Trevor Manuel raises the alarm over poverty, inequality
Like the earth they inhabit, societies have fault lines. Former finance minister Trevor Manuel spoke to these fractures last Friday in his keynote address to the gala dinner to mark Thebe Investment’s 30th year.
He drew on the words of US president John Kennedy and Financial Times writer Martin Wolf. Kennedy warned in his 1961 inaugural address if a free society cannot help the many who are poor, it cannot save the few who are rich.
In a 2015 column, “How SA can escape the ‘Belindia’ trap”, Wolf described SA as a combination of small, rich Belgium and very poor India. The Belindia metaphor was developed in the 1970s by Brazilian economist Edmar Bacha to describe Brazil’s socioeconomic fractures.
Wolf’s column came 17 years after Thabo Mbeki said something similar. Opening a parliamentary debate on reconciliation and nation building, he said the two were defined by “the material conditions in our society”, which divide SA into two nations, one black and poor and the other white and relatively prosperous. “We therefore make bold to say SA is a country of two nations.”
Manuel said Wolf’s observations remain prescient today. He referred to a recent Business Unity SA (Busa) document, “A Business Approach to BEE for Inclusive Growth”, in which it is warned socioeconomic fractures — sustained poverty, inequality and unemployment
— are “threatening SA’s economic and social stability”.
Among the remedies proposed by Busa are an overhaul of education and nutrition; intensive investment in unlocking the potential of small businesses; dealing with crime, especially among the poor; and infrastructure investment (especially power, water, roads, rail and broadband).
“Unless there are urgent plans to deal with at least these four sets of issues, we will perish together,” Manuel warned. “The truth is that we are running further out of road to correct the path.”
This is not the first time Manuel has talked about SA’s fault lines. In one of the presentations as chair of the National Planning Commission several years ago, he referenced a conversation he once had with Lee Kuan Yew, the man who drove Singapore’s socioeconomic development. Lee commented how difficult it must be for a country as diverse as SA — the country has 11 official languages — to do development.
There is plenty of socioeconomic data to back what Manuel is talking about. In its latest macropoverty outlook for SA, the World Bank says more South Africans have become poorer. The economy grew at an average of 1% a year between 2012 and 2021, “leading to a contraction of incomes per capita of 5.6% during this period”.
Using the upper-middleincome poverty line of $6.85 per day in 2017 purchasing power parity rates, 63% of South Africans are estimated to have been poor in 2021 — an increase of 1.5-million people compared to 2019. The bank says the poverty rate is expected to hover around the 63% mark up to 2024.
There are many warning signs that these fault lines are causing earthquakes, the most significant in recent years being the July 2021 riots. The panel appointed by President Cyril Ramaphosa to probe the riots warned, “It cannot be that almost three decades into our democracy there is still such deep racialised poverty and inequality in our society.”
But what is worrying is that, as Manuel despaired on Friday, it is still not clear to the rest of society what the government is doing to correct the country’s development path. It is worrying too that all these fault lines have been known for a long time.
In 1994, the ANC’s Reconstruction & Development Programme warned, “No political democracy can survive and flourish if the mass of our people remain in poverty, without land, without tangible prospects for a better life.”
And in December 1993, US economist Robert Barro warned of the same in an interview with the Wall Street Journal. “Many people seem to believe that a popularly elected black government can be established peacefully and would be able to maintain political freedoms, civil liberties and some kind of economic rights for its citizens, including the minority whites. [That] event would perhaps be the greatest political accomplishment in human history. To put it another way, it is not going to happen.”
Barro was off the mark on the peacefulness of the elections. However, as ANC leaders of yesteryear admitted, the country’s political democracy cannot survive and flourish if the majority of South Africans have no hope that there is a better future for all.