Tributes to the late Nelson Mandela have focused primarily — and understandably — on his efforts to secure racial reconciliation in South Africa. But the latest Bloomberg Businessweek reminds us of another important lesson from Mandela’s record: an economic policy based on private initiative.
Nelson Mandela, who died on Dec. 5, emerged from 27 years in prison in 1990 pledging to seize South Africa’s mines and banks. Instead, his government slashed spending and courted foreign investors, paving the way for the longest period of growth in the country’s history. “Only a Mandela could have realigned the African National Congress’s economic policy from the mindset of the 1950s to the world of the 1990s and beyond,” says Robert Schrire, a politics professor at the University of Cape Town. “He recognized that for the poor to prosper, the rich had to feel they had a future in the country.” …
… Mandela’s policies helped the economy, whose biggest sectors are mining (it’s the top global producer of platinum), manufacturing, banking, and telecommunications, to expand for 15 years. Rising tax receipts enabled the government to extend welfare payments to about 16 million people and give more than 85 percent of households access to electricity, up from 45 percent in 1996. South Africa held such promise that in 2010, the BRIC nations—Brazil, Russia, India, and China—invited the country to join their club.
Now “Mandela’s legacy of economic stability is coming under attack,” both from strike-happy labor unions and government central planners. Anyone who understands the fatal conceit of the government central planner can predict that the following scenario is not destined to turn out well.
To get the economy back on track, in December last year the ANC endorsed the National Development Plan. This document, drafted by a panel led by former Finance Minister Trevor Manuel and Cyril Ramaphosa, the ANC’s deputy president, sets out the investment required for roads and rail projects. It also calculates funds needed for services such as health and education to better prepare the workforce. The authors of the plan say it will help the economy grow at an annual average of 5.4 percent until 2030.