Analysis: Marikana massacre reveals depths of South Africa’s woes

By STELLA MAPENZAUSWA
Published on 25/08/2012 00:00

South African policymakers from president Jacob Zuma down routinely reach for external factors such as the eurozone crisis to explain why Africa’s biggest economy cannot grow faster or create more jobs.

But the bloody confrontations at the Marikana platinum mine last week, in which 44 people died – 34 of them shot by police – uncovered deep undercurrents of labour and social unrest and is forcing politicians to look closer to home for the sources of the nation’s problems.

What is being termed the “Marikana massacre” – which allegedly saw striking miners armed with spears and machetes hack mine guards and police officers to death, followed by strikers being cut down by a hail of police gunfire – has done more than trigger a wave of anguished soul-searching among South Africans.

It has also revealed another uncomfortable truth: that domestic factors such as soaring power tariffs and rising labour costs – relative to the rest of Africa and the developing world – combined with political uncertainty and simmering social resentment are as much, if not more, of a drag on business activity as the turmoil in Europe.

“This latest round of violence says to people – wait a minute, there’s way too much uncertainty in South Africa,” said analyst Mike Schussler.

“I’m sure other countries also have violent strikes, but I don’t know of many cases where policemen are hacked to ­
death,” he added, reflecting in part the blot Marikana has put on a post-apartheid South Africa which likes to project itself as distant and distinct from the poverty and suffering seen in Africa.

With Europe absorbing about 25 per cent of South African exports, nobody is denying that the eurozone meltdown has taken a toll on the most powerful economy in Africa. With most sectors of the economy stuttering, finance minister Pravin Gordhan has warned growth this year will be less than the 2.7 per cent projected in February. The World Bank has cut its own estimate to 2.5 per cent from 3.1 per cent.

In her latest monetary policy statement, Reserve Bank Governor Gill Marcus reiterates her by now familiar argument that “negative spillover effects” from the euro zone crisis on the South African economy are likely to persist and intensify.

But Marcus and Gordhan acknowledge the economy is riddled with structural constraints that keep growth below potential.

Domestic operating headaches cited by South African businesses include electricity tariffs that have soared by an average 25 per cent per annum since 2009, and unsustainably high labour costs.

South Africa’s union-friendly labour legislation enforces a mininum monthly wage of around $240 (£150), much higher than the average $70 (£45) in neighbours Zimbabwe and Mozambique.

“We’re losing our competitiveness because our commodities are also produced in South America and elsewhere in Africa where the labour costs are a fraction of what they are here,” Riel Malan, managing director of fruit and vegetable exporter Unlimited Group, said.

The Marikana mine carnage also shines a harsh spotlight on South Africa’s glaring income disparities and social inequalities, which fly in the face of the ruling African National Congress’s promise to create a “better life for all” after the end of apartheid in 1994.

Amid a growing perception that a much-debated government “black empowerment” drive has benefited only an elite and ANC-connected few, an increasingly restive black population has stepped up often violent protests against enduring poverty and poor basic services.

“The global headwinds have put into even sharper focus the demanding policy challenges of high inequality and unemployment in the country,” said World Bank country director for South Africa, Asad Alam.

This is tweaking the nerves of local and foreign investors already jumpy about calls from radical factions of the ANC to nationalise mines and confiscate white-owned land.

The country’s Gini co-efficient, a measure of income inequality, is one of the highest in the world at 0.69, planning minister Trevor Manuel conceded last week, when he unveiled a growth plan whose ambitious targets include creating 11 million jobs over two decades and more than doubling per capita income. This was just days before the Marikana bloodshed added dark clouds of potentially spreading labour unrest and violence to the already glowering economic outlook.