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SA Risks Losing Its Dream To A Skewed System

Sep 3, 2015



By Yves Kengen

I LOVE SA, I really do. I like its citizens, fighting every day to give meaning to the Rainbow Nation. Donald, Andrew and Liziwe, who enable strangers to discover Gugulethu’s hidden side. Dingani and his crew welcoming children after school at the Ipelegeng Community Centre in Soweto. Phyllis and Smal passionately teaching art at the Sibikwa Arts Centre in Benoni. Bongi coaching young girls netball at Extension 6 in Grahamstown. Achimota and Derek teaching youngsters dancing and marimba in Orange Farm. Andile teaching sewing to young girls from Numbi — "to give back to the community". These are my heroes.

These people will never enjoy the benefits of black economic empowerment nor will they benefit from SA’s economic development. To them, all the governing party’s commitments about improved education and housing were probably just empty promises.

As a European, I cannot possibly see the whole picture of what really underlies South African society. Nonetheless, I’m often haunted by the dark feeling that this country is missing the chance it was given by history. Indeed, instead of enhancing its resources by promoting the manufacturing sector, SA seems to move towards a form of governance that is subservient to northern multinationals and their watchdogs, namely the World Bank and the International Monetary Fund.

The spirit of the founding fathers of the Rainbow Nation should have enabled a new type of economic development: investment in processing industries to benefit from the added value of raw materials.

Yet African countries with mineral-rich soils made a historic mistake — they granted exploitation rights to foreign companies, abandoning profit in exchange for a laughable royalty out of proportion to the potential added value of the minerals that resides in manufactured products and job creation.

These markets generate huge profit margins that benefit, for now, only US, Asian, Indian and European companies. Meanwhile, Africa sells out its wealth, gaining nothing from the deal.

Let’s take Zambia as an example. It has one of Africa’s largest copper reserves. Since 2008, it has been receiving a 3% commission on mining income.

Before then, the rate was no higher than 0.6%. Meanwhile, 50% of the ore extracted from Zambia is exported to Switzerland.

Why Switzerland? Essentially because a crucial part of this extraction is granted to Glencore and its subsidiaries. A 25% levy is supposed to be passed on to Zambia.

However, through some offshore subsidiary tricks, the Anglo-Swiss company never pays a dollar to Zambia. Instead, it leaves extensive pollution. Is this the type of "development" SA wants?

This country has everything to develop its own economy and, above all, energy autonomy.

High-level universities and a population hungry to learn and work should make the country enthusiastic about the future. Yet, there must be political will.

How can we explain SA’s lack of energy capacity if not by the stranglehold some foreign companies retain on the energy apparatus?

Eskom’s distressing dependency on coal-fired power stations can only be explained by the omnipresence of Glencore, which retains a near monopoly on the coal market. It could not care less about the comfort of South African citizens — it is concerned only with its financial value.

On behalf of all my South African heroes, I make a special call for the development of a participatory economy in SA, based on a capitalistic model distinct from the tired one that proponents of globalised neoliberalism are still trying to impose.

It is true that a transition phase is required in order to thoroughly transform a nation and 25 years is probably not enough.

Nevertheless, it would be reckless to also sacrifice the "born free" generation on the altar of a perverted economic model.

*Kengen is a Belgian journalist



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