A New South Africa

An Interview with Max Sisulu

Max Sisulu is the Head of the Economic Planning Department of the African National Congress, the major national liberation organization in South Africa. He is the son of Walter and Albertina Sisulu, two prominent, long-time anti-apartheid activists.

Whites are beginning to see that apartheid, which has historically enabled them to have high standards of living, is putting a break on the country's further economic development. Multinational Monitor: How do you explain the current crisis of the South African economy?
Max Sisulu: The apartheid ecoHow do you explain the current crisis of the South African economy? Max Sisulu: The apartheid economy has reached its limits and is now in decline. For the past decade, it has been systematically declining, despite some slight improvements. There are a number of reasons for this. It is an economy that is based on cheap black labor. It is an economy that was built on dispossessing people of their land, forcing them to go and work. It is an economy that was and continues to be based on high-cost production and low-wage labor.
The 1960s and 1970s were periods of import substitution. The economy grew behind high tariff barriers and catered mainly to the white market-the people who had the money. A corollary of cheap labor is that the majority of people don't have the means to buy goods, so the domestic market is limited. [But the country's export potential was also limited], because the economy, growing behind tariff barriers and with government subsidies, was inefficient. The cost of production was not competitive anywhere in the industrialized world. It would have been competitive in Africa, but because of sanctions that option was closed.
After the 1970s, the process of capital accumulation changed. The labor force became restless and fought for changes and higher wages. There was political instability in the country which also scared off some investors. The profit to be made from investment in South Africa gradually diminished.
So the economy has reached a crisis where it is unable to move forward. Numerous obstacles are built into the economy, like [the lack of] education, training and housing for blacks. Blacks were deliberately not trained as part of the policy of apartheid. For a person to be productive, they must have a roof over their head, they must be educated and their working conditions must be decent. With advances in technology, the economy needs a more educated and a more skilled workforce. The South African economy does not have this because blacks have been denied education and training.
To resume development, the economy will have to change its orientation; the market will have to be broadened and basic goods and services will have to be produced for the people.
MM: How important a factor is the economic crisis in the decision of the white government to negotiate with the ANC?
Sisulu: The crisis is very important because it affects the whites directly. The cake is shrinking for the whites also. Many whites are losing their jobs. So the whites are beginning to see that apartheid, which has historically enabled them to have high standards of living, is putting a brake on the country's further economic development. Whites are beginning to see that the regime which systematically destroyed or mismanaged the economy is the Nationalist Party, which has mismanaged the economy for four decades.
MM: What kinds of added pressures or sanctions should the Western countries put on South Africa?
Sisulu: I would like those sanctions that have already been adopted to be implemented much more stringently. Many Western countries have adopted sanctions but they haven't really been very strict in applying them. An important corollary to the sanctions is increased political and material support for the opponents of apartheid and the countries of the region that have suffered from apartheid aggression and destabilization, countries like Zambia, Zimbabwe, Mozambique and Angola.
MM: What about financial sanctions?
Sisulu: We are concerned that the international community of banks not roll over South Africa's debt. When the debt does come up for review, it should not be rescheduled until apartheid is gone. There are a number of financial sanctions that can be applied.
Also, there are "people sanctions" of South African goods. If a government is unwilling to enact sanctions, then the people shouldn't buy South African food or South African krugerands. Those are sanctions that people can impose by buying or not buying.
MM: At what point will the ANC call for sanctions to be lifted?
Sisulu: The ANC has said that since we as people of South Africa are the ones who have asked for sanctions, we will come back to the world and say when we think they have served their purpose. Right now, the whole process of change in South Africa can still be reversed. The laws of apartheid are still in place. De Klerk's cabinet can, if it wishes, re-ban the African National Congress. We need to see the scrapping of all apartheid laws, the beginning of serious negotiations and a constitution that is agreed upon. At that point, we can then say, "We think the process has gone far enough, it can't go back"--and sanctions can be lifted.
MM: What is the role of foreign investment in the apartheid economy?
