South African society is plagued by the wealth gap between black and white inherited from the old days. SMAC has nervously dipped his toe into these dangerous waters and reveals that “blacks are good, whites are bad” is just a useful trope for the ANC and it is actually their policies which have made it worse.

South Africa was born in inequality and remains so as reflected by the Gini index, a statistical measure which encapsulates the distribution of the haves and have nots in a single number. An index of 1 indicates absolute inequality while 0 represents perfect equality. Socialist EU countries measure around 0.3 and indices above 0.5 indicate pretty unequal societies. It is a useful measure, albeit an imperfect one as it gives no indication of wealth, only its distribution. South Africa has the highest Gini at 0.63. Bad boy! It is this statistic which the ANC assiduously wields against Whites in order to justify their all their racist policies.

While the Gini Index for SA is bad, 8 of the top 11 Gini indices (>=0.5) listed by Statista are of SADC countries. Mozambique, a poster child for a black socialist/communist country, is 4 th on the list although it’s been free of the few Whites it had and has been ruled by Frelimo for 50 years. Zimbabwe, which underwent an agrarian revolution 45 years ago and where whites make up 0.2% of the population is 9 th . Zambia whose white population peaked at 2% in 1961 and dropped to 0.2% after independence 61 years ago is 3 rd on the list with a Gini index of 0.57 and Namibia is 2nd . So it is obvious that the trope that
Whites/Colonists are to blame for the continued excessive Gini Index is flawed and does not justify the ever harsher racist policies and regulations. The common thread is that the liberation movements have liberated the wealth for themselves and bugger the poor.

Since achieving power in 1994, the ANC addressed the wealth inequalities by introducing a plethora of race-based legislations and regulations such as Broad Based Black Economic Empowerment and Employment Equity laws as well as preferential procurement regulations. Although the intention was right, the unnatural accelerated nature of these moves did not take into account the limited rate at which societies can change. For example, in 1994 there were more than 100 times more White Chartered Accountants than African. Although avowedly Socialist/Communist, with their skilful handling, the ANC managed to increase the Gini. Under regulatory pressure, the few skilled blacks were ruthlessly hunted down by the private sector and the mere whiff of a qualification and experience allowed them to command excessive salaries. The government and SOEs (State Owned Enterprises) took this to another level and offered packages to Whites to leave. To the lucky few blacks, although they couldn’t offer competitive salaries, they could offer high positions. Thus was born, in sports team’s terms, the quota player who adds little and is actually a disruption.

Next, the requirement of companies to have a certain percentage of black ownership, created a stratum of wealthy blacks overnight, including some mega wealthy like Cyril Ramaphosa who were offered sweet ownership deals. 

This was followed by the onerous procurement legalisation favouring black owned businesses which created the worst beast imaginable – the tenderpreneur – where contracts are not awarded on the best company but to those who can corrupt the process the best.

Given the sophistication, the depth of the economy and the resources boom, this had little immediate effect except that the country undershot its growth potential while being hollowed out and corruption becoming endemic.  After the financial crisis hit and Chinese growth stumbled, SA found itself naked as the tide receded.  The race-based policies had created the conditions for a perfect storm.  The tax base was eroded, many skills had fled, corruption was entrenched at all levels, crime became rampant and basic government functions limped along at best.

Whites roughly managed to maintain their wealth by pivoting or leaving the country in a huff with their families.  Others left in a plane.  Unfortunately they took their toys and skills with them.  Underskilled blacks bore the brunt of years of tepid GDP growth while many lost jobs simultaneously with the unions extracting higher salaries for those who remained employed – go figure.  Of all the racial groups, Africans now have the highest Gini at 0.65 which, when combined with the fact that they comprise the poorest group, means that Blacks are disproportionately dirt poor.  Instead of creating “A Better Life for All” as their slogan goes, ANC policies have created a better life for some and wealth is now divided among the haves and the have nothings.

Can the ANC ever put the Gini back in the bottle?