Vol.1 No.18, 15 November 2001

For South Africa's Poor, a New Power Struggle


Professor Patrick Bond of the Witwatersrand Business School sent this contribution to SANE Views. Although it does not specifically provide New Economics solutions, it gives a good anecdotal background to some of South Africa's current social and economic realities, particularly as these relate to the provision of Electric Power to South Africa's poor and unemployed.

Professor Bond has just published a new book, Against Global Apartheid (click here for image of flyer). Below is an invitation to the launch of this book here in Cape Town on Friday 16 November. You will be very welcome to attend and participate in this event.

Dr Aart Roukens de Lange
SANE Views Editor and Research Co-ordinator
South African New Economics Foundation (SANE)

SANE is an autonomous network for the creation of a humane, just, sustainable and culturally appropriate economic system in South Africa.

Patrons: Archbishop Njongonkulu Ndungane, James Robertson (UK), Sheena Duncan, Gordon Oliver

For South Africa's Poor, a New Power Struggle

By Jon Jeter
Washington Post Foreign Service
Tuesday, November 6, 2001; Page A01

SOWETO, South Africa -- When she could no longer bear the darkness or the cold that settles into her arthritic knees or the thought of sacrificing another piece of furniture for firewood, Agnes Mohapi cursed the powers that had cut off her electricity. Then she summoned a neighborhood service to illegally reconnect it.

Soon, bootleg technicians from the Soweto Electricity Crisis Committee (SECC) arrived in pairs at the intersection of Maseka and Moema streets. Asking for nothing in return, they used pliers, a penknife and a snip here and a splice there to return light to the dusty, treeless corner.

"We shouldn't have to resort to this," Mohapi, 58, said as she stood cross-armed and remorseless in front of her home as the repairmen hot-wired her electricity. Nothing, she said, could compare to life under apartheid, the system of racial separation that herded blacks into poor townships such as Soweto. But for all its wretchedness, apartheid never did this: It did not lay her off from her job, jack up her utility bill, then disconnect her service when she inevitably could not pay.

"Privatization did that," she said, her cadence quickening in disgust. "And all of this globalization garbage our new black government has forced upon us has done nothing but make things worse. . . . But we will unite and we will fight this government with the same fury that we fought the whites in their day."

This is South Africa's new revolution. Seven years after voters of all races went to the polls for the first time, ending 46 years of apartheid and white rule, churches, labor unions, community activists and the poor in all-black townships are dusting off the protest machinery that was the engine of their liberation struggle. What most provokes South Africans' defiance today are what they see as injustices unleashed on this developing nation by the free-market economic policies of the popularly elected, black-led governing party, the African National Congress.

Materially, life here has only gotten worse since 1994 as the ANC has pursued a course of piecemeal privatization of state industries, whittling of import taxes and loosening of controls on foreign exchange.

The policies have expanded opportunities for foreign investors but so far have deepened the poverty inherited from apartheid's segregationist policies.

With domestic industries more vulnerable to foreign competition and the restructuring of public enterprises, the most industrialized country in sub-Saharan Africa has lost nearly 500,000 jobs since 1993, leaving a third of the workforce unemployed. The poorest 15 million South Africans have had their annual incomes shrink by nearly a fifth of what they were before apartheid's collapse.

The ANC's top officials, many of whom were initially Marxists, say their economic policies aim to remedy the imbalances of the past, which included protectionist trade policies and concentration of wealth in the hands of a relative few. To redistribute wealth, ANC officials say, they must first expand it, and they say only the global market and foreign cash can ultimately do that, albeit not without some growing pains as the economy adjusts.

Increasingly, this country of 44 million people is running out of patience as it endures a financial crisis that statistically outstrips the Great Depression. At the same time, costs of such basic needs as housing, electricity and water are soaring.

"We did not give up our lives and the lives of our children only to let this brazen capitalist system exploit us even more," said Shadrack Motau, an SECC board member.

In South Africa, the most despised acronym is arguably not HIV, the AIDS virus that infects nearly a quarter of the adult population, but GEAR, the ANC's economic package -- Growth, Employment and Redistribution -- which opens the door to global trade.

Hoping to generate revenue, streamline a bloated bureaucracy and extend service to blacks ignored by apartheid, the ANC announced six years ago that the government would sell public enterprises from the state-run airlines and the phone company to Eskom, the acronym for the public electricity commission. With encouragement from institutions such as the World Bank and International Monetary Fund, the government has so far auctioned off only small portions, while restructuring the public franchises into profit centers to showcase their attractiveness to potential investors.

The alienation felt by many poor blacks from this march to privatization has bred street rallies calling for a revival of "the spirit of '76" --a reference to the year of the Soweto riots, which gave the anti-apartheid campaign its second wind.

Virtually every week, thousands of demonstrators and unionized workers rally in the streets to denounce both GEAR and the ANC. Grass-roots organizations in Durban have begun moving evicted families back into their homes, sometimes only minutes after authorities have piled their household goods on the streets and bolted the doors. Unemployed plumbers in Cape Town reconnect their neighbors' water supply when it has been shut off because of nonpayment.

