Economic history of South Africa
Encyclopedia
Prior to the arrival of Europe
an settlers in the 15th century the economy of what was to become South Africa
was dominated by subsistence farming and hunting.
In the north, central and east of the country tribes of Bantu peoples occupied land on a communal basis under tribal chiefdoms. It was an overwhelmingly pastoral economy and wealth was measured in the number of cattle men held. Population growth had created a land pressure that had seen the tribes move steadily from the origins in central east Africa.
In the southern and western parts of the country, San (Bushmen
) peoples led nomadic lives based on hunting and the Khoikhoi
(Hottentots) peoples led a pastoral existence.
in the far south west of the country. It was not originally planned as a colony but as a refreshment station. Malnutrition, especially scurvy
, a vitamin C
deficiency arising from a lack of fresh fruit and vegetables, was a problem for the ships of the Dutch East India Company
that were plying trade between the Netherlands
and the Dutch East Indies
, modern Indonesia
.
To deal with the problems, the Company established a garden at the foot of Table Mountain
and bartered cattle from the Khoikhoi to supply to passing ships.
However, the arrival of permanent European settlers triggered profound change. The Europeans decimated the San driving them to the Kalahari Desert
region and virtually destroyed the Khoikhoi people as a struggle for land commenced. The Khoikhoi became farm workers and their identity merged with other groups.
Land hunger led to wars between the Bantu as the settlers migrated eastwards from the original settlement in Cape Town.
Between the wars, commerce developed between the settlers and the indigenous peoples. Sales of produce and stock saw the development of a black, landed peasantry.
as artisans. Their skills have contributed to the clothing being a major industry in the Cape today. There were other waves of migration from Europe. Persecuted Huguenots from France turned their hands to wine
production and Germans and British grew the nascent industrial base and developed modern farming methods.
The province of Natal
, a British colony was found suitable for sugar
production but the local Zulu tribes could not be attracted as cane cutters. Indentured labour was brought from India. The descendants of these labourers play an active role in commerce and industry today.
The European migrants diverged: the Continental Europeans merged to speak a Dutch-derived language, Afrikaans
, and the English continued to speak English which became the language of commerce. This dichotomy was also seen in the economy, as Afrikaners were mainly farmers while English-speaking South Africans were drawn to commerce and industry.
s formed two independent inland republics, the Zuid Afrikaanse Republiek (ZAR) and the Oranje Vrystaat (Orange Free State). On the coast the British occupied the Cape Colony and Natal.
The discovery of diamonds in the Cape Province in 1866 the discovery of gold twenty years later on the Witwatersrand
in the ZAR transformed the economy and attracted considerable foreign interest. The subsequent diamond and gold rush
es saw further migrations of a range of nationalities including Cornish miners and eastern European Jews amongst others.
The British invaded the Freestate and ZAR and brought them under British control uniting the four provinces in the Union of South Africa
in 1910.
But perhaps the greatest impact was the influx of international capital to finance the mining operations, including the arrival of Cecil John Rhodes
who formed the De Beers
Company and Anglo-American.
This was the start of a migratory labour system in which black men travelled to the mines to work leaving their families in the tribal areas.
The supply of labour became more than sufficient and the mining companies formed a buying cartel through their association, the Chamber of Mines. This enabled them to create a monopsony
(market conditions where there is only one buyer) that suppressed wages. The mines also attracted labour from neighbouring countries such as Rhodesia
(now Zambia
and Zimbabwe
), Nyasaland
(now Malawi
) and Mozambique
(that was then a Portuguese colony) that kept wages down.
.
The Rand Rebellion
was crushed with what was an early use of air power and some white miners were dispatched to the gallows
. Those sentenced to hang were said to have gone to the gallows quoting Karl Marx and Friedrich Engels's Communist Manifesto, saying, "Workers of the world unite", but instead of adding "You have nothing to lose but your chains", the condemned miners added, "for a white South Africa".
and the forced sale and consolidation of farms led to many being forced off the land. What were described as 'Poor Whites', almost exclusively of Afrikaner origin, flooded to the towns competing with blacks for jobs on the mines.
