The sins of SA ... and a lesson for Africa

Relieved that a new era has dawned and South Africa is finally rid of former President Jacob Zuma, Ziyad Motala, professor of law at ‎Howard University School of Law, draws attention to what he considers ‘the biggest and most mendacious state capture’ under the misinformed policies of Thabo Mbeki and Trevor Manuel, which, he argues, are worse in their long term consequences than the Zuma effect. In a brief covering note on his article for the American University Business Law Review, he says the effects of that early state capture, some of which was done in secret, has lasting and profound negative consequences for South Africa’s unemployment, GDP, tax revenue and the creation of economic opportunities for the historically disadvantaged. In the article on the Legalbrief Today site, he cites South Africa’s ‘love affair’ with Bilateral Investment Treaties (BITS), which were dotted with provisions indulgent to the privileged and detrimental to the interests of the majority as an example of how a state can surrender law and policy control. He notes that in blindly following the Washington Consensus – a set of 10 economic policy prescriptions considered to constitute the ‘standard’ reform package promoted for crisis-wracked developing countries – South Africa assumed largely first world free trade obligations despite its large unemployment and poverty. The pursuit of free trade obligations, not contextual to the realities of the country, resulted in the decimation of key sectors of the economy. The monetary policies allowed major corporate head offices and vast amounts of money to leave the country. These policies undermined the tax base, job creation and development of the economy. The starting point to fix it, argues Motala, is to realise that free trade and foreign direct investment by multinationals has not delivered African countries from poverty. The Asian models exemplified in the lessons of South Korea and demonstrate that the primary engine for development comes from within the country and its population. Fortunately African nations are beginning to recognise the benefits of trade protection, public development banks and more expansionary monetary policies – ‘all heresies under the Washington Consensus’. These countries are beginning to take back the initiative in setting their own policies to address their own unique problems, including that there is more to gain through trade from regional integration through the continent or with similarly placed economies than integration with the developed world.