"There's definitely been a revival of the struggle mentality," said Bongani Lubisi, 28, one of scores of jobless volunteers who roam Soweto each day reconnecting electrical service. "We thought that when we got rid of the old government that our black government would take care of us. But instead the capitalists are getting richer while the working people lose their jobs and can't even meet their basic needs."

For all its anti-communist fervor, the apartheid government shielded South Africa's domestic industries from foreign competition with policies that included stiff controls on foreign capital, heavy state subsidies and tariffs on imported goods. When blacks refused to pay rent and utilities as part of township-wide boycotts, the apartheid government did not evict them or shut off their services for fear of sparking riots.

Jacob Maroga, executive director of distribution at Eskom, said that Soweto's electricity problems started when the boycotts of the 1980s bankrupted the apartheid-controlled municipal government that purchased electricity and resold it to residents.

When Eskom began handling the accounts directly, it spent about $75 million in capital improvements and wrote off nearly $37.5 million in household debts. But in its preparations to sell the public utility, Eskom has focused on demonstrating its profitability to investors, following the World Bank's prescriptions for "cost recovery" in which the price for each kilowatt of electricity is set according to how much the utility spends to provide it.

That meant increasing costs by as much as 400 percent for some residents in Soweto, who for years were charged a flat rate for electricity.

"The idea is that we would do all [the improvements] and then the residents would start living up to their commitments. But we still recover only about 50 to 55 percent of the costs for the electricity we sell," Maroga said.

"There are clearly customers who don't have the capacity to pay," Maroga said. "But there is also this culture of nonpayment in Soweto where customers can afford to pay but they prioritize other consumptive spending. We need to deal with that."

In a place where median household income is less than $100 a month, 90 percent of all Soweto households with electricity are behind in their payments, according to a university survey. Sixty-one percent have had their service shut off within a 12-month period. In a community of nearly 1.5 million people, Eskom cuts off service to about 20,000 delinquent customers each month.

"This culture of nonpayment that people say exists in Soweto," said Virginia Setshedi, an SECC board member and law student, "it's only because people don't have money to pay."

Because Eskom sells electricity at discounted bulk rates, affluent municipalities in mostly white suburbs buy electricity and resell it to customers for roughly 30 percent less than what it costs Soweto's consumers. For the biggest users of Eskom's electricity -- industrial sites such as steel plants and coal mines -- the rate for each kilowatt is roughly one-tenth the rate for a household in Soweto.

That inequity drove a coalition of unreconstructed communists, retirees and college students to create the SECC nearly a year ago. Its chairman, Trevor Ngwane, a former ANC municipal council member, recruited a friend, a laid-off Eskom repairman, to train volunteers how to reconnect a power supply.

Since then, Operation Khanyisa -- which means "to light" in the Zulu language commonly spoken here -- has unlawfully restored electricity to about 3,000 homes.

"We're getting about 50 calls each day from the community," Setshedi said. "We don't ask why or when the people were cut off, we just switch them back on. Everyone should have electricity."

To combat the illegal connections and the SECC's growing celebrity, Eskom officials have published full-page ads in the Sowetan daily newspaper, warning readers that 10 South Africans -- mostly children -- were killed last year by exposed live wires. But SECC officials say that none of those fatalities occurred in Soweto, where volunteer technicians are trained to wrap live wires in plastic bags.

Patrick Bond, a business professor at the University of the Witwatersand and co-director of the Municipal Services Project, acknowledges that it is expensive to provide electricity to the poor, who use little electricity and are unable to buy it in bulk through their municipality, which results in duplicate costs for equipment, administration and labor.

But he said Eskom could largely resolve the debt problem in Soweto by charging big industries a few cents more for each kilowatt of electricity, subsidizing a cheaper flat rate for poor customers.

"Eskom has a rate structure that economically makes sense," Bond said. "But socially it makes no sense. Their structure is good for the northern suburbanites, but we'd like to see a structure that is good for

everyone. That means smaller profit margins in the short term but a healthier society in the long term."

Lubisi and another SECC repairman take Bond's argument to the street. They arrived one recent morning at the Maseka and Moema intersection flanked by two recruits.

"Red and white are used as live wires and they are very dangerous," Lubisi said, showing the wires to the trainees as a crowd gathered.

James Buthelezi has lived in this house on Maseka Street for as long as he can remember, and this was the first time the electricity had been cut off. Twenty-eight people live in this five-room house and a tool shed-sized room in the back yard.

No one has worked in months and the family survives on Buthelezi's mother's pension, less than $125 a month. Their unpaid bill is more than $3,000. "When they came to cut off our electricity, we begged them not to," said Buthelezi, 58. "We told them that we had babies and elderly people inside. They didn't even pause."

The SECC's members have tried to talk to Johannesburg's mayor about the hardships endured by families like Buthelezi's, but he has repeatedly given them the slip. In June, more than 20 angry residents marched to the mayor's home but again he ducked them.

Unable to cut off his electricity, they disconnected his water.

2001 The Washington Post Company

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