South Africa’s economic growth strategy needs a US makeover, not an Asian one – Moeletsi Mbeki

Asia’s economic success stories have been extensively documented in numerous books, attracting a steady stream of visitors to countries like China, Singapore, Vietnam, and South Korea who seek to witness their remarkable growth. This prompts the question: What lessons can Africa learn from these experiences, and who should serve as an inspiration? Political analyst, Moeletsi, presents a fresh perspective, suggesting that South Africa should redirect its focus away from the East and instead look to the New World, particularly the United States that we should emulate. In an interview with BizNews, Mbeki draws parallels between the American experience and South Africa’s emphasising the need for South Africa to break free from its neo-colonial economic structure imposed by the British, which heavily relies on the export of raw materials. He says that the big mining companies show little interest in beneficiation, instead focusing on excavation and calls for a revolutionary shift to proper industrialisation which includes a fundamental overhaul of South Africa’s education system. – Linda van Tilburg

Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.

Watch here

Relevant timestamps from the interview

  • 00:09 – Introductions
  • 01:04 – On comparisons between Asian countries like South Korea and South Africa
  • 05:44 – On the United States being the example that SA should follow
  • 08:18 – Where did the success story diverge between South Africa and the USA
  • 14:03 – On the colonial hold on our economy
  • 16:31 – On how do we break that hold of the new a colonial economy on South Africa
  • 22:07 – Do we have the capability to establish proper industrialization or beneficiation
  • 24:36 – Conclusions

Listen here

Excerpts from the interview

It is not helpful to look at Asian countries, they have a different history

Asian countries have a very different modern history, from that of South Africa. So, it’s not very helpful to look at what’s going on in East Asia and then say South Africa should do the same thing because our circumstances are very different. By modern history, I’m talking about the last 500 years since Columbus’s journey to the Americas, because that’s when the modern world started. 

The characteristic of the new world countries was the transfer of populations from Europe to the New World, a free population from Europe to the New World and the transfer of an enslaved population from Africa to the New World. That’s what distinguishes the New World from the rest of the world. So, when we are looking at comparisons between different parts of the world, you have to compare like with like. In East Asia, there was no transfer of populations from Europe to Asia and to East Asia. There was no transfer of African slaves to East Asia. That had a huge impact on the development of these countries over the last 500 years. The most prominent member of the New World is, of course, the United States, which was a British colony where people were transferred from Britain to set up colonies in what is today the United States and they were controlled by the Kingdom of England and their economy was designed from England. 

Read more: Transnet’s arch critic heralds its Durban Port’s Filipino partner as “best in world”

US and South African economies were established to meet British demands 

The United States and South Africa are very similar. We had slaves transferred from Africa. In fact, the first group of slaves that Van Riebeeck, the Dutch founder of South Africa, if you wish, were children, which he captured from a Portuguese ship going to Brazil, and they were amongst the first slaves and then there were slaves brought in from Java and Bengal and then from Madagascar, from Mozambique. That was slavery and that’s how South Africa was established and new crops were brought into South Africa from Holland like grapes, for example, apples, and wheat. These were crops that were not there in South Africa before. The United States had the same thing. They had slaves transferred from Africa to the United States and they grew tobacco and they grew cotton and all sorts of crops that were required by England. So, they were made to grow those crops and to supply those crops, especially cotton, became the foundation of the industrial revolution in England and it spread to the rest of all of Europe. But the cotton was grown by African slaves who were driven by white slave owners who were the British people, who were sent to colonise the Americas in the same way that the Dutch drove the slaves in South Africa and then the British took over in 1795 and took over South Africa. So, both the United States and South Africa were British colonies, and their economies were established to meet British demands and to satisfy the economies of Britain, not to satisfy the economies of those countries.

South Africa has not begun to dismantle the colonial economy that the British set up

We have our independence although we lost all the wars against Britain, we have independence of sorts but the colonial economy that the British put in place is still in place, which was an economy to exploit the mineral resources and sell the raw materials to Britain in the first instance, and then, of course, to the rest of the world. Why the United States is a role model is that it dismantled the colonial economy that the British had set up in America, which was exporting raw materials and slave labour or cheap labour. We still have a raw material-based economy exporting minerals based on cheap labour. Okay, they are not slaves, but they are called migrant workers in the case of South Africa. So, that is where we still have to go. We still have to overcome the colonial economic system that we inherited. It’s a very tough call, as you know, in the Civil War in the United States, more than 600,000 people were killed to dismantle the colonial economy in that war and Abraham Lincoln himself eventually got assassinated. So, we in South Africa have not even begun to dismantle the colonial economy that Britain set up in South Africa. That’s why the United States is a role model for us. Until we do that, we will continue with the levels of poverty that we have, and the levels of unemployment at 40% that we are sitting with because the raw material export economy benefits the colonial importer.

Read more: NHI debate: PPP model that works for 250m Indonesians – template for SA?

Big mining companies are not interested in the beneficiation of South African minerals

Well, the people who own the minerals of South Africa at the end a big part of them are the foreign investors and a big part of them come through the London Stock Exchange. So, they are not interested in the beneficiation of these minerals. They want to export raw diamonds, they want to export raw chrome, and they want to exploit raw iron ore. They are exporting iron ore and we have, for example, Anglo American Corporation which was set up by Ernest Oppenheimer. It started, ironically, in South Africa but today it is a British company. They are exporting iron ore instead of beneficiation.. If I can give you an example of Sweden. Sweden has very rich iron ore deposits but Sweden does not export iron ore. It exports what is called iron pellets, which are beneficiated iron ore with very high iron content. South Africa exports raw iron ore. You just dig up the soil and you can see it as red stones, put them on the train and then put them on the ship and then export them. Sweden doesn’t do that. Sweden exports iron pellets. Interestingly South Africa used to import iron pellets from Australia for a steel industry that we had in Saldanha. So, in Saldanha, you would get iron ore being exported to the rest of the world and then we import beneficiated iron pellets from Australia for our steel mills. So, that’s what we have in South Africa is actually what I would call a neo-colonial economy, which depends on the export of raw materials. 

Political will and changes in education systems are needed for industrialisation of the economy

 Well, at the heart of beneficiation are two things, political change and political will, which we don’t have at the moment. The second part is, of course, the human capital. You have to have the people with the skills to be able to beneficiate because you need higher and higher technology as you beneficiate your raw material, you need more and more skilled people. We don’t have that at the moment. So, political change will also have to be designed for our education system. Our education system today in South Africa is very focused on high-end academics. But, to industrialise the economy, you need a whole spectrum of skills, not just the top end of PhDs. You need a whole lot of other people who should be skilled on the assembly lines or in the manufacturing of components etc. So, that is the other thing that has to change in South Africa. So, you can see when I say South Africa needs a revolution, there are so many entrenched layers who benefit from the status quo. For example, if you look at our largest teachers union, the South African Democratic Teachers Union. They practically control the school’s education system to the benefit of the teachers, not of the children, let alone of the country. Now, those people are going to fight against the change and they have allies. The ANC is one of their biggest allies, So, they will fight against the change. So, you can see why to be able to industrialise a country like South Africa – that’s why the United States is a role model for us. It’s because they had to fight those forces in their country who are against the industrialisation of the country. 

Read also: