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SOUTH AFRICA ON A PRECIPICE

As a doomed ANC clings to our colonial economy, a violent uprising looms, warns analyst Moeletsi Mbeki

Entrepreneur and analyst Moeletsi Mbeki addresses students at Stellenbosch University on 11 May 2012. (Photo: Gallo Images / Foto24 / Denzil Maregele)

Businessman and political analyst Moeletsi Mbeki recently addressed a group of professionals, civil servants and politicians. He aired his views on the change needed to improve the lives of South Africans.

The majority of South Africans have lost all confidence in the ability of the ANC leadership to provide them with a better life, according to sociologist, businessman and political analyst Moeletsi Mbeki.

Mbeki based his assessment on the events of the July riots and the result of the November 2021 local government elections.

The ANC had left largely intact the unequal economy it had inherited from the National Party. 

This economy had been designed solely to serve the British colonialists and the minority, by extracting and exploiting South Africa’s huge natural resources using cheap black labour. He said this left the vast majority of hungry and angry black South Africans, who were on the margins of society, seeking radical change by any means necessary.

Beginning of the end

The ANC would not recover from the November 2021 local government poll, in which the party dipped to 45% of the national poll from the highs of 69% in the 2004 elections. This he told a gathering of professionals, civil servants and politicians in Durban during a dialogue hosted by Durban-based Xubera Institute for Research and Development, under the title “SA Now Faces A New Uncertain Future”, as well as in follow up questions by DM168.

“Let me remind you what happened in the November 2021 local government elections, in case you have forgotten. The results of those elections show that the black majority are no longer prepared to continue supporting the African nationalist in the form of the ANC… This means that in the future, the other parties can form a government without involving the ANC,” Mbeki said.

“If you look at other African nationalist parties that came to power in the 1950s and 1960s in other African countries, once they lose power, they never recover. The reason they never recover is that [once in power] they fail to replace the colonial economy, so the population loses confidence in them. The ANC, as I pointed out, has failed to replace the colonial economy with an economy that benefits the wider community.

“All the African nationalist parties, once they lose support of the people, they never recover, so they disappear. If the ANC loses the 2024 elections, as predictions suggest, it will be the beginning of the end for the ANC. 

“It is now clear to the people that the ANC, in whatever form it comes, is unable to solve the country’s problems,” Mbeki said, adding that the parties that would replace the ANC would also fail unless they were able to replace the colonial economy with one that would benefit the majority.

The provocative sociologist said the Afrikaner nationalists – the National Party – had business people, landowners, the church, farmers, traders, artisans, tradesmen and tradeswomen within its ranks. The National Party ensured that when it gained power from the British, it taxed mining companies and invested in railways to bring farmers’ produce to the cities; in Afrikaner conglomerates and in parastatals to employ their own people. He said the Afrikaner nationalists used taxes to build transport networks such as railways and highways, ports and other infrastructure to benefit its elite.

The Afrikaner nationalists also hobbled the growth and development of the South African economy by constraining the development of the human capital of South African blacks through its misguided education policies and employment practices.

On the other hand, the African nationalists, the ANC, which had no landowners or people with levers of the economy within its ranks, kept intact that British colonial-created economy, which has further been de-industrialised since 1994. 

The ANC used the taxes from mining and other sectors of the economy to support conspicuous consumption by the black middle class or elites. 

The African nationalists, in the form of the ANC, had abandoned or betrayed their historical mission to serve the interest of the black majority, he said.

The African nationalists, too, had hobbled economic growth by not investing in quality education and upskilling the poor black majority, he added.

“Since 1994, the ANC has used its power to tax the rest of the economy in order to promote a consumption-driven economy for the benefit of the black middle class. That is why the black majority are still living in poverty.”

Mbeki said that Finance Minister Enoch Godongwana had praised the mining sector during his Budget speech, and said that it was responsible for phenomenal tax returns. Meanwhile, two Anglo American-owned mining companies were declaring billions in profits, which they distributed to their British owners and shareholders, at the expense of the South African economy.

“The economy of South Africa was designed and developed to serve the British, whether you [have] the National Party or the ANC [in power], it is still the same.

“That is why the majority of South Africans are living in poverty.

Re-industrialise

“The way forward is that we must re-industrialise our own country. What we are doing today is digging out minerals, sending them to England to be sold to the benefit of the British who own our mining companies like Anglo American, which used to be South African-owned but is now British-owned. They are digging our minerals, selling them and pumping billions in profits to benefit the British economy. We must change that so that our economy is able to benefit South Africans and employ the 70% of the youth who are currently unemployed.” 

