Mandela’s Economic Legacy

A great South African, and probably the greatest ever South African, has left us for a new walk to immortality. I drove past Mandela Square this morning, and it occurred to me that this is now a memorial – to a man who many believe united our beloved country. But what of his economic legacy? Before he brought the ANC to government, there were fears he would be an anti-business leader, a communist sympathiser much closer in ideology to Fidel Castro than to Margaret Thatcher. We asked some of our experts for their views….

Dennis Dykes from Nedbank:
Nelson Mandela leaves a number of important legacies, but his main economic legacy was to settle business and investor nerves in the post-apartheid period by adopting a pragmatic rather than an ideological economic policy approach. He kept an open mind and it is often said that he was persuaded to follow a more market-based approach after discussions with global business and political leaders at the World Economic Forum in Davos in 1992. However, this did not mean that his compassion and concern for the poor and social justice was in any way diminished, with his government starting the strong drive towards addressing backlogs in areas such as housing, sanitation, education and health. Of course his status as a global icon also helped to market South Africa as a tourist and investment destination. His capacity to build national unity through actions such as those at the 1995 rugby world cup also helped build confidence in the new nation. In 1996, a health scare sent the rand tumbling, again underlining his central role. His economic legacy is significant and we need to reflect on how we can recapture some of that national unity of purpose that he espoused to grow the economy and address continuing inequalities in our society.

Neren Rau from SACCI:
It was definitely yet another demonstration of extraordinary leadership that Madiba succeeded in balancing the difference ideologies and political pressures within the Alliance to deliver a balanced approach to the economy.

Dawie Roodt from the Efficient Group:
The ANC morphed from a socialist-orientated liberation organisation into a neo-liberalist political party during the early 1990’s. This was fortunate for SA, a huge political change AND a significant change in economic policies may have been too much for this new democracy – Nelson Mandela was most likely the driving force behind this change of heart. In recent years, however, the true colours of the ANC with its socialist tendencies are reappearing again. Mandela was a pragmatist that was prepared to suppress his own ideological beliefs for the good of the country.

Frans Cronje from the SAIRR:
It was largely Mandela’s influence that saw the ANC abandon the afro-socialism that the party had advocated through the latter years of the apartheid system. In embracing markets and allowing for relatively conservative macro-economic policy Mandela allowed the rebuilding of the South African economy. This is a poorly understood fact but one that it our opinion was more important even that his investments in reconciliation.

Writer David Bullard:
Madiba had little influence on economic policies other than to put finance into the safe hands of Trevor Manuel. Now the commies rule.

Nedbank CEO Mike Brown
Madiba led South Africa from a closed state back into the democratic world and this allowed our economy to become part of the globalization trends that started in the 1990s.The South African economy of today has been a major beneficiary of our democracy for which we thank the father of our rainbow nation.

Raymond Parsons from BUSA:
It is difficult to find new words to describe the massive contribution which Nelson Mandela made to stability and progress in SA in the early years of democracy in SA after 1994. Whatever his initial ideological points of departure he soon put a strong stamp of pragmatism on economic policy and reached out to stakeholders like the business community to help undo the legacy of apartheid. An early visit to the World Economic Forum in Davos gave him new insights into an global economy from which he had been excluded for so long. His crucial support of the creation of Nedlac in 1995 was, through social dialogue, to provide the socio-economic dimensions of the reconciliation and nation-building to which he was so deeply committed. His pragmatism in economic matters at the time went a long way towards creating the consensual stability needed to underpin investor and business confidence in the formative years of SA’s new democracy. Already in 1996 he said in Parliament that SA needed a longer-term shared vision if it was to fully unlock its real economic potential and create a better life for all, a vision which his one-term Presidency unfortunately did not make possible. SA is still struggling to find this shared vision under the aegis of the latest National Development Plan and to rediscover the values that will make it possible.

Mike Schussler from economists.co.za
Yes I believe that the Mandela administration lead us to a more free economy and we have seen growth improvements over the fifteen years to 2008. Mbeki was essential in this; as was Trevor Manual, Derek Keys, Tito Mboweni and others. But of course the start was Nelson Mandela accepting that a generally mixed economy with a free market leading the way would be best. He also calmed everything down and business stayed and built the economy as did many thousands of entrepreneurs – some of whom had worked for the state before and then found that they had talents beyond paper work. I think if one looks at the adjustment at the time it was clear that labour productivity increased and capital costs declined, making the cost of doing business here much less until about 2007 when it started increasing again. The State Debt was reduced and the civil service became less until 2004 when it started increasing again. Reconciliation was as important to the economy after many years of mistrust and hate. Economies only grow when we have certainty, and his administration brought certainty.

Craig Pheiffer from Absa Investments:
The birth of democracy opened up the world to South Africa and brought with it both the good and the bad of being a member of the international economy. In the honeymoon years we did a lot that was right in maintaining the independence of the central bank, growing the pool of taxpayers, improving the efficiency of the tax system, balancing the national budget books, growing our foreign reserves and reducing our sovereign debt levels. Thanks to our glorious transformation we could also witness World Cup Cricket, Rugby and Soccer on our very own shores. Our markets attracted foreign investors and our domestic asset managers could invest larger and larger sums of money offshore. The downside to being part of the global economy has been the vagaries of foreign capital – easily being withdrawn when our domestic growth has stuttered or when emerging markets have collectively wobbled. But things have gone a little awry in recent years as the countercyclical fiscal policy has widened our Budget Deficit and increased our sovereign debt. Our currency has depreciated sharply and our current account deficit has widened as we struggle to keep growth at 2%, never mind 3% or the much higher levels of growth required to create sustainable employment. These have generally been tricky times for policy makers around the globe but we need to honour Madiba’s legacy by investing in our future through education and eliminating all of those labour market obstacles that are restraining our rate of growth from moving to a higher plane.

Conclusion: Mandela set this country on the right path. But if Malema ever gains real influence, Madiba’s economic legacy, as well as his legacy of tolerance and inclusiveness, would be in terrible danger.