Sisulu: Foreign investment has been very important to the apartheid economy. It should be remembered that South Africa's initial development was based on gold. Foreign investment poured into the country to mine the gold (and also diamonds) with extra low wage black labor. From the resources gained from mining, foreign investors diversified into manufacturing. Up to the 1960s, there was an influx of direct investment. The trend changed in the 1970s, when there was less direct investment and more loans. South Africa was able to get the loans in order to build and develop the economy and ensure that whites had a high standard of living.
With foreign investment came technology and skilled managers from England and North America. Technology has been very important in buttressing the apartheid system. The military industry, for example, was built with the help of the South African government but depended crucially on foreign expertise. Most of the basic infrastructure was set up with the help of foreign investment.
MM: What role do you see for foreign investment in the post- apartheid economy?
Sisulu: We have said that once sanctions go, we would want investment to flow into South Africa. But the investment coming into the country must not be a substitute for domestic savings and domestic investment; it will be in addition to mobilizing internal resources and putting them to productive use. Because of apartheid, companies today are not putting their money to productive use. There is a lot of spare capacity in the factories because there is no demand. Companies therefore prefer to put their money into the Stock Exchange. This doesn't produce any wealth, of course. So you have liquid money chasing paper assets, not being put into production.
In a free South Africa, those resources should be put into productive use, expanding capacity and producing for the majority of the people. The role of foreign investment would be to add on to what we have. We also want foreign investment to bring in its wake technology and to pass on knowledge and skills.
MM: What will be the government's attitude toward companies that stayed in South Africa when you asked them to leave?
Sisulu: I don't know what is going to happen to foreign companies that refused to leave South Africa, but clearly we will remember who our friends were and who worked with us. In terms of awarding contracts, a democratic government would obviously want to remember its friends.
MM: Assuming the ANC takes power, how far-reaching do you anticipate nationalization will be and what sectors are most likely to be nationalized?
Sisulu: There is no prior agenda saying what the ANC is going to nationalize. The ANC is in the process of formulating its economic policy. We have, of course, broad guidelines, but economic policy will be formulated by the people, not merely by the ANC. We are currently consulting with all sectors of the population, including the business community, small and big.
As with any government, nationalization is going to be an option that remains open. Whether it is going to be used or not is something else, but it is an option that can be used as one of the instruments for redistributing wealth and income. In evaluating the issue of nationalization, you look at what you want to achieve by nationalization, the costs of nationalization, other instruments available to achieve your objectives. Certainly we could not nationalize all industries, because we would need the ability to be able to run those nationalized industries. It would be crazy with the few people that we have to spread them in all these industries; that would be spreading them too thin and they wouldn't have the expertise to run them. So then we would be forced to call on the people [whose factories] had been taken to run things. That would open us to sabotage.
The present debate in South Africa over nationalization is a "red herring," really. It is a red herring because it is said that the ANC has no economic policy except nationalization. This is politically expedient for our opponents because of the experience of the socialist countries and because of the pressing for privatization in the West. They hope to portray the ANC as weak, as having no policy except nationalization. We are saying that the ANC has broad outlines to redistribute wealth and that this is only one of the ways of doing it.
MM: The Freedom Charter, written in 1955 under the auspices of the ANC and other groups, contains a political and economic program for a democratic South Africa. Is the ANC's commitment to nationalization more flexible than indicated in the Freedom Charter?
Sisulu: The Freedom Charter was a very broad outline. It said that the nation's resources must be brought under [popular] control. We are looking at every instrument available to us, taking into account the many changes that have taken place in Africa and South Africa [since the Freedom Charter was written]. We are not wedded to nationalization.
MM: What are some different methods that you are considering to redistribute wealth in the post-apartheid economy?
Sisulu: Increase the minimum wage. Put resources into education and training. Devote resources to building housing and infrastructure, such as water and electricity services, particularly in the black areas where these services do not exist. There is a need for a social welfare network for the unemployed and also for the elderly and for a sound pension system.
The whole land issue is very important. Land hunger is an area that needs to be solved. I don't have any answers and the ANC is discussing this problem. One possible way to address the question is to tax the land which is not used heavily or is unproductive, so that the land is sold to whoever can make use of it. We're talking about a number of possibilities when it comes to the land. For example, we are considering having the land belong to the state but making it available through leases. We are looking at all the options and studying them, so that we can find a way that enables people to work on the land and feed themselves and that also ensures that food is produced at an affordable price.
