“Sustainable" South Africa?

In South Africa, three interesting processes related to "sustainable development"--that ghastly phrase, denoting an allegedly more eco-friendly capitalism, often with a few "polluter-pays" regulations and social safety- net provisions added to orthodox neoliberalism--are underway as we move to the middle of 2001.

First, preparations are heating up for the Rio+10 extravaganza here next September. That's the tenth anniversary meeting of the "World Summit on Sustainable Development" (http://www.johannesburgsummit.org) which I've written about, cynically I must admit, on ZNet in January. Second, the anniversary of the Growth, Employment and Redistribution Programme gives us a chance to look at how well home- grown structural adjustment has worked in South Africa.

Third, on July 1 the African National Congress is meant to be keeping its municipal government campaign promise to give people a lifeline supply of free water, sanitation and electricity, but if the case of South Africa's fourth largest city is anything to go by, it's another broken promise. Let's look at each issue in turn.

The most striking warm-up event for Rio+10 is the gentrification of Alexandra township, which is next to Sandton, the luxurious suburb that will host the conference. Mzonke Mayekiso is an organiser for one of the main community groups in Alexandra, and he bewails the "forced removals" of hundreds of families to Diepsloot, a township about 40 km away:

The only thing that people were told was that the authorities want to "renew" Alexandra. It's just a lie. People were not properly consulted, and were given no choice. In fact, residents have nicknamed the private company that is doing the bulldozer demolitions of our houses "the red ants," because their overalls are red. They are black workers but led by a few white bosses. Organised resistance is still building.

The fiscal context is crucial: the tiny proportion of the national and municipal budget devoted to construction of proper housing. Only about a fifth as much is being spent by government as is required to reduce the huge apartheid-era backlog of three million houses. That in turn is a function of neoliberal macroeconomic policy.

Second, then, it is time to revisit the so-called "Growth, Employment and Redistribution" (Gear) strategy, which was announced with great fanfare five years ago, on June 14, 1996. Then deputy president Thabo Mbeki joked, "Just call me a Thatcherite." At the same time, finance minister Trevor Manuel immediately commented that the strategy was "non-negotiable" in its broad outlines.

In Britain two decades ago, exhibiting similar determination, Margaret Thatcher's policies slashed the public sector, lowered spending on key social programmes, generated vast inequality, cut industrial jobs dramatically, allowed money to flood out of the country, ran roughshod over democracy in policy formulation, and left society more atomised and alienated than at any time in memory.

But while Thatcher benefitted from North Sea oil and the phenomenal 1980s rise of the City of London (not to mention the historic defeat of organised labour and the Labour Party's own principles), in contrast, South Africa has lost vast socio-economic ground because of recent trends in international commodity and financial markets. And so a comparison of the Gear model's five- year projections and what actually transpired is a very discouraging exercise, especially for those who value economic justice. Did the Gear model fail because of the unexpected 1997-99 East Asian crash? Some economists say so, yet all the trends were off track before Thailand's mid-1997 meltdown. For example, modelers led by Andre Roux of the Development Bank of Southern Africa, consultant Iraj Abedian and Richard Ketley of the World Bank, predicted massive job creation halfway through 1996-- 126,000 new formal, non-agricultural sector jobs-- when in reality 71,000 were being lost that year.

Instead of being charged with malpractice or being disbarred from the economics profession, the three Gear leaders were rewarded with far higher salaries by, respectively, Investec, Standard and Deutsche Banks, where they now work. And perhaps that was actually Gear's ultimate problem: it was a macroeconomic policy for bankers, not for South African society. It is no surprise that the bankers' two main ambitions--lowering the budget deficit and inflation--were amongst the only projections which Gear met. The bias was confirmed, at the time, by Nick Barnardt, an economist at BOE NatWest Securities: "It is a clear choice for the market-related way of doing things and a defeat for the ANC left-wing."

The Congress of South African Trade Unions reacted with "serious reservations." If job hemorrhaging wasn't convincing enough, by mid- 1998, the stock market collapsed by half from April-September, money flooded out of the country and the rand fell nearly 30% in a matter of weeks. Another major currency deterioration last year showed that even if financiers enjoy Gear's hardened monetary policy and liberalised capital markets, that doesn't mean that the combination generates macroeconomic stability. Just the opposite, it is clear.

And if the "hot money" roller coaster wasn't destructive enough, the Gear era also saw the largest South African producers and insurers voting with their feet, establishing their primary listings on the London stock exchange: Anglo American, Billiton, Old Mutual, South African Breweries (the world's fourth largest), Didata, and last month even the DeBeers diamond monolith (linked to Anglo American through the Oppenheimer family).

Desperation about the huge hard-currency squeeze that results from the profit/dividend outflow to London is witnessed in Pretoria's recent decision to reverse policy and apply for a World Bank loan--reportedly $200 million--for hospital rehabilitation. Yet as argued in the campaign platform of the African National Congress in 1994, "The RDP must use foreign debt financing only for those elements of the programme that can potentially increase our capacity for earning foreign exchange."

