Tuesday, September 2, 2014

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South Africa's White Elite: The Dog that Doesn't Bark

Keeping their heads down and operating behind the scenes, South Africa's white business elite have managed to maintain their economic position.
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Buildings reflected in glass windows of office blocks on Cape Town's Foreshore. Photograph by Robert Wallace.

When the curtain finally came down on South Africa’s apartheid in 1994, it happened in a way that none of the key players had predicted. Both the African National Congress (ANC) and its opponents in the white supremacist National Party were surprised that they could reach an accommodation through dialogue and negotiation rather than armed force.

In the negotiations that had followed the release of Nelson Mandela and unbanning of the ANC, the parties sealed an unspoken deal. This handed political power to the black majority and left economic power in the hands of whites. There was to be no seizure of white assets, although there were, of course, plans to gradually achieve a more equitable balance of wealth.

Black economic empowerment?

Indeed, there were already plans afoot to bring the leadership of the ANC into the fold. White business magnates had begun to transfer assets into black hands in order to incorporate those at the top of the new political order. The new policy was ‘Black Economic Empowerment’ (BEE). As the commentator Moeletsi Mbeki put it: “BEE was, in fact, invented by South Africa’s economic oligarchs, that handful of white businessmen and their families who control the commanding heights of the country’s economy, that is mining and its associated chemical and engineering industries and finance”.

He pointed out that the policy was adopted well before the ANC came to power. In 1992, Sanlam Limited, a cornerstone of Afrikaner capital, helped create the flagship black empowerment company New African Investments Limited – led by Nthato Motlana, Nelson Mandela’s former doctor. Further deals followed and soon the new BEE elite were well-entrenched.

On the face of it, the policy was a success. A more equitable sharing out of the spoils of economic development came about, creating a new black bourgeoisie. At the same time the ANC abandoned its more radical economic policies allowing rich whites to continue enjoying a very pleasant lifestyle. A considerable proportion of South African assets were transferred to the BEE elite, but even at their height, these transfers were smaller than they appeared. As my colleague Paul Holden points out, the total value of BEE deals were around R250 billion ($30 billion), still a drop in the ocean when compared with the total value of private sector resources of R6 trillion ($700 billion).

Worse still, the BEE transfers were loans, not gifts. The companies had to earn profits and from these profits the loans would be repaid. That was at least the theory. In reality, many of the new black elite had little or no experience of business and a good number of the BEE companies were soon in difficulties. As the government’s own assessment of the problems of BEE rightly put it, this led to contracts being signed by people who lacked the necessary capital: “This has encouraged debt-driven deals that are likely to work only when the economy is growing rapidly and company profitability is expanding significantly”.

Soon the new elite were scrambling around to find a way out. They hit on a plan to nationalise the mines. This would transfer a sizeable chunk of their problems onto the shoulders of the state, which could buy them out at favourable rates. At this point they hit a stumbling block. The ANC’s left-wing allies, the unions of COSATU and the South African Communist Party opposed this solution.

The Communist Party openly attacked those who called for nationalisation. The party declared that it had warned against the use of state finances to bail out the new rich and came out strongly against “diverting billions of Rands of public funds to serve the interests of a narrow black (and white) capitalist stratum”.

Nor was it just a question of “bailing-out debt-ridden BEE capital”, according to the party. They reported that mine union officials had been quietly approached by members of the new black elite, asking for their support. They were told, “Why don’t you support the nationalisation of the mines? If government takes over the mines they will turn to us to run them.” The Communist Party accused the right in the ANC of being seduced by the emerging black capitalist class.

White business

While black business is in a relatively precarious position, their white contemporaries have worked hard to secure their privilege. For a start, they have kept their heads down and operated behind the scenes. Business South Africa, which whites controlled, merged with the Black Business Council in October 2003 to form Business Unity South Africa. Not all black businesses appreciated the change, and some broke away from the new body in 2009. Nonetheless, the white business community had found a convenient new home for their interests. From here they could lobby the ANC government.

Some in white business went further, joining the ANC’s Progressive Business Forum. Its stated purpose is to open direct links with the ruling party. Within a year of its formation, the forum was being portrayed in the press as a means of “buying face-time with cabinet ministers and senior government officials”. The ANC responded briskly that there was “nothing untoward about this”.

Today it is clear that the Progressive Business Forum is a potent means of raising money for the party. A seat at President Zuma’s table at a banquet held in Johannesburg in June 2012 was going for no less than R500,000 ($60,000).

This is not the only way the ANC has raised money from business. An investigation in 2006 by the Institute of Security Studies revealed the existence of a group of companies controlled by a firm called Chancellor House, which quietly accumulated stakes in minerals, energy, engineering, logistics and information technology. This has been a major source of funding for the ruling party and has resulted in inevitable conflicts of interest. “More often than not, these business opportunities have been dependent on the government’s discretion – the award of state tenders, mineral rights and the like. The ANC, as ruling party, has been both player and referee”, says the report.

