Contextualising historical and ahistorical development ideologies in Contemporary South Africa
Development policy in South Africa has always premised from historical injustice, focused more on correcting racialised economic distortions constructed by the apartheid regime. In 1994 and shortly thereafter, there was reasonable consensus that left leaning ideology, held to deeply within the liberation movement and among allied (local and global) forces, was best equipped to address the country’s development challenges.
One of the organizing principles of the rival conservative ideology was to examine issues without situating them in historical context. This is the same premise by which there are calls to construct a social and economic future without considering the legacy of racial suppression. It follows that the economic policies of post-1994 administrations were tilted more towards redistribution than they were towards growth. When the second (Mbeki) administration sought to build alliances with the neo-liberal franchise, the ideological resistance from within the governing party was swift and antagonistic. For the left, historicising development has always been non-negotiable.
Historical and ahistorical causes of unemployment in South Africa
The 2008 global economic crisis introduced a new factor in economic realities: poverty and unemployment caused by factors other than apartheid. The Zuma administration spared little effort to combine both historical and ahistorical approaches to the 2008 economic crisis. In fact, rather than responding to historical and ahistorical causes of unemployment in different ways, the debate turned radically historical, perhaps in defence of the breakdown of governance which delivered widespread corruption within and outside the state. Terms such as Radical Economic Transformation (RET) and White Monopoly Capital (WMC) made a grand entry into public discourse. Such return to history contaminated the ideological purity of the left, given that a global British public relations firm, Bell Pottinger, would later be charged with producing both the RET and WMC campaigns to legitimise the kleptocracy. This was a case of global capital postulating as champions of the historically poor, akin to a hyena championing for the rights of goats.
The radical history (minor) discourse did not end with the change of the Zuma administration. Both RET and WMC still form part of mainstream debate in contemporary South Africa, as alternative options to reduce the country’s inequality and poverty. In sum, the Zuma administration missed an opportunity, first to identify the emerging ahistorical causes of poverty, and second, to expand policy tools to include those whose poverty bears little if any co-relation with pre-1994 socio-political and economic conditions.
The Covid-19 pandemic is the second opportunity for democratic South Africa to address poverty, unemployment and inequality through both historical and ahistorical lenses. Consider the following. Unemployment in developed countries has skyrocketed, with the US economy closing in on a crisis not matched since the Great Depression and the UK reaching the highest unemployment since World War II. The UK is especially relevant in our analysis here. It was where the first Industrial Revolution started, and the economic benefits accruing to such technological advancement created a solid (intergenerational) middle class. The tectonic disruption of supply and demand markets by Covid-19, has led to general decline of economic activities leading to low production in these countries. None of the rising unemployment is linked to historical forms of poverty. In the context of South Africa, the emerging unemployment in part takes the form seen in developed countries.
Below I now turn to examine the extent in which the current administration has treated these ahistorical causes. Such analysis looks at the essential texture of the government’s socio-economic response strategy to Covid-19.
Covid-19 Socio-economic response: Historical or ahistorical?
On April 21, President Ramaphosa delivered a national address, which contained the administration’s socio-economic response to the Covid-19 crisis. Early into the address, Mr Ramaphosa clarified that the response was calibrated into three phases. The first phase responded to the humanitarian crisis, addressing tax relief, availing of disaster relief funds, emergency procurement, wage support through the UIF and funding to small businesses. The second was aimed at responding socio-economically and the third was focused on long term economic recovery. Here I attend to the first only briefly, and the second more robustly. The piece does not address the long-term recovery phase.
The socio-economic response speech did not allude to the historical injustices found in almost all government economic policy documents. In fact, Mr Ramaphosa used terms such as ‘disaster’ ‘catastrophic’ and ‘disruption’ as a preamble to the government’s response. The implication of such an ahistorical framework would be an ahistorical response. But given the ideological dynamics, along with the historical legacies of apartheid, such assumptions are subject to different interpretations.
Initially it was unclear if BEE, the tool employed to address historical distortions of the economy, would be the guiding principle in implementing the government’s economic response. The debate has not yet settled, and, there is no deconstruction of the racial relevance of strategy on the economic response, from the presidency.
With economic stability in perspective, Mr Ramaphosa posited the prioritisation of boosting supply and demand, and protecting jobs. The president announced the plan to inject R500 billion into the economy (equivalent to 10% of GDP), the largest stimulus package in the history of the country and among the highest Covid-19 related stimulus packages in any country, if we consider in GDP terms. The first R20 billion would go towards purchasing equipment to ensure that health workers could respond efficiently and that those infected by the pandemic are not placed in unbearable conditions. The second R20 billion would go to local government, in support of emergency responses along with emergency delivery of basic services. The first R40 billion therefore had little to do with stabilising the economy or protecting jobs, it had more to do with humanitarian response. And, any humanitarian response is a scramble to save lives, without reference to race, gender, or social class.
