Bonus Interview: Mike SchusslerComments
Mike Schussler is a leading South African economist, and CEO of the consulting firm Economists.co.za. In this interview, he evaluates the impact of Nelson Mandela’s peace-building legacy on the economy of South Africa, and also points out the shortcomings of the current government, which he says has failed to come to terms with persisting inequalities in south african society.
“I think in the long run, the value that Nelson Mandela added to south Africa is beyond the immediate. It’s about his image, its about the peaceful nation that we’ve become, slowly. It’s about the tolerance that’s in south Africa, not always as fast as we want to, and the fact that we have peace.
Peace in itself in south Africa, has added hugely to the economic successes that we’ve had in this country. And it’s enabled us to do things. Like present the soccer world cup, present the cricket world cup, or the world conference on sustainability or racism.
It’s also helped us grow our normal factories and things like that. Unfortunaly some of that legacy is now under threat under the renewed labour strife, that came to an end during his presidency. But it certainly shows that Nelson Mandela has meant a lot for the south African economy.
In the last year or 2, politics have changed, the economy hasn’t grown as much as we wanted to. I think the big thing in south Africa is that growth has not translated into jobs. Part of that is the problem that we have is the inequality.
Only four out of ten south African adults have jobs. The other problem is that only one out of four adults is part of the formal sector. So let’s call that the rich part of South Africa. And the rest don’t feel that rich, they feel they haven’t had that economic success. So the minority of people, and not based on race, have had good success out of it , they don’t really believe it but they’ve had relative success out of our transition to democracy.
The problem is that democracy has created very few jobs, and population growth has been higher than job growth. And that means that evermore people are on the unemployment line. And so while we have 25 percent unemployment, that is a manipulative figure with definitions changing, the big issue is we’ve gone from 20 years ago 5 out of ten south African having a job, during the period of sanctions, to where we have 4 out of 10 south Africans having a job. Getting paid better for that job, but it’s not translating into jobs for other people at the moment
“The problem with black economic empowerment is that it’s benefited very few. And actually some of the trusts where Nelson Mandela and some of the older A.N.C leaders are, have benefited more people probably than some of the newer ones which were supposed to benefit even more people, because those were considered to be too narrow. And now we find that with one or 2 exceptions, black economic empowerment is benefiting still fewer people. And that’s part of the problem of inequality then in South Africa.
So black economic empowerment has also hindered our performance as an investment destination, because companies have seen it as an extra tax. And that’s unfortunate but in a sense its true. And they don’t know if it does buy them that sort of peace. especially after the labour unrest that we’ve seen in the lat 18 months in South Africa. Where people say but, i bought this black economic empowerment, should it not have bought me a lot more workplace peace?
And again, going back to Nelson Mandela’s time, where there were fewer BEE transactions in the making, and then towards the end of his presidency, quite a lot. But they got ever narrower, and they included ever more the same people. So what you fount was that one person that was part of one transaction became part of another transaction and so forth over the next decade. And this is making government rethink, this is making business rethink. And on the other hand, what’s also making people rethink is ..let’s say a normal company, or so-called white owned company, will give away part of its shares to a black entrepreneur, who within 5 years later sells these shares , to another white person, and then the company has to start everything from scratch.
And these are the type of situations we have to look at, because it means that that one person got rich, decided not to do anything more with it, and now we go through the whole process again
“Not all the money was spent efficiently. The problem is the government did not spend the money..the money they got for land reform, even at today’s prices, should have enabled them to complete 50 percent of the transactions. They’re nowhere near to 25 percent. of the transactions that they wanted to complete. And then on top of that there was no form of support for many of the few black famers that were coming through. Whereas we’ve seen black farmers that are commercial anyway,be quite successful. And people forget that part very easily because they see the failure of the prime examples and they forget the people that wanted to go into farming and made their own plans were often much more successful. Yes that reform in many ways hasn’t been successful. But if you look at south african home ownership for example, african home ownership is on par if not more, in value, to white home ownership. Allthough whites are fewer. But we also see then indians and coloured have also made great strides in home ownership.And today because of the way things worked out, there are more africans with second homes, than there are whites with second homes, by far. One in three african families have a second home, typically in the old homeland area, but it’s somewhere where they go away to over holiday periods.
Whilst we look at all this, if one looks at land reform as a very emotive issue, and it’s on agriculture, and it’s held agriculture back. What people forgot is that a lot of the housing questions are not doing quite as badly. And every census that we’ve had, every household survey that we had has shown a very high home ownership. In fact higher than most of Europe, by far. And in such a way you could call us a capitalist nation allthough when you talk to our politicians you would swear we’re just slightly left to the communists.
I think it will be a period of a lot of mourning, i think it’ll be a very tragic period for South Africa. Well probably see a national holiday or something being declared. Which will have a productivity impact economically speaking perhaps. But at the other end I think were going to see a little bit of the benefit in the next year or two. Not just from the merchandising, but from the amounts of people that will want to come and visit South Africa. From the amounts of people that are going to be reminded about his status and what he did for our country. And perhaps other parts of the world. because our sort of peace process has helped the northern Ireland peace process, and other areas as well. Darfour, some south africans are involved in. Not all have been equally successful.And I think in that sort of sense we might see very much a little bit of a pick up in tourism again. People wanting to come and visit maybe his grave site, people wanting to come and visit Robben Island. and places where he stayed, Vilakazi street in Soweto, or in Houghton maybe.And maybe one or 2 places with historic significance. I think we musn’t underestimate that.”