Nkosi sikelel’i Afrika—and they’ll need it

SOUTH AFRICA’S long revolution against apartheid is over. Now for the long war against its after-effects.

The ceremony of peace was as symbolic as it was moving. On May 10th, beneath the British colonial architecture of Pretoria’s Union Buildings, Nelson Rolihlahla Mandela, after 27 years in jail for “treason”, swore to serve the South African state and became its first black president. Sworn in with him were his two deputies, one black, one white. Standing protectively behind him was General Georg Meiring, the white military chief. Helicopters flew overhead trailing the new flag, and fighter planes painted the sky in the flag’s six colours.

“Never, never and never again,” declared Mr Mandela, “shall it be that this beautiful land will again experience the oppression of one by another.” No longer was his country “the skunk of the world”—and there were Al Gore, Benazir Bhutto and Fidel Castro, among many others, to prove it.

F.W. de Klerk, the outgoing president, now a deputy president, looked baffled as two imbongi, praise singers, chanted a welcome for Mr Mandela. Scores of African National Congress members of Parliament, their new suits crisply pressed, burst into song. On the neat green lawns ANC supporters danced the toyi-toyi, a dance of exuberant defiance.

Mr Mandela’s other deputy is Thabo Mbeki, chairman of the ANC and now his heir apparent. Glaringly absent even from a lesser post in the new government is Cyril Ramaphosa, the ANC’s talented secretary-general who did so much to negotiate the new constitution. The ANC insisted that he had excluded himself, preferring a back-seat job strengthening the party. Sceptics suspected disappointment at losing the deputy presidency to Mr Mbeki had more to do with it.

Mr Mandela had to give cabinet seats to any party that had won 5% of the national vote. That meant six for Mr de Klerk’s National Party and three for Mangosuthu Buthelezi’s Inkatha. But the ANC—which won just under 63% in a vote eventually declared free and fair, despite some cheating—will dominate the new government.

The new defence minister is Joe Modise, a former commander of the ANC’s guerrilla army. The police portfolio too is in ANC hands—no easy post, given the security forces’ past loyalties and behaviour. Foreign affairs has gone to Alfred Nzo, a man ousted as ANC secretary-general in 1991 largely because he was thought incompetent. Even Mr Mandela’s estranged wife, Winnie, has a post as deputy culture minister. But home affairs has gone to Mr Buthelezi. And, to the relief of businessmen, finance remains in the National Party hands of Derek Keys.

Mr Keys’s role will be crucial in steering South Africa between justified social demands and economic reality. At a furious point in the negotiations earlier this year, Mr de Klerk told Mr Mandela: “When you join me, you will realise that I do not have the power you think I have.” President Mandela has not been put off. He says his first task is “to liberate all our people from the continuing bondage of poverty.” It is a daunting one. South Africa’s income per person roughly matches, say, Argentina’s. But behind the average, blacks have incomes one-tenth those of whites; nearly half have no formal job.

Job creation, says Mr Mandela, is his priority. With a population that may double in 30 years, he needs 5% growth each year if he is even to dent unemployment. Investors must be persuaded to put their money not only into shares, whose prices have soared in the past six months, but into factories and service industries. At the industry ministry, Trevor Manuel, another ANC member, will be eager to help. But how? The economy is only now surfacing from a four-year recession and from 20 years of autarky and decline; this year’s growth rate may be 3%. And even before the ANC draws up its first spending plan, the budget deficit is heading for over 7% of GDP. The government has no pot of gold to hurl into the market.

For many in business that is just as well. The ANC has a left-wing pedigree. However well-intentioned, goes the fear, the new government will be run by activists more used to planning how to bring down power cables than hold down inflation. It may be tempted, like other African governments, to think it can run the economy by promoting public-sector jobs with one hand while the other smothers private-sector ones with protection and labour regulation. The merest hint of nationalisation during the ANC’s election campaign sent business into a frenzy. And, in financing its public-works programme to put in houses, water pipes and electricity lines, the ANC may fuel a mini-boom that will later turn to bust.

Worse, though seldom mentioned, the ANC’s old taste for intervention was more than matched by its former oppressors. Long before sanctions bit in the mid-1980s, the apartheid government tried to forge industrial self-sufficiency behind high tariff walls and foreign-exchange controls. What it forged—with help from a fallen gold price and the cost of shoring up apartheid—was stagnation. South Africans grumble about the price of cars, for example. Car makers must use 70% local components—the makers of which must in turn use steel bought from the state company at several times the price of imports.

The concentration of business is a more reasonable invitation to intervene. Big family businesses and insurance companies, blocked from investing abroad, have gobbled up local equities to make a complex tangle of cross-holdings. Four groups account for 75% of the capitalisation of the Johannesburg stock exchange. This pattern tugs at the ANC’s old anti-business sentiment. Indeed, business could well fret far less about any notions of nationalisation than about trust-busting. Unbundling is the ANC’s latest buzzword. It plans a new commission both to boost competition and to spread ownership—ie, to blacks. To Tito Mboweni, the ANC’s new labour minister and former economist, this might mean “that we sell public-sector industries, such as the national abattoirs or South African Airways, to black entrepreneurs.”

The ANC is still vague on detail. White corporate South Africa, sensing an onslaught, is shuffling its hand pre-emptively. Blacks today occupy only 5% of managerial jobs. In March, Anglo American, a giant mining and industrial conglomerate which alone accounts for 40% of the stockmarket, said it would sell part of its holding in Johannesburg Consolidated Investments, a large mining house, to black businesses.

The ANC also wants to boost exports, especially of manufactures. Some firms have begun selling to the relatively easy markets of black Africa. Yet South Africa’s protected manufacturers—of motor vehicles, electrical goods and textiles, notably—may struggle at home, let alone in third markets, if they have to face real competition.

The economy is suspended, awkwardly, between the first world and the third. It is neither one of high wages and high skills that could challenge Taiwan or South Korea in high-tech goods, nor a low-wage one that might lure investors away from, say, the Philippines. “A small part of the economy looks a bit like Britain’s or America’s,” says Mark Addleson, an economist at Witwatersrand University’s business school. “So we try to get the rest to look like that too. Getting a job here means coming into the formal sector and expecting all the protection and security of a first-world economy.” The danger, he believes, is that the ANC’s keenness to spread labour protection will price South Africa’s goods, and so jobs, out of world markets.

This is just one worry about the ANC’s reconstruction plan, which promises first-world protection (maternity leave, paid holidays) to all. Yet its plans for social investment are sorely needed. At Econometrix, a consultancy, Azar Jammine says that government consumption spending—mainly on a bloated bureaucracy—has surged ahead over the past 20 years at the expense of investment. Most of the uniform rows of little match-box houses in the black townships date from the 1950s; classrooms lack books, even roofs.

The new government could borrow: its foreign debt, as a percentage of GDP, is about half that of the average middle-income country. But debts have to be serviced. Essentially, South Africa can afford a reconstruction programme only if it trims consumption spending, mainly public-sector pay, and boosts growth. The reappointment of Mr Keys will help. A former head of Gencor, a mining house, his austerity budgets have helped bring inflation down to 9.7%, the lowest rate for 20 years. South Africa could turn solid growth into real prosperity; the caveat has always been the level of political violence. Now it badly needs to preserve the precious spirit of confidence generated during its liberation election.