MM: So you are not necessarily committed to land redistribution?
Sisulu: We are very pragmatic. We are going into the situation committed to improve the standard and quality of life of our people. We are not going to nationalize unless it is going to solve land hunger, unless it is going to solve the issue of poverty. What we want is an economy that is going to address these issues, which are a result of apartheid and centuries of oppression.
MM: How concerned are you about capital flight and the flight of whites with professional skills as apartheid is dismantled?
Sisulu: There has been capital flight in South Africa for some time now. More money is going out of the country than is coming in. Part of it is to pay the debt. Much of it is going out because there is no confidence in the present apartheid economy due to political instability and other causes.
In a democratic South Africa, we would want to gain the confidence of the business community so that they would invest. We would also use laws to make sure that money remains in the country and is reinvested in the country.
About white skills: sure, some whites are going to leave the country, but we hope that others who have skills will come back home. There are thousands and thousands of both blacks and whites who left because of apartheid. If some would leave because of the demise of apartheid, some will come back for the same reason. If some whites want to leave because apartheid is gone and they are wedded to racism, they are free to leave.
MM: What role do you anticipate trade unions will play in a democratic government?
Sisulu: I think trade unions will continue to play an important role in a free South Africa, particularly in the areas of wage negotiations, improving the health of workers and improving the work environment. As members of the community, they play an important role in a wider aspect, in housing and in many other areas.
They will also have a wider influence in working with the government. The trade union movement, the private sector and the government will need to come to some working arrangement in a post-apartheid South Africa. We will need some peace and stability to deal with South Africa's problems. The trade union movement has fought for change and has also been involved in the process of building a post-apartheid South Africa, and it must be involved in the decision-making process, not just on the factory floor, but also on the national level.
MM: What do you expect the southern Africa regional economy will look like with a post-apartheid, democratic South Africa as a central component?
Sisulu: I think once apartheid goes there will also be opportunities for South Africa to be integrated into the regional economy. Cooperation and integration would have important benefits for the countries in the region, including a free South Africa. Southern Africa has a combined population of almost 100 million people. It is a territory almost as big as the United States. It has a varied climate so that any fruit or crop can grow. It has tremendous mineral resources. So cooperation has a lot of potential. Of course, there will have to be renegotiation of some of the regional treaties because up to now they have been based on an unequal footing and benefited South Africa and not the region.
MM: How do you think you will be able to instill confidence in the business community when in many ways the ANC's goals are contradictory to both domestic and international business interests?
Sisulu: Our primary concern, of course, is to raise the quality of life of our people. And we do believe that business, particularly South African business, has in the past benefitted from the system of apartheid.
If you want business to contribute to the destruction of apartheid and to building a new South Africa, it must have a stake in the future. We are prepared to sit down with business and talk about the future, so that its activities benefit not just the business community or the white community as in the past, but all the people of South Africa. Any economic development that is going to take place in a free South Africa is going to be in a framework that is put out by the government and designed to make the economy serve the people.
I'm sure business understands that there is a need to redistribute wealth. In South Africa, nobody doubts that. The disagreement with the business people is not about whether there isa need, but over how to redistribute wealth and income. And as I said, discussions are going on.
As far as the international community is concerned, they will be assured of a return on their investment. But this is going to be within the laws of the country; every country has laws which regulate business activity, whether by foreign companies or domestic companies.
MM: Are you pleased with how the ANC's discussions with South African business leaders have progressed?
Sisulu: Well, I think there is still a long way to go before we can say we have reached a point where we agree on a number of issues. We have expressed our concerns and perspective on the need to develop the economy. They have expressed some of their fears and we have addressed the fears of the business community and the white people particularly. But, of course, it is not a one-way street. There are also the concerns and aspirations and needs of the vast majority of the people which also have to be met and understood by the white community, by business.

Because of apartheid, companies today are not putting their money to productive use. There is a lot of spare capacity in the factories because there is no demand.

Our opponents hope to portray the ANC as weak, as having no plicy except nationalization. We are saying that the ANC has broad outlines and that this is only one of the ways of doing it.