This was the period of the global Great Depression
so all sections of the community were in fact impoverished but special attention was paid to white poverty.
The Carnegie Corporation founded by Scots-born, American philanthropist Andrew Carnegie
, conducted a study into white poverty that was published as the report of the Commission on the Poor White Problem in South Africa in 1932.
It led to the alleviation of white poverty but to some it also laid the foundations for the formalised system of racial discrimination against blacks that became known as apartheid.
Blacks had no vote and the whites used their political power to force the mining companies to protect skilled jobs for whites.
and the railways, which reserved even low skilled jobs for whites.
The 1930s and 1940s saw the rapid industrialisation
of the country as it supplied the mining industry and the government invested in major projects to protect white employment. South Africa not only had gold
and diamond
s but vast quantities of iron
, coal
and many other minerals. Agriculture
diminished in importance as mining
and then industry
grew.
While English-speaking South Africans dominated industrial and commercial life Afrikaners banded together in mutual financial organisations that in due course were to be become major players in that sector of the economy.
In the two decades following the rise to power of the National Party
, whites (particularly Afrikaners) were given an advantage over all other ethnic groups in South Africa through the manipulation of the labour market. During the Fifties, the income hierarchy in South Africa was essentially a racial one, with well-paid employment monopolized by Whites (almost all of whom were reasonably remunerated), Coloureds and Indians in middling class positions, and Black Africans at the bottom. As noted by one historian,
“Full employment, in combination with labour controls, limitations on the free movement and employment of non-whites, and the use of colour bars at company level, contributed to high levels of disposable income for the white population”.
English-speaking South Africans had participated in the discrimination that preceded apartheid, and tacitly supported the legislation
while paying lip service to opposing the laws. By so doing apartheid managed to create a system in which black people were pushed to the margins of their land through the imposition of the Land Act of 1913. Repercussions of this act are still felt today; many blacks are unskilled, illiterate, and have low living standards. Their schooling system, the Bantu languages
education, was based on the notion that black people cannot progress in scientific subjects, and has resulted in many being excluded from such jobs.
of labour purchase for the mines that kept wages low and outlawed trade unions, the English-speaking mining companies tolerated job reservation that prevented blacks from developing skills.
Over time the mining companies introduced changes to lower their costs but the alliance with the government continued.
White trade unionism was allowed but there were no black trade unions until the 1970s when black workers began flexing their economic muscles and, through the trade unions, promoting political change.
on the country began economic pressure that saw the unravelling of apartheid. There were oil
sanctions but South Africa continued to be able to buy oil on international markets and developed technology that allowed the conversion of coal into oil. A small gas field was discovered off the coast of the Cape
.
But the most damaging isolation was the denial of investment funds and the boycott
of South African investments particularly by influential universities and foundations in the United States.
Ironically during the 1980s gold reached its highest price as a result of international tensions reaping huge profits for the mining company conglomerates
. However, because of currency restrictions they were unable to invest abroad. The result was that they used their surplus funds to buy up businesses in virtually every activity in the economy.
However, the financial benefit for the mining companies of continuing to support the system eroded as international capital stopped flowing into the country.
recognised the economic unsustainability of the apartheid system and released Nelson Mandela
the black nationalist leader and unbanned the African National Congress
(ANC) that Mandela led.
Despite some fears that the country could become unmanageable because of tribal conflict or even a military take over by the white-dominated armed forces de Klerk and Mandela guided the country to democratic elections in 1994 with Mandela as president.
Despite socialist rhetoric and support from socialist countries in its early years the ANC maintained the mixed economy and encouraged the market economy including relaxing foreign exchange controls
.
In January 1991, SACP
general secretary Joe Slovo
, DP
Finance Spokesman Harry Schwarz
and Deputy Finance Minister Org Marais, debated the state's role in a post-apartheid economy, in an historic debate organized by the Institute for a Democratic Alternative for South Africa.
