A decade after Nelson Mandela assumed the South African presidency, the legendary leader’s legacy of economic stability is being undermined by rampant income inequality, Bloomberg News reports.
After an era of sanctions threatened to plunge South Africa into a dire economic crisis, Mandela traded his plan to nationalize banks and mines for a free market ideology that ushered in the longest period of growth in South African history and restored the nation’s economic standing in the world. However, Mandela’s pro-business policies essentially left poor black South Africans behind. Today, the average white family earns six times what black households make, and 73 percent of top business managers are white. Unemployment levels among young black workers is nearing 50 percent. The number of South Africans living on less than a dollar a day has doubled along with the number of millionaires in the country. Overall, unemployment is around 25 percent.
In order to restore economic stability, Mandela aggressively courted foreign investors who had avoided South Africa during apartheid, attracting major international companies that later bought many of the nation’s largest banks and manufacturers. However, the nation’s economic interests and natural resources are concentrated in the hands of a few conglomerates, making it very difficult for wealth to spread to most South Africans. In 2000, just five groups controlled 61 percent of stock market’s value. Small businesses, meanwhile, contribute just 30 percent to the nation’s GDP.
The U.S., which is experiencing soaring income inequality, largely along racial lines, could take a warning from South Africa’s predicament. The massive disparity between the wealthy and the poor has taken a toll on South Africa’s economic growth. Income from foreign investors has dropped since 2008, and more than a quarter of South Africans rely on welfare, making up 3 percent of the nation’s GDP.
Throughout his lifetime, Mandela was outspoken about the need to combat poverty and believed strongly in redistributing wealth to the poor. South Africans revere his dream of “a rainbow nation at peace with itself and the world.” However, the nation still has a long way to go in order to fulfill his dream.