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Cadres, Capitalists, Elites and Coalitions: The ANC, Business and Development in South Africa

Literature › Works

Jo-Ansie van Wyk (2009). Cadres, Capitalists, Elites and Coalitions: The ANC, Business and Development in South Africa. Nordic Africa Institute Discussion Paper 46. Nordiska Afrikainstitutet, Uppsala.
Type report
Scope Post-1994 South African economy
Method synthesis review
Period studied 1985–2008
Regions South Africa
Themes transition post apartheid, business and state, politics ideology elections, macro fiscal finance debt, unions strikes, inequality poverty unemployment, comparative theory
Citation key wyk2009

Argument

The paper argues that South Africa's transition was an elite-driven 'double transition': a democratisation pact among the ANC, NP and IFP, followed by an economic pact between ANC elites and white (later also black) capital. Using elite-settlement theory (O'Donnell and Schmitter, Burton and Higley, Sisk), it explains the ANC's abandonment of nationalisation through four factors: the nature of the political settlement, the role of business, developments inside the ANC, and the role of the IFIs. The economic pact stabilised the economy and attracted FDI but entrenched white capital and created a small black elite, while poverty and the 'second economy' persisted. The paper closes by asking whether a developmental pact and state is emerging under Zuma and the post-2005 turn.

Evidence and method

Secondary literature (Sisk, O'Meara, Padayachee, Habib and Padayachee, Hirsch, Taylor, Gumede), ANC and government documents and speeches, autobiographies (Mandela, Maharaj), newspapers, World Bank, IMF and DTI sources, plus small tables on FDI, social services and black-led JSE listings. No interviews were conducted.

Findings

  • The transition was driven by a convergence of NP, white business and ANC elites from 1985 onwards. (p. 8)

    By 1985, an unexpected convergence took place between elites of the NP government, white business and ANC elites.

  • The 1980s crisis combined economic and political pressures, which pushed elites to settle. (p. 11)

    By the mid-1980s, South Africa reached a doubly critical juncture: an economic crisis

  • The ANC dropped nationalisation once the political transition began, choosing pro-market policies that stabilised the economy and attracted FDI. (p. 9)

    ANC elites opted for pro-business/market policies, which stabilised the economy and attracted much needed foreign direct investment but produced mixed developmental results.

  • Business lobbying shaped the RDP: the Brenthurst Group revised a draft RDP while the ANC leadership kept its Alliance partners uninformed. (p. 25)

    At this meeting, a fifth draft of the Reconstruction and Development Programme was revised on the recommendation of members of the Brenthurst Group.

  • GEAR replaced the RDP in 1996 and was imposed without consulting NEDLAC or Alliance partners, alienating COSATU. (p. 33)

    Four months later, in June 1996, the South Africa government discarded the RDP and adopted a pro-growth and pro-business orthodox economic reform policy

  • Growth under the pact rose markedly relative to the last decade of apartheid. (p. 26)

    Whereas South African economic output during the last decade of apartheid averaged 1%, it increased to an average of 3% between 1994 and 2003.

  • Voluntary corporate unbundling sharply raised black share ownership on the JSE in the mid-1990s. (p. 35)

    which significantly increased (0.5% to almost 20%) the black business elite's proportion of shares on the Johannesburg Stock Exchange (JSE)

  • A GEAR-era 'second economy' persisted, with trade liberalisation and privatisation failing to improve employment. (p. 34)

    failed to improve employment figures, which resulted in more black people being left in the 'second economy', i.e., outside the formal economy.

  • The political transition was complete but economic power remained outside ANC hands. (p. 21)

    By the end of the GNU, political power was in the hands of ANC elites, but not economic power.

  • The beneficiaries of post-1994 neoliberal policy were a minority of 'insiders'. (p. 43)

    These groups, the 'insiders' of South Africa's democratic transition, comprise a minority of the population.

  • Employment equity left whites dominant in top management even by 2007. (p. 37)

    Whites are still dominating at 68.2%.