The second expenditure category (R50 billion), would be directed to addressing the livelihoods of the most vulnerable in society. This involves the use of South Africa’s social welfare programme as a Covid-19 socio-economic response instrument. In this regard, the president announced an increase of the amount of money given out through social grants to support the poor and the vulnerable. This increase would last for six months, following which the government would revert to distributing the regular amounts. There are seven types of social grants in South Africa. These are:
The Child Support Grant,
Older Person’s Grant,
The Disability Grant,
Care Dependency Grant,
War Veteran’s Grant and
Foster Child Grant
Of all the above, only the Foster Child Grant and the Grant in Aid are not means tested. Which is to mean, the remaining five types of grants are conditioned on the value of the applicant’s assets and income. The basic condition however, is that any eligible individual must be a South African Citizen, a permanent resident or a refugee living in South Africa.
And, for the first time in democratic South Africa, those who are unemployed, but who are unable to access UIF or social grants, will be eligible for a monthly basic income grant of R350. After the pandemic has receded, we will need to examine whether such an intervention is a meaningful economic tool that should be considered under ordinary economic times.
Still on the social welfare programme, numerous studies in South Africa have demonstrated that social grants have been effective in reducing poverty although there is little evidence on how they interact with inequality. The reduced economic pressure on poor households realised from increased income of social grants, will minimise the economic burden these households place on incomes of middle-class households, black and white.
South Africa’s social welfare programme is largely founded on historical economic data, that there are South Africans whose poverty will not be addressed through employment creation only, because it is historical. Although for the most part these will be black South Africans, there is no legal ringfencing, and South Africans from any racial or gender background, who meet the asset and income requirements can apply. On the contrary, those whose economic conditions have worsened due to Covid-19 can legally opt-in without any racial, gender or class barrier. The social welfare tool is therefore a double-edged sword, addressing historical poverty on one hand, on the other, maintaining an open door for any eligible South African.
Finally, the president announced that the balance of funds will go towards supporting both small and medium businesses on operational costs, and, injecting cash into the financial system to improve liquidity. There are at least seven types of relief funds, aimed at business support. These are:
There is 500m availed by the Department of Small Business Development, of which eligibility of the applying business is evaluated on a case by case basis. No historical conditions are applicable.
The Department of Tourism has availed an additional R200m, which will support SMMEs based in rural areas and townships and those owned by women, young people and people with disabilities.
The health care fund will mainly go to research on Covid-19. No historical conditions are attached.
Trade and Industry
The fund will seek to provide industrial funding towards vulnerable businesses, and especially businesses considered vital for addressing the impact of the COVID-19 pandemic. The basic eligibility criteria are that businesses must be South African owned. No historical conditions are applicable.
Agriculture and food
To boost food production and support farmers in distress. No historical conditions are applicable.
The National Empowerment Fund has made loans available for black entrepreneurs to manufacture and supply a range of medical products, including medical masks, sanitisers, dispensers and related healthcare products. Historical conditions are applicable.
Labour and Employment
Assistance via the UIF benefit scheme . No historical conditions are applicable.
Made available to qualifying retail tenants. No historical conditions are applicable.
Made available to assist South Africans affected by the outbreak, without historical conditions attached.
Source: Adapted from Dlothi and du Plessis (2020)
By and large, apart from the fund relief availed by the National Empowerment Fund, and the tourism and hospitality support, all the above funds employ an ahistorical approach to their conditions. This drift should be viewed in light of what Mr Ramaphosa labelled as the New Economy. The financing of the New Economy, according to Mr Ramaphosa, will include international financial institutions inclusive of the IMF and the World Bank, the rationale being that different conditionalities have been established for Covid-19 pandemic related loans. Also, the New Economy will involve Radical Economic Transformation (RET) although close examination of the President’s address seems to suggest a re-definition of RET as focused on spatial and social transformation, the ‘social’ being euphemism for women, youth and people with disabilities. Racial transformation was conspicuously absent in the president’s implicit re-definition.
Since Ramaphosa came to power, his pragmatic camp has been unable to successfully persuade the alliance partners that approaching the IMF, implementing economic reforms and de-racialisation of economic debate (within reason) is not akin to selling the country to imperialists or to the so-called White Monopoly Capital. Historically, ideological concessions and changes have been occasioned by brutal social and economic realities such as the global recession of 2008 or the 2019/20 coronavirus pandemic.
Both these titanic disruptions have demanded the need for economic pragmatism. The Ramaphosa administration seems to have grabbed the opportunity for pragmatism in addressing the two kinds of poverty (the historical and the ahistorical). A new pragmatic economic policy for a New Economy is clearly emerging in South Africa. Whether such emergence will be disrupted by ideological frictions is an open question.