There has been capital flight in South Africa for some time now. Much of it is going out because there is no confidence in the present apartheid economy.

Any economic development that is going to take place in a free South Africa is going to be in a framework that is put out by the government and designed to make the economy serve the people.

Table of Contents

Whites are beginning to see that apartheid, which has historically enabled them to have high standards of living, is putting a break on the country's further economic development.	Multinational Monitor: How do you explain the current crisis of the South African economy? Max Sisulu: The apartheid ecoHow do you explain the current crisis of the South African economy? Max Sisulu: The apartheid economy has reached its limits and is now in decline. For the past decade, it has been systematically declining, despite some slight improvements. There are a number of reasons for this. It is an economy that is based on cheap black labor. It is an economy that was built on dispossessing people of their land, forcing them to go and work. It is an economy that was and continues to be based on high-cost production and low-wage labor. The 1960s and 1970s were periods of import substitution. The economy grew behind high tariff barriers and catered mainly to the white market-the people who had the money. A corollary of cheap labor is that the majority of people don't have the means to buy goods, so the domestic market is limited. [But the country's export potential was also limited], because the economy, growing behind tariff barriers and with government subsidies, was inefficient. The cost of production was not competitive anywhere in the industrialized world. It would have been competitive in Africa, but because of sanctions that option was closed. After the 1970s, the process of capital accumulation changed. The labor force became restless and fought for changes and higher wages. There was political instability in the country which also scared off some investors. The profit to be made from investment in South Africa gradually diminished. So the economy has reached a crisis where it is unable to move forward. Numerous obstacles are built into the economy, like [the lack of] education, training and housing for blacks. Blacks were deliberately not trained as part of the policy of apartheid. For a person to be productive, they must have a roof over their head, they must be educated and their working conditions must be decent. With advances in technology, the economy needs a more educated and a more skilled workforce. The South African economy does not have this because blacks have been denied education and training. To resume development, the economy will have to change its orientation; the market will have to be broadened and basic goods and services will have to be produced for the people. MM: How important a factor is the economic crisis in the decision of the white government to negotiate with the ANC? Sisulu: The crisis is very important because it affects the whites directly. The cake is shrinking for the whites also. Many whites are losing their jobs. So the whites are beginning to see that apartheid, which has historically enabled them to have high standards of living, is putting a brake on the country's further economic development. Whites are beginning to see that the regime which systematically destroyed or mismanaged the economy is the Nationalist Party, which has mismanaged the economy for four decades. MM: What kinds of added pressures or sanctions should the Western countries put on South Africa? Sisulu: I would like those sanctions that have already been adopted to be implemented much more stringently. Many Western countries have adopted sanctions but they haven't really been very strict in applying them. An important corollary to the sanctions is increased political and material support for the opponents of apartheid and the countries of the region that have suffered from apartheid aggression and destabilization, countries like Zambia, Zimbabwe, Mozambique and Angola. MM: What about financial sanctions? Sisulu: We are concerned that the international community of banks not roll over South Africa's debt. When the debt does come up for review, it should not be rescheduled until apartheid is gone. There are a number of financial sanctions that can be applied. Also, there are "people sanctions" of South African goods. If a government is unwilling to enact sanctions, then the people shouldn't buy South African food or South African krugerands. Those are sanctions that people can impose by buying or not buying. MM: At what point will the ANC call for sanctions to be lifted? Sisulu: The ANC has said that since we as people of South Africa are the ones who have asked for sanctions, we will come back to the world and say when we think they have served their purpose. Right now, the whole process of change in South Africa can still be reversed. The laws of apartheid are still in place. De Klerk's cabinet can, if it wishes, re-ban the African National Congress. We need to see the scrapping of all apartheid laws, the beginning of serious negotiations and a constitution that is agreed upon. At that point, we can then say, "We think the process has gone far enough, it can't go back"--and sanctions can be lifted. MM: What is the role of foreign investment in the apartheid economy? Sisulu: Foreign investment has been very important to the apartheid economy. It should be remembered that South Africa's initial development was based on gold. Foreign investment poured into the country to mine the gold (and also diamonds) with extra low wage black labor. From the resources gained from mining, foreign investors diversified into manufacturing. Up to the 1960s, there was an influx of direct investment. The trend changed in the 1970s, when there was less direct investment and more