, education
and health
to blacks for whom these services had seriously lagged behind in the apartheid years.
The ANC also initiated a system of “black empowerment” that favoured black employment and required the transfer of some of the white owned businesses including mining companies to black ownership.
The slow legal and bureaucratic process of restitution is causing impatience among blacks and concern among white farmers that South Africa may go down the route of neighbouring Zimbabwe
where land is being unilaterally seized by the government and its supporters.
infrastructure.
This has served the country well in the post apartheid years, as has a sophisticated financial system that is allowing South Africa to provide services to the rest of Africa that it was prevented from doing under apartheid.
South Africa punches above its weight internationally. Foreign investment has flowed from South Africa around the globe: several major companies including Anglo-American, Old Mutual
and South African Breweries
are now listed on the London Stock Exchange
.
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an settlers in the 15th century the economy of what was to become South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
was dominated by subsistence farming and hunting.
In the north, central and east of the country tribes of Bantu peoples occupied land on a communal basis under tribal chiefdoms. It was an overwhelmingly pastoral economy and wealth was measured in the number of cattle men held. Population growth had created a land pressure that had seen the tribes move steadily from the origins in central east Africa.
In the southern and western parts of the country, San (Bushmen
Bushmen
The indigenous people of Southern Africa, whose territory spans most areas of South Africa, Zimbabwe, Lesotho, Mozambique, Swaziland, Botswana, Namibia, and Angola, are variously referred to as Bushmen, San, Sho, Barwa, Kung, or Khwe...
) peoples led nomadic lives based on hunting and the Khoikhoi
Khoikhoi
The Khoikhoi or Khoi, in standardised Khoekhoe/Nama orthography spelled Khoekhoe, are a historical division of the Khoisan ethnic group, the native people of southwestern Africa, closely related to the Bushmen . They had lived in southern Africa since the 5th century AD...
(Hottentots) peoples led a pastoral existence.
European Settlement
In 1652 a permanent European settlement was established in Cape TownCape Town
Cape Town is the second-most populous city in South Africa, and the provincial capital and primate city of the Western Cape. As the seat of the National Parliament, it is also the legislative capital of the country. It forms part of the City of Cape Town metropolitan municipality...
in the far south west of the country. It was not originally planned as a colony but as a refreshment station. Malnutrition, especially scurvy
Scurvy
Scurvy is a disease resulting from a deficiency of vitamin C, which is required for the synthesis of collagen in humans. The chemical name for vitamin C, ascorbic acid, is derived from the Latin name of scurvy, scorbutus, which also provides the adjective scorbutic...
, a vitamin C
Vitamin C
Vitamin C or L-ascorbic acid or L-ascorbate is an essential nutrient for humans and certain other animal species. In living organisms ascorbate acts as an antioxidant by protecting the body against oxidative stress...
deficiency arising from a lack of fresh fruit and vegetables, was a problem for the ships of the Dutch East India Company
Dutch East India Company
The Dutch East India Company was a chartered company established in 1602, when the States-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia...
that were plying trade between the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
and the Dutch East Indies
Dutch East Indies
The Dutch East Indies was a Dutch colony that became modern Indonesia following World War II. It was formed from the nationalised colonies of the Dutch East India Company, which came under the administration of the Netherlands government in 1800....
, modern Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
.
To deal with the problems, the Company established a garden at the foot of Table Mountain
Table Mountain
Table Mountain is a flat-topped mountain forming a prominent landmark overlooking the city of Cape Town in South Africa, and is featured in the flag of Cape Town and other local government insignia. It is a significant tourist attraction, with many visitors using the cableway or hiking to the top...
and bartered cattle from the Khoikhoi to supply to passing ships.
