Sunday, February 15, 2004

Gauging Black Stewardship of the South African Economy

To hear some people speak, one would think South Africa had entered into a downward economic spiral since 1994, under the mismanagement of its new black leadership. This 2003 IMF Staff Report should prove a useful counter to that sort of propaganda. Contrary to the imaginings of many detractors of black rule, the South African economy has actually undergone a strong change for the better, which has been rewarded with ratings upgrades from both Fitch and Standard & Poors, from "stable" to "positive", while Moody's has hiked South Africa's long term foreign currency debt rating from Baa3 to Baa2, and its domestic debt rating from Baa1 to A2.

I know it's hard for people who think all blacks are stupid and incompetent to accept, but the facts simply don't bear out the notion that South Africa is going to the dogs. Economic growth, as good as it has been (and a substantial improvement over that recorded in the last 15 years of National Party rule), would be even better, were the South African economy not hampered by the artificial skills shortages induced by state-sponsored racism. To quote from an article in this week's Economist (sub. reqd.),

South Africa is not as bad at making jobs as is popularly believed. Between 1996 and 2002, about 2m jobs were created. Skilled workers have found new opportunities in tourism, information technology and manufacturing. Unskilled workers have done less well, though the number of informal farm jobs has risen.

Not enough new ones have appeared, however, to mop up the swelling flood of would-be workers. South Africa's available labour force in 2001 was 16.4m people, 3.5m more than a decade earlier. Barely two-fifths can expect to find a formal job (see chart). Unofficially the labour supply is even bigger, including perhaps 2m illegal Zimbabweans.

South Africa may have an oversupply of unskilled workers, but at the same time the country is suffering from a shortage of skilled ones. One economist, Iraj Abedian, estimates there are between 300,000 and 500,000 unfilled posts for skilled workers in hospitals, clinics, schools, universities, financial firms and the civil service. Too few South Africans are skilled enough to take the work: many school-leavers are innumerate or otherwise unemployable. (emphasis added)

The Bantu Education Act of 1950 and the cynically named Extension of University Education Act of 1959 (which actually closed off black entrance to white universities) worked precisely as intended, and if South Africa isn't enjoying the growth of an Asian tiger, it is not black but white misgovernment that is to blame. Indeed, the growth of the South African economy had been on a relentlessly downwards path ever since 19711973, as the terms of international trade shifted away from primary exporters to those with large numbers of skilled workers. Thabo Mbeki has his faults, which are glaring and have been condemned here on several occasions, but economic mismanagement isn't one of them.