The ideational dimension of South Africa’s “rainbow miracle” remained intact. 65 The salaries of highly skilled frontline public sector workers are typically between levels 6 and 8—so the increase in the share of employment in levels 9–11 generally is consistent with an enlargement of the managerial ranks. [32][52] Dominic Barton was elected as Managing Director, a role he was re-elected for in 2012 and 2015. In Zuma’s second term, per-capita income growth entered negative territory. [99]:163 The authors found that the best-performing companies were "obsessed" with acquiring and managing the best talent. The losers in elite conflicts within the ANC felt aggrieved. The scandal-plagued firm scored yet another COVID-19 government contract, making over $7 million since December. Since the mid-1920s, employment in the public sector had been used as a political tool of targeted employment creation, acting as something of an employer of last resort to address the “poor white” problem.59 The policing arm of the public sector was the mechanism for ruthless enforcement of apartheid controls. 66 Department of Public Service and Administration; South African government’s personnel salary database; and Public Service Commission, “State of the Public Service 2006: Assessing the Capacity of the State to Deliver,” Pretoria, 2006. [65][66] At least twice, Gupta used a McKinsey phone to call Rajaratnam and retained other perks — an office, assistant, and $6 million retirement salary that year[67] — as a senior partner emeritus. 55 Simpiwe Piliso, “How ANC Bigwigs Jostled for Telkom,” Sunday Times, October 15, 2006; and Simpiwe Piliso, “ANC Defends State Role in Telkom Deal,” Sunday Times, October 15, 2006. In a rapidly changing polity such as South Africa’s, in which elite transformation (including internal contestation among aspirant elites as to who would be the new “insiders”) was central to the agenda, the strains became apparent before long. Plausibly, in other contexts, a turn to anger could precede, indeed catalyze, a subsequent attack on institutions. They have advocated for the country to return to “the basics,” to reembrace the trajectory of the Mandela and Mbeki presidencies. [44], McKinsey denied giving Enron advice on financing issues or having suspicions that Enron was using improper accounting methods. There is the potential to set in motion virtuous circles of positive interactions. . [98], McKinsey consultants published Creative Destruction in 2001. As per its name, the 2004 BB-BEE Act went beyond a narrow preoccupation with ownership. In addition, the board chairman, who had resisted political pressure, was removed and replaced with Ben Ngubane, who was alleged to be close to Zuma. [140], As part of a lawsuit against Allstate, 13,000 McKinsey documents were released, showing that McKinsey recommended that Allstate reduce payouts to insurance claimants by offering low settlements, delaying processing to wear out claimants through attrition, and fighting customers that protest in court. High growth, with real income rising by 40 percent over the period. In March 2015, Eskom’s executive procurement committee approved a cost escalation, but this increase was rejected by Molefe immediately upon becoming CEO. South Africa became a Republic in the 1960s. . By the early 2000s, MTN’s ownership structure had stabilized; it had emerged as the highest-profile BEE-controlled firm in South Africa. 111 Thabo Mbeki’s “I Am an African” May 1996 speech to parliament on the occasion of South Africa’s passage of a new constitution is another powerful statement, in a similar vein. First, the trajectory of change is a knife-edge. It is easy to overstate the practical impact of this protocol in the years immediately following its issuance: both the PetroSA and Eskom/Medupi examples noted earlier happened during this supposed good governance heyday. The OECD also cited wage increases rather than an increase in employment as the primary driver of government spending; see OECD, “OECD Economic Surveys: South Africa.”. Incremental gains in other sectors of provincial service provision must also be viewed in a wider context of long-term net underperformance, resulting from a disproportionate failure to expand the frontline highly skilled segment of the public sector workforce at the expense of a burgeoning managerial class. Opposition parties used the freedom that parliament allowed to voice objections vigorously and theatrically. There also was domestic scandal. Fourth, initiating a new cycle of renewal requires a set of ideas that address in a “good enough” way the imbalances that had resulted in derailment—including a readiness to challenge incumbent interests that had blocked change. Growth, underpinned by hope, had transmuted into anger. Institutions can function as shock absorbers. With in-depth features, Expatica brings the international community closer together. The role of media was critical, amplified, and supported by a variety of nongovernmental activist organizations. The final straw was a conflict over whether South African Airways should cede the potentially lucrative route to Mumbai to an Indian-owned airline championed by the Gupta family. The initiatives did not address in any systematic ways the country’s extreme concentration of wealth and income. He was a visiting scholar at the Harvard Business School, a regular visiting professor at Maastricht University, a research director for the International Growth Centre in Zambia, a member of the OECD Inclusive Growth Advisory Panel, and