However, the arrival of permanent European settlers triggered profound change. The Europeans decimated the San driving them to the Kalahari Desert
Kalahari Desert
The Kalahari Desert is a large semi-arid sandy savannah in Southern Africa extending , covering much of Botswana and parts of Namibia and South Africa, as semi-desert, with huge tracts of excellent grazing after good rains. The Kalahari supports more animals and plants than a true desert...
region and virtually destroyed the Khoikhoi people as a struggle for land commenced. The Khoikhoi became farm workers and their identity merged with other groups.
Land hunger led to wars between the Bantu as the settlers migrated eastwards from the original settlement in Cape Town.
Between the wars, commerce developed between the settlers and the indigenous peoples. Sales of produce and stock saw the development of a black, landed peasantry.
Immigrant Skills
The Europeans meanwhile imported slaves from MalayaMalay Peninsula
The Malay Peninsula or Thai-Malay Peninsula is a peninsula in Southeast Asia. The land mass runs approximately north-south and, at its terminus, is the southern-most point of the Asian mainland...
as artisans. Their skills have contributed to the clothing being a major industry in the Cape today. There were other waves of migration from Europe. Persecuted Huguenots from France turned their hands to wine
Wine
Wine is an alcoholic beverage, made of fermented fruit juice, usually from grapes. The natural chemical balance of grapes lets them ferment without the addition of sugars, acids, enzymes, or other nutrients. Grape wine is produced by fermenting crushed grapes using various types of yeast. Yeast...
production and Germans and British grew the nascent industrial base and developed modern farming methods.
The province of Natal
Colony of Natal
The Colony of Natal was a British colony in south-eastern Africa. It was proclaimed a British colony on May 4, 1843 after the British government had annexed the Boer Republic of Natalia, and on 31 May 1910 combined with three other colonies to form the Union of South Africa, as one of its...
, a British colony was found suitable for sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
production but the local Zulu tribes could not be attracted as cane cutters. Indentured labour was brought from India. The descendants of these labourers play an active role in commerce and industry today.
The European migrants diverged: the Continental Europeans merged to speak a Dutch-derived language, Afrikaans
Afrikaans
Afrikaans is a West Germanic language, spoken natively in South Africa and Namibia. It is a daughter language of Dutch, originating in its 17th century dialects, collectively referred to as Cape Dutch .Afrikaans is a daughter language of Dutch; see , , , , , .Afrikaans was historically called Cape...
, and the English continued to speak English which became the language of commerce. This dichotomy was also seen in the economy, as Afrikaners were mainly farmers while English-speaking South Africans were drawn to commerce and industry.
Boer Republics
The AfrikanerAfrikaner
Afrikaners are an ethnic group in Southern Africa descended from almost equal numbers of Dutch, French and German settlers whose native tongue is Afrikaans: a Germanic language which derives primarily from 17th century Dutch, and a variety of other languages.-Related ethno-linguistic groups:The...
s formed two independent inland republics, the Zuid Afrikaanse Republiek (ZAR) and the Oranje Vrystaat (Orange Free State). On the coast the British occupied the Cape Colony and Natal.
The discovery of diamonds in the Cape Province in 1866 the discovery of gold twenty years later on the Witwatersrand
Witwatersrand
The Witwatersrand is a low, sedimentary range of hills, at an elevation of 1700–1800 metres above sea-level, which runs in an east-west direction through Gauteng in South Africa. The word in Afrikaans means "the ridge of white waters". Geologically it is complex, but the principal formations...
in the ZAR transformed the economy and attracted considerable foreign interest. The subsequent diamond and gold rush
Gold rush
A gold rush is a period of feverish migration of workers to an area that has had a dramatic discovery of gold. Major gold rushes took place in the 19th century in Australia, Brazil, Canada, South Africa, and the United States, while smaller gold rushes took place elsewhere.In the 19th and early...
es saw further migrations of a range of nationalities including Cornish miners and eastern European Jews amongst others.
The British invaded the Freestate and ZAR and brought them under British control uniting the four provinces in the Union of South Africa
Union of South Africa
The Union of South Africa is the historic predecessor to the present-day Republic of South Africa. It came into being on 31 May 1910 with the unification of the previously separate colonies of the Cape, Natal, Transvaal and the Orange Free State...
in 1910.
