Updated February 2011
In the wake of successful democratic elections and the installation of a government of national unity (GNU) under the leadership of the African National Congress (ANC), South Africa was able to re-enter the family of nations. Before the end of 1994 it had joined or rejoined the United Nations and the agencies associated with it, the World Bank , the Organisation of African Unity, the Commonwealth, the Non-Aligned Movement and the Southern African Development Community and established diplomatic relations with countries across the world (Simon 2001, 385, 386; South African history Online 2006). Internally, social militarisation gave way to a culture of social, cultural and political freedom (Freund & Padayachee 1998, 1180). The dismantling of embargos and sanctions opened up the world for South Africa to resume normal business and trade relations and South African business expanded aggressively into Africa (Simon 2001, 389-395). South Africa attracted foreign aid for reconstruction, primarily from the EU, USA, Japan and the UK, though by 1998 only half the funds promised had materialised (Simon 2001, 401, 402). Anticipated inflows of foreign fixed investment did not, however materialise, and while large amounts of foreign capital did flow in it was short-term and volatile in character (Simon 2001, 397; Freund & Padayachee 1998, 1176). However, the country's foreign debt was at low level as a result of the enforced debt repayment to American banks from 1985 onwards (Freund & Padayachee 1998, 1174).
Serious challenges facing the new government included a stagnant economy with high and rising unemployment, high inequality between and within the different race groups and widespread poverty; moreover South Africa remained a violent and polarised society (Freund & Padayachee 1998, 1174; Carter & May 2001, 19). To tackle these problems the government announced a Reconstruction and Development Programme (RDP), which though vague on details, was essentially social democratic in orientation and aimed at the empowerment of the poor (Freund & Padayachee 1998, 1175, 1176; Jeeves 2004, 509). In 1996, after a sharp drop in the value of the rand, the government abandoned the RDP in favour of a Growth, Employment, and Redistribution (GEAR) policy that aimed at job creation through a neo-liberal focus on structural reform of the economy, trade liberalisation privatization and the attraction of foreign investment (Freund & Padayachee 1998, 1175, 1176; Jeeves 2004, 509; Magubane 2002, 97).
Monetary policy, focused on containing and reducing the high inflation rates inherited, favoured high interest rate (Magubane 2002, 100). Fiscal discipline was emphasised to reduce the drain on government spending by domestic debt interest payments, and the budget deficit fell steadily, while spending priorities were realigned so that military expenditure declined sharply and that on social services was increased (Carter & May 2001, 17; Magubane 2002, 97). The government also embarked on a policy of affirmative action for groups that had previously been subject to discrimination and of Black economic empowerment (Freund & Padayachee 1998, 1175; Beinart 2001, 309-313).
The implementation of government's ambitious economic and social plans was hampered by the need to solve various institutional problems. The sensitive and difficult task of demobilising or integrating the liberation movement's armed wings' and homelands' troops into the Defence Force began in early 1994 and was completed by 1998, as was a reduction in the size of the Defence Force as a whole (Williams 2006, 45, 47). Other state organs to advance democracy had to be created, such as the Human Rights Commission, the Gender Commission, and the Public Protector, while provincial administrations for the nine new provinces had to be set in place (London 2004, 6). The fragment apartheid state bureaucracy, with 13 departments and of education for instance, had to be integrated and transformed into tools for the delivery of social infrastructure and services aimed at the upliftment of the poor (Magubane 2002, 91; Beinart 2001, 302, 303; Freund & Padayachee 1998, 1177).
