It was a coincidence that I arrived in the capital of South Africa on the same day that the government announced the national budget for the fiscal year 2002-2003. As soon as I reached my hotel room, I turned on the TV and sat watching and listening to South Africa’s Finance Minister who was addressing the Parliament with a 33-page report detailing the budget. I understood that the ruling party, the Parliament and the opposition approved the budget. I further understood that the budget managed to cover economic schemes in general including projects thought necessary for the poor, who were the most affected by the former apartheid regime.
The minister explained how the government is planning to reduce burdens on the poor through fiscal aid and subsidies. More encouraging is that corporate taxes would be reduced from 48 to 30 percent.
The budget deficit has been reduced from 4.5 percent in 1995-1996 to 1.4 percent for the fiscal year 2001-2002 and is likely to be reduced as well during the current budget. That brings the country’s budget deficit within the limits laid down by the Maastricht Treaty for 12 euro-zone countries. At the same time it is a comprehensive, coherent budget that tackles the major challenges facing the country. Unfortunately, due to South Africa’s political past and its struggle to root out apartheid, it has failed to attract foreign investments in spite of abundant opportunities, low costs, adequate laws and regulations and political stability.
In fact the doors are open for investment as the South Africans are willing to accommodate projects that will reduce unemployment that currently is about 30 percent. Still, the South Africans have moved forward remarkably during the past 10 years since the first black government took over under Nelson Mandela. Exports to Europe, Africa and the Americas have increased significantly from 1.7 percent in 1991 to 12.8 percent in 2002. This increase was possible because of dedicated efforts to create more economic ties and intertrade with many, mainly sub-Saharan, countries.
In brief, South Africa has managed to accomplish in 10 years what the Arab states have failed to implement in 50 years in terms of intertrade and other economic ties! Thabo Mbeki, who took over from Mandela, is the engineer of the economic plan to activate and promote economic cooperation, intertrade and investments between African countries. In spite of such endeavors, many African leaders oppose Mbeki’s policies. Some African leaders are jealous of South Africa’s achievements and others see its policies as detrimental to their endeavors to take properties from the whites dominating Africa’s resources. On the other hand, international circles have welcomed South Africa’s endeavors to root out poverty and backwardness.
The only setback that faces South Africa is that some superpowers believe there is a technological gap between the relatively advanced South Africa and its neighbors.
Therefore, there are doubts that such endeavors will progress rapidly with other African countries trying to halt the South African invasion.
In fact, South Africa has managed to secure 40 percent of the dark continent’s market despite strong economies in oil-producing countries such as Nigeria, Angola, Libya, and Algeria. In addition, South Africa is technologically advanced with a relatively disciplined workforce and politicians aware of their country’s problems and shortcomings. Even taking into account the many challenges South Africa will face, the Arab world would be wise to learn from the South African experience.
