DPMN Bulletin: Volume X, Number 2, April 2003

Introduction 

Following the demise of apartheid and the transition to democracy in April 1994, the new South African government inherited a well-developed economy characterised by sharp socio-economic inequalities. The socio-economic inequalities were particularly marked by affluence in white communities, and the backwardness of the native reserves and homelands inhabited by the majority of blacks. During the apartheid era, development efforts were largely concentrated in high-income white urban enclaves, thereby neglecting the majority of the black population. This duality was further complicated by the parallel interracial inequality, with the best socio-economic facilities being reserved for whites, and the poor facilities reserved for blacks. The result of the inequalities was: "the two-nation theory: one rich, one poor, one black, one white" (Department of Welfare 2000).

The advent of democracy in 1994 created a crisis of expectations among the majority of the previously disadvantaged communities. During the protracted struggle for majority rule, liberation movements capitalised on widespread discontent with distribution of power and wealth in society.

With the advent of the new democratic political dispensation, the new South African government faced the problem of how to correct the inherited socio-economic imbalances. In an effort to reduce not only socio-economic imbalances but also meet the high expectations among the majority of the black population, the government pledged itself to rapid socio-economic development by placing alleviation of poverty and inequality at the centre of its development agenda.

This paper reviews the efforts of the South African government to come to grips with development challenges of the post-apartheid era. It assesses the strategies pursued to bring about economic growth and to address inherited inequalities.

Background

South Africa became a democratic, non-racial state in 1994, after a protracted liberation struggle against the Apartheid regime, which had been characterised by colonialism, racialism and repressive laws. According to the ideology of apartheid, each race was to be kept apart, and each was to develop separately. Of the areas envisaged for blacks, the overwhelming majority was the poverty-stricken Native Reserves, occupying little more than 13 per cent of the total national territory (Omer-Cooper 2000). Apartheid also entailed the retention of economic power and privilege in white hands, while cheap labour policies and employment segregation concentrated skills in white hands and left blacks largely unskilled. Thus racial segregation in the economic sector, education, health and social welfare, "left deep scars" of inequality and poverty: the majority of the population – the black section of society – was characterised by abject poverty, and minimal access to basic social and economic services. Consequently, apartheid legacy created a divided society sustained by a system of separate and unequal development and segregation in almost all spheres of socio-economic, political and cultural life. The result was a myriad of institutions serving different racial groups.

Following the demise of apartheid and transition to democracy, the new constitution (The Constitution of the Republic of South Africa 1996 (Act 108 of 1996)) provides for a common South African citizenship, with all citizens having equal access to the rights, privileges and benefits. South Africa is also one of the few countries on the continent with a constitution which entrenches democracy, eliminates all forms of discrimination, promotes and protects human rights but also strives to attain socio-economic rights for all.

Development Policy and Strategies

The fact that the South African government has placed the need to address poverty and inequality firmly at the centre of its development strategy agenda is reflected in the various development policy documents and strategies that have been developed in the few years that the government has been in power.

Reconstruction And Development Programme (RDP), 1994-1996

The government development strategy was first articulated in the original 1994 RDP document (ANC 1994, 1) in which the ANC sought " to mobilize all our people and our country’s resources towards the final eradication of apartheid and the building of a democratic, non-racial and non-sexist future". The programme sought to attain socio-economic growth and basic needs delivery, while at the same time addressing the legacy of injustice. The Programme (ANC 1994) put emphasis on ‘people-centred development’, ‘ integrated development’ and ‘sustainable development’ that is democratic and participatory. The RDP proposed several dimensions that should be addressed to achieve socio-economic transformation of the South African society. The RDP further set out various socio-economic commitments and targets for delivery. RDP further set out various socio-economic commitments and targets for delivery as follows:

•  The creation of 2.5 million jobs over a ten-year period;

•  The building of one million houses by the year 2000;

•  The connection to the national electricity grid of 2.5 million homes by 2000;

•  The provision of running water and sewerage to one million households;

•  The distribution of 30% of agricultural land to emerging black farmers;

•  The development of a new focus on primary health care;

•  The provision of ten years of compulsory free education for all children;

•  The encouragement of massive infrastructural improvements through public works; and

•  The restructuring of state institutions by 1997 to reflect the broader race, class and gender composition of society.

Thus, the RDP provided an overarching policy for sustainable development, which sought to transform South African society.

