MANAGEMENT

BRIEFING

18 August 2003

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INTERSEARCH

Dr. J.A. du Plessis

P.O. Box 25587

Monument Park

Pretoria

South Africa 0105

Tel: (012) 460-6366

Fax: (012) 460-6366 (ask for)

E-mail: insearch@mweb.co.za

SOUTH AFRICA: THE STATE OF THE NATION AND

THE END OF DEMOCRACY (PART III)

Understanding the future

This report is a continuation of part 2 (South Africa: beyond democracy) where the broad outlines of developments that impact on society were discussed.

In an attempt to obtain a better grasp of the future, and the crucial next decade, a clear perception of the state of the nation could be useful. In non-political terminology this can be formulated as the state of society, for the latter, in fact, is the real building block of the nation and the state.

South African society is basically ten years away from the first democratic election in 1994. Nearing the end of 2003 there is a growing realisation that the past ten years have experienced fundamental changes to the country and society. There is also an uncomfortable feeling that the country is again entering another period of change.

This second major shift within ten years is due to the following:

§ The phase from 1994 to 2003 reflected a politically driven society. The ANC government focussed on the broadening of democracy and the fundamental restructuring of society as a mechanism to achieve it.

§ Although still a high political priority, there are growing indications that government has been losing its capability to unabatedly continue with the process of transformation.

§ With the election in 1994 South Africa only experienced the first casual encounter with globalisation and HIV/AIDS was a non-existent political issue, still beyond the horizon. By 2003 both globalisation and HIV/AIDS have developed into driving forces outside the realm of traditional party politics and government, with an enormous capability to change the way in which society functions.

South Africa between 1994 and 2003 is two worlds apart and this shift can be perceived in the way in which society has changed over the past ten years.

According to Census 2001, which was released in July 2003, the South African population growth increased with 2% to 44.8 million people.

The composition of Society in 2003

In racial terms the composition of society reflected 79% blacks, 9,6% whites, 8,9% coloureds and 2,6% Indians.

The racial features

Unemployment was officially rated as 29,4%, while under the broader definition it was estimated as 41,9%. In numerical terms some 1,9 million people were without a job in 1995 and this has officially increased to 4,9 million in 2002, but 8,1 million under the broader definition.

Economic activity

Households that earned less than R670 per month increased from 20% in 1995 to 28% in 2000.

Some 22 million people have an income of less than R144 per month. In broad terms, almost 50% of the population has been derailed from the economy and is in some way dependent on the state for their survival.

There is a sound legislative framework for adult education and various authorities are responsible for the implementation. However, about 50% of adults in South Africa have less than 9 years schooling – about 10 million people. In 1999 the October Household Survey found that 90,7% of non-urban people have no training. Close to 3 million people are uneducated.

Education – Expertise

Figures from the national Department of Education indicated that out of every ten children who start school, only four would go through to matric. The pass rate for the matric exams increased by 5% in 2000 and then 11% in 2001. However, the number of learners who entered the final exams declined from 552 862 in 1998 to 449 371 in 2001 and 443 821 in 2002. From the latter number of learners only 5 000 succeeded with a C and higher symbol in mathematics or science – of whom only 835 were black learners.

Higher education

When it comes to tertiary education, only 9% of the population has a degree. South Africa produces only 18 people per million with doctoral qualifications, while Australia delivers 170 doctoral degrees per million people.

Migration

According to Statistics SA some 58 000 South Africans emigrated between 1996 and 2001, of whom 22% were professional people. Other researchers have indicated that, on average, 3,5 times more people have emigrated abroad than are reflected in the figures of SSA.

The country has a serious problem in training its own people and runs the risk of losing its expertise to foreign countries. In this process South Africa is losing its competitive edge.

Information about the impact of HIV/AIDS is varied, but it all points in the same direction. From this certain trends are clearly identifiable.

