South Africa before and after Mandela
- 6 December 2013
- From the section Business
South Africa before and after Nelson Mandela: There is virtually no comparison.
Before Mandela it was a country shackled by apartheid. His release from prison in 1990 and his moves to reconcile the country marked the transformation of South Africa as a society and an economy.
One of the sharpest memories from my formative years was of the global push to divest from South Africa. There was a strong movement to push multinational companies into pulling investment from the country as a way of ending apartheid. When that finally happened, Mandela became the face of the new South Africa. In fact, he was the symbol of "Africa rising" in a number of respects.
This is the phrase frequently heard, as Africa has become the fastest growing region in the world after Asia. This is a far cry from the years when the region's dominant issues were poverty and debt forgiveness.
On the back of the extraordinary commodity boom of the past decade, African nations have grown well, many quite rapidly, averaging 5% a year in the past decade. This has been the longest expansion of incomes in 30 years. The International Monetary Fund forecasts that seven out of the top 10 fastest growing economies in the world are currently, and will be, in Africa for the next few years: Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia, and Nigeria.
Whether these countries can sustain that economic growth depends on a number of factors, including whether they have managed to industrialise and mechanise agriculture using the proceeds from the double-digit rise in commodity prices. And, importantly, we may soon find out whether they have done enough to adjust to the looming end of that extraordinary commodity boom.
For the largest country in the region, the transformation is notable. At one stage, South Africa accounted for one third of the entire output of the near 50 countries in sub-Saharan Africa.
South Africa's average income during the 1980s was about $5,000 (£3,055) per capita (adjusted for purchasing power so what a US dollar buys there versus in the US), which made it a lower-middle-income country. It had doubled to $10,000 by 2010 and is now closer to upper-middle-income as it approaches £13,000-to-£14,000, which the IMF estimates that it can achieve by the middle of the decade.
And, it became part of the BRICS - adding the 'S' to Brazil, Russia, India and China - those other large emerging economies.
For investors seeking higher returns, South Africa has become a popular destination, causing problems along the way, but signalling its arrival as one of the new players in the global economy.
This is not to suggest that South Africa doesn't have challenges. To name a few...
With double-digit unemployment of about 25%, even estimated to be as high as 50% in some studies, the lack of jobs is a recurrent concern.
A high level of income inequality is another problem. For instance, the average income of black Africans in the country is one tenth-to-one fifth of that of white people.
This jars with the perception that South Africa is an attractive destination for investors. This is why the country has been described to me as having a first world financial market within a third world economic system.
Not all of these changes are due, or even necessarily related, to Mandela's release from prison and his becoming the first black President of South Africa.
But his actions led Africa's biggest economy into a transformative era. For those of us who were inspired by him, that link in our minds is inextricable.