But perhaps the greatest impact was the influx of international capital to finance the mining operations, including the arrival of Cecil John Rhodes
Cecil John Rhodes
Cecil John Rhodes PC, DCL was an English-born South African businessman, mining magnate, and politician. He was the founder of the diamond company De Beers, which today markets 40% of the world's rough diamonds and at one time marketed 90%...
who formed the De Beers
De Beers
De Beers is a family of companies that dominate the diamond, diamond mining, diamond trading and industrial diamond manufacturing sectors. De Beers is active in every category of industrial diamond mining: open-pit, underground, large-scale alluvial, coastal and deep sea...
Company and Anglo-American.
Migrant Labour
The indigenous people had little taste for the mining economy and this led to a shortage of labour on the mines. In a measure to force labour to the mines, Rhodes, who had turned from forming the De Beers Company to politics, secured the passing of the Glen Grey Act in 1894. The Act obliged the payment of tax with the specific aim of forcing peasant farmers, who were not part of the money economy, to find work that paid money in order to pay the taxes. The Act was a deliberate move by Rhodes to force labour to the mines.This was the start of a migratory labour system in which black men travelled to the mines to work leaving their families in the tribal areas.
The supply of labour became more than sufficient and the mining companies formed a buying cartel through their association, the Chamber of Mines. This enabled them to create a monopsony
Monopsony
In economics, a monopsony is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers...
(market conditions where there is only one buyer) that suppressed wages. The mines also attracted labour from neighbouring countries such as Rhodesia
Rhodesia
Rhodesia , officially the Republic of Rhodesia from 1970, was an unrecognised state located in southern Africa that existed between 1965 and 1979 following its Unilateral Declaration of Independence from the United Kingdom on 11 November 1965...
(now Zambia
Zambia
Zambia , officially the Republic of Zambia, is a landlocked country in Southern Africa. The neighbouring countries are the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana and Namibia to the south, and Angola to the west....
and Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
), Nyasaland
Nyasaland
Nyasaland or the Nyasaland Protectorate, was a British protectorate located in Africa, which was established in 1907 when the former British Central Africa Protectorate changed its name. Since 1964, it has been known as Malawi....
(now Malawi
Malawi
The Republic of Malawi is a landlocked country in southeast Africa that was formerly known as Nyasaland. It is bordered by Zambia to the northwest, Tanzania to the northeast, and Mozambique on the east, south and west. The country is separated from Tanzania and Mozambique by Lake Malawi. Its size...
) and Mozambique
Mozambique
Mozambique, officially the Republic of Mozambique , is a country in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west and Swaziland and South Africa to the southwest...
(that was then a Portuguese colony) that kept wages down.
Rand Rebellion
South African gold mines are deep and expensive to run and the mine companies endeavoured to keep costs down. However, in trying to train blacks for skilled jobs, they ran into conflict with white miners. Such was the resistance of the whites that it triggered a rebellion in 1922 in the area around the centre of gold mining: the WitwatersrandWitwatersrand
The Witwatersrand is a low, sedimentary range of hills, at an elevation of 1700–1800 metres above sea-level, which runs in an east-west direction through Gauteng in South Africa. The word in Afrikaans means "the ridge of white waters". Geologically it is complex, but the principal formations...
.
The Rand Rebellion
Rand Rebellion
The Rand Rebellion was an armed uprising of white miners in the Witwatersrand region of South Africa, in March 1922, sparked off by their intensified exploitation by their employers. Jimmy Green, a prominent politician in the Labour Party, was one of the leaders of the strike...
was crushed with what was an early use of air power and some white miners were dispatched to the gallows
Gallows
A gallows is a frame, typically wooden, used for execution by hanging, or by means to torture before execution, as was used when being hanged, drawn and quartered...
. Those sentenced to hang were said to have gone to the gallows quoting Karl Marx and Friedrich Engels's Communist Manifesto, saying, "Workers of the world unite", but instead of adding "You have nothing to lose but your chains", the condemned miners added, "for a white South Africa".
