Nelson Mandela: his economic legacy

When Nelson Mandela stood in front of the Union Buildings in Pretoria 19 years ago to be sworn in as South Africa's first democratically elected president, he embodied the hopes of a nation.

Apartheid was vanquished, and in its place the rainbow nation was born. It was a time of great optimism.

There was much work to do, but there was a feeling that if everyone pulled together, a post-apartheid dream could be realised.

Much of that dream in economic terms was based on the Freedom Charter - the document signed in 1955 by Mandela and others opposed to apartheid.

It promised work and education for all, and a sharing of the country's vast natural resources. By the time apartheid came to an end, the South African economy had spent years being battered by sanctions. The infrastructure was, and remains, the most highly-developed in Africa, but the years of economic isolation were taking their toll.

Mandela and the African National Congress (ANC) inherited an economy that was heading for bankruptcy.

Inefficiency and corruption

It was a difficult task to create a silk purse of an economy from the pig's ear that Apartheid had left. However, many analysts pointed out that great strides were made in delivering some of the Freedom Charter aspirations in the early years of the new South Africa.

Chief economist at the Efficient Group, Dawie Roodt said, "Many millions of people got running water and electricity. But infrastructure was neglected, and slowly state inefficiency and corruption became serious problems," he said.

On the surface, at least, things looked good at the start. Inflation, which was running at 14% before 1994, fell to 5% within 10 years. South Africa's budget deficit, which was 8% in 1997, fell to 1.5% in 2004. Interest rates dropped from 16% to under 9% in the first decade of the ANC government.

Once sanctions were dropped, South African exports blossomed. Before Mandela took the oath of office, just 10% of the country's goods were earmarked for export. By the turn of the century nearly a quarter of them were.

It wasn't just economic numbers on sheets of paper. In the 14 years after 1996, the proportion of South Africans living on $2 (£1.22) a day fell from 12% to 5%.

Group economist at Investec,Annabel Bishop said South Africa's economy has "essentially doubled in real terms" since the fall of apartheid, growing at an average of 3.2% a year since 1994, as opposed to only 1.6% per annum for the 18 years before the end of white minority rule.

She said that the real tax revenue have effectively doubled since 1994, which has enabled the government to expand social welfare.

"The state provision of basic services has been extensive," she said.

But the early years still had to contend with huge problems. Apartheid had created rampant unemployment among the black population, an albatross that continues to hang around the economy's neck almost two decades later. South Africa's official unemployment rate has hovered around 25% for years, and youth unemployment is much higher. By some measures half of those under 25 are out of work.

President Jacob Zuma is acutely aware of this. It's a situation that, combined with falling education standards and a skills shortage, is storing up problems for the future.

"We have developed a number of sectoral strategies especially focusing on skills development to meet these challenges," Zuma has said.

While overseas companies scrambled to get into the newly open economy after 1994, foreign direct investment (FDI) didn't transform into the millions of jobs that were needed.

The General Secretary of the trade union organisation, Cosatu, Zwelinzima Vavi, recently said, "While we have made huge gains since 1994, on the economic front workers' lives have not been fundamentally transformed. We still face massive problems in our economy."

Wide inequality

The gap between the rich and the poor in South Africa is one of the highest in the world. In fact, by some measures it's actually greater than it was under apartheid.

Under the commonly-used Gini coefficient for measuring inequality, South Africa scored 0.63 in 2009. Under the coefficient, nought is the most equal and one is the the least equal.

In 1993, the country's rating was 0.59, which has led many to the conclusion that the gap between the rich and poor is getting bigger.

Meanwhile, the United Nations regularly ranks South Africa's cities as some of the most unequal in the world.

But coefficients and reports apart, the most casual of observers only has to drive the few miles across Johannesburg or Cape Town to go from views of stunning mansions with German cars, to shacks and open sewers.

A business woman in Johannesburg, Lerato Kabwe said she felt more economically confident during Mandela's presidency than she does today.

"We basically don't know where we're heading," she said.

South Africa's unemployment rate rose from 15.6% in 1995 to 25.6% in 2000 The average per capita income declined from 13.2% of the US level in 1995 to 8.5% in 2000.

On average, a white household in 2013 earns six times more than a black one Nearly one in three blacks is unemployed, compared with one in 20 whites More than 25% of South Africans benefitted from social grants in 2010 - up from 13% in 2002.

"Everything is expensive. How do we survive? The opportunities are limited. We're far from economic freedom because the minority that was previously empowered - they still have economic power. When will the equality happen?," she queried.

Bank employee Peter said he's "hopeful, but at the same time, negative towards the economic outlook".

"Nevertheless I think, right now, we are getting more opportunities, as opposed to before Mandela being elected as president," he said.

While much was done and planned in the early post-apartheid years to right the wrongs of the previous era, analysts say that many policies faced insurmountable problems.

Initially, Black Economic Empowerment (BEE) was a 'quick fix' - giving black South Africans a stake in the nation's industries from which they had so long been excluded.

However, in the first 10 years of the new ANC administration, the fruits of the BEE policies tended to end up in the pockets of a politically well-connected elite.

Even though the BEE policies expanded over the years and helped create a rapidly expanding black middle class, they still largely failed to improve the lot of the majority.

Marikana mine shootings

A case in point in the inequality picture is South Africa's mining sector. 2012 was the most turbulent year for the country since the end of the apartheid, with violent wildcat strikes across the sector, and 34 miners shot dead at Lonmin's Marikana platinum mine in Rustenburg.

In a way the Marikana mine is a microcosm for the country. The workforce is split, largely between the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU).

The board of Lonmin is mostly white, although until recently the ANC's new deputy president Cyril Ramaphosa had a seat. Ramaphosa is often tipped as a successor to President Jacob Zuma. He's also a former head of the NUM.

A combination of factors meant the lowest-paid and least-skilled workers at Marikana began to slip behind. In an industry where the average wage supports 10 people, these men were on the wrong side of the wealth gap.

They also began to view the NUM as being too close to Lonmin to efficiently look after their interests.

BBC