South Africa: Life After Apartheid
Nelson Mandela is one of the world’s most beloved figures. As an individual, he continually sought the reintegration of South Africa instead of its dismantling by bringing oppressed persons together in unity with their former oppressors. South Africa was in line to be a nation of growth and development as long as it could move past its colonial history and deep socioeconomic scars that ravaged the nation, but Nelson Mandela died. After Nelson Mandela’s death, a string of corrupt politicians took advantage of the one-party state to participate in every type of graft and bribery known to 3rd world countries. In the chaos, some companies took advantage of weak government oversight to aggrandize their mining, tech, or finance enterprises, and propel themselves into extreme wealth and luxury. On the other side of the divide (literally and figuratively), native South Africans found themselves barred from wealth generation opportunities while being sequestered to poverty conditions in the burgeoning state. The new state was vulnerable, and at one point could have embraced its diversity from a governmental perspective. Unfortunately, the state acquitted itself poorly after the death of President Mandela and now sits on the precipice of revolution and civil war.
Factors of Stability
One of the most important factors for the stability of supply chains through a country is its political stability. Countries that are politically stable represent a healthy environment for business development. Governments are contingent on the ability of private companies to provide an income structure to keep people employed and happy, as well as to keep the nation’s coffers full. For South Africa, many of its largest and most powerful companies based out of Johannesburg. (DeBeers, Anglo American, and MTN Group are just a few of the companies headquartered in Johannesburg). These companies fill out the tax-paying bracket of the country, while employing many people in and around the region. These mining companies purportedly provide more to South Africa than they consume, but they also generate wealth inequality along ethnic lines.
Wealthy suburbs on the left, crowded slums on the right.
Wealth Divide
In South Africa, 55% of people live in poverty, 25% are in extreme poverty (unable to buy basic goods to sustain life), and 39% of households were unable to buy food before the Coronavirus crisis. The Coronavirus crisis hit South Africa particularly badly, as the South African beta variant was partially vaccine-resistant and transmissible to rodents, crippling what little economic recovery the country had hoped for. While all of this disaster struck, places like Sandton maintained their economic dominance while neighboring townships like Alexandra fell into complete ruin. The locations that were able to maintain economic relevance grew as investment capital maintained its trajectory while those on the bottom of society suffered more than before. Of the proposed 500 billion rand (almost $32 billion USD) investment for economic recovery, only 36 billion (or $2.25 billion USD) ever made it to the people. South Africa may pride itself on diversity, but it is currently the most financially unequal country on earth. While it maintains itself as the 35th largest economy and a G20 nation, the nation is in dire straits similar to France prior to the French Revolution, but with additional ethnic conflicts and cultural divides.
Recommendations
For companies and businesses involved in South Africa, my advice is this: run. The African National Congress (ANC) one-party system is not above seizing private assets to maintain power, and mining operations can take over a decade to be profitable. While South Africa has rich resource reserves and low labor costs, those advantages are completely ruined by the geopolitical instability, the militant divides between economic and ethnic groups, the one-party state, and the rampant civil disorder frequently exhibited in the region. For example, these are problems of South Africa today. I appreciate how progressive South Africa looks on paper. People want to believe that the nation maintains itself as the country of Nelson Mandela, but it has become a pale facade of his image. South Africa today is facing corruption and dismantlement; its problems are numerous and intractable. At the end of the day, South Africa is unified by colonial borders that became obsolete decades ago and has been limping along ever since as a bruised and artificially cohesive state.
~ Fïn ~