The impact of HIV/AIDS

The recent Census report has again reiterated government’s lack of concern, or maybe understanding, about the impact of HIV/AIDS on society. President Thabo Mbeki indicated that the report was needed in terms of future planning, but it contains no information regarding the impact of AIDS on the country’s population demography. This kind of information is of vital importance for any future planning, but was unobtainable because HIV/AIDS by law is not a notifiable disease or cause of death. If Government officially is in denial about HIV/AIDS, one cannot expect the population to use condoms and believe in anti-retroviral treatment.

South Africa is blindly navigating into the future.

The deputy provincial director-general of health for the Western Cape, Dr Fareed Abdullah said at the recent AIDS Conference in Durban that five million South Africans will die of Aids in the next eight to ten years unless universal anti-retroviral treatment begins soon.

The infection rate

UNAids already estimated the HIV infection in South Africa in 2001 at 5 million people. Other groupings such as the Actuarial Society of South Africa (ASSA) projected that 6,6 million people were already infected on 1 July 2002.

According to UNAids 600 000 people died of Aids in South Africa during 2002 and 360 000 deaths occurred in 2001 – an average of 1 000 per day. From 2004 onward, without interventions to treat and prevent HIV effectively, there will be around 700 000 deaths a year

In his presentation Abdullah said that by 2006, without anti-retroviral therapy, there will be an average of 1.4 million Aids cases a year in South Africa.

Professor Quarraisha Abdool Karim of the Centre for the Aids Programme of Research in South Africa said at the conference the death rate would continue to rapidly rise, as would an increase in the number of orphans and a continuing large number of new HIV infections.

The United States based Population Reference Bureau projected in its latest world population data sheet that South Africa's population would drop from 44 million in 2003 to 35.1 million in 2025. Earlier this year the University of South Africa's Bureau of Market Research estimated that HIV/Aids was expected to ravage South Africa's population growth with 12 million people by 2015.

The minister of Labour, Membathisi Mdladlana, presented some serious warnings about the impact of HIV/AIDS on the labour force when he recently released the Department of Labour’s guidelines on HIV/AIDS. Without anti-retroviral intervention the average life expectancy of men is expected to decrease to 43 years in 2005 and 38 years in 2010. In the case of women, the average life expectancy is 43 in 2005 and 37 years in 2010.

Shortened life expectancy

The Aids Conference in Spain in July 2002 projected an average life expectancy of 36,5 years for South Africa.

The Medical Research Council reported that 40% of deaths of people in the age sector between 15 and 49 in 2000 were Aids related. The ASSA projected that of the 6,6 million people infected by 2002, “over 6,1 million (95,1%) were in the age group 18-64 years.”

With anti-retroviral intervention as many as 1 million AIDS orphans can be expected. Without treatment it could go as high as 1,8 million. The agony of the situation lies in the fact that if the middle sector of society collapses, there will be very few people to look after the orphans. The orphans are already the result of the present collapse of the middle sector of society.

Orphans

These figures are of enormous significance. It is a clear indication that HIV/AIDS has been destroying the middle section and the productive part of the population: parents, workers, managers, teachers, etc. This is what has made the HIV/AIDS pandemic in South Africa so unique: it has been pressurising the middle sector of the population to the point where some parts may eventually start collapsing.

When the structure of society starts to change, all the other institutions will follow in due course. This is not readily understood.

Change of the demographic profile

There have again been warnings that an effective Aids vaccine is far from ready. Although the direct cost for treatment seems to come down, hidden costs and medical responsibility for the infected patient seem to be major problems. The latest “Qualsa Healthcare HIV Programme: treatment protocols 2003” provides an indication of what HIV treatment implies.

Treatment

It is a twice-daily treatment for life for the patient, conducted by a medical practitioner with the back up of a skilled and experienced clinical team. It implies regular testing of the patient and a very high rate of compliance with the treatment; otherwise a decline of effectiveness sets in.