Political violence in KwaZulu-Natal did not come to an end, for disagreement between the ANC and the Inkatha Freedom Party (IFP) over constitutional autonomy of the province within the Republic was fought both there and in Parliament (Halisi 1998, 429; South African History Online). In Parliament the IFP boycotted much of the negotiation process as well as key votes on the final constitution (Sarkin 1999, 75). In 1995 the government was forced to send in 1000 extra troops to quell the escalating violence; though violence receded, especially after an agreement reached between the ANC and IFP in June 1997, flare-ups continued to occur (South African History Online). Less bloody, though still of concern, were attacks on Black people by White right wing extremist groups, but these were brought to book by the security forces and their capacity was destroyed (South African History Online; Freund & Padayachee 1998, 1180). Crime unleashed by the lawlessness of the 1980s, however, continued to be of concern, especially violent crime such as murder and rape (Shaw & Gastrow 2001, 240). South Africa, by the late 1900s had the highest rates of murder and armed robbery and, moreover, it was primarily Africans and the poor that became victims (Shaw & Gastrow 2001, 244, 245, 246). Local vigilante groups such as People Against Gangsterism and Drugs (PAGAD) in the Cape Town Coloured townships mushroomed, presenting a new security threat of their own (Halisi 1998, 434).
To deal with those who had committed politically motivated human rights violations during the apartheid era legislation was passed in 1994 that created a Truth and Reconciliation Commission (TRC) with powers to grant amnesty to perpetrators who made full disclosures of their crimes and to allocate reparations to victims (Beinart 2001, 342, 343; Jeeves 2004, 512, 513). However, senior officials in the apartheid regime did not for the most part come forward to confess, while the IFP fiercely rejected the proceedings and the TRC was criticised for treating the actions of those opposing apartheid as if they were on the same moral footing as those defending it (Beinart 2001, 343, 344; Jeeves 2004, 514). The public hearings were extensively televised and reported in the media; the testimony of victims was traumatic for Blacks whose painful memories were rekindled and shocking for Whites who were in denial about the atrocities of apartheid, so that even though the full truth did not emerge, some sort of symbolic closure and cleansing was achieved.
In between late 1995 and mid 1996 democratic local government elections were held for the first time. Voter turnout though not as high as in 1994, remained impressive, with 80% of registered voters casting their ballots (see 1995/96 Local government election results - voter registration and turnout). The ANC, the National Party (NP) and the IFP performed worse than in 1994, while the Democratic Party made considerable ground improving its share of the vote from 1.7% in 1994 to 13.5% (compare 1995/96 Local government election results - votes per party and 1994 National Assembly results). The NP attributed its loss of support amongst voter to its participation in the GNU, and when Vice-President FW de Klerk was not able to secure the entrenchment of the GNU as a permanent feature of the final constitution, he resigned and the NP withdrew from the GNU leaving the ANCF and IFP as sole partners (Freund & Padayachee 1998, 1178).
Negotiations over the final constitution were drawn out, with the NP and the DA pressing for a federal order and the IFP demanding a high degree of autonomy for KwaZulu-Natal, but in the end the final arrangements differed little from the transitional constitution (Beinart 2001, 294, 295). A National Council of Provinces replaced the Senate and the entrenchment of a GNU was removed (Beinart 2001, 295). The first version passed by Parliament on 8 May 1996 was unanimously rejected by the Constitutional Court as failing to adhere to the 34 principles agreed on an enshrined in the 1993 interim constitution, pointing to ten areas of conflict, and it was referred back to Parliament (Sarkin 1999, 69, 72, 73). Renewed wrangling arose over the issue of federalism and the IFP ended its 18 month long boycott to argue for greater powers for traditional leaders, especially in local government, but withdrew again when it saw it had no support from no other parties (Sarkin 1999, 75). The final version of the constitution was adopted by an overwhelming majority (the IFP's 43 members were absent, the Freedom Front's nine members abstained and the African Christian Democratic Party's two members alone voted against it) and it was unanimously certified by the Constitutional Court on 4 December 1996 (Sarkin 1999, 75, 76; see Constitution and Constitutional provisions).
