A New Democratic Nation: Economic and Social Conditions, 1994-2009
Despite the good intentions of the new leaders who took the helm at the beginning of the post-apartheid years, South African and its people have seen mixed results when it comes to the economy, employment, public safety, public health, and infrastructure. What follows are some of the key conditions and challenges that the country grappled with during the 15- year period immediately after the end of apartheid until 2009, when Zuma took power.
The macroeconomic policies that the ANC adopted in 1996 stabilized a weak economy and led to considerable achievements. Between 1993 and 2000, the fiscal deficit was reduced from 9.1 percent to less than 2.5 percent. By 2004, the inflation rate had also dropped to the lowest rate since 1959, and interest rates were brought down to levels last seen in the 1980s. The country’s credit ratings improved, allowing the finance minister to raise debt at better rates. And, by 2005, the central bank’s reserves had grown to US$15.1 billion.
The growth rate in the country increased steadily after 1994, as well, giving the country its most consistent growth performance ever. Yet it remained lower than that of most developing countries—and more in line with that ofadvanced economies where4 average per capita income is six to seven times higher than South Africa’s.5
Unfortunately, the South Africa economy took a hit, as did every other country in the world, after the 2008-2009 global recession. Yet the country fared much better than other countries, due in part to government policies that prohibited banks from investing in the kind of credit derivatives that fueled the crisis in America and Europe. The government’s massive public investment in preparing for the 2010 World Cup, plus a government stimulus package of 690 billion rand over the next three years, also helped improve the country’s economic picture.6