Mbeki said recent statistics indicated that the South African civil service was the highest paid in the developing world, higher than most countries whose wealth was far higher than that of South Africa.

To illustrate his point, he said most of the South African state-owned companies were in shambles, wasting billions and failing to meet their mandate. Yet some executives and managers were raking in millions in undue remunerations and benefits.

The poor masses were on the verge of unleashing a violent uprising against the ruling elite, unless the country changed its trajectory, re-industrialised and accommodated the poor and angry masses, including the 70% of the youth who were unemployed.

Mbeki said a report by a high level panel appointed by President Cyril Ramaphosa to investigate the July riots and violence found, among others, that there was a weakness in state institutions such as the police, intelligence and others as a result of being hollowed out. 

It also found high unemployment, particularly among the youth (and no practical and consistent plan by the government to address this). Inherited high levels of poverty and the state’s lack of planning left many poor people living in grinding conditions in shanty towns around urban centres. The report also stated that State Capture and corruption at all levels of government were responsible for the unrest. 

The black majority were rejecting the ANC at the polls because the party had diverted taxes towards conspicuous consumption, benefiting the African elite instead of developing the economy and investing in human capital and other measures, Mbeki said.

“The black majority are asking themselves ‘what are we benefiting from this economy’ and are rejecting the ANC at the polls,” he said, adding that the party was incapable of self-correcting and reversing its decline.

Apart from mining companies and their shareholders, a small group of elite South Africans – between 10% and 12% of the population who earned more than R60,000 a month – were benefiting most from the wealth of the country, Mbeki said. 

Unless the pool of beneficiaries was vastly increased and accompanied by the mass skilling of the population, the country would not develop optimally and would instead remain on the precipice.

He said South Africa, under apartheid, once sent troops to South Korea to protect that country from Communism. Yet today, South Korea’s economy was tenfold that of South Africa because the South Asian nation had spent its resources on industrialising, developing its human capital and growing its economy optimally instead of diverting its resources to the benefit of the ruling elite.

It was a myth that South Africa’s minerals were endless and that the country would forever benefit from these natural endowments. “Once you dig out these minerals, they don’t return. South Africa was once the biggest gold producer in the world; today it is seventh. We have to start to re-industrialise. We have got to start developing this economy beyond mining.” 

The country was fortunate to have untapped reserves of skilled professionals who could help South Africa develop an alternative economy that would embrace the majority and create much-needed jobs, he said.

Looking for messiahs

Asked what he thought of the Ramaphosa presidency, Mbeki said: “We in South Africa are [always] looking for messiahs and there are people who put themselves forward to be the messiahs. The reality is that the ANC is a 110-year-old institution. So as an institution, that’s how the ANC operates. It is not governed by individuals, is not regulated by individuals, and it is not going to be failed by individuals.”

The ANC was a party of the black middle class which was benefiting from the economy in its current form. “The black middle class knows that everybody has to make sacrifices to change this economy and it is not prepared to do that because it is benefiting from it. The black middle class feels that its interests are best served by retaining the British colonial-created economy that thrives on mining and cheap black labour and they want to keep it that way.

“So it doesn’t matter whether Cyril Ramaphosa is the president, Thabo Mbeki is the president or Jacob Zuma, it is still the same. The ANC is an institution that serves the interests of the black middle class,” said Mbeki. DM168

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All Comments 46

  • Fairly hard-hitting points of view here, although the concept of the British economy being propped up by South African mining is a bit of a joke.

    • Agreed. Author may wish to have a look at the share register of Anglo’s, fairly certain that the PIC, IDC and various other SA institutions representing South Africans and their money are present…….

    • Before the profits, in the form of dividends, are repatriated to Britain, Anglo American would have paid 28% company tax, plus a further 20% dividend withholding tax which is an effective 42.4% tax to the government coffers. Add in parasitic BBBEE policies and country risk and one will soon realise why foreign investors are not flocking to our shores.

  • Mr Mbeki, let me tell you this ! SA was doing just fine, after Madiba & Thabo had been running the country. You cannot still be referring to Apartheid, when it comes to the economy. All this started when Zuma took over. Yes Luthuli house put him there, knowing that they would all benefit from the following years of Zuma & corruption. Where were you when all this was taking place, i never heard a word from you, which makes you complicit in the lack of service delivery to our people, and the deterioration of our flourishing economy. Lets just dump the racism rhetoric, stand together, as ANC is the only Party capable of keeping this country together, and rebuilt our economy. If you would like to comment, do it by suggesting Cyril dumps the Red Tape, create an informal economy, dump BEE, dump minimum wage, win over the Unions, restrict border crossings. Then we might start making progress for this Rainbow Nation. We, right now, don’t need negative stories.