South Africa's economic growth, and its ability to meet its ambitious GEAR targets as far as attracting foreign investment and job creation, was limited by the exigencies of globalisation and the weaknesses of its neo-liberal macro-economic policy were exposed. Contrary to expectations, the large capital flows into the country did not increase Fixed Domestic Investment, but were short term and highly volatile, boosting share prices on the stock exchange, but not leading to increased economic production or job creation (Magubane 2002, 91, 95; Nattrass & Seekings 2001, 61, 62). While economic growth accelerated from 1.2% in 1993 to 3.2% in 1994, averaging an annual 3.6% between 1994 and 1996 it fell of sharply in 1997, averaging 1.8% between 1997 and 1999 (IMF 2008). In the mid-90s it was projected that a 6% growth rate a year was required to meet the GEAR's job creation targets, and consequently also its poverty reduction targets, but economic performance fell far short of this (Jeeves 2004, 509; Freund & Padayachee 1998, 1176). Moreover it was expected that foreign capital would contribute half of the private investment needed to achieve these growth rates, but this did not materialise and from a high of 6.1% in 1996 private investment growth fell to 4.7% in 1997 and then became disinvestment chalking up figures of -2.9% and -4.4% for 1998 and 1999 respectively (Nattrass & Seekings 2001, 61).
The fall in growth and investment rates was largely due to the Asian crisis and the loss in confidence of short-term investors in emerging economies that led to massive capital outflows in 1998, along with a 16% decline in the value of the rand between May and August (Nattrass & Seekings 2001, 61, 62; Magubane 2002, 98; Simon 2001, 401). The Reserve Bank and government's adherence to neo-liberalism aggravated the situation as they persisted with restrictive monetary and fiscal policies to reduce inflation and the government's deficit before borrowing; in this they were successful, but at the expense of investment job creation (Nattrass & Seekings 2001, 61, 62; Magubane 2002, 95, 98, 100). Inflation fell steadily from a high of 9.9% in 1993 to 6.9% in 1998 and the deficit from sank 9.3% of GDP in the 1993/4 financial year to 3.4% in 1998/9 (Magubane 2002, 97; Nattrass & Seekings 2001, 61). The government's policy of trade liberalisation exposed labour intensive industries to external competition while, as a result of labour market rigidities, the export growth was capital intensive and as a result such growth that took place before 1998 was accompanied by small declines in job numbers (-0.7% in 1996 and -1.7% in 1997), but in 1998 and 199 the economy shed jobs precipitously (-3.7% in 1998 and -3.2% in 1999. Nattrass & Seekings 2001, 61, 62; Aron & Muellbauer 2001, 14). By the end of President Mandela's term of office the economy had lost half a million jobs and unemployment had risen from 20% to 23% between 1994 and 1997 according to the narrow definition (from 32% to 38% if people who have given up looking for jobs are included) while average per capita income grew by a measly 0.82% a year (Magubane 2002, 98; Nattrass & Seekings 2001, 50; IMF 2008).
Other GEAR objectives were also not attained, for privatisation proceeded painfully slowly and by the time the government was ready to sell off assets in the late 1990s the loss confidence in emerging markets forced them to put their plans on hold and while export growth did occur this did not meet GEAR's expectations (Freund & Padayachee 1998, 1176; Freund & Padayachee 1998, 1176, 1177). The impact of poor per capita income growth and job losses, combined with the government's affirmative action policies, led to growing inequality between Blacks, even as the overall differences between Whites and Blacks decreased (Freund & Padayachee 1998, 1176; Nattrass & Seekings 2001, 47). Between 1993 and 1997 government spending on the poorest 40% of households rose by 50% (Nattrass & Seekings 2001, 57). Despite the shift in government spending towards social services, especially education, health, social security and housing, GEAR targets aimed at the upliftment of the poor were not met (Carter & May 2001, 17).
Massive rises in expenditure on education went for the most part to bringing Black teachers' salaries to par with those of Whites (so strengthening the Black middle class) and, although some was spent on hiring more teachers and reducing pupil-teacher ratios, teachers in schools catering to the poor remained unqualified and unmotivated so that gains were marginal (Nattrass & Seekings 2001, 58, 59). However, compulsory for schooling for African children between six and fourteen years was phased in from the beginning of the 1995 school year (South African History Online 2006). Free healthcare was extended to women and children under the age of six in 1995 and in 1996 abortion on demand up to the first 12 weeks of pregnancy was introduced and, under special circumstances, termination of pregnancy could be granted up to 20 weeks (London 2004, 8; South African History Online). Rises in health spending allowed the government to place more clinics in urban poor areas, but the rural poor were neglected and the fundamental inequalities and inefficiencies in the healthcare system were not addressed (Nattrass & Seekings 2001, 59; Freund & Padayachee 1998, 1179). Even more disturbingly, the burgeoning crisis brought on by the HIV/AIDS epidemic was ignored (Jeeves 2004, 516). Anti-natal surveys conducted by the Department of Health showed a rapid rise in the numbers of pregnant women testing positive for HIV; in 1990 0.7% tested positive, by 1993 it was 4%, 14% in 1996 and 22% by 1999 (Health Systems Trust 2008).
