Business is advised that an important shift is occurring in South Africa, with significantly higher political risk in the short- and medium-term. The vulnerable socio-political trust on which South Africa’s 1994 political settlement was based is disintegrating across the northern part of the country, including its economic heartland centred around Johannesburg.

Inter-group tensions have increased significantly in recent weeks as a result of perceived incitements by the ruling African National Congress (ANC) to ‘shoot and kill’ members of the Afrikaner ethnic group.

In the past months, a new consensus has been forming among Afrikaners of all political persuasions that the ANC government is unable to protect its citizens and that it has adopted an agenda hostile towards minority groups. These views are increasingly shared by members of the English-speaking white community, Asians and Coloureds. It is highly unlikely that the government will be able to gain the trust of northern Afrikaners in the medium term.

Recent triggers

On 3 April 2010, the leader of the influential ANC Youth League, Julius Malema, expressed support for Zimbabwean president Robert Mugabe’s land nationalisation and redistribution policies and their application in South Africa. Whilst in Zimbabwe, Malema defiantly sang an anti-apartheid resistance anthem, Kill the Boer (Kill the Afrikaner / farmer), which was recently ruled unlawful by the High Court of South Africa because of its incitement to violence.

Recently the South African Institute of Race Relations published a report highlighting the concerted efforts of the African National Congress government to nationalize land (republished in SAReporter).  The authors pointed out that the Department of Rural Development and Land Reform had outlined two policy proposals, both effectively transferring agricultural land from private to public ownership.  The first option openly calls for the government to appropriate all productive land and then tenure the property to private citizens.  The second option would envisage a redistribution of available land to farmers as the government saw fit.  Presumably the government would ration land and break-up larger landholdings.

The government justifies state sponsored private property seizure with the argument that agricultural land is a “national asset.”  To-date the South African government has declared that mineral and water resources are “national assets” to be controlled by the government in the “public interest”.   

In the case of agricultural land, the government has been clear on what it defines as the public interest.  In the name of economic transformation, it aims to redistribute farming properties from white citizens to the rural black poor.  By the government’s own estimates, there are roughly 19 million rural poor, the vast majority of whom are black.  There are also estimated to be around 40,000 white farmers remaining in South Africa.  It is impossible to envisage a “transformational” redistribution of privately owned land from 40,000 white farmers to 19 million rural blacks without there being a revolution in the methods of agricultural production.  Effectively, for the South African government’s plan to redistribute land to have any meaningful social impact, there will necessarily be a dramatic reduction in the average farm size in the country. 

Paul Romer, one of America’s most prominent economists has proposed a novel solution to reducing global poverty and providing safer environments to people living in under-developed regions of the world.  His concept is one he calls Charter Cities, new urban environments that, despite being located in poorer regions of the world, would be managed by an advanced economy or group of nations.  These cities would be subject to the foreign law of say Switzerland or Canada rather than that of Cuba or Indonesia.  Professor Romer’s idea was inspired by his cleaning lady.  A Hispanic migrant, she would safely hide-away her earnings in her socks before returning from Romer’s home to one of Chicago’s poverty ridden suburbs.  Romer began thinking about ways to improve the security of his cleaner, a mother with two children.  Further, how could the billions of people worldwide be helped that despite being employed, were living on barely a subsistence wage?  The economic theorist believed the problem was the lack of adequate laws and the failure to enforce them.  Not an easy problem to solve even in Chicago which is well known for corruption and crime.  He believed it would be far easier to introduce better laws and enforce them in new cities where millions, like his cleaning lady, could move to for a better future.

Romer’s Charter Cities would simply require a developing nation provide a piece of unoccupied land sizeable enough for a new city and a city charter to be assumed by a developed nation.  These new cities, he suggests, would have the potential to enjoy the same prosperity that Hong Kong did when it was a colony administered by the British.  As hypothetical examples, Romer notes on his website the possibility of Canada developing a new Hong Kong in Guantanamo Bay, Cuba or a city in northern Australia, under Australian jurisdiction, for Indonesians.  Some, like the new Guantanamo metropolis, would eventually return to Cuban jurisdiction, as Hong Kong returned to China, once the rule of effective law was firmly in place.

With the Finals Draws now determined, the countdown to next year’s soccer World Cup can begin in earnest.  Despite serious initial fears about the event not being able to be held because of organizational difficulties, there is now no doubt that it will take place as scheduled.

President Zuma has asked that South Africans welcome the many visitors with “warm hearts.”  He has also stated, in an interview this month with Danny Jordaan of the Organizing Committee, that the cup “must not leave the continent.”  Given this demand, and ANC policies in South Africa to-date, we can make some calculated guesses as to some of the changes we’re likely to see at the tournament next year to ensure that it is more fair;

The ANC would insist that the Dutch team, popularly known as Oranje, change their nickname to “Colonialist Tigers”

Any white South African player found in the opposing team’s half, will have his citizenship removed.

In the name of equality, goals scored by European teams will be distributed evenly amongst those from Africa .

Any perceived foul upon a South African player will immediately be referred to the Truth and Reconciliation Commission after which South Africa will be awarded a penalty.

Affirmative action will be extended to all teams, requiring that at least half of all teams be comprised of ANC members.

All tournament balls will be redesigned to include an equal number of black and white patches.

In the name of “Land Reform” all teams opposing South Africa must double the size of their penalty boxes.

Given all of that, may the best team win!