The Reconstruction and Development Programme continued, "Above all, we must pursue policies that enhance national self-sufficiency and enable us to reduce dependence on international financial institutions." Instead, thanks to the 1995 abolition of the financial rand and further Gear liberalisation, George Soros put it bluntly in a Davos interview in January: "South Africa is in the hands of international capital." Manuel's position as chair of the World Bank/IMF during 2000 didn't change matters, nor does ex-radical activist Mamphela Ramphele's position as Bank managing director for social development herald any discernable change.

The logic behind Gear is, predictably, based on the hope that export-led growth will boost South Africa into a globally-expansive economy. To this end, trade minister Alec Erwin is arguing that Northern "dinosaur industries" (sic) like agriculture and manufacturing should be penetrated by cheap Southern imports. Given the hypocrisy of continuing Northern protectionism-- like the Bush Administration's steel industry bonsala last month--it would appear that at first blush Erwin has a point. (Erwin was mooted as potential secretary-general of the World Trade Organisation, given his role in denuding the UN Conference on Trade and Development of teeth from 1996-99, so be careful of this chap, folks.)

To achieve export-led growth, the plan is to give huge subsidies of various sorts--including the world's cheapest electricity (which is why the US accuses SA of "dumping") to large minerals- processing firms, so they can earn the hard currency South Africa requires to service apartheid-era debt and pay for imports. Not my definition of sustainable.

To get to my third point, a couple of weeks ago, I visited the Eastern Cape city of Mandela Metropole--formerly known as Port Elizabeth--to see this travesty for myself. The proposed "Coega" deep-water port and Industrial Development Zone (IDZ) are the major development initiatives in this most poorest of South African provinces, and the largest single construction project proposed for South Africa as a whole. State investments will be at least $200 million for a new port, to be made by the state- owned company Portnet, and hundreds of millions more in other incentives.

Last week, hundreds of low-income people were resisting eviction from decades-long residence at Coega. They have become symbols of failure by the public-private Coega Development Corporation to follow rudimentary environmental and social impact assessment, community participation and even standard cost-benefit analysis.

Alongside a local economist, I've done a long, turgid critique of orthodox cost-benefit analysis (http://www.queensu.ca/msp under background research, by Hosking/Bond), so won't dwell on that part of the Coega story now (more is available at http://www.coega.org). The immediate human problems are too compelling.

The victims are being moved from semi-rural villages north of Mandela Metropole into a remarkably cramped set of choc-a-bloc little houses called Wells Estate. Their cows and vegetable gardens are among the casualties. But most worrying for many, is the prospect of paying urban rates and service charges on meagre pensions. (Currently, the Wells Estate has no electricity and water but that is allegedly a short- term problem.)

Last week on national television, tears streamed from residents who were being forcibly moved. Like the displacement in Alexandra last week, this was another scene from the bad old days.

The costs are mounting. Not only will national taxpayers be gouged to provide tax benefits and offset the loss of customs revenue in the proposed duty-free zone. In addition, low-income people like those displaced to Wells Estate will be asked to sacrifice more, in the form of cheap water and electricity for incoming IDZ tenants, that should rightfully be theirs instead.

The contradiction is being heightened because of the Mandela Metropole's decision to cut off water and electricity services to those who cannot pay, at the same time that free lifeline services are meant to be available, on July 1. During April (the last month for which records exist), nearly 4,000 residents were disconnected from electricity and 1,430 from water, with more tens of thousands on the lists of people still to be cut. Rather than allow poor families to remain connected to water and electricity, the city appears anxious to cut them off.

In fact, the city engineer reported to the metro council last month that those who were cut off because of high arrears "are likely to demand their Free Basic Services allocation each month" which "will lead to an unsupportable load on the disconnection/reconnection service." Not only did he recommend against providing services to impoverished households in arrears. For those in deep arrears, the policy is to attach and sell household goods.

Yet the reason for most arrears is the high price of existing services. This year, most Mandela Metropole consumers pay 60% more per kiloWatt hour of electricity than large businesses. The "free basic services" promised in Mandela Metropole are miserly. For electricity, just 50 kWh per month will be free, which is less than four days of consumption by an average low-income household. For water, a family of eight will get 25 litres per person free each day, enough for just two flushes of the loo.

The solution for a large metropole like Mandela is not complicated. Policies should be reversed so that the larger users subsidise the low-income users, through a "rising block tariff" system that gives everyone sufficient to meet basic needs. Surpluses raised from large-volume users can be plowed rapidly into new capital investment in infrastructure. Social benefits would include job creation, improved public health, higher labour productivity, microenterprise spinoffs and gender equity.

But precisely such a plan was proposed by renegade progressives in central government's Working for Water programme a few years ago. The response, by an assistant city engineer was blunt: "If a rising block water tariff were to implemented for industry, Coega would not go ahead." In other words, the perceived need to pump more cheap water and electricity into the neoliberal White Elephant means that poor people will not get an adequate subsidy for basic needs.

Such blatantly unsustainable development will be on show at Rio+10 next September. Come visit and unite with locals whose resistance is growing daily.

(Patrick Bond, a Johannesburg-based activist and academic, is at pbond@wn.apc.org)