United States of America Boulevard: there was a time when no self-respecting black-township resident would have wanted an address so redolent of US imperialism. Just a decade or so ago, Fidel Castro and Che Guevara were township street names of choice. One might have thought that Hugo Chávez would now be keeping South African sign-makers busy. No chance, or at least not in Cosmo City, a flashy new housing estate on the outskirts of Johannesburg. Here the US of A Boulevard is among the most sought-after addresses – as is Las Vegas Crescent – because it is here that members of the new, black middle class are flocking in droves, in search of mock-Tuscan villas and a share of the consumerist new South African dream.
When Nelson Mandela was released from prison in 1990, his first speech brimmed with vintage redistribution rhetoric. To be fair on the “old man”, it had been forced upon him by anti-apartheid radicals, who feared he had gone soft behind bars, but not surprisingly the markets dived. Since then, however – indeed, since the very next morning – the economic policies of the African National Congress have moved to the right. Now, as South Africa celebrates the anniversary of Mandela’s inauguration on 10 May, bigwigs in the ruling party are embracing capitalism with such relish that President Thabo Mbeki, the very man who unleashed this capitalist fervour, is expressing unease over some of his old comrades’ pursuit of bling, and the long-quiescent unions are muttering that it is time to take “back” the party.
“This is banker heaven,” one American banking executive told me recently, shortly after my return after nearly a decade away. He did not need to explain. All around us in a trendy Johannesburg mall were members of the “Black Economic Empowerment” (BEE) crowd, many no doubt celebrating deals to secure equity from historically white-run firms, a key part of the government’s policy to level the economic playing field. I found the scene all the more riveting given that I had last visited that mall in 1993 when, as a newly arrived foreign correspondent come to cover the bloodbath threatening the transfer of power, I had been the only customer in an Italian restaurant. The proprietor was convinced that South Africa was heading for the abyss, and sold up. How wrong she was (on both counts).
Buoyed by the surge in global commodities prices, and steered by Mbeki’s prudent fiscal policies, South Africa’s econ omy is enjoying its most concerted spurt since the Second World War and Johannesburg is booming. For the past two years the economy has grown at about 5 per cent. This is not as high as it needs to be if unemployment is to come down, but to have ventured such a prediction at the start of my first stint would have led to widespread rolling of eyes. Yet now, consumer confidence is at a 25-year high; the Johannesburg Stock Exchange’s top 40 index has gone up nearly 250 per cent in the past three years; house prices are up more than 125 per cent since 2003; new car sales soared by nearly 16 per cent to an astonishing 714,000 last year.
And for once in South Africa’s history, it is not just white people who are prospering. Leaf through the pages of City Press, a Sunday newspaper aimed squarely at black South Africans. I remember it for its doughty political coverage, but not much else. Now it has a glitzy motoring section. “Two BMW 3-Series for the price of one”, ran a typical headline two weeks ago. Beneath it was a story headlined: “Mercedes-Benz B200 pricey but quite nice”. According to figures quoted by the business magazine Finance Week, the number of “super-rich” (those earning more than four million rand – £285,000 – a year) has risen by 50 per cent in the past five years. While blacks, Asians and people of mixed race accounted for less than 25 per cent of this category in 2001, they now account for 34 per cent; that figure is expected to rise to over 40 per cent by 2011.
So what happened to the idealism of the ANC cadres I knew back in the early Nineties? The cynical or simple answer is that many have been seduced by easy money. The Johannesburg of 2007 reminds me as much of Vladimir Putin’s Moscow – a boom in construction and car sales and a flowering of oligarchs – as of the unhappy Joburg I knew in the early 1990s.
“We [black South Africans] must have business role models,” says one of the better-known members of the ANC billionaire elite, who has had dozens of directorships handed to him on a plate primarily because of his “struggle” credentials. “Are you denying us the right to make money?” says another. They have a point. It is hypocritical for western commen tators to argue, as they often have, that the governments of newly independent African states have no idea how to run an economy – and then condemn their supporters when they prove rather canny capitalists.
But the arguments of the new black “Randlords” are a little lame. Their talk of having been “deployed” into business may be true, but it is also a convenient euphemism for the acquisition of serious money.
Overtaken by greed
The simpler truth is that many “struggle” veterans have appreciated that after years of fighting the good fight they do not need to stay poor. What is more, it is rather easy to become rich, given the desperation of white businesses to prove their commitment to the new era by finding a black partner, and, in many cases, any old black partner.
The rise and fall of the “Queen of BEE”, South Africa’s most prominent black businesswoman, who had to resign in disgrace recently from more than a dozen boards because of a huge conflict of interest, was a reminder of the perils of the new culture. Mbeki himself has taken to bemoaning the “money, money, money” way. Last year he used the annual Nelson Mandela Lecture to castigate those for whom “success and fulfilment means personal enrichment at all costs and the most theatrical and striking public display of that wealth”.
