LOS ANGELES TIMES INTERVIEW : Tito Mboweni : Shaping South Africa’s Post-Apartheid Economy

The economics department of the African National Congress began working inside South Africa only a few months ago, but Tito Mboweni wasted no time in posting a few choice decorations on the office walls.

Next to pictures of ANC president Oliver Tambo and deputy president Nelson Mandela is a chart showing several dozen boxes knitted together by twisting lines. The title of that work of art is: “McGregor’s View of Anglo Control.” It is a research company’s analysis of the businesses owned or controlled by South Africa’s business giant, the Anglo American Corp.

“I love this,” Mboweni said, chuckling as he held up a copy of the chart within easy reach on his desktop. Then he turned serious. “We have to do something about this,” he said. “I mean, we really have to.”

Mboweni’s choice of art wouldn’t bring many smiles in the plush executive suites at Anglo American, the white-run firm that controls at least one-third of the total capitalization on the Johannesburg Stock Exchange. These days Anglo American feels like a big, delicious pie that the ANC wants to share with its hungry, disenfranchised black supporters. And Mboweni, a genial 31-year-old, appears to be holding the knife.

The ANC’s chief economist in South Africa was a student activist under threat of arrest when he left the country in 1980 to join the ANC in exile. He earned an economics degree at the University of Lesotho and a master’s at the University of East London in England.

Now he’s much in demand among the white business Establishment, which is curious, to say the least, about his plans for their future.

The ANC’s commitment to nationalize the mines, banks and monopoly industries was spelled out back in 1955. But, as the ANC scrambles to turn its theory into practical economic blueprints, there are signs that some in the organization may be rethinking the Marxist solutions it once favored.

And today Mboweni is meeting South Africa’s top executives over lunches and dinners. He’s speaking to business organizations, writing articles for local financial publications and hosting potential overseas investors.

So far, at least, Mboweni hasn’t let all the attention go to his head. He called a businessman from the airport not long ago to ask for a lift to the office. Minutes later, a large, chauffeur-driven Mercedes-Benz arrived. “Perhaps,” Mboweni said, “they thought they should show me the benefits of the private sector.”

Question: You have been meeting many white business leaders in South Africa, conservative Afrikaners as well as more liberal English-speakers. What has surprised you?

Answer: When you are an academic, you tend to view business as a kind of monolithic “capital.” Sometimes the assumption is that “capital” thinks the same way, that the caucus thinks together. I’m finding that it’s not as easy as that. . . . There are certainly sections, certain individuals within the South African business community who hold a completely different view from others. There are lots of differences and tensions. Some sections of business, I think, are prepared to go a long way with the process of transformation; others are not. Some are willing to listen; others are not.

Q: Who is most willing to listen?

A: My most exciting times have been with Afrikaner businesses (descendants of the first white settlers in South Africa). . . . Those are really true South Africans, those ones. We have very frank discussions, and they confront the issues. . . . Once you’ve done that, I’m telling you, you’ve got comrades there.

They are committed to the country. They are not going to invest somewhere else; they will invest here. And you have the feeling that you are making progress with the Afrikaner business community.

Q: How about the non-Afrikaner white business Establishment, such as Anglo American Corp.?

A: There are also differences there. But there are some big companies, whose names I won’t mention, that are very arrogant. They are playing merry-go-round with us. And we don’t have time to play. There’s work to be done. . . .

So when we go for a dinner or a lunch with some of the arrogant businesses, we’ve just wasted our day, because they spend too much time trying to show us how foolish we are. They think we don’t know economics. It’s not very productive.

I’m not saying we will stop discussions with those who are arrogant. We are all . . . stuck together. And therefore we have to find ways of breaking the logjam where it exists. . . .

Q: On the whole, do you find businessmen pretty fearful?

A: They are concerned . . . about the future. They are concerned that a new dispensation (political system) must create an environment for business. . . . And we are equally concerned, actually.

But others (are) . . . more than just concerned. They go a long way toward finding programs to assist the development of the black business community, to (improve) labor relations, to discuss socioeconomic problems, health and so on. Some of the discussions go further than just dealing with the fears of business into some of the real challenges facing this country in the medium to long term.

Q: Anglo American is the largest and probably the most important private company in South Africa. What, in the ANC’s view, is Anglo’s future in a post-apartheid economy?

A: There are discussions (about Anglo) going on within the movement (ANC) and within all the forums concerned about a new South Africa. Those discussions have centered, amongst other things, on the role conglomerates currently play in the economy and what should be done. . . . We think that this concentration of economic power is a problem. And, worst of all in South Africa, it is a concentration that is in white hands. Black people today own about 1.52% of the productive assets in this country. That’s nothing, really.

So we are discussing de-conglomeration through antitrust legislation, through various forms of taxation and through other regulations.

Q: Is nationalization one of the options being considered for Anglo?

A: No. . . . If you de-conglomerate and the separate companies are able to continue their productive processes, I don’t see what the problem is. No, I don’t think that’s an outright option.

Q: What about the mining industry, much of which Anglo and its partners control? Do you envision a state takeover?

A: The mines are a special category. There’s an argument (within the ANC) that says that the mines are a natural resource, just like oil in the Middle East, . . . and must be mined by a public corporation.

Q: What other options are there?

A: One option is state participation--joint ventures between the public and private sectors. . . . That is a very powerful argument. The union movement is very strong on the mines. And ordinary folk out there . . . look to the mines and say, “That’s ours.” It’s different from a factory producing shoes.

Q: Some economic analysts believe mining in South Africa is too technologically complex and financially risky to be handled by the state.

A: I suspect also that the mining of oil must be a fairly complicated process, yet the oil industry in Norway is state-run. And the mines in Britain are state-run.