The White Paper on the Reconstruction and Development Programme, 1995 refined the 1994 RDP document and identified five goals that needed to be addressed in order to achieve socio-economic transformation of South African society. The fundamental goals of RDP were as follows:

•  To create a strong, dynamic and balanced economy in order to eliminate poverty and meet the basic needs of every South African;

• Develop human resource capacity of all South Africans;

• Ensure that no one suffers racial or gender discrimination in hiring, promotion or training situations;

• Develop a prosperous, balanced regional economy in Southern Africa; and

• Democratise the state and society.

RDP was expected to engineer growth, through increased public expenditures on social service provision. The RDP put emphasis on programmes to meet basic needs and enhance human resource development, placed a major emphasis on social infrastructure and development programmes that address poverty and inequality.

Thus, during the 1994-1996 period, the RDP was viewed as the cornerstone of government development policy – a yardstick against which the success of the government development policy could be assessed. However, as a development policy document, the RDP had a number of shortcomings. First, it looked more like a ‘wish list’ than a strategy document focusing on opportunities and constraints. Second, it made no attempt to set priorities; or to assign responsibility for the implementation of each programme component. Third, it lacked mechanisms for inter-departmental coordination. Finally, local government, which has been assigned constitutional responsibility for promoting socio-economic development, did not have adequate planning and implementation capacity.

In any case, while the government appeared to have been content with the RDP’s broadly humanitarian thrusts, problems began to surface from 1995. The economy, in particular, was not growing at the envisaged rates. The sluggish performance of the economy in turn impacted negatively on the RDP, with achievements falling behind expectations. The welfare orientations of the Programme also came under critical scrutiny as investors and international financial institutions began demanding greater clarity on national economic policy. The release (in 1995) of the White Paper on RDP reflected the beginning of a significant shift towards economic pragmatism – specifically, towards increasingly free-market leanings.

Growth Employment and Redistribution Strategy, 1996

GEAR did not completely depart from earlier government policy but committed government to accelerating aspects of existing policy, albeit with a very significant compromise to the neo-liberal policy. Consequently, some of the policies initiated in the RDP were subsequently incorporated in the Growth Employment and Redistribution Strategy (GEAR) which subsequently replaced RDP in 1996. The goals of the GEAR package of policies are:

•  a competitive fast-growing economy which creates sufficient jobs for all work-seekers;

•  a redistribution of income and opportunities in favour of the poor;

•  a society in which sound health, education and other services are available to all; and

•  an environment in which homes are secure and places of work are productive.

GEAR package of policies were designed to achieve high rates of economic growth, to expand the private sector, to improve output and employment, achieve fiscal reform and encourage trade and investment. Furthermore, GEAR sought to achieve redistribution and improvement in basic living conditions as a result of generally, revitalised economic performance. GEAR rests on the assumption that the expansion of the private sector would have a substantial impact on the economy, whilst the role of the state would largely be a facilitative one. The evolving thinking was that the re-distributive role of the RDP was to be attained by a more circuitous route.

In order to facilitate economic growth and the expansion of the private sector, the government undertook to reduce state spending and the budget deficit; reduce corporate taxes and relax foreign exchange controls. It further pledged to control inflation; promote privatisation, and encourage wage restraint: all goals which are prescribed as universal panaceas for ‘development’ by the Bretton Woods institutions such as the World Bank and IMF (Office of the President 1996a).

According to GEAR, the results of such a strategy would be an economic growth rate of 6 % per annum by 2000, which in turn would generate up to 400000 jobs per annum, boost exports by over 8 % per annum and lead to a drastic improvement in social conditions. It was thus anticipated that in the period from 1996 to 2000, 1.35 million jobs would be created. Critical to the attainment of the goals was a significant increase in private investment and non-gold exports, together with increased state expenditure on social infrastructure (Office of the President 1996a).

Other RDP-Related Strategies

The RDP was reinforced and supported by a number of implementation strategies, such as the Anti-Poverty Strategy, Integrated Sustainable Rural Development Strategy and Urban Development Strategy. These policy documents formed the core of local economic development (LED) policy.

The Rural Development Framework, 1996

The Rural Development Framework (RDF) addresses the issues of how to involve rural inhabitants in decisions affecting their lives. The RDF’s vision for rural development has two key elements: a focus on governance and the provision of infrastructure and services; and a focus on an enabling framework for rural livelihoods to expand, mainly by restoring economic rights to marginalised areas.