loans. South Africa was able to get the loans in order to build and develop the economy and ensure that whites had a high standard of living. With foreign investment came technology and skilled managers from England and North America. Technology has been very important in buttressing the apartheid system. The military industry, for example, was built with the help of the South African government but depended crucially on foreign expertise. Most of the basic infrastructure was set up with the help of foreign investment. MM: What role do you see for foreign investment in the post- apartheid economy? Sisulu: We have said that once sanctions go, we would want investment to flow into South Africa. But the investment coming into the country must not be a substitute for domestic savings and domestic investment; it will be in addition to mobilizing internal resources and putting them to productive use. Because of apartheid, companies today are not putting their money to productive use. There is a lot of spare capacity in the factories because there is no demand. Companies therefore prefer to put their money into the Stock Exchange. This doesn't produce any wealth, of course. So you have liquid money chasing paper assets, not being put into production. In a free South Africa, those resources should be put into productive use, expanding capacity and producing for the majority of the people. The role of foreign investment would be to add on to what we have. We also want foreign investment to bring in its wake technology and to pass on knowledge and skills. MM: What will be the government's attitude toward companies that stayed in South Africa when you asked them to leave? Sisulu: I don't know what is going to happen to foreign companies that refused to leave South Africa, but clearly we will remember who our friends were and who worked with us. In terms of awarding contracts, a democratic government would obviously want to remember its friends. MM: Assuming the ANC takes power, how far-reaching do you anticipate nationalization will be and what sectors are most likely to be nationalized? Sisulu: There is no prior agenda saying what the ANC is going to nationalize. The ANC is in the process of formulating its economic policy. We have, of course, broad guidelines, but economic policy will be formulated by the people, not merely by the ANC. We are currently consulting with all sectors of the population, including the business community, small and big. As with any government, nationalization is going to be an option that remains open. Whether it is going to be used or not is something else, but it is an option that can be used as one of the instruments for redistributing wealth and income. In evaluating the issue of nationalization, you look at what you want to achieve by nationalization, the costs of nationalization, other instruments available to achieve your objectives. Certainly we could not nationalize all industries, because we would need the ability to be able to run those nationalized industries. It would be crazy with the few people that we have to spread them in all these industries; that would be spreading them too thin and they wouldn't have the expertise to run them. So then we would be forced to call on the people [whose factories] had been taken to run things. That would open us to sabotage. The present debate in South Africa over nationalization is a "red herring," really. It is a red herring because it is said that the ANC has no economic policy except nationalization. This is politically expedient for our opponents because of the experience of the socialist countries and because of the pressing for privatization in the West. They hope to portray the ANC as weak, as having no policy except nationalization. We are saying that the ANC has broad outlines to redistribute wealth and that this is only one of the ways of doing it. MM: The Freedom Charter, written in 1955 under the auspices of the ANC and other groups, contains a political and economic program for a democratic South Africa. Is the ANC's commitment to nationalization more flexible than indicated in the Freedom Charter? Sisulu: The Freedom Charter was a very broad outline. It said that the nation's resources must be brought under [popular] control. We are looking at every instrument available to us, taking into account the many changes that have taken place in Africa and South Africa [since the Freedom Charter was written]. We are not wedded to nationalization. MM: What are some different methods that you are considering to redistribute wealth in the post-apartheid economy? Sisulu: Increase the minimum wage. Put resources into education and training. Devote resources to building housing and infrastructure, such as water and electricity services, particularly in the black areas where these services do not exist. There is a need for a social welfare network for the unemployed and also for the elderly and for a sound pension system. The whole land issue is very important. Land hunger is an area that needs to be solved. I don't have any answers and the ANC is discussing this problem. One possible way to address the question is to tax the land which is not used heavily or is unproductive, so that the land is sold to whoever can make use of it. We're talking about a number of possibilities when it comes to the land. For example, we are considering having the land belong to the state but making it available through leases. We are looking at all the options and studying them, so that we can find a way that enables people to work on the land and feed themselves and that also ensures that food is produced at an affordable price. MM: So you are not necessarily committed to land redistribution? Sisulu: We are very pragmatic. We are going into the situation committed to improve the standard and quality of life of our people. We are not going to nationalize unless it is