Judging by the white tents I saw set up outside of the IMF and World Bank earlier this week, there must be some sort of prominent economics meeting going on in town (my ignorance reveals that I’m not much of an economics person). I suspect that this is why South Africa’s Minister of Finance, Pravin Gordhan, was around to speak at the Brookings Institution today (his counterpart in Zimbabwe will speak at Freedom House tomorrow and I hope to cover that as well). The Chief Economist for Africa at the World Bank was also on the panel, I’ll post separately on his remarks (and those of a Brookings economist), which were mildly incendiary and displeased me, on Friday or over the weekend.
The topic of the panel was “Inequality and Inclusive Growth in Africa” and not surprisingly with that theme, Minister Gordhan expounded on the social aspects of inclusive growth. I was disappointed, although not surprised, that the Minister did not refer to the unfortunate instances of xenophobia in South Africa that appear to have been indirectly related to the 2008 global economic crisis or the more recent unrest in South Africa’s extractive industries, best exemplified by the Marikana Mine Massacre in August 2012. The Minister did say that South African exports to SADC countries have risen dramatically in recent years. However, I wonder what impact South African xenophobia will have on the long term trajectory of that relationship, particularly as Mozambique industrializes (Maputo, Tete) and renovates its ports (Beira).
Mr. Gordhan opened his remarks by thanking Brookings for placing Africa prominently on its agenda and made the first of several remarks to the effect that Africa was increasingly becoming a center of global attention and that in 20 to 30 years a shift from the West to the East would have solidly migrated to the South. He spoke of the challenges that South Africa faces as a young democracy (it will be 19 in ten days) and pointed to the 1913 Land Act as bearing particular responsibility for a lack of inclusive growth in South Africa.
One of the Q and A’s focused on land reform. The Minister straddled a line there that seems to be systematic of his government since the upheavals surrounding land in Zimbabwe. He stated that “a lot more still needs to be done” in regard to undoing the historic injustices surrounding land distribution, but he added that it would be very important to ensure that any reclaimed land continue to be economically productive. He also stated, albeit rather mildly, that global sanction on Iran have hurt South Africa.
Minister Gordhan gave some statistics on the impact of the 2008 crisis on the South African economy but seemed to be generally of the opinion that South Africa and India weathered the crisis better than most industrialized countries. In light of that claim (given the extensive ties of both countries to the UK), it is somewhat ironic that the Minister also indicated that African economies were more gravely affected by the crisis given their historical links to Western Europe.
The audience seemed very interested in the new BRICS bank, I have to confess that I’m not. The main takeaway from Gordhan seemed to be that “good progress” has been made and that most of its key details will be revealed over the next six months.
Mr. Gordhan was somewhat critical of the Millennium Development Goals, suggesting that they may be a ‘ticking the box’ process that lacks real substance. He closed with a quote from Nelson Mandela on humanity’s need for justice and necessary items like food.
Gordhan’s talk was very interesting for its substance – there were times that his litany of overarching economic prescriptions caused my focus to wander; however he frequently made references to compelling social issues, such as the need to earn a living wage. Minister Gordhan and the African National Congress seem to be walking a tight-rope. South Africa is much more democratic than it was two decades ago, but there is no competitive opposition party, it remains one of the most unequal societies in the world, and those making 70 -80 Rands a day ($10USD) undoubtedly have a very poor quality of life. I suspect that this balancing act is not sustainable for too much longer.