In an effort to re-emphasise its commitment to poverty alleviation and rural development, the government produced the "Thriving Rural Areas: Rural Development Framework" in 1997, which was basically an attempt to provide a national rural development strategy. However, the RDF’s failure to develop a comprehensive integrated rural development programme with a set of specific delivery targets has in practice meant that the realisation of the rural development strategy has been left to the GEAR strategy.

The Urban Development Framework, 1996

Similarly, as a consequence of apartheid, urbanization had a negative impact on the majority of the population, especially the poor. Towns were characterised by separation of residential areas by race, with the consequent unequal access to amenities, infrastructure and livelihood opportunities. The Urban Development Framework (Office of the President 1996b) seeks to undo the above by setting down programmes for restructuring the apartheid city, as follows:

•  Integrated planning that targets the poor through less rigid zoning, more flexible planning mechanisms, etc;

•  Planning higher-density land-use through densification and enhanced public transport;

•  Reform of the urban land and planning system;

•  Development of coherent strategies for inner-city redevelopment, township upgrading, urban infill, the reintegration of apartheid buffer zones, and provision of open space for recreation;

•  Developing effective urban transportation and restructuring commuter transport subsidies;

•  Establishing sound environmental and disaster management, particularly concerning dangers facing settlements of the urban poor such as fire and flood.

The central objective of the above-mentioned strategy is to reduce poverty in a holistic manner.

In addition, in his "State of Nation Address" on 25 June 1999, President Mbeki re-iterated his government’s commitment to poverty and inequality alleviation through his challenge to the nation to create "a caring society" and by strongly emphasising that local economic development was crucial to urban renewal and an integrated rural development strategy.

The programmes referred to earlier provide an indication of the government’s commitment to poverty reduction. Therefore the eradication of poverty and inequality and meeting the basic needs are at the core of the government’s development policy and strategy.

The Impact of Development Policy Reform

The development challenge facing South Africa is a daunting one. Despite its shortcomings, RDP played a critical role in fostering a more democratic culture and establishing ANC legitimacy. As Munslow and Fitzgerald (1997, 57) aptly put it: "There is no doubt that RDP played a pivotal role in ensuring the successful transition from separate development towards a more sustainable development future". Furthermore, RDP’s projects on basic needs provision would count among its successes. A lot has thus been achieved with specific regard to the implementation of the Government’s priority on addressing the lack of access to basic social services. Between 1994 and 1999, the following had been achieved (Munslow and Fitzgerald 1997; Mbeki 1998; Department of Welfare 2000):

•  Four and a half million people have gained access to portable water;

•  Just over a million low-cost houses have been constructed;

•  There is now free and compulsory 10-year education;

•  A total of 58,921 households have received 745,015 hectares of land in both redistribution and restitution programme; and

•  Free medical care for pregnant women and children under six years of age is provided.

In spite of the preceding measures, the apartheid legacy remains almost intact. For instance, 10 % of urban and 39 % of rural households still do not have access to basic sanitation services, and 26% of urban and 23% of rural households do not have access to waste removal (Xundu 2002).

As noted earlier, the government had banked on the neo-liberal fiscal and economic measures adopted from 1995/6. Unfortunately, much of the gains expected from the adoption of the measures did not materialise. In spite of the macro-economic changes instituted in recent years, South Africa’s economic performance has been generally disappointing. GEAR failed to effectively attain many of its goals. Although changes in corporate tax levels, foreign exchange controls and interest rates have yielded some degree of increased investment, many of the strategy’s long-term targets have not been met. The anticipated 6% growth rates in GDP remain illusory. The economy grew by only 3.3%, and by 1998, it was actually contracting at 0.3%. Similarly, exceptionally poor performance was recorded in the job market. Instead of achieving the creation of 200,000 jobs in the first 18 months of GEAR’s existence, 80,000 jobs were in fact lost. By 1999, it was estimated that the economy had actually shed off some 500,000 jobs since 1994, and 350,000 since the inauguration of GEAR in 1996. Throughout this period, formal employment dropped. Similarly, investment rates have been low and FDI inflows disappointing. Thus, although GEAR helped ensure macro-economic stability and thereby enhanced the government’s international status, yielded tangible macro-stabilisation achievements and enhanced policy legitimacy, it has done little to address internal problems of skyrocketing unemployment and limited economic growth. In short, GEAR has not lived up to the government’s expectations.