'Poor Whites'
Among the white population there were many sharecroppers, tenant farmers who shared their crops with their landlord in lieu of rent. DroughtDrought
A drought is an extended period of months or years when a region notes a deficiency in its water supply. Generally, this occurs when a region receives consistently below average precipitation. It can have a substantial impact on the ecosystem and agriculture of the affected region...
and the forced sale and consolidation of farms led to many being forced off the land. What were described as 'Poor Whites', almost exclusively of Afrikaner origin, flooded to the towns competing with blacks for jobs on the mines.
This was the period of the global Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
so all sections of the community were in fact impoverished but special attention was paid to white poverty.
The Carnegie Corporation founded by Scots-born, American philanthropist Andrew Carnegie
Andrew Carnegie
Andrew Carnegie was a Scottish-American industrialist, businessman, and entrepreneur who led the enormous expansion of the American steel industry in the late 19th century...
, conducted a study into white poverty that was published as the report of the Commission on the Poor White Problem in South Africa in 1932.
It led to the alleviation of white poverty but to some it also laid the foundations for the formalised system of racial discrimination against blacks that became known as apartheid.
Blacks had no vote and the whites used their political power to force the mining companies to protect skilled jobs for whites.
Labour-Afrikaner Nationalist Unity
From the late 1920s whites elected governments that united white labour and Afrikaner Nationalism that used sanctions such as denying government contracts, against businesses that did not employ people who spoke Afrikaans. Nationalised industries were established, like steelSteel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
and the railways, which reserved even low skilled jobs for whites.
The 1930s and 1940s saw the rapid industrialisation
Industrialisation
Industrialization is the process of social and economic change that transforms a human group from an agrarian society into an industrial one...
of the country as it supplied the mining industry and the government invested in major projects to protect white employment. South Africa not only had gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and diamond
Diamond
In mineralogy, diamond is an allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is less stable than graphite, but the conversion rate from diamond to graphite is negligible at ambient conditions...
s but vast quantities of iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
, coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
and many other minerals. Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
diminished in importance as mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
and then industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
grew.
While English-speaking South Africans dominated industrial and commercial life Afrikaners banded together in mutual financial organisations that in due course were to be become major players in that sector of the economy.
Apartheid
In 1948, a government was elected (by the whites alone) that introduced the policy of Apartheid (segregation) that was ostensibly to allow different racial groups to progress in their separate areas. In practice, Apartheid legislated racial division that confirmed white economic and political superiority and ensured that blacks were maintained in subservient positions.In the two decades following the rise to power of the National Party
National Party
-Active parties:-Former parties:...
, whites (particularly Afrikaners) were given an advantage over all other ethnic groups in South Africa through the manipulation of the labour market. During the Fifties, the income hierarchy in South Africa was essentially a racial one, with well-paid employment monopolized by Whites (almost all of whom were reasonably remunerated), Coloureds and Indians in middling class positions, and Black Africans at the bottom. As noted by one historian,
“Full employment, in combination with labour controls, limitations on the free movement and employment of non-whites, and the use of colour bars at company level, contributed to high levels of disposable income for the white population”.
English-speaking South Africans had participated in the discrimination that preceded apartheid, and tacitly supported the legislation
Legislation
Legislation is law which has been promulgated by a legislature or other governing body, or the process of making it...
while paying lip service to opposing the laws. By so doing apartheid managed to create a system in which black people were pushed to the margins of their land through the imposition of the Land Act of 1913. Repercussions of this act are still felt today; many blacks are unskilled, illiterate, and have low living standards. Their schooling system, the Bantu languages
Bantu languages
The Bantu languages constitute a traditional sub-branch of the Niger–Congo languages. There are about 250 Bantu languages by the criterion of mutual intelligibility, though the distinction between language and dialect is often unclear, and Ethnologue counts 535 languages...
education, was based on the notion that black people cannot progress in scientific subjects, and has resulted in many being excluded from such jobs.
