The harsh realities about South Africa that the World Bank dare not speak
- Patrick Bond
A great deal of detail about poverty and inequality in South Africa remains unspoken.
Sometimes silences speak volumes.
In his seminal book Stanford University anthropologist James Ferguson criticised the World Banks 1980s understanding of Lesotho as a traditional subsistence peasant society. Apartheids migrant labour system was explicitly ignored by the bank, yet remittances from Basotho workers toiling in mines, factories and farms across the Caledon River accounted for 60% of rural peoples income:
Acknowledging the extent of Lesothos long-standing involvement in the modern capitalist economy of South Africa would not provide a convincing justification for the development agencies to introduce roads, markets and credit.
Using Michel Foucaults discourse theory, Ferguson why some things cannot be named. To do so would violate the banks foundational dogma, that the central problems of poverty can be solved by applying market logic. Yet the most important of Lesothos market relationships exploited labour was what caused so much misery.
Three decades on, not much has changed. Today, the banks main South Africa research team reveals a similar Voldemort problem.
Like the wicked villain whose name Harry Potter dared not utter, some hard-to-hear facts evaporate into pregnant silences within the banks new South African Poverty and Inequality Assessment Discussion Note. Bank staff and consultants are resorting to extreme evasion tactics worthy of Harry, Ron and Hermione.
The banks point of view
From the banks viewpoint:
South Africa spent more than other countries on its social programs, with this expenditure successfully lifting around 3.6 million individuals out of poverty (based on US$2.5 a day on a purchasing power parity basis) and reducing the Gini coefficient from 0.76 to 0.596 in 2011.
This is .
1) Spent more than other countries? Of the worlds 40 largest countries, only four - South Korea, China, Mexico and India - had lower social spending than South Africa, as a share of Gross Domestic Product (GDP).
2) Millions lifted out of poverty? In fact many millions have been pushed down into poverty since 1994. Unmentioned is poverty that can be traced to neoliberal policies such as the failed 1996-2001 plan co-authored by two bank economists. This made South Africa far more vulnerable to global capitalist crises.
The banks South Africa poverty line is $2.5/day, which was R15.75/day (R473/month) in 2011, the date of the last poverty census. In contrast, that food plus survival essentials cost R779/month that year, and the percentage of South Africans below that line was 53%. University of Cape Town economists led by Josh Budlender that StatsSA was too conservative and the ratio of poor South Africans is actually 63%.
For a net 3.6 million people, more than 7% of South Africans, to have been lifted out of poverty is plausible only if the banks much lower R473/month line is used. But by local standards, the number of poor people has soared by around 10 million given the 15 million population rise since 1994.
3) The bank adjusts the Gini Coefficient (measuring income inequality on a 0-to-1 scale) from 0.76 to 0.596 by including state social spending that benefits poor households. But here another silence . The bank dare not calculate pro-corporate subsidies and other state spending that raise rich peoples effective income through capital gains.
Such wealth accruing through rising corporate share prices is enjoyed mainly by richer people when companies benefit from new, state-built infrastructure in their vicinity. Also ignored by the bank, mainly benefit the rich in the same way. South Africas after-tax profits have been among the worlds highest, according to the .
Indeed the Treasurys single biggest fiscal policy choice has been to condone illicit financial flows. These escape through bogus invoicing and other tax avoidance strategies. The Washington NGO Global Financial Integrity they cost South Africa an annual $21 billion from 2004-13, peaking in 2009 at $29 billion. The bank dare not mention these flows or the resulting capital gains enjoyed by South African shareholders.
4) The Bank was most impressed by governments
provision of free basic services (mainly water, sanitation, electricity, and refuse removal), and social protection mainly in the form of social grants, primary health care, education (specifically no-fee paying schools), enhancing access to productive assets by the poor (e.g. housing and land), as well as job creation through the Expanded Public Works Program.
But the bank evades vital details, such as how free basic water was piloted in Durban in 1999 before becoming national policy in 2001. After a tokenistic 6 free kiloliters (kl) per month, the price of the second block of the water within the tariff increased dramatically. Overall by 2004 the price had doubled. , the lowest-income third of households lowered monthly consumption from 22kl to 15kl, while the highest-income third cut back by just 3kl/month, from 35kl to 32kl.
5) Another unmentionable concerns the banks largest-ever project loan: $3.75 billion in 2010 for the corruption-riddled, oft-delayed Medupi coal-fired power plant. Eskoms repayment of that loan plus other financing has the price of electricity to poor people by more than 250% since 2007. But neither the loan, the borrower, the project nor the soaring price of electricity are mentioned. Nor are Eskoms special pricing agreements with BHP Billiton and Anglo that to a tenth as much as poor households pay.
6) The bank applauds a grant that
now reaches 11.7 million children. Grant payments have risen from 2.9% of GDP and now amount to 3.1%.
But a meagre 0.2% of GDP suggests the amounts provided are tokenistic. The child grant of just R340/month is about a third of todays StatsSA after-inflation poverty line.
The South Africans who cannot be named
The bank endorses governments apparently sound policy on redistribution because its researchers cannot grapple with the core problem that best explains why South African capitalism causes poverty and inequality: extreme exploitation systems amplified after apartheid by neoliberal policies. The most cited scholarly research about post-apartheid exploitation is by local political economists like , , and but the bank dare not reference these books.
To truly tackle poverty and inequality, only one force in society has unequivocally succeeded since 1994. That force is the social activist. Their successes include raising life expectancy from 52 to 62 over the past decade, reversing municipal services privatisation, cutting pollution and raising apartheid wages. But the organisations responsible such as the Treatment Action Campaign, Anti-Privatisation Forum, South Durban Community Environmental Alliance and trade unions are also, from the banks viewpoint, South Africans who cannot be named.
, Professor of Political Economy, .This article was originally published on . Read the .