In 2008, the going got tough and we defaulted to our fractious tribes, writes Ray Hartley.
It was the year that the fewest people since 1994 expressed confidence in a ‘happy future for all races’ The economy took a knock and it affected the confidence of people, if you look at social cohesion
When they cut down pine trees near the Chernobyl reactor in 2009, they discovered something remarkable. Before the disaster, the rings had been an even tan colour. After the disaster, they were a darker brown. It was plain to see that there had been a disruption deep enough to fundamentally change the character of trees for years to come.
So too with the national development indicators released by the minister of performance monitoring and evaluation, Collins Chabane, this week. Think of it as cutting down a pine from 1994 and seeing the patterns. They tell a story of steady progress followed by a great disruption and a wobbly downhill slope. The year that it all went down was 2008.
It was the year of two seismic events. The first was the global financial crisis, which began in 2007 and accelerated through 2008. The second was the recall of Thabo Mbeki just nine months before his term of office was due to expire.
Scanning the 19 years of statistics that make up the indicators, the year 2008, buttressed by 2007 and 2009, stands out dramatically. It was a year of new records. Brace yourself for a list of numbers — it is the only way to tell this story.
In 2008, South Africa recorded its highest foreign direct investment yet — just more than R100-billion — as buyers sought to cash in on three straight years of GDP at above 5%. Contributing to the investment spike was the Industrial and Commercial Bank of China, which bought a 20% stake in Standard Bank in a deal brokered by Goldman Sachs.
The total investment for 2008 — what the economists describe as gross fixed capital formation — reached a new-high of 23.1% of GDP. Astonishingly, the government ran a budget surplus of 0.9% of GDP, marginally up on the only other surplus in recent history, which had occurred in the previous year.
At the same time, 2008 saw government debt at a record low of 22.4% of GDP. To place this in perspective, debt in 1994 was 47% of GDP. Last year it ran at 32.4%.
More South Africans were employed in 2008 than in any other year in the country’s history: about 13 867 000 people at work.
We built 160 403 houses in 2008, second only to the following year when we built a thousand or so more. More hectares of land — 443 600 — were redistributed than in any year since the fall of apartheid.
South Africa had more teachers — about 400 953 — on the books than in any year since 2004, when the statistics were first recorded.
About 29.1% of higher education graduates qualified in engineering sciences — the highest proportion recorded since 1994.
But there is another, less flattering, side to the story of 2008. It was the year that the fewest people since 1994 — about 61% — expressed confidence in “a happy future for all races”. The only number lower was last year’s 58%.
Fewer people — 45.7% — identified themselves as South African than in any year since 2004, when this statistic was first recorded. It is the only time that this number sank below 50%.
The warning lights were blinking for the economy, with inflation running up to 11.3% on the back of rising food and oil prices.
South Africa’s global competitiveness ranking, according to the Institute for Management Development, sank to an all-time low of 53 out of the 55 countries measured.
What these statistics tell us is the story of a great disruption, a country that was flying too close to the sun and about to crash and burn. But how has South Africa changed? Which parts of our DNA were altered and how?
One of the more remarkable graphs in the development indicators shows a jagged intersecting “X”. One line tracks declining faith in service delivery and another the rising number of service delivery protests. It should by now be no surprise that the intersection occurs in 2008 — the year that everything changed.
The economic boom years that preceded 2008 may have delivered wealth to those in the civil service and private sector, but this “wealth effect” disguised the fact that the government’s ability to deliver services declined under Mbeki. It was a decline that would accelerate in the years to come.
The single biggest change wrought by the global financial crisis is that we became a nation dependent on the government to stay afloat. Although our regulatory system shielded us from the worst effects of the crisis, South Africa experienced a “bail-out” of a different kind.
Government expenditure on social grants has risen. The recipients for 2003 numbered 6.4 million. By last year, about 15.5 million people were receiving grants.
Foreign direct investment had all but dried up by last year, when it measured a mere R1.6-billion, but total investment remained at about 19% of GDP. Money to build things was coming from the government, not the private sector.
Rudi Dicks, who holds the title outcome facilitator in the Department of Performance Monitoring and Evaluation, puts it simply: “The only reason we continue to not show negative signs is the infrastructure spend.”
The billions spent on commissioning Eskom’s Medupi and Khusile power stations have kept the numbers in the black.
The sustainability of this tax and spend agenda has to be questioned. If the productive economy does not grow, where will the tax receipts to fund all this spending come from? What looms is growing borrowing.
Chabane says the cabinet is taking steps to boost the private sector’s contribution. What is fascinating is that the government appears to be looking past the “conglomerates” to smaller businesses to grow jobs. The plans include boosting commercial agriculture, particularly small farmers, looking at “the real problems that SMMEs are facing” and finding ways to get more businesses involved in beneficiation.
But can the state move beyond plans such as these to implementation? Does the state have the ability to release private initiative, or is it captive to interests that want to see it dominate the economy?
The second change since 2008 is that South Africa has suffered an identity crisis. Chabane blames the global financial crisis, saying: “The economy took a knock, a serious knock. It affected the confidence of people if you look at social cohesion.”
What concerns him is last year’s statistic that showed that “more and more people begin to identify themselves in terms of race or in terms of tribe or in terms of something else”.
It is, he says with polite understatement, “a bit of a worry”.
Perhaps it is infra dig for ministers to talk about the ANC’s great schism, because Chabane avoids ascribing any blame for the deteriorating social cohesion to the battle between President Jacob Zuma and his predecessor, Mbeki.
But it is hard to believe that Zuma’s victory over Mbeki at the 2007 Polokwane conference, which was followed by the ignominious removal of the president from office in 2008, had nothing to do with growing public disillusionment with the state of the nation. It was, after all, the year that fewer people identified themselves as South Africans than ever before.
It was the year we suffered our first post-apartheid meltdown — and the fallout will continue for years to come.
Picture: ALON SKUY SMOULDERING: Fallout from the political and economic ruptures of five years ago will continue for years to come
By Ray Hartley
Ray Hartley is Rhodes University graduate
Article Source: Sunday Times