The debate must be based on what would be the most appropriate and nationally beneficial to the construction of a post-apartheid economy. And, therefore, we’d like to debate these things with Anglo American and other firms . . . not in a merry-go-round fashion but with the aim of finding solutions. . . .

Q: The peace process, the legalization of the ANC and other reforms have raised the economic expectations of blacks in this country. Isn’t that dangerous? How can the ANC ever meet those expectations?

A: High expectations are a very healthy thing. Look at it this way: If you go to Alexandra township, the first thing you are met by is a cloud of smoke and dust. It’s very unhealthy. Secondly, you don’t see proper houses. . . . In the main, you see squatting conditions. People don’t have proper water services. There’s no proper sewage system. There are no proper roads.

You go across Louis Botha Avenue into the white suburbs and what do you see there? Wide-spaced homes, some with swimming pools and tennis courts. Clean air. There’s electricity there.

Black South Africans look up to the ANC and say: “We definitely don’t expect our position to continue like this forever. We want change. And we expect that . . . liberation will bring those changes.”

They have massive expectations. But it must be the duty of the democratic government, together with the private sector and all who are involved in the economy, to meet these expectations.

Q: To what degree does the ANC part company with its ally, the South African Communist Party, on the future economy?

A: The ANC’s perspective is that of a mixed economy, where there is a public sector and private sector and other types of economic organization, not collectives but cooperatives.

The ANC and the SACP have got an alliance now . . . (based) on a common issue and an understanding about the immediate post-apartheid face of South Africa. But . . . the SACP says that the time will come when there will begin to be differences. The SACP wants to create a socialist society in South Africa. The ANC is more committed to a national democratic economy. That will depend on so many factors, but clearly the ANC is not a Socialist Party or a Communist Party. . . .

Q: How big should the public sector be?

A: Perhaps it’s too early to tell. A lot of discussion has to take place. My own opinion is that it is already fairly substantive. . . . It contributes something in the region of 29% to gross national product. . . . . I don’t think one wants to increase that.

But we say that if, as the economy develops, certain aspects are being neglected by the private sector or in which the private sector is not interested . . . the state will have to intervene.

Q: The ANC talks often of redistributing the wealth in South Africa. Does that mean taking wealth away from whites?

A: Our conception of redistribution is related to growth of the economy. Take the example of providing electricity to black townships. Providing more electricity creates jobs, both within the electric company and elsewhere in the production of stoves, electric meters, fridges and bulbs. . . . By meeting the basic need of electricity, you create a multiplier effect and it redistributes.

We have been misunderstood to believe we’re going to take away from somebody. But that’s not fluid, that’s not dynamic. We think growth through redistribution is a better mechanism. So that not only does the private sector benefit, and the ordinary folk who have no jobs benefit, but the broader society benefits.

Q: What about land, though? That’s not something that can grow.

A: It’s not something that can grow, but it’s something that can produce food. A significant percentage of black South Africans want to work on the land, and the way land ownership is structured, it’s obviously racial . . . 87% of the land area is legally white and only 13%--less actually--is black. That has to change.

We need a land reform program that will . . . abolish racial restrictions to land ownership and use . . . and bear in mind the question of food production . . . .

From the economics point of view, we’d like food production not to be forgotten, because people will come to us when they have no food and say, “What’s going on?”

Some of the things we could do, for example, are to have a land tax . . . legal restrictions on the number of acres one person can own or . . . restrictions on absentee landowners.

It will be very difficult to satisfy everyone. There are a lot of compromises that have to be made, but we can’t leave black people wondering: When is liberation coming? These must be compromises that show black people we have made progress.

Q: Does the damage done by several years of international sanctions make your task more difficult?

A: Those sanctions were in the main aimed at getting the apartheid government to change. It is true that in the process it affected industry, agriculture and so on.

There’s no doubt that sanctions have had an impact on the government and the private sector. But most American companies that disinvested sold their businesses to local companies and very few jobs were actually lost. What sanctions did lead to was the continued conglomeration of South Africa, because it was the big companies here that grew.

But the (U.S.) Comprehensive Anti-Apartheid Act actually made a lot of impact on government policy. . . .

The question is: What now? Our view is that sanctions will be maintained for as long as apartheid still exists (or until) the course becomes clearly irreversible.

But already there are many companies in the United States and Britain and West Germany . . . thinking about investment in South Africa. What we are saying to them is you’re welcome to come invest in a post-apartheid South Africa. . . .

Q: What modern-day economic models are you looking at for South Africa?

A: Our problem is that there has not been any country in an apartheid situation. From a theoretical point of view--yes there are theoretical tools you pick up. But they don’t really apply here.

Some comrades are now thinking that Sweden in the ‘30s and ‘40s is something that comes nearer to us. Others argue something else--France in the postwar period, Taiwan, Japan. There’s a whole basket of examples.

Q: Having met business leaders in South Africa, are you more or less hopeful about the future?

A: I think it’s very promising. I think once we engage in these discussions, a lot of energies are unleashed. . . . South Africa has the potential of contributing to development of the (southern African) economy, and that economy will play a competitive role in the world economy.

For example, we’re talking about expansion of some services. South African Airways has major expansion potential in cooperation with airways in the region. . . . If we work out a mutually beneficial program of how we can have a megacarrier in the sub-region, I think we would be going a long way to making our mark on the sub-regional economy.

There’s optimism about success.

Q: For years, the ANC has been studying South Africa’s economy. Hasn’t it been all theoretical up to now?

A: Right, and now it’s practical. But it’s more exciting this way. Having had the theoretical training was very useful, but now we are coming to practicalities. We are thinking: What are the actual, possible things we can do to build a national consensus, so that the next time we see a South African product, we can be proud of it. . . . That would be nice, actually.