The good news, however, for those who fret from afar that its new elite have been overtaken by greed, is that there is more to South Africa’s revolution than just conspicuous consumption. Day by day the country is becoming more “normal”.
Society remains, of course, in many ways unthinkingly racist. How is it that so many whites still talk of their gardeners as “garden boys” when they are referring to adult men? Yet, despite Mbeki’s Africanist insistence, aired in his weekly online columns, and repeated to me in person, that racism still poisons society, my impression is that race relations have improved vastly. It is far rarer now, as a white man, to be met with the pre-emptive cringe that used to be the hallmark of so many interracial encounters. I remember, soon after my arrival in 1993, hearing of the experience of a black American colleague. She was queuing in Thrupps, the Fortnum & Mason of Johannesburg, and a white woman looked over her shoulder at the French cheeses in her basket and said: “Oh, what good taste your madam has.” “I am the madam,” my friend replied. That encounter is impossible to imagine now.
The country is also no longer so out of date. In the Nineties many whites, and not just Pretoria civil servants with their beehive hairdos and floral print dresses, or their shapeless suits and grey shoes, dressed as if in a Fifties sitcom. Black South Africans were by and large no more contemporary: township style was a scruffy T-shirt and jeans. I remember Dali Tambo, the designer and chat-show-host son of the late ANC leader, shaking his head in despair over South Africans’ dress sense. Since then there has been a collective make-over. Go to one of the half-dozen malls that have opened in Soweto in the past year or so. They are little different from the malls in Johannesburg’s suburbs – or, indeed, the rest of the world.
What’s getting worse?
So where is the catch? My second morning back, I was reflecting on my impressions of the “new normal” when I met up with a former senior government official and ANC stalwart. What should I keep my eyes on, apart from the boom, I asked? “Corruption, incompetence, unemployment and crime,” he said. “They are all getting worse.”
South Africa has between 20 and 40 per cent unemployment. Trevor Manuel, the well-regarded finance minister, who has just overseen South Africa’s first budget surplus in recorded history, concedes that this keeps him awake at night. After dithering, the ANC is rolling out vast infrastructure projects, in particular for the 2010 World Cup. But 5 per cent growth will not make inroads into unemployment.
Manuel shrugs off the charge that he could have been bolder in seeking higher growth. Speaking to me before he delivered his budget speech, he also rejected the idea that a surplus was an “embarrassment of riches”. Rather, he suggests it is an insurance policy against harder times. But he is also the first to rail against the incompetence of swaths of the government which are unable to spend his bumper revenues. He bemoans the lack of a skilled workforce, and concedes that credit levels are dangerously high, because South Africans, particularly members of the black middle class, borrow to the hilt.
“The situation reminds me of Bolivia or Peru,” says one businessman. This is not, as you might think, the caustic one-liner of a disillusioned “whitey”. Rather, it is the view of Moeletsi Mbeki, the president’s younger brother, one of the government’s more trenchant critics. In particular he is appalled by the Black Economic Empowerment policy. It is, he says, just a cosy arrangement between white business and the black elite that will return to haunt South Africa.
There are many places in South Africa where the Bolivia/ Peru analogy rings all too true. There is not much bling in Boikhutso, a down-at-heel township in the old Western Transvaal. The main road is at last tarred and more houses have electricity than in the old days. But life is still grim, with unemployment over 50 per cent. It is places like this that spew out the young men who feed the crime wave, possibly the main disincentive to investors as they choose between South Africa and other developing markets.
Crime was appalling ten years ago when I left after my first stint. Now, anecdotally at least, it is just as bad. Take the 24 hours before I wrote this article: the family of a prominent regional politician was held up by a gang at gunpoint at the family house in northern Joburg; millions of rand were stolen in a raid on a military base in Pretoria; a Capetonian I met had been bound with his family and frogmarched through a wood by gun-wielding thugs, expecting to be killed.
The greatest threat to Mbeki’s legacy is not crime, however, but a backlash against bling. This is the tussle that will come to a head in December at the ANC’s five-yearly conference, when radicals have vowed to take on the centrists, including Thabo Mbeki. I accompanied him recently to Soweto on one of his rare township tours. Bridget Ngeleza, an unemployed secretary, watched his progress from the garden of her shoebox bungalow. She was far from starry-eyed, but thought his embrace of capitalism was right.
“He wants people to help themselves,” she said. “He doesn’t like to spoon-feed people.” My guess is that she reflects the bedrock of the party. It may be ugly, but the era of bling has some years to run yet.
Alec Russell is the southern Africa correspondent of the Financial Times
South Africa’s wealth by numbers
16% increase in number of dollar millionaires in 2005
$11,000 average annual income, compared to $1,750 for the rest of sub-Saharan Africa
25% rise in demand for credit in 2006
3 number of South African billionaires on Forbes’s 2007 Rich List
55 number of BMW dealerships in the country (plus one Rolls-Royce and two Porsche showrooms)
Research by Shabeeh Abbas and Jonathan Pearson
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