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Neo-colonialism or great leap forward?

The Daily Mail and Gurdian
14 November 1997

The Investors' Conference into the Wild Coast Development unveiled R12-billion worth of new projects but critics argue only a chosen few will benefit, writes Craig Bishop

`The Eastern Cape development train is in motion - don't be left behind," was the advice given by President Nelson Mandela to more than 500 delegates at last weekend's Investors' Conference in East London. Not everybody was impressed, however. The United Democratic Movement leader, General Bantu Holomisa, says the "gravy from this train" will go to "a new black elite, who are being used by foreign multinational corporations to get land under the guise of black-led companies".

Over 150 projects were presented to the delegates, representing Eastern Cape investments totalling R12-billion, which are set to add R4-billion to the gross domestic product (GDP) of the region.

The flagship projects are Billiton's plans for the seventh-largest zinc smelter in the world (at a total cost of R2,7-billion) and a R1,5-billion deep-water port based at either Coega (near Port Elizabeth) or East London.

The zinc plant is expected to employ 4 000 people in the two-year construction stage, and create 600 permanent jobs thereafter, adding 10% to regional GDP.

Meanwhile, the Eastern Cape motor industry is set to enter a new boom era. Delta expects to spend R1,2-billion on new products and VW announced its successful bid for a R400-million export order to Britain. Mercedes-Benz SA also announced major expansion plans for the year 2000.

And tourism projects totalling more than R1-billion could double the present value of international tourism once the unrealised potential of the Wild Coast is tapped.

The Eastern Cape projects are poised to deliver a much-needed investment into the country's poorest province, but Holomisa says he is "sick and tired" of the latest trend in ANC-led development.

"SDIs are tantamount to neo-colonialism of a special kind. The so-called empowerment models create a whole lot of mini black Oppenheimers with minimal benefit to the larger majority," Holomisa said.

Meanwhile, Justice Willem Heath, head of two of South Africa's most powerful investigation forces, the Heath special investigation unit and the Heath tribunal, has warned that his work in the province is "far from finished", and that the next few months would see a string of "high profile political surprises".

"We are investigating virtually every holiday resort on the Transkei coast. We have warned the initiatives on numerous occasions that they have a serious problem.

"In that area no survey was ever done - no property is registered in the Deeds Office, which means that you cannot sell or lease that land. I can't imagine that any reasonable businessman from overseas would be interested to invest once they know that." But, these same "reasonable businessmen" are integral to the success of the developments. The government can invest only 10% of the total investment required, forcing it to look to foreign multinational corporations for help.

Department of Trade and Industry's special projects co-ordinator, Paul Jourdan, says that the initiative concept is a "proven means of giving government more job- creating bang for its limited bucks".

Jourdan says that the temptation for the government to ride roughshod over community or environmental concerns is "tempered by a commitment to consultation with interested parties", where the government is "bound by its own belief in progressive environmental and labour practices".

But, despite trade minister Alec Erwin's assurances that the government is "being as rigorous as we possibly can" over community consultation and environmental concerns, information-starved communities are still far from being full participants of what Erwin describes as "the shrinking global economy".

Small Projects Foundation's managing director, Paul Cromhaut, has been involved in the establishment of 21 information centres and shops, designed to give access to information on government legislation and initiative proposals so that communities can make informed decisions about their options.

"To prevent total community disruption, we need dissemination of information so there is scope for people to make rational decisions about whether development in their area is good or bad."

Wits University Graduate School of Public and Development Management lecturer, Patrick Bond, says the investors may be looking in the wrong place.

"Studies by the Industrial Development Corporation show that the Eastern Cape is the main provincial loser from globalisation, with all the key sectors except tobacco and chemicals expected to lose output and jobs.

"Since a well-balanced economy requires both backward and forward linkages, it's going to be crucial for provincial officials to replace the top-down megaproject with a bottom-up, basic-needs infrastructure strategy if they want to withstand coming economic hardship."

Meanwhile, Holomisa, who is claiming 25% of the provincial electorate, is playing on this frustration.

Holomisa, who did not attend the conference because "no one invited me," says that the majority will not benefit from "yet another lofty, wonderful idea by the African National Congress, which is looking at leveraging in investment from countries with proven human rights abuses, such as Indonesia".

Holomisa says the conference comes at an opportune moment for the ANC in the Eastern Cape, traditionally seen as the ANC's strongest constituency.

"They need to boost their image because people are starting to write them off."

Holomisa says that unlike the foreign aid that was poured into the Reconstruction and Development Programme in 1994/95 and then allowed to "quietly disappear into Thabo Mbeki's office", SDI money is invested directly.

"But they are talking the language of consortiums and privatisation to communities where around 70% do not even have bank accounts. How will communities be able to buy shares?"

Cromhaut replies by saying that black entrepreneurs are critical to sustainable job creation and creating value in previously neglected areas.

"If we are looking at long-term development in these communities, then risk takers are needed to set the example. They are the change agents that bring about innovation and make it work."

Umtata and Port St Johns real estate agent, Leon Fourie agrees. He says that the trend of migration away from Eastern Cape towns to Gauteng could well be reversed by the projects.

"Instead of Gauteng gold mines, the Wild Coast is starting to be seen as the new site of gold by people in Port St Johns."

No one disputes that development and job creation are well overdue in the Eastern Cape, particularly the Transkei. But, it remains to be seen if SDIs can meaningfully welcome communities into the global socio-economic community.