Is the glass half full or half empty?

There’s lots to cheer about in the Goldman Sachs analysis, until you hit the black hole that is unemployment

ALMOST exactly 20 years ago, in November 1993, the results of a survey of South African attitudes to democracy was released.

Conducted by Decision Surveys International, the survey found, unsurprisingly, that 73% of black South Africans believed their lives would improve following the first democratic election set for April the following year.

What was more surprising was how few whites — only 8% — believed their lives would improve. No less than 82% of whites were worried about the forthcoming election.

The most important issues identified by those polled were improving education, housing and job creation. But the main concern of all races was political violence.

To understand this, you need to go back 20 years. In what was a “quiet weekend” in November 1993, 10 ANC-supporting teenagers were gunned down in an attack in what was then known as “Zululand”.

The son of an Inkatha leader was shot dead near Johannesburg and 12 people were murdered in political

The number of South Africans living below the poverty line has been reduced by 9%

violence on the East Rand.

In those days, the news wires would report the death toll with detachment every Monday morning. This is how some of the deaths were reported on November 8 1993:

“The bodies of two men with gunshot and hack wounds were found at Hostel Three in Thokoza and a man was shot dead in Khumalo Valley in Katlehong. The bullet-riddled body of a man was found in the township’s Letshogo Street and a man was shot dead in Crossroads squatter camp in Katlehong.”

These days, the massive tasks of the first years of transition — the ending of political violence, the reorganisation of the homelands and the apartheid administration into a single state with nine provinces and the birth of a new constitutional order — are taken for granted.

What remains contested is whether South Africa has progressed over the past 20 years.

On Monday, Colin Coleman, local head of Goldman Sachs, placed stats on the table in an effort to provide a “fact-based” account of the economy’s progress — or lack of it — since 1994.

Coleman does not fit the investment banker stereotype.

Twenty years ago, he was a member of the Consultative Business Movement, and worked behind the scenes to help lever the reluctant Mangosuthu Buthelezi and his Inkatha Freedom Party into participating in the 1994 polls.

Coleman said he initiated his report, titled Two Decades of Freedom — What South Africa is Doing with it, and What Now Needs to be Done, because “the dialogue around South Africa had taken a turn for the worse”.

His concern was that there was no “empirical base” underpinning the strong opinions exchanged about the state of the nation.

For several months, he has been presenting the results of his investigation to academic boards, to the Reserve Bank, to the Treasury, to government, to the ANC’s top six leadership, including President Jacob Zuma, to the DA, to business organisations and to boards such as that of Anglo American.

“There’s been a universally positive reception to the factbased analysis, to a longer range, more balanced perspective.”

Among those present at Coleman’s presentation to the ANC was Zweli Mkhize, the party’s treasurer-general.

“It’s a very balanced report. It’s a good base of information for government and the private sector.”

Mkhize sees positives for the ANC in the report, in particular “how there has been an impact on the society in terms of the creation of the middle classes”.

One of Coleman’s key points was the upward migration of a large number of black South Africans out of the lower Living Standards Measures (LSMs).

Measuring households against their acquisition of a range of consumer goods and property, LSMs provide the best insight into quality of life.

Add to this the roll-out of social grants to some 16 million people and there has been a significant improvement.

Before democracy, only 8% of whites believed their lives would improve, but many more had in fact benefitted. “There’s evidence that whites have gone wealthier on an aggregate basis,” says Coleman.

The improvement in living standards is something the DA’s finance spokesman, Tim Harris, acknowledges. The ANC must “be commended for improvements noted in the report”, most notably that “approximately 10 million South Africans have entered the LSM 5-10 demographic since 2001”.

Harris says: “The number of South Africans living below the poverty line has been reduced by 9%” and there had been a “notable” improvement in labour productivity.

“Despite these achievements, a two-decade-long failure to tackle unemployment still mars the ANC’s track record.”

Sitting starkly at the centre of Coleman’s report is the failure of South Africa to absorb new entrants into the labour market and what he describes as “the youth unemployment problem”.

No less than 71% of the unemployed are between the ages of 15 and 34, while 44% of the unemployed have never worked before.

The average unemployment rate has hovered around the 25% mark for the past 19 years.

Coleman’s statistics show that while labour productivity has improved, this improvement has been nullified by sharp rises in wages.

The second major problem which the country faces is the absence of net foreign investment. While some money has flowed into the country, this has been offset by capital outflows. The decision by some corporations to relocate their primary listings to London and New York has led to an outflow of capital in the form of dividends.

Coleman does not believe that these problems will be addressed by another round of planning. “We have the plans. We need to execute.”

He points to “low-hanging fruit” that can be harvested to make an immediate difference. Aside from the obvious need to produce a smarter, more inventive nation, a comparison with a basket of peer countries shows that a big difference could be made by radically increasing the number of personal computers and internet users.

There appears to be fresh momentum behind the National Development Plan, which has been vigorously opposed by the trade unions.

Says Mkhize: “We need to all support the NDP. It offers a vision, a direction that the country needs to be taking.”

The ANC went so far as to issue a statement welcoming the Goldman Sachs report, referring to “our vision encapsulated in the National Development Plan to create a more inclusive, equitable and growing economy”.

What about the opposition

There’s evidence that white South Africans have gone wealthier on an aggregate basis

from within the ANC and the trade unions to the NDP? Mkhize says: “Our democracy is about everybody expressing their views. But you must know at which point we make decisions.”

He invokes the notion of “sufficient consensus”, which was used to break deadlocks in constitutional negotiations before 1994. Plans cannot be held back “simply because there is a sector that is opposed”.

Among those present at the Goldman Sachs presentation was business leader Bobby Godsell.

He toyed with his glass of water before asking: “Is the glass half full or half empty? Well, the correct answer is that it is both half full and half empty.”