South Africa: Third most unequal country on Earth

January 5, 2014

In Blog

South Africa, Unequal by Design

How Nelson Mandela’s legacy is holding South Africa back.

South Africa is not happy. Not only has the country lost its first black president, Nelson Mandela, but it is now facing its deepest crisis since its democratic transition in 1994. A host of challenges face the country in the new year: protests and strikes continue to hobble key industries; gold prices (and, concomitantly, the value of the rand) areprojected to fall; and economists have cut their forecast for economic growth due to high unemployment and a lack of foreign investment.

Adding to this cloudy forecast for 2014, inequality in the country has remained sky-high, despite two decades of African National Congress (ANC) power. 

With a Gini indexabove 63, it is the third most unequal place on earth, after Comoros and Namibia.


With a Gini index above 63, it is the third most unequal place on earth, after Comoros and Namibia. The mining sector, which is one of the country’s chief economic engines, is in turmoil. The government has responded to demands for better pay and working conditions from miners and other laborers with a nationwide crackdown, not an invitation to the negotiating table. (In the photo above, South Africans take part in a “service delivery protest” in Cape Town on Oct. 30.) Corruption, cronyism, and political favoritism abound. As a result, so does cynicism.
These problems were brought into sharp relief following the death of Mandela. President Jacob Zuma was vociferously booed by thousands while eulogizing the country’s beloved founding father. And, revealing South Africa’s deep-rooted corruption, the signer for the deaf at the Mandela memorial was a fraud who made up gestures while standing behind foreign dignitaries like U.S. President Barack Obama. It turned out that he worked for a flimsy shell company contracted by the ANC. Nobody bothered to vet his credentials. The supposed head of the company is nowhere to be found.

These are all unfortunate symptoms of a deep institutional rot that can be traced back to the founding of South Africa’s democracy. As in the cases of Chile and Turkey, its transition was guided by a constitutional framework that gave outgoing oligarchs — in this case, apartheid leaders — an upper hand in new democratic life. A complicated institutional arrangement gave outgoing elites veto power over policies that threatened their political and economic interests. Though apartheid leaders have faded into the background, the legacy of their transition bargain with the ANC still haunts South Africa’s democracy.

Mandela was fully aware of the tradeoffs implied by the bargain he and the ANC struck with the Apartheid regime. The inequality was by design. In fact, his willingness to tolerate patently undemocratic features of a new South African democracy was what made him the ideal person to head the South African transition. One of Mandela’s chief strengths is that he was a temperate and prudent leader who had come to understand how critical it was to build trust and proceed cautiously. Had he agitated for wholesale, radical reform, it is unlikely that the apartheid regime would have been willing to hand over power to begin with. Instead, he tolerated compromises such as the creation of political enclaves of white elite dominance.

Mandela captured this sentiment perfectly during his first presidential campaign when he said, “Just as we told the people what we would do, I felt we must also tell them what we could not do. Many people felt life would change overnight after a free and democratic election, but that would be far from the case. Often, I said to crowds … ‘life will not change dramatically, except that you will have increased your self-esteem and become a citizen in your land. You must have patience.'”

South Africans now feel they have waited long enough.


South Africans now feel they have waited long enough.The promise that there would be steady progress, even if tainted by the perpetuation of white privilege, has given way to hopelessness in the face of the ANC’s growing monopolization of power. A nascent black elite has begun to replace the former apartheid-era oligarchy. These new elites are more intent on guarding their newfound status and wealth than on ushering in a new era of shared prosperity. Indeed, the country has become infamous for its excessively lavish parties, in which business men, investors, and public officials comingle in posh hotels and mansions. And, to add insult to injury, the successor party to the apartheid regime has merged with Mandela’s own ANC.
What must South Africa do to forge a new, more equitable and enduring social contract? First and foremost, it needs to uproot the laws and institutions that grant the rich and well-connected disproportionate political power. In Chile, for example, incoming president Michelle Bachelet has promised to do away with the country’s heavily biasedbinomial electoral system that favors the wealthy, one of the most consequential legacies of former dictator Augusto Pinochet’s 1980 constitution, which continues to guide the country today.

Reform might not be as easy in South Africa as it is in Chile, however. Chile has a longer history of democratic government, albeit one that was brutally interrupted by Pinochet, and its citizens are wealthier and better educated. Inequality is also declining, and there is a stronger consensus around political pluralism and the rule of law. And crucially, a more robust party system in Chile gives voice to a wider range of political preferences than in South Africa. Despite healthy pluralism, citizen preferences in Chile are now aligned in favor of reforming the underlying institutional architecture that underpinned its first two decades of post-Pinochet democracy.

The ANC has indeed proposed some promising solutions to the country’s longstanding problems. A market-assisted land reform program, though slow and still too small in scale, began in 1994 and has transferred millions of hectares of land to black farmers. The ANC is now attempting to speed up land reform. Reforms of the criminal justice system have made the police force more professional and representative, despite some lingering problems. And social assistance grants from the Department of Social Development have kept many citizens out of poverty.

Yet the ruling party itself is a key obstacle to deeper change. On the one hand, key players in the ANC have leveraged the culture of impunity inherited from the authoritarian era, the result of a devil’s pact with many of the apartheid regime’s former elites, to line their own pockets. South African institutions therefore continue to shield powerful politicians, though many of them are now black. This creates incentives that favor cronyism and nepotism, instead of pluralism and redistribution. And although the ANC’s monopoly on power is checked by the judiciary, judges have also been blamed for coddling oligarchs and stifling land reform.

What South Africa needs most is more vigorous democratic competition to undercut the hegemony of the ANC and push it to act on behalf of all South Africans. But the irony is that the prospects for real change lie with a party that is opposed to Mandela’s ANC and, therefore, much of his legacy: the main opposition party, the Democratic Alliance (DA). If the DA can find a way to discipline the ANC without threatening policies that benefit the poor and disenfranchised, then Mandela’s true legacy might be realized. The DA currently has 67 of 400 seats in the National Assembly, and is growing in popularity. In concert with other opposition parties, the ANC is now a few seats short of the two-thirds majority it needs to unilaterally amend the constitution. Yet, the DA’s 17 percent of seats is nowhere close to the numbers it would need to block legislation.

However, staking the hope for South Africa’s future on the DA, or any other opposition party, for that matter, is risky. The opposition’s 2013 gains were modest, and the ANC is still the most powerful party by a wide margin. The best check against entrenched autocratic legacies, corruption, and the monopolization of power by the ANC is a political culture and institutions that can help keep the powerful in check. This will depend on the ability of South Africans to move beyond the lionization of the democracy’s founding figures and to develop values and practices that encourage a free media and healthy civil society. Indeed, South Africa appears to be moving in this direction: the past year has been characterized by a host of protests and strikes against ANC policies and the state of the economy. This mirrors the experiences of other young democracies in highly unequal countries with strong authoritarian legacies, such as Chile, Mexico, Peru, and Uruguay. The ANC must heed the calls for reform if it wants South Africa to flourish as a democracy in the future.