Effective HIV infection treatment implies the availability of a well managed and skilled health service. This is the one element in the treatment programme that is lacking at present.

Since 1994 HIV/AIDS has progressed from a disease to a pandemic. As a disease it infected and killed people; as a pandemic it infiltrates systems and causes system failure.

In a recent voluntary saliva test of white-collar workers an IT company discovered that 7% of them were infected – and it was suspected that the figure could be higher.

HIV/AIDS can destroy a system – and company – from more then one angle. It can directly affect the workforce with a resulting decline in production, or it can infiltrate management and paralyse decision-making with resulting system failure. This is why advance knowledge of HIV infection is so crucial for the survival of any functioning system and effective company.

System failure

HIV/AIDS has affected the destruction of the extended family system, which has been the backbone the African society in particular. Dr Anne Barnard of Ingwavuma Orphan Care told the conference that “Already, children as young as four years old are trying to care for their ill and dying Aids-infected parents”. Her research indicated precisely how HIV/AIDS was destroying the extended family system. “The families contained 78 adults and 137 children with no one experiencing regular paid employment. Of those families 16 had no healthy adults, and five had no healthy adults older than 25. Six families had two sick members and two were caring for three ill family members.

Two-thirds of the households had experienced one or more deaths in the last three years due to HIV/Aids, with most of the deaths in children younger than five.

Destruction of the extended family

A third of the parents died during the three-month study period.

This is not unique to the northern parts of KwaZulu-Natal. Unfortunately, it is a message received from many rural areas of South Africa. African society is in a crisis for survival.

Catherine Cross, an anthropological economist of the Human Sciences Research Council, said at a seminar in Pretoria that the death of a family member due to Aids is often only the first, and not the worst, ordeal survivors have to face. "The sequence goes from Aids to poverty to land snatching to dispossession...Dropping out of the community is the final risk to Aids survivors."

Very often the community does not regard such youths as fit to be given the right to the land their late father had occupied. They are deemed to be unreliable until they are married. "If households don't keep the right to land, they don't have the right to exist."

From AIDS to outcast

The fundamental transformation of society first reflected itself in the restructuring of the Public Service between 1994 and 2000. Mbeki indicated that the constitution of 1996 provided the basis for the eradication of historical inequalities by affirmative action as embodied in the Employment Equity Act of 1997. This law compels companies to change the profile of senior management according to the population composition.

At present senior management positions in the Public Service are 56% black, 8% Asian, 10% coloured and 26% white. In the private sector senior management is 79% white and 11% black.

Transformation of society – 1994 to 2000

The process of transformation in the Public Service has been politically driven with the composition of the population as the cornerstone – it was a numbers driven process from the very start.

Based on reports from the Auditor General to parliament and from Mbeki himself, the process can be summarised as follows:

According to the composition of the population principle, blacks were moved into management positions and whites left en masse.

In addition certain budgetary adjustments were made. The salary component of the budget for many departments was increased. In certain departments such as defence, education and transport the salary component climbed as high as 92% of the total budget, with no money left for equipment, maintenance and operational costs. As expertise left the Public Service due to transformation the government’s capability to provide services to the public has been deteriorating.

Nation building at 2003 is something completely different from nation building after 1994 for the composition of society has changed irrevocably.

Society at 2003 is torn by high levels of illiteracy, poverty, lack of skills and the deaths of the productive sector of the population. This is an abnormal society with a high level of dysfunctional systems - and it is likely to remain this way for a long time to come. This has important implications for the public and private sector.

Mbeki has been emphasizing the importance of nation building since 1994. Once he described South Africa as a country of two nations: one rich and white and the other poor and black. His attempts at transformation and black economic empowerment can be seen as a mechanism to change this discrepancy into a new unity.