going to solve land hunger, unless it is going to solve the issue of poverty. What we want is an economy that is going to address these issues, which are a result of apartheid and centuries of oppression. MM: How concerned are you about capital flight and the flight of whites with professional skills as apartheid is dismantled? Sisulu: There has been capital flight in South Africa for some time now. More money is going out of the country than is coming in. Part of it is to pay the debt. Much of it is going out because there is no confidence in the present apartheid economy due to political instability and other causes. In a democratic South Africa, we would want to gain the confidence of the business community so that they would invest. We would also use laws to make sure that money remains in the country and is reinvested in the country. About white skills: sure, some whites are going to leave the country, but we hope that others who have skills will come back home. There are thousands and thousands of both blacks and whites who left because of apartheid. If some would leave because of the demise of apartheid, some will come back for the same reason. If some whites want to leave because apartheid is gone and they are wedded to racism, they are free to leave. MM: What role do you anticipate trade unions will play in a democratic government? Sisulu: I think trade unions will continue to play an important role in a free South Africa, particularly in the areas of wage negotiations, improving the health of workers and improving the work environment. As members of the community, they play an important role in a wider aspect, in housing and in many other areas. They will also have a wider influence in working with the government. The trade union movement, the private sector and the government will need to come to some working arrangement in a post-apartheid South Africa. We will need some peace and stability to deal with South Africa's problems. The trade union movement has fought for change and has also been involved in the process of building a post-apartheid South Africa, and it must be involved in the decision-making process, not just on the factory floor, but also on the national level. MM: What do you expect the southern Africa regional economy will look like with a post-apartheid, democratic South Africa as a central component? Sisulu: I think once apartheid goes there will also be opportunities for South Africa to be integrated into the regional economy. Cooperation and integration would have important benefits for the countries in the region, including a free South Africa. Southern Africa has a combined population of almost 100 million people. It is a territory almost as big as the United States. It has a varied climate so that any fruit or crop can grow. It has tremendous mineral resources. So cooperation has a lot of potential. Of course, there will have to be renegotiation of some of the regional treaties because up to now they have been based on an unequal footing and benefited South Africa and not the region. MM: How do you think you will be able to instill confidence in the business community when in many ways the ANC's goals are contradictory to both domestic and international business interests? Sisulu: Our primary concern, of course, is to raise the quality of life of our people. And we do believe that business, particularly South African business, has in the past benefitted from the system of apartheid. If you want business to contribute to the destruction of apartheid and to building a new South Africa, it must have a stake in the future. We are prepared to sit down with business and talk about the future, so that its activities benefit not just the business community or the white community as in the past, but all the people of South Africa. Any economic development that is going to take place in a free South Africa is going to be in a framework that is put out by the government and designed to make the economy serve the people. I'm sure business understands that there is a need to redistribute wealth. In South Africa, nobody doubts that. The disagreement with the business people is not about whether there isa need, but over how to redistribute wealth and income. And as I said, discussions are going on. As far as the international community is concerned, they will be assured of a return on their investment. But this is going to be within the laws of the country; every country has laws which regulate business activity, whether by foreign companies or domestic companies. MM: Are you pleased with how the ANC's discussions with South African business leaders have progressed? Sisulu: Well, I think there is still a long way to go before we can say we have reached a point where we agree on a number of issues. We have expressed our concerns and perspective on the need to develop the economy. They have expressed some of their fears and we have addressed the fears of the business community and the white people particularly. But, of course, it is not a one-way street. There are also the concerns and aspirations and needs of the vast majority of the people which also have to be met and understood by the white community, by business.
Because of apartheid, companies today are not putting their money to productive use. There is a lot of spare capacity in the factories because there is no demand.
Our opponents hope to portray the ANC as weak, as having no plicy except nationalization. We are saying that the ANC has broad outlines and that this is only one of the ways of doing it.
There has been capital flight in South Africa for some time now. Much of it is going out because there is no confidence in the present apartheid economy.
Any economic development that is going to take place in a free South Africa is going to be in a framework that is put out by the government and designed to make the economy serve the people.