“As it has always been”

Nearly two decades after the ANC came to power, the black middle class is both powerful – through its influential role in the ANC – but also dependent on the party for its position. It is insufficiently well-resourced to stand on its own feet and reliant on state contracts and BEE legislation for its positions. The white elite, on the other hand, are better endowed and better resourced. Some have moved to become consultants rather than hold formal positions in companies. Others have moved some or all of their wealth offshore – treading the trail blazed by companies formerly listed in South Africa like Old Mutual and Anglo-American, which are now listed on the London stock exchange. At the same time, white business has learnt to live with the ANC in government, working behind the scenes rather than raising their voices in public.

President Zuma summed up the situation rather astutely when he addressed ANC’s policy conference on June 26, 2012. Much had been achieved since taking power in 1994, he said, but much still had to be done. The president went on to outline the key issues that had to be tackled – among them were economic relations, which, he said, were still largely unchanged.

When the end of apartheid came, he said, “We had to be cautious about restructuring the economy in order to maintain economic stability and confidence at the time. Thus, the economic power relations of the apartheid era have in the main remained intact. The ownership of the economy is still primarily in the hands of white males as it has always been.”

Further reading: Think Africa Press' review of "Who Rules South Africa?" and interview with the authors Martin Plaut and Paul Holden.

Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, syndication or educational purposes, please contact: editor@thinkafricapress.com

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Comments

 

I like this article for outlining the pragmatic partnership that has evolved in South Africa since the "curtain finally came down on South Africa’s apartheid era". But the apartheid policy has deep roots which continue, in my opinion, to exert influence in a covert, world-wide form, in our work with nuclear power.  I'll be succinct with this fairly challenging perception. Firstly to say that our ability to generate electricity from nuclear power comes entirely from our white man's way of looking into the Atomic World, and then figuring out a technology that can extract the energy that we see is down in there. The similarities between the European colonisation and exploitation of Africa, and now - the colonisation and exploitation of the (newly discovered) "continent of Atomica" are just too close and numerous to be ignored.Whereas we have an excellent knowledge of the physics of the atom, there is a meta-physics of this 'neighbouring dimension' waiting to be developed. And I would suggest it is the traditional knowledge and mythic notions of African culture that can best understanding the living nature of this invisible world. The meeting place of black insight and white knowledge seems to me to be the idea "discovered" by quantum theorists, of this being an "holographic Universe": Which on close examination is the same universal principle known in ancient Egypt by the simple phrase: "As above, so below". In other words, two different ways of looking at the energetic processes of our Universe, and each of them sees the same overarching (and underlying) principle.  In this context, the Atomic World becomes the subcontinent that is downstairs from where we are in this shared Universe: A land and landscape where the particle population lives in settled family systems and tribal communities, that are virtually identical to how we humans live in our dimension.  Look with social curiosity at what goes on inside of our nuclear reactors and be prepared to see the parallels with the Atlantic Slave Trade. History is repeating itself. Our white man's pride in physics, our fascination with the engineering, the consuming notion of cheap energy, the quest for military advantage: all of these make us oblivious of the social and sentient nature of the particles, and the pain and suffering we inflict on the inhabitants of this neighbouring world we think is ours for the taking. We are only just now emerging from the previous cycle of this behaviour, and here it is again ! My sense is that South Africa, more than any other nation, has - in the African population - the experience and instinct to look again at our understanding of and relationship with the Atomic World, and see how we Humanity are once again caught up in a colonial adventure. This time - of universal proportions. Which is impossibly hard for the nuclear nations to recognise.  I have developed a couple of web sites <nuclear4everyone.com> and <kenyanuclear.com> which seek in different ways to make this whole insight more accessible and visible. My interpretation is surely imperfect, but at last we are beginning to consider our nuclear work in the larger setting of the holographic nature of our Universe, which opens a door for a much more creative approach to this "next floor down" world. The 'holographic principle' flags up the potential for Humanity to create some kind of collective spiritual process that can reach down into the Atomic realm and seek to heal in the first instance the phenomena we classify as radiation.If this is real, and it can soon enough be tested once we set our minds to it, then a synthesis of the social and spiritual power within the African population, along with the technical expertise of the white people, could create a process that can effectively treat the radioactive waste materials that have accumulated in the back yards of every nuclear nations. Such an enterprise could generate revenues of the same order of magnitude as the gold mining industry. And this, to cycle back to the topic of the article, should then provide for a more equitable distribution of wealth in both local and world society.  I commend this insight to you, as needing more consideration that I can give it.