How South Africa's poor continue paying for the privileges of the rich

Daily Maverick

24-06-2025

It is South Africa's political-economic structure, its 'relations of power', that need transformation, if the objective is to reverse our shameful poverty, unemployment and inequality. This transformation begins with the rejection of what has shaped the fundamentals of our economy since 1994 – neoliberalism.
The poor continue to be the constant losers regardless of the specific crisis afflicting the economy at any time. Some 20 years ago, for instance, the collapse of the rand against the US dollar, British pound and the EU's euro was offered as part of the explanation why most people were experiencing economic hardship.
Then – as hard as it is to remember or imagine – the opposite happened. The rand began to strengthen, doubling its value against the dollar. But the hardships of most South Africans remained unchanged. Indeed, the very strength of the rand was presented as the cause of growing poverty and unemployment.
Without our predilection for producing remedial plans for every problem, I wonder how many people have ever heard of – or remember – AsgiSA, the Accelerated and Shared Growth Initiative for South Africa, launched in February 2006. The initiative was supposed to introduce policies and interventions to achieve sustainable economic growth of 6%, which would halve poverty and unemployment by 2014.
No sooner was it announced than the global economic gurus, to whom our government is beholden, warned that too much growth was inflationary and then, as now, inflation was presented as a deadly disorder. Interest rates around the world accordingly began increasing to counter the excessive inflationary growth rate. Following this lead, our Reserve Bank claimed that a growth rate of only 4.1% was sustainable if inflation was to be controlled.
Leap into the present and the same pattern persists. South Africa's 2025 Budget shows that only some of the particulars of the pattern have changed. The urgency of economic growth as the means to solving our myriad problems – growth being the only issue on which all members of the GNU agree – was central to the brouhaha over the new national Budget.
All the GNU's 10 members claimed that the interests of the poor were primary in either shaping or opposing the first two versions of the Budget. The third and finally agreed version was supposedly based on the same objective, with creating jobs as the main one.
The finally agreed Budget, however, still left most South Africans the victims of the same macroeconomic policies accepted by all parliamentary political parties since 1994, notwithstanding the occasional rhetoric of some of them.
Under the headline of ' Education and health funding slashed while fuel levy increased ' – despite the appalling state of both education and health – Daily Maverick's Neesa Moodley details the impact of the Budget's austerity impact on additional items such as social grant recipients, the early retirement programme for the public sector, the zero rating of more essential food items, and Home Affairs.
That VAT is the most regressive of all taxes didn't deter the ANC from wanting to impose a 2% VAT increase, or inhibit it from still seeing itself as speaking on behalf of 'our people'. Indeed, the wanted VAT increase caused the SACP such internal conflict that it pledged itself to stand against the ANC in the next national election – the municipal one in 2026. But, hedging its bets, the SACP remains loyal to its alliance with the ANC.
Neoliberalism, with its standard characteristics – austerity, tax rates for the rich that are untouchable unless being reduced, conservative monetary policies, public debt that is unpayable yet remains both permanent and the primary budget line item, growing inequality and dependence on the global 'market' – remains sacrosanct (for those wishing to know more about my understanding of neoliberalism).
There is one standout issue, however, that is permanently free from the austerity cuts and restrictions the government says are unavoidable, if, as it must, it prevents getting into even heavier debt by borrowing money.
The Employment Equity Amendment Bill, the Mineral Resources Bill, the R100-billion Transformation Fund and the legally binding BEE legal sector code for the greatly enhanced involvement of black (ie African) lawyers are current examples of this exemption. 'SA is busy intensifying BEE', as the former editor of Business Maverick, Tim Cohen, noted in February 2025.
He considered this intensification to be the movement from BEE's first wave to its second and third waves. A commitment to this intensification was a central theme of President Cyril Ramaphosa's keynote address at the Black Business Council's (BBC) Annual Conference on 5 June 2025.
'Transformation', apart from being a constitutional mandate as Ramaphosa reminded the BBC, remains legitimised by its claim to be designed to help 'our people' by the imperative of reducing poverty and unemployment.
Transformation rich in reassuring rhetoric
The reality is less righteous. It is the African rich who feed off the in-your-face African poverty as the rationale for still more measures to promote their wealth. Then-President Thabo Mbeki, rather than feeling the need to camouflage this reality, made it the key theme of his address to the Black Management Forum's annual conference in December 1999. He declared:
'I will speak only to the question of the challenge of the formation of a black capitalist class, a black bourgeoisie'.
Despite such frankness, he still felt the need for euphemism. The implicitly all-inclusive 'black bourgeoisie' being one such euphemism.