    • Perhaps you should update your knowledge. Moeletsi Mbeki has been a strident critic of the ANC and was the only analyst who was unafraid to tackle his own brother. He wrote the book Architects of Poverty in 2012.
      If you never heard a word from him, it is because you weren’t listening, much like the ANC politicians. We need more people to speak the truth to power. I am not sure that avoiding negative news stories helps us to climb out of the hole.

  • Prefer Moeletsi article of 12 February 2011 forecasting Tunisia Day and the criticism of BEE and affirmative action though the thread is there to look at South Korea, where they rejected communism and spent resources on industrialisation, developing human capital (no one can be better than Angie and Blade), and growing economy optimally instead of diverting resources to benefit of ruling elite ( hail ANC industrial billionaires and politicians who got caught up by our champion Zondo)

    • When the Korean War ended South Korea and Ghana had the same (roughly) GDP, population and education. Now, 70 odd years later? LOOK at the figures. SA can go the Korea route and fly!

      • No way Glyn – SA will never be able to match South Korea. Most people of this country are far too entitled and lazy. If they can’t get it via grants and corruption, it is either stolen or taken by force.

  • Possibly the ANC could expel all races other than the the so called indigenous races and then see how the country fares. Looking at countries in Africa I think we could guess what SA would look like. For goodness sake, do something apart from blame whites.

    • I don’t think it’s blaming whites at all: it is corruption made legal and our corrupt politicians and elite benefit. It is a system that is being criticised, not people. Read about money flows from south to north- it is not a controversial idea at all.

  • “The economy of South Africa was designed and developed to serve the British, whether you [have] the National Party or the ANC [in power], it is still the same.

    “That is why the majority of South Africans are living in poverty.

    Unadulterated rubbish.

    Be honest with yourself Mr Mbeki: the reasons the majority of South Africans are still living in poverty are:

    1. The government is arrogant and racist to the point of economic destruction. White skills exist to help but because they “may not be used” this country flounders.

    2. The governing party steals everything from everyone – again to the point of economic destruction (and beyond).

    It’s time for black people to step up and acknowledge that you are destroying the country all by yourselves.

    Stop looking for scapegoats for your own issues.

    • What you say is true but it is also true, and mot rubbish, that more money flows north than south. And why wouldn’t the British design an economy that benefits them?

      • @virginia the truth is that everyone does things that benefit them. You and I included. There’s no mystery there. It is not however the problem in this country, it is simply a distraction from the 2 issues I’ve identified above – in the same way racism is.

        Fix the above 2 problems and we will all have a country worth living in.

        • @virginia – in case unclear I am not disputing the truth of whether or not money flows north. I am focusing on the untruth of the following statement: “That is why the majority of South Africans are living in poverty”.

          The future is and always has been ours alone to determine.

          The solution is so simple, and it’s free. Here it is…

          Stop blaming others. Strive hard to promote integrity, and inclusion for each and every citizen in this country.

          If we do this, we will win. If we don’t, we will lose.

          All of us.

  • Whether you choose to blame the Brits, the Afrikaners, the Whites, or anyone other other than yourselves; three words for the ANC: One. Last. Chance.

  • I normally agree with Moeletsi but there is so much that is incorrect in this article. The SA economy( not the British economy) is currently being propped up by mining companies who are paying tens of billions in taxes and royalties. Where does he think the money for all the grants comes from? We can’t reindustrialise because of the lack of reliable power and the inflexibility of our labour legislation. The ANC destroyed the education system and thousands of well qualified white teachers who could have assisted in the transformation of the “black” education system left the profession
    and often the country. Finally the elephant in the room that no one will even mention is that the black population in 1994 was +/- 30 Mill and is now +/- 50 Mill. Most of this increase has occurred in rural areas or in townships surrounding the major metropolis. Many of these people have poor nutrition and limited education and are very little use in a modern high tech economy. I concur that a revolution is almost inevitable but to blame it solely on colonialism and the British is just making excuses. S Korea would have given their eye teeth to inherit the 1994 economy of S.Africa.

