of black talent under apartheid.
Nonetheless, there are substantial grounds for fearing that many BEE gains are hollow.
For a start, the commitment of business has been questionable, the government having systematically appeased large-scale capital by making major concessions over BEE targets and compliance in pursuit of economic growth (Tangri and Southall 2008). Second, even leaving aside the suspicion that (an unknown) proportion of deals are the product of politically connected ‘tenderpreneurship’ rather than of Weberian-style enterprise and risk taking, BEE deals have overwhelmingly been funded by debt. This, of course, is far from unusual in merger and acquisitions activity but it has consistently meant that BEE firms have been particularly exposed when they have encountered difficult market conditions, as occurred most notoriously in 1997 (when many black investors fell foul of that year’s plunge in share prices) but more pertinently as a result of the current global crisis, with empowerment analysts reporting that black investors in BEE deals have been left with a huge debt burden, and that the deals are having to be restructured by the banks in order to save them from collapse (Business Report, 6 January 2010). Meanwhile, although criticism of established firms doing major deals only with a small number of ‘usual suspects’ has moved them towards more broadly based shareholdings, the large majority of BEE deals involve South African companies only, with multinational investors holding back: thus in 2009, only four out of twenty BEE deals in the mining sector were initiated by foreign investors (ibid). Two (albeit tentative) conclusions would seem to follow: first, given the perils for black investors of investment on the open market, the advantages of seeking deals with the state which offer political protection from market fluctuations are likely to be enhanced. Second, given the increasing dependence of South Africa upon foreign investment and the increased weight of foreign firms on the JSE, the government may find it necessary to relax further the conditions and implementation of BEE.
Meanwhile, pursuit of black empowerment has exacerbated a growing crisis within the parastatals. For the ANC, the state owned enterprises (SOEs) have a vital role to play in promoting growth and are viewed as key instruments of a ‘developmental state’. Formally, they are governed by boards which, although appointed by the government as the ‘shareholder’, operate at arm’s length and are relatively autonomous from political authority. In practice, the balance between the government setting broad parameters versus intervention for political reasons has proved difficult to achieve. The most notable instance has been the government’s ignoring of advice in the late 1990s that the country needed more power stations, which culminated in a major power crisis in 2008, widespread power shortages and the mining industry having to cut production to work with rationed supply. It is difficult to avoid the conclusion that the welcome upward mobility of blacks within the parastatals has been unduly politicised through the penetration of political influences into what should more properly be internal human resources processes, the suspicion being that who obtains senior positions may influence the allocation of tenders to external actors (Williams 2010).
The outcome has been a parastatal sector which is constantly having to be bailed out with unbudgeted public funding, has earned an unenviable reputation for inefficiency, and is often held hostage to political fortune. Recent indicators have been major controversies around suspensions, dismissals and resignations of CEOs and aspirants to their jobs from most major parastatals, and ferocious battles around their leadership as different factions within the ANC have lobbied hard for the appointment of their favoured candidates to top positions,6 this apparently linked to networks of ‘tenderpreneurship’ geared to securing contracts from state bodies. By early 2010, Transnet, SAA, Eskom, Armscor and a key section of Denel and Saab Aerostructures, were all being led by acting CEOs, with the authority of the new minister of public enterprises, Barbara Hogan, undermined by ANC infighting (Ensor 2010). Such political contestation has inevitably intruded upon long-term strategic planning, with Eskom, for instance, apparently wedded to a business model which, inter alia, is tied to reckless expansion of dirty and dangerous (coal-fired and nuclear) technologies at the cost of engagement with more environmentally friendly alternatives; dangerously compromised by its relationship with Chancellor House (an ANC owned company) which together with Hitachi is contracted to supply generation systems for new coal-fuelled power stations; and has secured approval for price increases to overcome capital shortages which may make South Africa’s electricity among the most expensive in the world (Ashton 2010; Pillay, this volume).
Some parastatals’ functioning may be more performance oriented than is presented by screaming headlines in the media (for example, Wells 2010) but even so, the image of a public enterprise sector that is simultaneously inefficient and expensive makes a nonsense of the government’s commitment to the pursuit of a developmental state and contradicts its own desire to attract foreign investment, promote growth and create jobs.
FRAYING AT THE EDGES? The ANC’s declining control of society
The ANC provided an absolutely necessary condition for the success of South Africa’s ‘reform bargain’: the political legitimacy of the state and government in a country where both had been under bitter attack for decades. Today it continues to have no effective challenger, and in 2009 again demonstrated its capacity to win elections on a playing ground which, whilst tipped in its favour (notably by its access to massive financial resources), nonetheless allows ample scope for opposition party mobilisation. However, there are numerous indications that the ANC’s hegemonic hold over its original liberation constituency is declining: apart from its loss of the Western Cape provincial election to the Democratic Alliance and the decline of its proportion of the vote in all provinces except KwaZulu-Natal, the 2009 elections continued a constant trend whereby the ruling party is still winning elections but with the support of a declining proportion of eligible voters, and its support is increasingly drawn from Africans (Daniel and Southall 2009). As Butler points out below, this is against a background of declining popular trust in key political institutions. The converse is the ANC’s declining capacity to shape and control society. Three aspects are highlighted here: division and dissent within the ruling party itself; the crisis in education; and popular protests at perceived failures in ‘delivery’ by provincial and local government.
Division within the ANC
Butler outlines how the divisions within the ANC which erupted in the ousting of Mbeki as ANC president and the election of Zuma at Polokwane in December 2007 have continued into the Zuma government. Unlike under Mbeki, differences within the party are increasingly open, yet contestation is often ill-mannered, supposed debate about policies is often really about personal and factional advantage, and the party is increasingly riven by struggles for office, patronage and resources, with Zuma balancing one faction off against another while, simultaneously, Xhosas are replaced by Zulus in key locations, notably the intelligence services. So desperate is this struggle that in some provinces and municipalities it is waged with violence, killings and assassination. Reference has already been made to how ANC politics have penetrated the parastatals, but factional struggle has also entered the public service, and various ministries have become host to political networks which seek diversion of public resources to private pockets. As Hoag demonstrates below with regard to a single department, Home Affairs, this administrative disorder results in enervation, fear, corruption and ‘comfortable underperformance’. This endangers projects of institutional reform, and under Zuma, is widely perceived to have rendered the government rudderless. Meanwhile, although labels of right and left are of dubious utility (Julius Malema of the ANC Youth League punts nationalisation of the mines while the South African Communist Party rejects it), Zuma’s opting for broad continuity in fiscal policy under