Yet only some five months earlier, the ANC had reaffirmed, at its 50th Annual Conference, that it had a much narrower understanding of who was black. In practice, as well as selected public use, it meant Africans in particular (Thesis 8 of the National Question in South Africa). This dual meaning of black has become sufficiently common for people to clarify their meaning when black is not used generically to include everyone who isn't white. Hence the term black African.
President Ramaphosa's response to the question put to him in Parliament on 27 May 2025 by the leader of the Freedom Front Plus, Corné Mulder, is among the clearest and most comprehensive analyses demonstrating that the Budget was not alone in omitting the needs of poor Africans. Transformation does the same, despite the trillions of rands their poverty legitimises when spent on the creation, consolidation and expansion of the African bourgeoisie.
Ramaphosa merits quoting at some length. Although himself using the formula 'black people in general and Africans in particular' in 2017, and, more especially when presenting the ANC's President's Political Report in 2022, he reverted to the more inclusive 'black people' in his answer to Mulder's 2025 Parliamentary question (as he frequently did in his aforementioned address to the BBC, in June 2025):
'I am rather surprised and taken aback when I hear that policies of black economic empowerment militate against the growth of our economy. That, I find quite surprising because I work from the starting point that our economy was held back over many years by the racist policies of the past.
'Black people were brought in as hewers of wood and drawers of water and they were just brought in as labourers. They were not even seen as consumers. They were not seen as active players in the economic landscape of our country.'
The reality of apartheid, including the wholesale exclusion of black South Africans from the economy, could not be forgotten, as if it were merely 'a bad dream', Ramaphosa reminded Mulder:
'So I am really baffled, I am baffled by people who still hanker for policies of the past and to have you, Sir, say black economic empowerment is holding our economy back.'
Ramaphosa was particularly incensed by the accusation that transformation was the major impediment to achieving the reduction of poverty and unemployment. All his GNU member parties agreed that cutting poverty and unemployment was the sine qua non for the way forward. They further agreed that this couldn't be achieved without economic growth. For him, there is no inconsistency between growth and 'black' wealth:
'Why can't black people be made to own productive aspects of our economy, why can't they be rich as well?'
He claimed that both the World Bank and IMF had, in separate reports, agreed with him. Ramaphosa said that both institutions had identified an excessively over-concentrated economy as the roadblock to growth. Ramaphosa's still-intact apartheid mindset selectively equated this unhealthy concentration as being the continuation of apartheid, where the white minority enjoyed state protection of their ownership and management of the major sources of wealth.
Given his misunderstanding of 'concentration', he was baffled by the new, sustained and growing fashion of attacking transformation, in both South Africa and the US. His expectation is applause for transformation, for its explicit intention is nothing less than forcing open the bolted doors of white wealth, with the keys still secured in white safes.
His apartheid-cemented mindset made him unable to comprehend that, as used by both the World Bank and International Monetary Fund (and economists more generally), concentration referred to sector/s of an economy dominated by a small number of very large corporations.
These oligopolies, as they are called in standard economics, or monopolies in Marxian terminology, are sufficiently powerful both to set market prices and deter others from becoming competitors. (It seems that some of the established beneficiaries of BEE prefer not having additional competitors created by the continuation of BEE.)
In either case, oligopolies are considered to constrain supposedly free markets, which is why most developed economies, including South Africa, have statutory institutions formally mandated to control such anti-competitive behaviours. Provided they don't take this mandate too seriously. If they do, even our (mostly) toothless Competition Commission is lambasted for 'thwarting growth '.
This, despite the commission's acceptance of the normalisation of anti-competitive behaviour worldwide and the need for South Africa's corporations to be 'competitive' in markets controlled by much larger corporations than South Africa's large ones.
Hence, too, the Treasury's response to pressure from Parliament's Finance Committee to expand the VAT zero-rated food basket. The Treasury explained that zero-rating was a blunt instrument, for it also benefited retailers and distributors who did not pass on the price reductions to consumers. Such additional profiteering was just presented – and accepted – as an unchangeable fact of economies.
Capitalism on neoliberal steroids
The effects of this modern-day economy (which dominates much of the world) go way beyond the austerity cuts and restrictions of South Africa's current Budget. As argued elsewhere, it is the South African form of neoliberalism that creates and reproduces the very poverty, unemployment and inequality the GNU is committed to reversing.
Most of the 187 countries identified by the International Labour Organisation (ILO) in 2020 as austerity-stricken are committed to GDP-measured growth as the antidote to austerity. South Africa, along with the others, sees the antidote as being an injection of foreign capital into their economies.
