Reversing Apartheid's Imbalances

AS the countdown for South Africa's first all-race elections enters its final lap, the African National Congress (ANC) is putting the finishing touches on a comprehensive $11 billion socioeconomic development plan designed to tackle the legacy of more than four decades of apartheid.

The reconstruction and development plan will give top priority to providing housing and creating jobs. It will be financed initially by diverting state spending away from areas such as defense and apartheid bureaucracies. The program was published last week.

``The fact is, the ANC is the only party with a comprehensive plan and, therefore, this document can be considered the blueprint for future development,'' a Johannesburg stockbroker says.

``But we need to guard against the grand designs of the past, and make sure that there is a relationship between the human and management resources available and the scope of the plan,'' he adds.

Politicians of the ruling National Party have criticized the $11 billion figure as a ``deliberate and spectacular underestimate'' of costs.

In an editorial, Business Day, South Africa's authoritative financial daily, warns against politicians who promise increases in government spending without raising taxes, ``particularly just before an election.''

Program's objectives

The reconstruction program sets the following targets: the creation of 2.5 million jobs through public works programs over the next decade; the building of 300,000 houses a year; a provision of clean drinking water for the 12 million people who do not have it; and electricity for everyone.

The ambitious plan has the cautious backing of the business community, trade unions, and international financial institutions -

providing an ANC government adheres to internationally accepted norms to finance it.

Rudolf Gouws, a Rand Merchant Bank economist in Johannesburg, says he welcomed the release of the ANC figures because they will help bankers convince foreign investors that a new government will not ``explode the deficit to 10 percent.''

Former trade unionist Alec Erwin, a ANC parliamentary candidate, says it would take at least 10 years for the ANC plan to reach final fruition.

The Urban Foundation, a private-sector development group, said a public works program aimed at creating about 2 million temporary jobs for the most deprived section of the population would cost about $3.4 billion a year - about 10 percent of the country's budget or 3 percent of gross domestic product (GDP).

Fewer than 50 percent of black South Africans are employed in the formal sector, while about 25 percent have jobs in the mushrooming informal sector (such as street vending), and the other 25 percent are unemployed.

Urban Foundation director Ann Bernstein warns that the public works programs would offer only a short-term palliative to the country's economic woes; it would have to be accompanied by much-needed skills training to solve the long-term problem, she says.

Last week, the head of economics for the ANC, Trevor Manuel, said the targets could be achieved without increasing the tax burden through defense cuts and by cashing in the dividend from eliminating apartheid. An end to a 10-year boycott in black townships, with tenants in government housing refusing to pay rent and for services, would also help finance the program, he said.

The program omitted explicit mention of keeping the budget deficit from exceeding 6 percent of GDP - a point of concern in government and business circles.

The ANC, however, promised in a letter of intent to the International Monetary Fund to reduce the deficit from its present level to 6 percent of GDP, according to a report in the Guardian newspaper in London.

ANC turnaround

This newspaper story also reports that the ANC has promised that white Finance Minister Derek Keys and white Reserve Bank Governor Chris Stals would retain their posts after the election. The ANC has declined to confirm or deny the reports.

The reconstruction plan was published this month after lengthy discussions within the ANC, which has seen six drafts of the document. Each draft has moved further away from socialist-leaning rhetoric and more toward the principle that development must be driven by free enterprise and economic growth.

``It still has some rough edges,'' says a business executive, who is encouraged by the ANC's shift toward more realistic economic policies. ``But it represents an astonishing turnaround from the ANC's obsession with central control of the economy which dominated its thinking four years ago.''