  • The facts is that more money goes north than any amount of aid that is “given” to the south. Why is it so hard to believe that huge western conglomerates make a financial killing in Africa? Why else would they be here? And it is exploitative and history shows that whether it is Lumumba in Congo, or Mosadak in Iran, anyone who suggests that the mineral wealth should not be allowed to benefit “the west”, is not long for this life. And this kind of economy depends on corrupt local politicians – and we have plenty here. The recent expose of Credit Suisse ‘s shady clients show where corrupt Africans hide their money. And none of it could happen without corruption in Europe, foreign financial tax havens and the greed of foreign investors. To believe this, all accepted fact, is not in any way to remove responsibility from a criminal kleptocracy called the ANC. Why the hysterical outrage? The British got rich from slavery, opium, sugar and cotton: now it’s called old money and ” the city:. The truth is often outrageous.. but still the truth.

    • What I can’t understand is the age of maritime exploration started in the 1400’s. How come the SA navy in those years didn’t send out their vessels to look for new opportunities and perhaps open trade with Portugal, Spain and England? Missed a trick there

    • @virginia – At the risk of offending… So what.

      Everyone who is rich has got rich somehow, and usually at the expense of others. This applies to all races in all parts of the world; South Africa certainly does not hold any exclusive rights in this regard.

      Indeed, you may as well complain about the sun rising.

      Which is one of the reasons I say that this entire article is a distraction. As I’ve tried to explain in my response to you above, the problems we face are simply problems of national mindset.

      We simply need to grow up and stop blaming others for problems we can “easily” solve ourselves.

      • You seem to suggest ethics don’t matter: if you get rich by designing a paper clip or seeking drugs, it doesn’t matter. I disagree that all benefit is at the expense of others – what a bleak world view.

        • Neither of your points reflect what I am saying so I won’t waste time debating them.

          I will simply say again that this topic is a side-show and mask for the real problem besetting this country:

          Our self-destructive national mindset.

          The good news is that unlike global greed – it is something well within our power as a people to fix.

  • Mbeki has a very distorted economic view and needs to educate himself on how the real world works. Sweeping statements like this are simply dangerous and not based on any realism.
    Please show us where in Africa the poor have benefited form getting rid of the colonials!!
    Their knowledge and skills form the basis of world class education and can unleash the massive potential in all South Africans to compete in the World economy.
    Reverse apartheid is a spectacular own goal and simply blind racism. Doubling down on failed ideology and policy and expecting a different result is madness.

  • Sharp analysis, there never was an economic reconstruction when Apartheid ended. Concurs with one key finding in our recently completed national material flow account, where we found that the domestic economy, in material terms, is very small by international comparison.

  • The myth is that mining is a massive part of the economy..,,,. It isn’t it’s less than 10% of gdp. The sector that is collapsing is manufacturing. Finances do ok but they don’t employ the numbers. The problem is the race laws and corruption and service delivery. Without a big policy shift we doomed because as Mbeki says people are real angry and you can’t blame them ….. you get to life then there’s a hundred reasons why you can barely stay alive while others bask is total luxury. Not gonna last for sure

  • I am not an economist but I think there are some other issues left out of the discussion. Some time ago the ratio of average income between CEO and lowest paid employee across SA was published, comparing 1994 to more recent years. The results were staggering. Almost doubling in ratio. Why would this be? Who are these CEOs? You cannot only blame the “British economy” for this increasing gap between highest and lowest paid employees. Neither can you blame the “British economy” for the trade deals made with China that saw our local industries struggling for survival. Perhaps the net effect of these deals should be explored. Who is benefitting from these?
    If only the billions of tax payers money could be used productively to maintain transport and power infrastructure and properly managed new infrastructure projects, many more poor people in South Africa would have earned a wage. The opportunistic thieving crowd that is in control of our national government (and many local governments) is the cancer that is killing our nation, not so much the system they inherited.

      • While supply and demand are important drivers of wage differentials, this is a gross oversimplification. The institutional framework of facilitating extremely high salaries, bonuses, share options, share issues and share repurchases has resulted in what might even be called corporate capture by the top executives. It has happened in most Anglo Saxon countries but not in Europe under very different supply and demand circumstances. Read Piketty on the emergence of a supermanagerial class

  • The country is in a mess as a result of poor governance, corrupt dealings and cadre deployment. This adverse situation can be seen not only in official appointments at all levels but in the devastation of state owned entities, the dire state of most municipalities, the appalling services at state owned hospitals, and the generally shocking caliber of state sponsored education. The common denominator in all of this malfunction, is the ANC. The party has thrown away the goodwill and all the promise of 1994 and has left the country with raging joblessness and poverty, while a few elite live in luxury. Of course this cannot continue indefinitely- there has to come some sort of reckoning and it will not be pretty.

