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Mandela: Giant footsteps, long shadow

NOMURA emerging markets expert Peter Attard Montalto reflects on the life and time of late president Nelson Mandela:

It is not normal for analysts to write obituaries. But normally past leaders’ shadows over a country fade, and normally they are not wound up into the very fabric of a country and its outlook.

Not so for Nelson Mandela - who sadly died last night, peacefully, but after a long illness stemming from his 24 years on Robben Island, and a recent stint in hospital he never really recovered from.

He was an amazing icon, who was both an inspiration yet truly human as well, which is why so many people felt such a connection to him.

He gave his life to achieve a simple, yet at the time distant, dream, something that required great and sad sacrifices on the personal front.

His life was ultimately characterised by a series of pivotal decisions between 1989 and elections in 1994 about the need for peace, for difficult but genuine forgiveness and reconciliation that was contrary to the views of many in the wider anti-apartheid movement at the time, and the need to turn away from violence to peace.

This decision was certainly difficult given the decisions he made as a young man before entering prison that violent confrontation and sabotage were a legitimate method of countering the apartheid state.

However, it was his time in prison, 27 years in total and 24 on Robben Island, that shaped his ability to not only make these decisions but provide the leadership to take the black majority with him and avert what was a very real threat of not only interracial but also intra-racial violence at that time spilling over into civil war.

The end of apartheid was a long and carefully thought through struggle rather than an accident or, indeed, a miracle.
 
His legacy is one of the most liberal and well rounded constitutions in the world and a vision of a post-racial society, of forgiveness and solid institutional foundation for the country. His leadership casts a long shadow over his successors.

Mandela’s job while he was president was to build a nation, unite its people and secure its foundations. In this he was successful.

In matters economic he took a number of key decisions before entering power, such as the rejection of the previous ANC policy (from the Freedom Charter) of nationalisation of industry, and realised the need for a more pragmatic social-democratic, liberal form of economic policy as opposed to the more hardline socialism (or even communism) promoted by many in the ANC.

However, while in power much of the key economic policy making was done under the leadership of then Deputy President Thabo Mbeki and, as such, criticisms about the lack of infrastructure investment at the time and other issues should not be placed at Mandela’s door – he was busy building that nation.  

One of the areas where there is a question mark, however, is around the decision to create a cadre of rich black empowerment businessmen who were not industrialists or really (if we are honest) job creators.

The choice here was complex, and based partly on the need to create at least the perceptions of rapid sharing of wealth even if Mandela knew it would be impossible to create true equality more widely.

However, loyalty to the party which pushed hard on this issue was also partly to blame. The result is still evident today and is being further compounded by the government, whereas in our view a more widespread form of empowerment through families of workers and local community would probably be more appropriate.

Under his term in office, however, inequality did fall and key policy decisions were taken which reduced absolute poverty quite sharply.

This legacy, however, is now at risk. Inequality and unemployment have risen since, education standards stagnated after an initial surge, underlying growth has been very weak at only around 3.5% vs its theoretical potential to be 5.5-6.0% under the right policy choices, and this in turn has held back development.

More important, however, is that the quality of leadership, and in particular its adherence to and respect for constitutional democracy, has faded to be now well short of Mandela’s legacy.

This has been seen most recently in the ugly racial language used by the ANC in the current election campaign – language we believe reflects an ongoing seam of real belief in the ANC of black domination and not simply election stump rhetoric.

We should never forget that Mandela fought as much internally against black domination as he did externally against apartheid suppression.

Does it affect the political scene? We think the quality of the debate in South Africa is vibrant enough and Mr Mandela’s presence felt strongly enough during his later years that South Africans are already well aware of the issues and where their country is at.

That said, such time for reflection may well reinforce those thoughts that are already there. While there may have been a marginal fear among the electorate of voting against the party of which Mandela when alive was still a member, such fear should now pass and we expect this to feed into the end of the “struggle debt” supposedly owed electorally to the ANC.

What of the markets and wider sentiment from investors with Mr Mandela’s passing? The lack of reaction in ZAR today has been notable – the Zimbabwe scenario doomsayers have been silent so far.

However, there is a disturbing minority in the South African finance community who push this line to varying degrees. We have not always had the most bullish view on South Africa but we have always firmly rejected this line.

South Africa’s institutions have stood many assaults in recent times (and their strength is a core part of the investment grade rating), and the media is alert enough to the threats to the country.

This is not to say that Mandela’s legacy is not fragile – it should be protected, watched over and fought for – but for those of a more structurally bearish bent, we think the ANC is a broad church still firmly anchored in the “rational” policy space even if there has been something of a shift to the left under Jacob Zuma and even under the latter days of Thabo Mbeki, rise of opposition parties and vibrant civil society (charities, media, unions etc) and all-important protections.

The reaction of markets, FDI investment (or the withholding thereof) and considerable need for foreign funding are also important restraining factors.

We should also recognise how far South Africa has come, even if we zoom in on the issues at stake now.

But to conclude, while I never met Mr Mandela, his vision for South Africa has always been crystal clear in those I've met in the many years I've been travelling to South Africa and particularly the youth who he helped to be born free.

As such, his legacy is secure in the long run, even if it may well be a bumpy road to get there.

*Peter Attard Montalto is a director and emerging markets economist at Nomura. Views expressed are his own.

*Share your memories of Nelson Mandela with Fin24 users.


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