South African Farmers Once Sent Aid to England: The Roles of Corruption and Colonialism in Reversing
In my previous article I attempted to suggest a few reasons for the level of poverty in the townships and rural areas of South Africa. In this article I want to suggest what might be the underlying causes for the inequalities that I observed.
The former South African President, Jacob Zuma, is probably the first person that comes to mind when thinking about problems in the country. He is definitely an easy target: The man is a walking and talking symbol of corruption, not to mention hilarious to watch when he tries to discuss large numbers. It is hard to forget the speech Zuma gave at the ANC general council, where he famously fumbled over figures.
In addition to his uncanny numeracy, he can be very creative. In fact, when he was caught embezzling over $15m to “renovate” his luxurious home, he told authorities that his swimming pool was an ‘anti-fire pool’, to be used only to put out a potential flaming inferno that could engulf his holiday mansion. He claimed that it was fair to call these ‘renovations’ taxpayer expenses because the pool was essential for his personal security as the President.
Tenuous to say the least, but at the time he escaped punishment. Three years later and he has, at last, been officially dismissed by his party. However, this is just as likely to be a result of many other discrepancies that he has been involved in since. Without doubt, Zuma’s dismissal will be a cause for celebration for citizens across the country, but this should not distract from the fact that he still managed to hold the highest possible position in elected office for years despite constant accusations against him.
Zuma should have been punished severely for his actions, no matter how inconceivable his excuses may be, but corruption is not a problem unique to South Africa. The UK was rocked with expenses scandals a few years ago, one MP famously using taxpayers money for maintenance on his moat. Therefore, to understand where South Africa’s problems stem from, we have to look past Zuma. We must analyze why some parts of the country have been politically and economically reformed and others haven’t.
The book ‘Why Nations Fail’ by Acemoglu and Robinson describes, quite succinctly, the implications of colonial rule on income distribution in South Africa. The land that is now South Africa was initially colonised by the Dutch, then by the English. Contrary to popular belief, the rural lands called the ‘interior’ were actually very quick to adopt the technologies and practices brought over by the Europeans. Soon enough, rural African farmers were using ploughs, advanced irrigation methods and even established property rights. The lands were previously untouched, so with European technology, farmers became considerably wealthy.
Here’s a little known fact: In 1869, a missionary recorded that he had collected 46 pounds in cash from African farmers for the Lancashire Cotton Relief Fund. Scarcely believable, but entirely true, in 1869, Africa was giving aid to England. With this in mind, isn’t it curious how, in my previous article, I reported that even to this day property rights in rural South Africa were still a very loose concept and farming was relatively primitive and unprofitable for local farmers?
In 1913 the British Colonial Government introduced the Natives Land Act. The basic premise of this act was to divide South African land. It gave the productive 87% to Europeans and the rest to African natives. This Act and its subsidiaries basically ensured that Europeans took the control of the profitable farmland, whereas Africans were forced off their lands and were only permitted to stay if they worked for its new occupants. The areas designated for natives were controlled by Chieftains and property rights were once again a foreign concept. It is no surprise that today the ‘dual-economy’ of South Africa is a mirror image of the situation in 1913.
But things didn’t stop there. Mpumalanga, the region discussed in my first article, is in dire need of investment. Better-funded schools, an extensive transport infrastructure, healthcare (that could reduce the 40.5% HIV/Aids rate) and some legitimate policing could potentially transform the province. However, a lot of South Africa’s tax revenue is extracted from the country by “developed-world” institutions via fraudulent financial flows. In fact, across the whole African Continent, more money flows out through uncollected tax revenue from activities undertaken in Africa than the amount received from foreign aid. By these “activities” I mean business activities done by foreign multinationals. For example the mining of South African diamonds by belgian monopolist, DeBeers.
These activities are perfectly legal in themselves, but the earnings from these activities are declared disproportionately and often prices are set using outdated and asymmetric dynamics. As a result of these practices, resources from African countries flow out of the continent through multinational activity, whilst actors in these producing countries don’t come anywhere near close to being fairly compensated by first world standards.
If you fail to identify with this issue, look at it this way: European countries could save significant portions of the billions they send out in foreign aid, each year, if they could design policies to prevent their companies from unfairly exploiting African resources.
In many ways, the developed world is giving with one hand, yet taking away with the other. If you’re wondering how this practice works and how it is allowed to continue, I will be writing about the South African Diamond Industry in my next article.