  • What Mbeki fails to mention is that South Koreans rolled up their sleeves and WORKED!!!! In this country work is a swear-word.

    • And what he, and all the above commentators, fail to mention or even know about when the word colonialism comes up is that William the CONQUEROR took England in 1066, French became the official language for the next 300 or so years. Fast forward past history of industrial revolutipns, greates navy blah blah, they have what they have including a monarch of German descent. So the “poor me” card, like the inevitable “race” cards always get trotted out when backed into the corner of inepitude.

  • Dear mr Mbeki, perhaps you want to consider these as well:
    1. One of the world’s worst education systems – you cannot employ people with no skills on a large scale
    2. Population growth – if your population grows faster than your GDP, people get poorer; no getting around that basic math.
    3. Land reform – government is sitting on millions of hectares of unproductive state owned land; get going already! And by all means, use tax to purchase and redistribute land where it makes sense.
    4. Adversarial relationship with business – belligerent unions ; red tape; race driven requirements benefiting only the black elite; why would people invest their capital in running a business in SA?
    5. SOEs – everything the government runs is a disaster. Privatize now. Without reliable electricity and cheap transport no economy can grow.
    I can go on…….

  • It is pointless trying to blame the past. The reality is that the imperialist and colonial powers followed economic strategies which benefitted the few, apartheid took that strategy up a few notches and the ANC has taken it to new heights to benefit the Black middle class and has combined this with obsession with outdated ideologies and gross incompetence. The cumulative effect of excluding the majority of the population from the mainstream economy throughout our history is that we face a massive problem of social disintegration which is spreading anarchy – a process which is uncontrolled. The question is how can this be turned around. The political arena is less than promising. The major power groups outside the political arena are business, trade unions, NGO’s and faith groups. How they play their hands over the next few years could make a significant difference either way.

  • I absolutely disagree with Mbeki’s take. Yes he is a critic of the ANC, but in this article he has missed a step. We don’t have an economy mired in colonisalism and please – our mining industry propping up the UK government? Hardly! – what we do have is a kleptocracy enabled by African oligarchs (fashionable word right now) who espouse politics of the stomach – that’s all. Nothing more complicated or scary than that. In fact, read Rebecca Davis’ piece this morning. Definitely more instructive than this. Mr Mbeki we don’t have an economy, we have the private sector who is hanging on by a thread while keeping the wolf from the door. And let’s be honest, some in the private sector are complicit in this kleptocracy of ours, so it’s certainly not bouquets all round.

  • Excellent! As Frantz Fanon said, the local bourgeoisie can only imitate the final decadent stage of the Western bourgeois and lacks the entrepreneurial drive of a middle class in its prime. They are hedonistic conveyors of neo-colonialism.

  • This is a very weird article from Mbeki, nor his usual balanced style. Heck! The poor British are to blame for everything. For a start if the BBEEE laws were scrapped the money flow will be South!

  • “”South Korea’s economy was tenfold that of South Africa because the South Asian nation had spent its resources on industrialising, developing its human capital and growing its economy optimally instead of diverting its resources to the benefit of the ruling elite.”” No mention of BBEEE here.

  • We need to remember why in the first place the Anglo’s of this country took their money to England and other places – it was simply no longer viable to allow the erosion of their capital in this country. We have been talking of the Brain Drain and Capital Drain for many years due to unfriendly business policies by the ANC government. I see their siding with Russia in the current conflict as another source of evidence that we will continue to see the Drain ……… We need to choose our friends wisely and on objective criteria.

  • Interesting article, some depressingly morose comments, simple reality is that the country is in a mess on many fronts, no one is going to fix it other than ourselves and there is a pressing need to tap the immense human potential that exists within our borders. Debating whose fault it all is while mildly entertaining doesn’t really move us forward. Regrettably my standard grade maths brain does not have a plan on how we proceed from here – in case someone was going to ask.

  • The attempts at pleas, supplications and logical debate with the incumbent powers, from all areas of society, have, largely, fallen on deaf ears. These inputs are tarred with WMC brush and summarily dismissed. Perhaps a mass uprising is the only way to make the ANC govt sit up and take notice of the complete mess they have created.

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