With the world awash with capital seeking profit-maximising investments – there are about 215 other investment destinations that capital can seek, according to Professor Adrian Saville of the Gordon Institute of Business Science – countries are obliged to be even more 'business-friendly' than their immediate competitors. The World Bank Group's President, Tim Young Kim, alerted governments as far back as 2017 to what this means:
'If the conditions are not right for private investment, we need to work with our partners to de-risk projects, sectors and entire countries.'
'De-risking' means maximising the freedom enjoyed by the capital of would-be investors. In addition to the Competition Commission's (standard) impotence, this is why profit shifting from the Global South continues unabated, despite the $242-trillion known to have been involved for the period 1990-2015 (constant 2010 USD). The global amount is $492-billion per year. A 2022 estimate for South Africa's losses is $329-billion over five decades.
The Dennis Davis Tax Commission of 2022 put South Africa's losses at more than R100-billion. The free movement of capital is taken as given by foreign capital. This is why calls to tax the rich in the world's most unequal society can only but fall on deaf ears. This is why we are expected to celebrate when the export of food increases, while at the same time attacking the government – whether or not it's in a GNU formation – for the worsening unaffordability of food at home.
This – along with a more generalised poverty and despair – is why some of us cry when mothers sell their children, while others applaud when the mothers and their accomplices are given life sentences.
And we know well that the self-imposed restraints on budgets compel even well-meaning governments to increase the cost of petrol, notwithstanding their awareness that this will aggravate hunger and poverty, for the imperative of profit maximising will force businesses to increase their prices.
The way forward?
With the DA still being labelled a 'white' party, it is easy to dismiss their opposition to race-based laws because they oppose transformation that threatens their apartheid privileges. But, apart from such party-political opportunism, there is no reason to doubt the sincerity of Willie Aucamp, the DA spokesperson – or most DA members, for that matter – when, in dismissing the anti-transformation accusation, he added:
'We believe that genuine redress must uplift all South Africans and remove the obstacles that continue to exclude millions from economic participation.'
Given the reality of 'transformation', as Thabo Mbeki's brother, Moeletsi has noted:
'As the ruling party, the ANC had the role of nation-building. Instead, it has adopted policies that benefited only the African elite and alienated everyone else.'
And because this reality is too discomforting for most of the ANC's political leadership and the more specifically business members of the 'black' bourgeoisie, they, too, probably sincerely endorse the sentiments expressed by the ANC's economic transformation subcommittee head, Zuko Godlimpi. Those opposed to transformation, he contended, have
'routinely tried to turn the legal system into their fighting stick against policies aimed at structural transformation. The grammar of this effort changes over time to be about inadequacies of this legislation, but the substance is the same: retain relations of power that privilege the same historically defined group in terms of economic access, employment opportunity, higher education access and overall social upward mobility.'
South Africa's social stability, in his assessment, required nothing less than successful transformation.
Ramaphosa developed these themes during his address to the BBC. While acknowledging that 'black African' households had experienced a 46% increase in real income between 2006 and 2023, the average income of 'white' households still remained nearly five times greater than African ones and, thus, failed to meet the demographics required by the Employment Equity and related acts.
Since the persistence of 'poverty-stricken' Africans in post-apartheid South Africa is the fundamental rationale for African wealth, as expressed as recently as 9 June 2025 by CEO of Business Leadership SA (BLSA) Busisiwe Mavuso, with white-dominated institutions that 'look like outposts of Europe', Ramaphosa's playing with statistics is not surprising.
It is to be expected that he would fail to mention that the 46% increase in African income reflected the huge inequality between the African rich and poor, an inequality that plays a major role in making South Africa the world's most unequal society.
It is, indeed, most probable that he is not able to acknowledge this reality even to himself. Such a denial would be wholly consistent with the disjuncture between reality and his illusions on display in his glowing report to the BBC on health, education and unemployment.
What he and the DA – like all the other parliamentary parties – are most fundamentally not able to accept is that it is South Africa's political-economic structure, its 'relations of power', that need transformation, if the objective is to reverse our shameful poverty, unemployment and inequality. This transformation begins with the rejection of what still remains nameless in Parliament, even though it has shaped the fundamentals of our economy since 1994: neoliberalism (as I've already revealed).
While this first step to the DA's 'genuine' transformation remains beyond Parliamentary thinking, this is unlikely to apply to most of you, the readers of this article. After the experience of 31 years of neoliberal practice, it is a tiny step to guarantee its continued failure – and the consequential growing instability in all its many areas in our society.
This knowledge is powerful. It makes it possible for us to increase in size sufficient for our voices not only to be heard in Parliament, but to be represented in Parliament. DM