Government and private sector - 2003 and beyond

It is doubtful, however, whether nation building will survive after the way in which society has been transformed over the past decade. The powerful impact of HIV/AIDS has changed the game rules of politics and society and it is very likely that society will be qualified in the near future by two new concepts: the Infected and the non-Infected. HIV/AIDS is already a dominant issue on the national agenda and the demands of the pandemic on the whole of society could very easily lead to a paradigm shift from the present struggle mindset to something new.

HIV/AIDS does not only have the capability to deal a devastating blow to nation building, but it is doubtful whether democracy itself will survive, remaining intact. If democracy is about elections and the formation of majority and minority groupings in parliament according to public support, then HIV/AIDS has the potential to change exactly that.

Impact on the nation and politics

Within ten years HIV/AIDS as disease has infected enough people to disrupt the whole political scene. The nature of the disease could change the culture of politics and the demands – and therefore policies. HIV-infected people are quite likely to demand medical care here and now at reasonable cost, or perhaps free of charge, regardless of whether the economic system can afford it.

This demand could be supported by such numbers that no political party would be able to resist them as a unitary bloc. The possible dilemma is that no party will be able to resist an Infected Bloc, but then, no party will be able to accommodate them and survive. An effective Infected Bloc could change the face of politics in South Africa and, quite possibly, bring democracy in its present form to and end.

The end of democracy?

The fact is that there is no certainty about these issues. This is the first time in modern history that something like this is happening to a country and, unfortunately, that country is South Africa.

The private sector will have to provide an answer to the 2003 state of society in the country.

Government’s response to the state of society after 1994 was the process of transformation and all indications are that Government will continue with the policy, regardless of whether the composition of society has radically changed.

The private sector will have to realise that Government’s approach to society is in line with political thinking typical of the period from 1994 tot 2000. The emphasis is on time and percentage: e.g. the process of empowerment has to be in place by 2015 with 25% black ownership.

The new structure of society will not necessarily accommodate these demands, for one of the features of the new society is a lack of skills and expertise that will affect time frames and percentages.

There is, however, a certain new trend to be identified in the private sector in the management of a situation where society in certain sectors is facing collapse, Government is in no position to step in and provide, HIV/AIDS still has to outplay itself and globalisation is making increasing demands on production. This situation by 2003 is unique and differs completely from the situation after 1994.

Challenge to the private sector

Government’s inability to provide certain basic services to society has initiated a new dynamics. The lack of law and order, in spite of taxes and a police force, has led to such a security risk for companies that private security companies have started up in large numbers since 1994.

Transformation will continue

The implications here are that Government’s mismanagement, or inability to manage, has led to the privatisation of security in South Africa. Privatisation, however, could not have happened without the reintroduction of management expertise into the security business.

Apart from Government’s inability, two other factors play a role in the new environment: HIV/AIDS and globalisation. Privatisation in itself does not guarantee the survival of the security industry, for the impact of HIV/AIDS will basically have the same effect on the police force as on the personnel of security companies. The economic survival of security companies will probably rely on their capability for technological intervention, which implies the replacement of the human element with technological capabilities of surveillance.

New trend

This will definitely have labour implications for the industry, as it will cause unemployment. This, however, is also an indication of the process of globalisation where the workforce of yesterday will not be in a position to compete with the demands of tomorrow. This will call for some deregulation on Government’s side or else private sector companies in the security industry could face the risk of going out of business.

From mismanagement to privatisation

What is true about the security industry is also valid for most other industries. If the private sector is to position itself in this new environment, it seems that the following issues are of primary importance:

§ Government will have to deregulate and discard the time and percentage approach to the private sector.

§ The services Government cannot provide and that are needed will have to be privatised.

§ Management expertise will have to be introduced and skills and know-how will have to be protected.

§ Technological intervention will be necessary in order to protect the competitive edge of a company in the market.

By 2003 Government has been left with a sound political majority in parliament, but an inability to deliver. Good governance has become a problem. In reaction to this, the private sector leadership will have to accept a much higher leadership profile in years to come, to compensate for Government’s inabilities.