Business Support for Apartheid
With the support of foreign capital, the mines and the mining finance houses, largely dominated by English-speaking South Africans, prospered under the system of apartheid and shunned outright opposition. In return for the continued monopsonyMonopsony
In economics, a monopsony is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers...
of labour purchase for the mines that kept wages low and outlawed trade unions, the English-speaking mining companies tolerated job reservation that prevented blacks from developing skills.
Over time the mining companies introduced changes to lower their costs but the alliance with the government continued.
White trade unionism was allowed but there were no black trade unions until the 1970s when black workers began flexing their economic muscles and, through the trade unions, promoting political change.
Sanctions
The imposition of international sanctionsEconomic sanctions
Economic sanctions are domestic penalties applied by one country on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas...
on the country began economic pressure that saw the unravelling of apartheid. There were oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
sanctions but South Africa continued to be able to buy oil on international markets and developed technology that allowed the conversion of coal into oil. A small gas field was discovered off the coast of the Cape
Cape of Good Hope
The Cape of Good Hope is a rocky headland on the Atlantic coast of the Cape Peninsula, South Africa.There is a misconception that the Cape of Good Hope is the southern tip of Africa, because it was once believed to be the dividing point between the Atlantic and Indian Oceans. In fact, the...
.
But the most damaging isolation was the denial of investment funds and the boycott
Boycott
A boycott is an act of voluntarily abstaining from using, buying, or dealing with a person, organization, or country as an expression of protest, usually for political reasons...
of South African investments particularly by influential universities and foundations in the United States.
Ironically during the 1980s gold reached its highest price as a result of international tensions reaping huge profits for the mining company conglomerates
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
. However, because of currency restrictions they were unable to invest abroad. The result was that they used their surplus funds to buy up businesses in virtually every activity in the economy.
However, the financial benefit for the mining companies of continuing to support the system eroded as international capital stopped flowing into the country.
Apartheid Economically Unsustainable
In 1990 the white president Frederik Willem (F.W.) de KlerkFrederik Willem de Klerk
Frederik Willem de Klerk , often known as F. W. de Klerk, is the former seventh and last State President of apartheid-era South Africa, serving from September 1989 to May 1994...
recognised the economic unsustainability of the apartheid system and released Nelson Mandela
Nelson Mandela
Nelson Rolihlahla Mandela served as President of South Africa from 1994 to 1999, and was the first South African president to be elected in a fully representative democratic election. Before his presidency, Mandela was an anti-apartheid activist, and the leader of Umkhonto we Sizwe, the armed wing...
the black nationalist leader and unbanned the African National Congress
African National Congress
The African National Congress is South Africa's governing Africanist political party, supported by its tripartite alliance with the Congress of South African Trade Unions and the South African Communist Party , since the establishment of non-racial democracy in April 1994. It defines itself as a...
(ANC) that Mandela led.
Despite some fears that the country could become unmanageable because of tribal conflict or even a military take over by the white-dominated armed forces de Klerk and Mandela guided the country to democratic elections in 1994 with Mandela as president.
Despite socialist rhetoric and support from socialist countries in its early years the ANC maintained the mixed economy and encouraged the market economy including relaxing foreign exchange controls
Foreign exchange controls
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.Common foreign exchange controls include:...
.
In January 1991, SACP
South African Communist Party
South African Communist Party is a political party in South Africa. It was founded in 1921 as the Communist Party of South Africa by the joining together of the International Socialist League and others under the leadership of Willam H...
general secretary Joe Slovo
Joe Slovo
For Joe Slovo Informal Settlement in Cape Town, see: Joe Slovo .Joe Slovo was a South African politician, long-time leader of the South African Communist Party , and leading member of the African National Congress.-Life:Slovo was born in Obeliai, Lithuania to a Jewish family who emigrated to South...