In spite of the government efforts, the majority of South Africans still find themselves in poverty. Thus the level of poverty and inequality in South Africa is one of the major dimensions of the legacy of apartheid that still remains unchanged. According to the Poverty and Inequality Report (PIR) prepared on behalf of the office of the Executive Deputy President in 1998 (Office of the President 1998), poverty is not only a multi-dimensional phenomena but also a fundamental national problem. The PIR revealed that:

•  Fifty per cent of the population are defined as poor using a South African poverty line of about R353 (US$40.00) per adult per month;

•  Poverty is mainly rural: while 50% of the total population of South Africa is rural, rural areas contain about 72% of those members of the total population who are poor;

•  The poverty gap was about R28 billion in 1995, and 76% of this was accounted for by rural areas;

•  Sixty-one per cent of black people are estimated to be poor, compared to 38% coloured, 5% Indian and 1% white;

•  Sixty per cent of the female-headed households are poor; and

•  There are extreme variations in poverty rates among the nine provinces, with the poverty rate being highest in Eastern Cape (71%), Free State (63%), North-West (62%), Northern Province (59%), and Mpumalanga (57%).

According to Statistics South Africa October 1999 Household Survey, unemployment is viewed to be one of the major contributions to individual and household poverty. For instance, in October 1995, 14.4 million of 26.4 million South Africans aged 15 years or older were economically active. Of the 14.4 million, 10.2 million were employed and 4.2 million (30%) unemployed. According to SSA (1998), the South African economy experienced a net loss of jobs: there was a rise from 20% in 1994 to 23 % in 1997 official unemployment figures. The levels of unemployment are particularly higher amongst the previously disadvantaged groups. Thus, in spite of the government’s efforts to correct the inherited socio-economic imbalances, South Africa remains the most unequal society in the world.

Conclusion: Problems and Prospects

The South African government’s commitment to development and reconstruction has been explicitly stated in various development policy documents discussed in this paper. Since 1994, the country has witnessed the reform of development and sectoral policies to overcome the legacy of apartheid. Consequently, the policy, legislative and institutional framework has been put in place. However, in spite of government efforts, a significant number of the populace still find themselves in greater poverty, and an ever-increasing percentage is unable to afford and/ or access basic needs.

Thus the transition to a multi-racial democracy in 1994 posed difficult development policy challenges, and South Africa’s achievements in surmounting these challenges should be noted. However, based on the RDP/ GEAR package of policies, economic performance has been disappointing: GDP growth has remained low, formal employment continues to fall and key objectives of poverty reduction and improved service delivery remain largely unattained – the minimum economic needs of the country in terms of income distribution, poverty alleviation and employment have not been met. Nonetheless, although a great deal has been done to address the apartheid backlog of demands, the need still remains acute. The most pressing problem facing South Africa today is the absence of sustained economic growth and job creation, which are essential to reduce poverty and improve socio-economic conditions.

References

African National Congress (ANC). 1994. Reconstruction and development programme: A policy framework. Johannesburg: Umanyano Publication.

Department of Welfare. 2000. National report on social development 1995 – 2000. Pretoria: Government Printer.

Mbeki, T. 1998. The building has began: Government’s report to the nation, ’98. Pretoria: Government Printers.

Munslow, B., and P. Fitzgerald. 1997. Search for a development strategy: The RDP and beyond. In Managing sustainable development in South Africa, edited by P. Fitzerald, A. McLennan, and B. Munslow, eds. Cape Town: Oxford University Press.

Office of the President. 1996a. Growth, employment and redistribution: A macro economic strategy. Pretoria: Office of the President.

_____. 1996b. The rural development strategy: Putting rural people in charge. Pretoria: Office of the President.

Office of the President. 1998. Poverty and inequality in South Africa: Report prepared for the Office of the Executive Deputy President and the Inter-Ministerial Committee for Poverty and Inequality. Durban: Praxis Publishing.

Omer-Cooper, T. D. 2000. South Africa: Recent history. Africa South of the Sahara London: Europa Publications.

Statistics South Africa (SSA). 1998. Unemployment and employment in South Africa. Pretoria: Statistics South Africa.

_____. 1999. The people of South Africa: Census 1996. Pretoria: Statistics South Africa.

Xundu, X. 2002. Local Government confronts troubling realities. Business Day, Report of 13, November, p. 4.