a Bradlow fellow at the South Africa Institute for International Affairs. It featured centrally in the Public Protector’s 2016 State of Capture report.108 Once Zuma vacated the presidency, momentum for the nuclear deal seemed to have dissipated. ), Towards Employment-Intensive Growth in South Africa (Cape Town: University of Cape Town Press, 2016); and Nicoli Nattrass and Jeremy Seekings, Inclusive Dualism: Labour-Intensive Development, Decent Work and Surplus Labour in South Africa (Oxford: Oxford University Press, 2019). [24]:22 McKinsey created practice areas for manufacturing and business technology in the late 1990s. 59 Carnegie Corporation of New York, “Carnegie Corporation in South Africa: A Difficult Past Leads to a Commitment to Change,” Carnegie Results, Winter 2004. As the table shows, over the course of two decades both measures declined steadily but modestly. As seen in figure 6, in the two (pre-COVID-19) years subsequent to Ramaphosa becoming president, there was no economic growth recovery. 49 Almost all of the core negotiators who were not already senior industry executives subsequently were appointed as nonexecutive directors on the boards of leading construction companies. [19][151], In October 2018, in the wake of the assassination of Jamal Khashoggi, a Saudi dissident and journalist, The New York Times reported that McKinsey had identified the most prominent Saudi dissidents on Twitter and that the Saudi government subsequently repressed the dissidents and their families. This is not the place for a comprehensive review of the impact of New Public Management on public governance in South Africa.71 What is relevant for present purposes is that its introduction weakened centralized control over the administrative processes of government as a result of the extensive contractualization of service delivery through public procurement and supply chain arrangements. 4.1 (2009): 910–942; and V. Naidoo, “Changing Conceptions of Public ‘Management’ and Public Sector Reform in South Africa,” International Public Management Review 16, no. [4] En 2021, McKinsey compte plus de 130 bureaux répartis dans 65 pays et réunissant près de 30 000 personnes. (This ethnopopulist scenario is a fairly good approximation of what has transpired in Zimbabwe since the early 2000s.). Malema outlined the EFF’s economic vision as follows: “Soldiers and the police are not our enemy; our enemy is white monopoly capital and their political co-optees. [20][21], McKinsey & Company was founded in Chicago under the name James O. McKinsey & Company in 1926 by James O. McKinsey, a professor of accounting at the University of Chicago. 106 Perhaps not entirely coincidentally, one of the first major investments of the Gupta family, jointly with Duduzane Zuma, was the purchase in 2010 of the hitherto-Canadian-owned Uranium One mine. Four elements are central to a strategy capable of credibly fostering inclusive development, focused especially on proactive support for upward mobility: (1) improved public sector governance, (2) a strengthened supply side of upward mobility, (3) a strengthened demand side of upward mobility, and (4) growth-compatible redress. For three of the measures, the country emerges as a strongly positive outlier, though its score on a fourth is more mixed—albeit for an understandable reason. This has led to a growing shortfall in the availability of nursing staff within an already overloaded public health service, which caters to the vast majority of citizens who cannot afford private health insurance and care. The telecommunications industry also saw some questionable transactions. Tables 8 and 9 provide estimates of the magnitudes. Where inequality is the domain of interest, the ideational challenges are different for political entrepreneurs who support the status quo and those who challenge it. 30 Hirsch, Season of Hope: Economic Reform Under Mandela and Mbeki. They are monopolising, they are not black. [32] He organized McKinsey into 72 "islands of activity" that were organized under seven sectors and seven functional areas. [30] McKinsey became a private corporation with shares owned exclusively by McKinsey employees in 1956. As noted earlier, while Ramaphosa began the task of rebuilding the damaged state early in his tenure, he chose an incremental and legalistic path to reform. . Brian Levy teaches at the School of Advanced International Studies, Johns Hopkins University. Resistance remains strong in many regions, cities, and towns, and Ramaphosa’s hold on power remains conditional. It is imperative that South Africa strengthen the governance and effectiveness of the public sector. Innovation is needed. However, this muddling-through scenario is unlikely to have the broad-based political support needed for it to be sustainable over the medium term. . The contract went to a joint venture between Hitachi Power Systems and Chancellor House—the investment arm of the ANC.54. 