The Case of the Two Economies

My Perspective
South Africa – The Case of the Two Economies

Despite the progressive transition and tremendous strides made by the African National Congress led government in the South African Political landscape, the country is still economically divided. The apartheid regime divided South Africa racially and economically, and twelve years into democracy the government has succeeded in turning around the racial component but is struggling to shake off economic segregation.

South African like many other African countries in the 1960’s after the attainment of independence is in a predicament of having two economies. One is advanced and skilled and fast becoming more globally competitive, the second, mainly informal, marginalized and unskilled. Should this trend continue unabated, South Africa will be “ country with an island of wealth and prosperity surrounded by waves poverty that could lead to insanity” (Victor Mditshwa. 2004).

South Africa is emerging as a capitalist and bourgeois country, with features of a black middle strata escalating. This shows that there are strides being made to capacitate some of the black elite to aspire as capitalists through state programs such as the Black Economic Empowerment. While the majority of the population is servicing the economic system, a few ‘chosen’ reap the rewards. The South African landscape perpetuates divisions, as the cities and towns have the economies, social institutions and political imperatives and resources while the rest of the countries, all that is outside the cities can be compared to less developed countries. The more developed cities are the most sought after for more development while in the marginalize, rural and semi urban communities there is little to no development.

The biggest challenge for the government is closing the gap between the two economies, to move away from hard focus on reconciliation to a more developmental focal point. The merger of democracy is not based on the participation of the citizens in socio-political activity only, we note that elections are important and significant in any democratic country, so is the establishment of social groupings such and Non-Governmental Organisations but even more importantly is citizen participation in the economic life of the country. It is important that a vibrant democracy encourages its citizens to be a part of the economy, until such a time as the ordinary man in the street becomes an active part of the economy, democracy will remain a pigment of our imagination.

Some of the major challenges for the South African democracy are; how to achieve better standards of living as well as how to attain sustainable development. The government has to contend on how to promote broad economic development and empowerment. South Africa can gladly pronounce that its political system is a reflection of democracy, what it cannot boast on is the limited progress made by its programs to uplift the social and economic status of the most destitute of the land. Ten years into democracy and South African is still the second (to Brazil) undivided country in the world, people are still dying of poverty although this not at an extreme rate, but it is enough to alarm the politicians of the land, the health system not conducive for a country claiming to be uplifting the social ills of the land, housing is still a big problem as many continue to live in shacks, whilst many cannot afford bank loans to build houses. Some of the constitutional obligatory’s are not being met by the government. This leads to the conclusion that those in the second economy, blacks in particular continue to be segregated and underdeveloped at the hands of the state.

Mkandawire argues that the structural capacity of the democratic development state to implement economic policies wisely and effectively is dependent on various factors including institutional, technical, administrative and political capacity. Government is to set clear, attainable goals to ensure the merger between the two economies. Economic reform currently seats in the middle of the government agenda, where it sometimes forgotten are left to individuals. It does not form the centre for government engagement with the world – invertors. While opening up of the economy is advisable in light of international trends and markets, South Africa need to be cautious so that this does not sideline or sabotage its internal initiatives to cultivate a new brand of economically mobile beings. The South Africa Government has to reduce its role in enterprises that are not at the forefront of its public service delivery. Individuals and private companies have to be encouraged to play an active role in taking up some of the state owned and run enterprises. SMME’s should be fast tracked country wide for the economy to create jobs, SMME should be finances and gotten off the ground. The finance sector should play a leading role in financing the SMME’s especially those owned by black people and women as to fast track the BEE process.

To achieve its developmental stage the state should disperse information. Citizens become their own liberator, through forming their own opinions, ideas, choices and demand their rights only if they have access to information. Government should create environment, which enable free flow of information. Partnerships with citizens and the private sector in this regard need to be fostered.

By: Mihlali Gqada