Pensions, which were a major source of income for the poorest 40% of South African households, were allowed to fall in real value by 20% between 1993 and 2000 and grants to poor single parents were reduced to enable improved take-up rates amongst the very poor, but this was hampered by red tape and bureaucratic inefficiency (Nattrass & Seekings 2001, 57-59). The electrification and water provision programmes initiated by the previous government were continued, but between 1994 and 1997 less than 200 000 houses were built and its target of 1 million houses by 1999 was way beyond its reach (Freund & Padayachee 1998, 1176, 1177; Beinart 2001, 316). Once more the focus was on the urban areas and the rural poor were neglected (Jeeves 2004, 516). Land reform was not undertaken, despite the degree of rural poverty and landlessness and despite the massive imbalances in landownership between Blacks and Whites, because the constitution entrenched property ownership rights and the government could not afford to purchase land on a willing buyer willing seller basis; indeed, the government was hampered even in restoring land confiscated under apartheid to their rightful owners by these constraints (Jeeves 2004, 515; Freund & Padayachee 1998, 1179). The failures of the government to meet its GEAR targets for the upliftment of the poor were partly a lack of resources as a result of its commitment to fiscal prudence and discipline, partly the result of international economic events beyond its control and partly due to corrupt misappropriation of resources allocated, mismanagement and incompetence (Freund & Padayachee 1998, 1177, 1178).
By 1997, as a result of a shift of the ANC to the right and the reconciliation of opposition parties to the finality of the new constitutional order, there was little to tell the different political parties apart and the captains of industry, their fears of socialism under an ANC government allayed, shifted support from the NP the to the ANC (Freund & Padayachee 1998, 1178; Southall 1999, 11). The civic organisations that had played a key role in the struggle against apartheid became moribund when their leaders were shifted into public office and the Congress of South African Trade Unions (COSATU) was hampered by loss of its leadership as well (Freund & Padayachee 1998, 11778). Nevertheless, COSATU had become a considerable force to be reckoned with, growing from 1.3 to 1.8 million members between 1994 and 1999 and did not hesitate to mount mass strikes to protect workers' rights (Beinart 2001, 298; 299). Sidelined as far as economic policy formation was concerned after the adoption of GEAR, it and the other member of the Tripart Alliance with the ANC, the South African Communist Party (SACP), became increasingly critical of the content of government policy and of the way it was implemented, though discussion of forming a socialist-labour party came to nothing (Southall 1999, 11).
In June 1999 South Africa conducted it second national democratic elections in which the ANC improved its share of the vote from 63% in 1994 to 66%, while the opposition became extremely fragmented; where in 1994 seven parties had shared 148 seats, now 11 parties shared 134 seats (compare 1994 National Assembly results and 1999 National Assembly votes and seats by party; Southall 1999, 14). The share of the NP (now styled the New National Party of NNP) declined precipitously from 20% to under 7% and the IFP less so from 10.5% to 8.6%. The DP on the other hand rose from 1.7% to 9.6%. The IFP lost absolute control over the KwaZulu-Natal Legislature and its voluntary coalition with the ANC now became one of necessity (see 1999 Provincial legislature results. Southall 1999, 11). The NNP likewise lost absolute control of the Western Cape Legislature and was forced to bring the DP in as junior coalition partner (Southall 1999, 11). The ANC, as before, won the other seven provinces outright. Nelson Mandela stepped down as President and the National Assembly elected ANC party leader Thabo Mbeki as his successor.
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