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The Economic Legacy of Nelson Mandela in Perspective

By  +Follow December 9, 2013 8:42PM
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The outpouring of sentiment occasioned by the passing last week of South African anti-apartheid leader Nelson Mandela at the age of 95 has been nothing less than ubiquitous. This attention is the very least that can be done by way of recognizing and paying homage to the momentous accomplishments of a historical figure of such magnitude, but it is perhaps not surprising that the general thrust of these discussions, at least in mainstream media outlets, have been careful to not tread too far into the more controversial aspects of the legacy that surrounds the man and his incredible life.

For instance, it was not front-page news that, prior to Mandela’s release from a 27-year prison sentence in 1990, US presidents had for years backed the apartheid government of South Africa, ostensibly as part of the grand strategy to protect the “free world” from the threat of Soviet Communism. Very little has been said about how, during the presidency of Ronald Reagan, for instance, Mandela and his African National Congress were placed on the official terror watchlist at a time when global public opinion was swinging wildly in favor of ending the apartheid. As late as 1986, Reagan favored strengthened economic relations with the regime in Pretoria, and even opposed congressional efforts to impose sanctions on it.

Mandela's Ride on the Terrorist-to-Statesman Pipeline

Perhaps unsurprisingly, in 1985 a most distinguished future Vice-President by the name of Dick Cheney voted “no” on a resolution calling for Mandela to be released from jail. To be fair, in the mid-1980s Cheney had not yet noticed the terroristic proclivities of allies suc as Saddam Hussein, who at the time was brutally prosecuting a war that the US defense establishment approved of, and funded against the fledgling clerical regime in Iran.

Less than a decade later, the South African and Iraqi leaders would trade places, though it was not until 2008 that the Nobel peace prize laureate would be officially removed from the US terrorist “watch-list” (with predictable irony, Mandela’s “terrorist” sympathies re-emerged as a talking point in right-wing media after his vocal opposition to the Anglo-American invasion of Iraq in 2003).

Emerging Markets: Financial Performance Versus Reality on the Ground

But the hypocrisy that has been a reliable, if unfortunate, feature of geopolitics since as far back as the historical record goes is not the only subject being overlooked or otherwise delicately handled in all of the retrospectives on the life of Nelson Mandela. Indeed, while much has been made of his “economic legacy,” this has occurred mostly in the form of praise for his opening up of the South African economy to foreign investment.

The current economic (and political) reality in South Africa suggests a more complicated picture, however, and one that serves as a caution against confusing the symbolic value of a leader with the details of his or her accomplishments. South Africa is a coveted emerging market economy, one of the much-heralded BRICS nations alongside Brazil, India, Russia, and China.

The recent and relatively rapid growth trajectory of these populous economies has lifted large amounts of people out of poverty and, as we are told, into a new “middle class”. As a result, emerging markets and the ETFs that track them have created many new opportunities for generating returns for investors in the US, but it would be hasty to assume that the day-to-day realities for the average person living in a country like South Africa have improved in a comparable fashion.

A Rising Tide That Has Not Lifted All Boats

While many corporations and investors have been anxious to tap into the prospect for increased demand represented by South Africa, the economic growth of the country since the official end of apartheid papers over some rather bleak realities.

For instance, while poverty overall has declined since 1994, income inequality has worsened significantly. The country's Gini Coefficient, a metric used by World Bank economists to evaluate the distribution of income or consumption expenditure (by comparing it to a perfectly even distribution), is the fourth-highest in the world at 63.14. Prior to the election of Mandela in 1993, the figure was significantly lower at 59.33.

Furthermore, as of 2009, over 60 percent of South Africans were found to be living off of $5 or less per day. While access to basic needs like clean water and healthcare has improved greatly since the time of apartheid, the average life expectancy as of 2011 was just over 52 years, and as of 2008, at least two-thirds of deaths were the result of disease and malnutrition. Add to this an unemployment rate that has balooned from pre-apartheid levels of 17 percent to today's 25 percent, and it becomes clear than Mandela's legacy is an incomplete one, still awaiting fulfillment.

Economic Implications of Graduating from Terrorist to Statesman

Mandela and the African National Congress resorted to armed struggle officially in 1961, after many years of non-violent resistance to apartheid being met with an increasingly brutal institutional response. Mandela, a lawyer by education prior to devoting his life to the struggle, was caught and imprisoned in 1962. The US, and Western nations by extension, were apprehensive about supporting the African National Congress and its political goals due to the the Cold War architecture undergirding international relations. The ANC at the time was recieving a great deal of support from the USSR, and thus, nomatter how just the cause, its program was tarred and feathered as a proponent of subversive communism.

The socialist bent of ANC politics also made Western countries nervous about their economic interests in South Africa. Resource nationalism, the bane of fossil-fuel and commodity companies the world over, was an outcome that threatened the nationalization of the country's massive natural wealth. Mandela was no doubt aware of this prior to his election to the presidency in 1994. Furthermore, though apartheid was officially over, ownership of the country's wealth was still firmly in the hands of the old white elite. To wrest it away and create a new order would have entailed a much greater armed struggle than the one that had been waged by the ANC since the early 1960's.

In his new role as statesman, then, Mandela chose to compromise on the more difficult aspirations that would have dealt most directly with both race and class issues in South Africa, and opted to keep the nation open and friendly to foreign investment, in the form of loans and guidance from the International Monetary Fund and the World Bank. While it is impossible to underestimate the significance of officially bringing the apartheid era to an end, it must be said that much of the economic structure of that regime is still in place, and in some cases, has gotten much worse.

On Aug. 16 of 2012, when 44 striking miners at the Marikana mine owned by the UK's Lonmin were shot dead by police forces, it was a terrible reminder of the ravages of social inequality. This was the single-most lethal use of state-violence against the populace since the 1960s when resistance to apartheid began. Shamefully, however, this incident implicated the political forces that in the past had built their name on resistance to oppression, as the National Union of Mineworkers was actually responsible for initiating the attempt to put down the strike on the part of its own workers, who were and still are being paid very little for back-breaking and dangerous work.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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By  +Follow December 9, 2013 8:42PM
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