How fast will the ANC fall, part two: Two approaches to business — cronyism or contempt

China’s Deng Xiaoping, the greatest economic reformer of the 20th century, tried to explain to Zimbabwean President Robert Mugabe what it took to achieve his extraordinary record of job creation. 

“The reform path must be driven by the realities on the ground, not ideology,” Deng told Mugabe. Mugabe rejected his advice, scolding Deng for ideological deviations. Deng threw up his hands in despair, Deng’s translator recalled.

The ANC came to power at a time when the dominant Western economic philosophy was neoliberalism — cutting the size of government, jettisoning businesses outside the private sector, and free trade. Deng said the Soviet Union’s Mikhail Gorbachev was “stupid” to follow that policy. Deng proved he was right.

The ANC believes in a developmental state. It’s a good idea with a proven track record. The developmental state is the model that turned Asia into a job-creating powerhouse — in both democratic and one-party states — while Africa languished. 

But the right, public interest relationship with business is an essential tenet throughout the literature. Developmental state experts repeatedly warn that corruption — “rent-seeking” — often overwhelms an economy, but public interest cooperation with business is essential. 

Even the most left-wing economic policy drafted by ANC members, the Macro-Economic Research Group, made it clear a strong private sector was essential to a developmental state. But under the ANC, even in its neoliberal phase, the rift with business grew.

The ANC inherited from the National Party (NP) government a business-state divide based on ideology and prejudice. The NP’s ties to most of business were minimal, but the ANC reduced it further. There are the cronies and the criticised. In practice that leads to a sad combination of cronyism and contempt.

No developmental state is possible in such a climate, and rising unemployment and floundering policy are a perfect formula for election loss.

History is replete with examples of voters rejecting popular leaders. Winston Churchill was voted out as British prime minister just two months after winning the war in Europe. British voters were sick of the war. They wanted more from the peace than the conservative Churchill would give them, like a national health service. 

In 1993 the National Party approved a democratic Constitution. Everything it stood for was reversed. There was no place for an apartheid party. Although efforts were made to repurpose it for a new era, the momentum of its own history overwhelmed it. 

In the democratic election the following year a majority of white and Indian South Africans made the National Party the second-largest party, with 20.37% of the vote, but it was a spent force. It lingered for 11 years until the renamed New National Party finally folded its tent. 

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When I was growing up that prospect seemed impossibly remote. The NP was overwhelmingly powerful. In the early years after it took power in 1948 with a minority of white votes, many thought its rule would be short-lived. Anti-white supremacist activists of the ANC and other banned parties had returned from World War 2 proud of their role in defeating fascism. 

Democracy had won in Europe and Japan. They were surfing the wave of history. Surely South Africa’s turn was next? In the 1960s I knew more than one activist convinced he (not she) would be the only white person in the first ANC Cabinet!

In the 1940s they drew hope when Churchill and US President Franklin Roosevelt signed the Atlantic Charter, committing them to self-determination, and when the United Nations was established. Nelson Mandela was inspired by both. You can see the residue of 1940s idealism in Killarney, Johannesburg, where blocks of flats were named after famous early UN meeting venues like Dumbarton Oaks. 

But Churchill soon made it clear he planned to keep his British colonies regardless of the Atlantic Charter, and Smuts took offence when the United Nations he helped establish turned on his racial policies.

The NP came to power propelled by Afrikaner nationalism and apartheid, while the United Party continued its descent. Members of the new government had prayed for a German victory. During the war, John Vorster, prime minister from 1966 to 1978, had been interned as a Nazi sympathiser. His brother Koot, the later esteemed head of the Dutch Reformed Church, was convicted and jailed by a court for spying on South African naval movements for Nazi Germany. 

Now the tables were turned. The pro-Germans were on top. South Africans who had fought and died for their country were no longer heroes to their own government.

By the early 1970s, people on the ANC side were despondent. Victory might be inevitable, but it was not clear who would live to see it. ANC support remained, but there was little to sustain it.

The NP government proved resilient. Its white support grew. Some weathervanes felt the fresh wind and crossed over to the NP for their share of the spoils. A few idealists switched the other way.  

The idea advanced by some that there was no patronage under apartheid is bunk. The party gobbled up control of the patronage-laden institutions — the education system, national and local government and the state-owned enterprises. Government bank accounts switched to Volkskas. NP newspaper groups got the telephone directory printing contracts. 

The Broederbond used its government influence to advance careers for ideological and personal purposes. It blocked talented critics, including white Afrikaners.

By 1969 there was a new, urban middle class of Afrikaner professionals and managers, and the entrepreneurs who employed them. Their interests diverged from those of fellow NP members who were Afrikaner workers. 

The white urban elite needed to work with black trade unions, whose members consumed their products. They wanted to end international sanctions, which hurt their business prospects and their aspirations to be part of a wider modern world.

On the other hand, many white workers felt threatened by the tiniest cracks in the apartheid edifice. They were supported by a few Afrikaner intellectuals, who broke away to form the Herstigte Nasionale Party. 

In 1982 the Conservative Party was the second right-wing breakaway from the NP, representing a similar constituency. Within five years it became the official opposition in the white Parliament, taunting the NP for straying from its ideological roots.

This was the NP that FW de Klerk inherited in 1989. The economy had stopped growing. Government debt was rising alarmingly. To understand the economic hole he was in, De Klerk listened to big business in a way the NP government never had. They told him apartheid was the obstacle to growth.

De Klerk called a final white referendum on a vague set of ideas for negotiations. When he won, he ended the white Parliament and the Bantustan charade before the rift in his ranks had a chance to consolidate. 

After 1994, Mandela did as well as could be hoped to bring racial reconciliation, but the decisive future issue for South Africa was economic development. The traditional NP voter didn’t really have a dog in those fights. 

Racial reconciliation and black economic development would not get the average NP volunteer out of bed in the morning. There was no place for an apartheid party, and an Afrikaner nationalist party would be self-defeating. 

The NP had never been a party of economic expertise or racial reconciliation. NP politicians were middle class, but they were not close to the major business leaders, who were still predominantly English-speaking whites. 

The NP never built an inclusive modern economy. For whites, state-owned institutions like Eskom functioned exceptionally well by today’s standards, but the growth era of the 1960s and 1970s was based on the good luck that the gold price soared. That good fortune was enough to meet most of the white population’s needs for electricity, iron and steel and other state-driven requirements. 

But in the areas that would shape the next developmental surge, the white government was absent. Telecommunications was at least a generation behind the times, and decades of strict censorship left South Africans ill-equipped to be part of the coming digital revolution.

The ANC has not been able to build that growth, and the ANC’s breakaway EFF cannot either. What way forward, then, for the beloved country? DM

Read Part One here

Tomorrow, part three: ANC cars tell a turbo-charged story

John Matisonn is a former senior United Nations elections official, Independent Broadcasting Authority councillor, and long-time political and foreign correspondent. He is the author of Cyril’s Choices, An Agenda for Reform; and God, Spies and Lies, Finding South Africa’s Future Through its Past.

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