As South Africa and the world mourn the loss of Nelson Mandela we take a look at the economic legacy of South Africa’s first black president and liberator. Imprisoned in 1963 and sentenced to life, accused of trying to overthrow the government, Mandela was released in 1990 following years of international campaigns. Having led the negotiations to abolish apartheid, Mandela went on to lead South Africa’s first democratic, multi-racial government. Mandela made it his life’s work to eradicate the institutionalised racism, poverty and inequality that ravaged South Africa and in doing so, changed the lives of South Africans forever, becoming the “father of democracy”. Between his election as the country’s first black president in 1994 and 2013, real GDP will have grown by 82.2% while exports will have grown by 265% in US$ terms. South Africa is the largest economy in Sub-Saharan Africa but despite his best efforts, the country still faces serious economic and social problems.
Madiba’s Economic Legacy Lives On
As president of South Africa, Mandela inherited a deeply divided nation, whereby living standards and quality of life depended solely on the colour of a person’s skin. He immediately set about establishing social welfare programmes:
- Government Final Consumption Expenditure increased by 164% in real terms between 1994 and 2013 as Mandela’s administration tried to create an equal society. Many predicted a bloody transition from the apartheid regime to democracy but under Mandela’s guidance, South Africa came through the transition without a prolonged civil war;
- Around the world, Mandela became a figurehead for triumph over adversity and he used this influence to turn the eyes of the world to South Africa. Between 1994 and 2012, Foreign Direct Investment inflows to the economy grew by 899% in real terms while Gross Fixed Capital Formation grew by 197% in real terms over the same period;
- In 2013, South Africa is now part of the BRICS (Brazil, Russia, India, China and South Africa), a group of the most important and mature emerging markets in the world and is the largest economy in Sub-Saharan Africa in US$ terms, accounting for 26.8% of total Sub-Saharan GDP.
Long Walk to Economic Freedom
However, South Africa still has a long way to go in terms of social and economic development. It is still considered the most unequal of a ranking of 85 core countries globally in 2013, while annual gross income per capita has only increased by 66.8% in real terms between 1994 and 2013. Chronic unemployment continues to blight the South African economy with 25.1% of the economically active population out of work in 2012, with unemployment amongst those aged 15-24 years reaching 41.3% in the same year. Labour market rigidities have made the country less competitive with wage costs rising but productivity falling and in 2012 and 2013 this led to a series of wildcat strikes in one of the economy’s most important sectors, mining. This dependency on the mining and quarrying industry has also exposed the South African economy to vulnerabilities from weak commodity prices which drag on the economy.
There is no question that South Africa has a lot of work left to do in order to be considered “developed” and to ensure a fair standard of living for all its citizens. However, the country’s fate was changed forever by Mandela and his vision of a free and equal South Africa.