, DP
Democratic Party (South Africa)
The Democratic Party was the name of the South African political party now called the Democratic Alliance . Although the Democratic Party name dates from 1989, the party existed under other labels throughout the Apartheid years, when it was the Parliamentary opposition to the ruling National...
Finance Spokesman Harry Schwarz
Harry Schwarz
Harry Heinz Schwarz was a South African lawyer, statesman and long-time political opposition leader against apartheid, who eventually served as the South African ambassador to the United States during the country’s transition to representative democracy.Schwarz rose from the childhood poverty he...
and Deputy Finance Minister Org Marais, debated the state's role in a post-apartheid economy, in an historic debate organized by the Institute for a Democratic Alternative for South Africa.
Black Empowerment
At the same time they embarked on the Reconstruction and Development Plan to improve services including housingHouse
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...
, education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...
and health
Health
Health is the level of functional or metabolic efficiency of a living being. In humans, it is the general condition of a person's mind, body and spirit, usually meaning to be free from illness, injury or pain...
to blacks for whom these services had seriously lagged behind in the apartheid years.
The ANC also initiated a system of “black empowerment” that favoured black employment and required the transfer of some of the white owned businesses including mining companies to black ownership.
Land Hunger Again
A major source of stress remains the redistribution of land. Under apartheid 73% of land was in so called “white areas” and many blacks had been forcibly uprooted and removed to tribal areas.The slow legal and bureaucratic process of restitution is causing impatience among blacks and concern among white farmers that South Africa may go down the route of neighbouring Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
where land is being unilaterally seized by the government and its supporters.
First World Infrastructure
The needs of the mines and for the whites to maintain internal security under apartheid had seen parts of South Africa develop a first worldFirst World
The concept of the First World first originated during the Cold War, where it was used to describe countries that were aligned with the United States. These countries were democratic and capitalistic. After the fall of the Soviet Union and the end of the Cold War, the term "First World" took on a...
infrastructure.
This has served the country well in the post apartheid years, as has a sophisticated financial system that is allowing South Africa to provide services to the rest of Africa that it was prevented from doing under apartheid.
South Africa punches above its weight internationally. Foreign investment has flowed from South Africa around the globe: several major companies including Anglo-American, Old Mutual
Old Mutual
Old Mutual plc is an international long-term savings group. Established in 1845 in South Africa, it is now a FTSE100 listed company operating in 33 countries.-History:...
and South African Breweries
South African Breweries
The South African Breweries , then called Castle Breweries, was founded in 1895 specifically to serve a new market of miners and prospectors in and around Johannesburg. Two years later, it became the first industrial company to list on the Johannesburg Stock Exchange...
are now listed on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
.
See also
- Economy of South AfricaEconomy of South AfricaThe economy of South Africa is the largest in Africa, accounts for 24% of its Gross Domestic Product in terms of PPP, and is ranked as an upper-middle income economy by the World Bank, which makes the country one of only four countries in Africa represented in this category...
- Economy of AfricaEconomy of AfricaThe economy of Africa consists of the trade, industry, and resources of the people of Africa. , approximately 922 million people were living in 54 different countries. Africa is by far the world's poorest inhabited continent...
- Economic History Society of Southern AfricaEconomic History Society of Southern AfricaEconomic History Society of Southern Africa , established in 1980, aims ‘to promote the study of, and interest in economic and social history’...
- Investment Analysts Society of Southern AfricaInvestment Analysts Society of Southern AfricaThe Investment Analyst's Society of Southern Africa is the liaison body for the financial analyst profession in South Africa. It is based in Johannesburg South Africa, with members from Cape Town, Durban and throughout the region.-Membership:...
- Economics Research South AfricaEconomics Research South AfricaEconomics Research South Africa is an economics research program funded by the National Treasury of South Africa. It is currently hosted by the University of Cape Town's School of Economics....
- Economic Society of South AfricaEconomic Society of South AfricaEconomic Society of South Africa , established in 1925, is a "discussion forum" for South African economists in academic life, government and business. It is chaired by M.V. Leibbrandt....