109 Sharun Mukand and Dani Rodrik, “The Divided Public Heart,” Aeon, June 6, 2018, https://aeon.co/essays/how-do-elites-manage-to-hijack-voters-ideas-of-themselves. [44], In his July 2002 in-depth BusinessWeek article on the aftermath of the Enron scandal, John Bryne wrote that McKinsey had been a "key architect of the strategic thinking that made Enron a Wall Street darling. [39]:208[82] By 1997, about one-fifth of McKinsey's consultants departed under the up or out policy each year. There have been increases in the aggregate amount the public sector spent on wages. Pressure on institutions can come from a lack of robustness in the elite bargain and thus ongoing contestation among elites; it also can come from ongoing challenges in incorporating nonelites. Credible commitment requires that a critical mass of elites in the private, government, and political realms support and voluntarily comply with the rules of the game, with compliance underpinned by credible mechanisms of enforcement. The effort to combine growth and redistribution required a collective, society-wide commitment—one that cut profoundly against the grain of South Africa’s historical legacy. McKinsey does much of its pro-bono work through the SSO, whereas a Business Technology Office (BTO), founded in 1997, provides consulting on technology strategy. [33], In the 1940s, McKinsey helped many corporations convert into wartime production for World War II. Kgalema Motlanthe served as president from the time of Mbeki’s resignation until, subsequent to the 2009 election, Zuma acceded to office. . Ideas matter—a hopeful vision of change, when combined with a “good enough” responsiveness to distributional concerns, can be sufficient to launch a positive trajectory. 142 Anthony Atkinson, Inequality: What Can Be Done? The business insiders whose investments and skills were concentrated in capital-intensive sectors of the economy—and formal employees (by the mid-1990s, predominantly black) who enjoyed relatively high wages as a “labour aristocracy” of insiders—reproduced the inequalities of the past, with little economic incentive to change. But at the same time, there is a substantial risk that unaddressed distributional imbalances can result in a reversal, setting in motion a cumulative downward spiral of decline. But there also is substantial risk that unaddressed distributional imbalances could cause a cumulative downward spiral of decline. Insofar as this shift has been combined with a rising propensity to patronage and clientelism, the public sector has had to contend with growing pressures on the fiscus and on service quality (see “Transformation of the Public Sector” later in the paper­). Institutions assure that the bargains underpinning cooperation will be monitored and enforced. Postsecondary-school adolescents and young adults also need expanded investment in higher education and vocational training. (The other two, Group Five and Basil Read, also were above the target of 30 percent.) However, supporting the policies of the political challenger could economically hurt the low-income voter . . . The South African experience suggests that a positive trajectory can be sustained as long as influential interests and citizens more broadly remain hopeful that preexisting legacies of inequality and injustice are being addressed. 12 Feb 2021, Pretoria. [48] Also in 2003, the firm established a headquarters for the Asia-Pacific region in Shanghai. 6 Albert Hirschman, “The Turn to Authoritarianism in Latin America and the Search for Its Economic Determinants,” in David Collier, ed., The New Authoritarianism in Latin America (Princeton, NJ: Princeton University Press, 1980), 88. The big economic question faced by the ANC was: What would be the ideal relationship between growth and redistribution in South Africa? Over the course of the subsequent eight years, an accelerating downward spiral of decline seemed to take hold. 135 From forty-one to forty-nine nurses per 10,000 population. However, the economy continued to be structured along lines built by apartheid: white economic elites dominated ownership and control of the private sector. . After earning a law degree from the University of the Witwatersrand in 1988, he commenced his career as a lawyer at Bowman Gilfillan, becoming the first black South African partner in 1994. 141 Brian Levy, Robert Cameron, Ursula Hoadley, and Vinothan Naidoo (eds. As a prelude to exploring the reasons for this turn from hope to anger, it is important to reiterate that the deep underlying cause was continuing economic inequity. 29 Paul Taylor, “A Black Success Story Brewing in South Africa,” Washington Post, July 21, 1993, https://www.washingtonpost.com/archive/politics/1993/07/21/a-black-success-story-brewing-in-south-africa/019e6509-16f0-495e-b60f-4d407e9e43fb/. Its mean per capita income is well below what would be perceived, in high-income countries, to be middle class. Informal commitment mechanisms can provide robust credibility. By the end of the apartheid era, the economy had stopped growing. To address the former, the settlement provided a platform for cooperation between established and emerging elites. There was ample reason for the majority of South Africans to feel that, notwithstanding the promises of mutual benefit, the deck remained stacked against them. An early example of such proactive initiatives was the privatization of the government-owned sorghum beer industry in 1990 and its transfer to the hands of black entrepreneurs, forming the National Sorghum Breweries Ltd.29 Soon after, in 1993, the Afrikaner-dominated conglomerate SANLAM sold 16 percent of the Metropolitan Life insurance company to a black empowerment consortium, New African Investments Limited (NAIL). South Africa’s political settlement was built around four distinct subbargains: All of these subbargains except for the last one, which was pursued at least into the 2010s, were built on shaky foundations. . All four firms had met the charter’s BB-BEE targets for providing capacity-building support to their subcontractors and for enterprise development. 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