In South Africa I see stark evidence of extraordinary income inequalities

Irish Times

10-05-2025

Cape Town
is a cosmopolitan melting pot.
A jumble of creeds, colours and languages, the city is a fusion where it's impossible to define or establish what a true Capetonian 'looks' like. A creation of trading empires – first Portuguese, then Dutch, then British – like most so-called imperial cities, it leans towards liberalism and as much tolerance as might have been possible under apartheid. Its Anglican archbishop,
Desmond Tutu
, acting in partnership with the secular
Nelson Mandela
, came to symbolise the morality of resistance.
Economically, commercial places like this are rule-makers not rule-takers, adjusting and adapting to whatever history throws at them. Ideas come and go, as do power bases, and the nimble, somehow, survive. In the great cycle of economic history, the majority of the incomers were brought by someone else or running away from some despot, as each empire peaked and troughed. The Indonesians, those from Madagascar and Borneo, were brought as slaves by the
Dutch
. The Indians and Malays came as bonded labour – British chattel, in effect. The Huguenots were escaping Catholic France, and some Jewish people saw their chance to flee Romanov Russia.
This long-term observation about how cycles of economics, commerce, migration and ideology impact profoundly the lives of all of us is reinforced in central Cape Town by a largely unnoticed slab of the Berlin Wall. This tatty eight-foot piece of communist concrete symbolised for locals the understanding that the end of apartheid and the end of communism were inextricably linked. In the great game of 1970s and '80s detente, being 'on our side' was enough. The ANC were Moscow's crowd down here, as were most of the African liberation movements, financed and armed by the Kremlin.
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From the archive: The fall of the Berlin Wall led to the rise of Ireland
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On the other side, the Pretoria apartheid regime was used by the Americans as a regional bulwark against Sovietism. As long as there was communism, there would be its despicable antidote, apartheid. And so long as this remained the case, Mandela could rot in Robben Island.
Once the Berlin Wall fell, the Kremlin ran out of roubles and the communist threat disappeared. Only at this stage did
the last president of apartheid South Africa, FW de Klerk
, get the tap on the shoulder from Washington. The game was up for the Afrikaner-dominated apartheid state. Many in the West like to think protests, sanctions and the mass-mobilisation of the anti-apartheid movement was the external catalyst for internal regime-change. It sounds nice, but it isn't accurate. Had the Wall not fallen, the ANC would've remained toxic in America for many more years, and the white South Africans might have clung on for even another decade or more.
The world tipped on its axis in those years between 1989 and 1994, and by the time South Africa beat New Zealand to win the 1995 Rugby World Cup the jig was up. Hastily, America scrambled for a new global ideology that would give liberated Africans a pathway to prosperity, replacing Marx. The Yanks came up with the 'Washington Consensus' a jumble of ideas based loosely around the free movement of money, globalisation and deregulation.
Mandela himself never bought it, but he played the game. The core notion was that poor Africans would provide ample opportunity for rich Western investors to fuse their capital with cheap African labour, making products that could be re-sold in the rich West. Over time, according to the textbook, prosperity would take off as they got our money and boosted their productivity to create Asian-style growth, not just in South Africa but throughout the continent.
Thirty years later, with the world abandoning globalisation, how's this going for Africa? Not great, to be honest. Poverty remains endemic. Recent reports show stagnation. The World Bank warns that real per-capita income is actually 2 per cent below its level of five years ago, and extreme poverty is rising. Economic vulnerabilities like high debt levels are crippling political stability. Coups are a regular reality.
In 2023, nearly half of African nations had debt-to-GDP ratios above 60 per cent, with many spending more government revenue on debt interest than on education or health. It is incredibly expensive to produce anything in parts of Africa where infrastructure is in tatters and, without adequate transport, energy and technology, costs are driven up to 50 per cent
above
the global average, reducing competitiveness.
Energy insecurity compounds risk. Less than half of Africans have reliable access to electricity. Closing Africa's energy gap will require $190 billion annually – about 6 per cent of GDP. Climate-related risks, especially in agriculture – a lifeline for millions – further deepen vulnerabilities. In 2022, climate hazards affected more than 110 million Africans and caused an estimated $8.5 billion in damages.
As a result, 30 years after liberation, democracy and globalisation, there is hardly any manufacturing. The economy of Africa is still chained to digging stuff out of the ground and selling it as primary commodities to the West, where we transform this stuff into consumer goods. Rare earth minerals and mobile phones are a good example. Rare earths are mined in Africa and put into phones that are made in China under American licence while the intellectual property, the real value, is domiciled in Ireland. Who gets the cream? The Irish exchequer not the African country that owns the essential raw materials.
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The old global economic order is dead
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Obviously, this is an extreme example but it brings it all home – so to speak. When you consider that
more than half of the world's babies will be born in sub-Saharan Africa by 2100
by 2100, another 30 years of stagnation is not an option. If it is, these people will move en masse to where they can make a living. Where might that be? Europe, of course.
I am in South Africa on an admittedly high- income gig – a book tour. This in itself is evidence of the extraordinary income inequalities in the country. I'm travelling around a bit. Driving in the rural part of Guateng, the province of Jo'burg, two basic technologies dominate the villages at the side of the road, both of which tell local people that there is a paradise out there somewhere. The cheap mobile phone and the ubiquitous satellite dish give impoverished people a view of a rich and comfortable world.