for how to employ large numbers of workers cheaply and still uphold international standards of safety and environmental quality.
The second set of reforms that South Africa must undertake deals with our economic and diplomatic engagement with the rest of Africa.
- The South African government should continue to encourage investment in Africa— as well as investment in our own country— by getting rid of all remaining exchange controls.
There has been considerable progress in removing exchange controls in the past ten years, but more needs to be done, both to free up new sources of capital and send investors a signal of our confidence in South Africa and the African economy as a whole.
- Our government should work towards free trade in Africa, and should take the lead by lowering its own trade barriers. At present, Africa's internal trade barriers are the highest in the world and cost African economies some $11 billion per year.
- We should also make sure that South African investment in Africa is responsible investment. The new Corporate Responsibility Index of the Johannesburg Stock Exchange should be expanded and extended to more South African companies as a way of monitoring and rewarding firms that embrace fair investment practices.
- In foreign policy, South Africa must abandon its policy of quiet diplomacy toward Zimbabwe and adopt a more activist role.
Last year, the Democratic Alliance proposed a "Road Map for Democracy" in Zimbabwe with specific timetables and concrete rewards for progress. A similar idea was taken up at the Commonwealth Heads of Government Meeting (CHOGM) in Abuja, Nigeria in December. It is worth reviving and using as the basis for South African mediation in the crisis.
- South Africa must also use its strong voice within the AU and Nepad to ensure that these institutions enforce a strong set of norms across the continent— norms that reflect the human rights and democratic values enshrined in South Africa's own constitution.
- In addition, South Africa should make these pan-African institutions more effective by encouraging them to focus on their core functions.
In the case of the AU, that means focusing on peacekeeping efforts such as the Peace and Security Council, and the development of regional peacekeeping forces.
In the case of Nepad, that means strengthening the African Peer Review Mechanism and converting the Nepad bureaucracy into a management consultancy that offers services and advice to African governments and institutions.
- Finally, South Africa should continue to take the lead in re-shaping Africa's relationship with the world. We should continue to negotiate free-trade arrangements such as the US-SACU agreement, and push for an end to the trade-distorting agricultural subsidies and import barriers in developed countries that hurt Africa's economic growth.
Above all, South Africa must continue to remind Africa and the world of our continent's great potential. South Africa's own history teaches us that even the greatest obstacles to progress can be overcome through collective effort.
Through South African leadership in Africa, we can fulfill the prophetic dream of Dr Martin Luther King, Jr., who hoped for a world that was not only free from political oppression, but free from the oppression of poverty and need.
The key will lie in South Africa's ability to overcome the racial obsession that is the legacy of our past. Demography is not, and should not be, destiny. Each of us is far greater than the sum of our demographic parts.
As the great American poet, Walt Whitman, wrote: "I am large. I contain multitudes."
Every human being is wonderfully complex. Race can never be more than one among the many ways in which we know ourselves.
South Africa itself is a hubbub of multitudes— of different groups of people whose rich diversity gives our country its uniqueness. At the same time, the amazing diversity within each of these subcultures suggests that what Whitman wrote of the individual is just as true of the group.
We will be far better off as a nation if we look beyond race. We must remember the dictum of the American philosopher John Rawls, that any policy of upliftment that we undertake must be "to the greatest benefit of the least advantaged".
South Africa can and must succeed. Our progress can help ensure that Africa fulfills more of humanity's hopes, and fewer of its fears, in the years ahead.
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