Mishal Husain: Do you think that the black empowerment strategy as we see it in South Africa at the moment is really the most effective possible means to create a strong black middle class because it strikes me that it is creating a black elite in many ways. And one of the businessmen we see in the film Humphrey Khoza is obviously one of the few really successful black CEOs, but he's still the exception.
Susan Rice: Yes, but the time is short. I think you can't possibly judge the success of black economic empowerment in the time frame that we've seen. Obviously it's going to start with a small core, and if it succeeds it will benefit a far broader section of society. I think what was interesting, as we saw in the film, is that the strategy of his company depends on creating small and medium size enterprises essentially at the grassroots level that will be self-sustaining long after Uthingo moves on. And that's very important. That's where growth is going to come, whether we're talking about South Africa the rest of Africa or anywhere else in the developing world, it's the small and medium size enterprise level. It's with small women entrepreneurs who, in this case, got the contract for repairing the lottery machines. These are the sorts of businesses where you get women who wouldn't be in the workforce or, for that matter, men who wouldn't be in the workforce. They're given jobs, they're given skills, they're given capital and if that piece of the pyramid -- the bottom part of the pyramid -- can be expanded and sustained, then that's where you're going to start to see the benefits.
Mishal Husain: But those aren't the companies that really produce the most money for South Africa. I mean the big companies, the mining companies, the diamond companies, all of those companies are the ones which are overwhelmingly white today.
Susan Rice: No, but it's at that small micro level where the jobs are going to be created. There are only a finite number of jobs that Anglo America can provide within South Africa. There are limits to its own internal growth capacity. So what you need if the economy there and elsewhere, anywhere, is going to grow is job creation at what I would call the grassroots level at the small and medium size enterprise level. That's not to say that domestic and foreign investment isn't important and that large multinationals or domestic conglomerates are not important. And you also obviously have to change their policies. But the job growth, which is what is the critical requirement in South Africa for political sustainability as well as economic redistribution, is going to have to come from the grassroots level.
Mishal Husain: And job growth is exactly what's not happening right now. I mean South Africa has a pretty terrifying unemployment statistic.
Susan Rice: It does indeed.
Mishal Husain: What do you think of that? I mean is that a government failure or is that just a question of more time to find its feet?
Susan Rice: I think it's a question of largely more time to find its feet. I'm not here to say that every policy pursued by the government of South Africa is perfect or working, but unlike a number of other economies including our own, it's difficult to sit back and say well this is the wrong fiscal policy, this is the wrong macroeconomic strategy. That's not in fact the case. For the most part, this is a government that has managed to implement the right and responsible fiscal and macroeconomic polices. It's done so without incurring a great deal of depth from the multilateral institutions. It's done so without the World Bank and the IMF having it on a short leash. And what has been lacking -- while it has achieved growth -- it hasn't achieved the 6 percent or more growth that's necessary to start to drag large numbers of people out of poverty. But show me an economy of that size that's integrated into the global economy that's growing at 6 percent today. There are very few.
Mishal Husain: The reality for the government of South Africa, though, is that their average unemployed young voter is not going to judge them as fairly as you just did.
Susan Rice: Exactly.
Mishal Husain: They're going to be angry.
Susan Rice: That's a political problem. But when you step back and look at what economic policy advice you would give the government, there's not a huge amount that you can point to and say that they're doing inappropriately. The policies have been largely correct. They've been buffeted by a range of things: the Asian financial crisis which hit much of the developing world, oil prices, lack of foreign investment globally and, in particular, to Africa -- even though South Africa is a better investment bet than perhaps other parts of Africa. So all of these things have made it difficult, and yet that doesn't give comfort or patience to your 15-year-old who's looking to come out of high school and has no reasonable expectation of getting a job.
Mishal Husain: Let's just talk for a moment about the implications of failure. Negative as it may seem, but just next door in Zimbabwe you have this horrifying example of what the country can be like with resentment toward white control of the economy or even just one part of the economy. What would you say are the implications there for South Africa as it copes with this process?
Susan Rice: Well, there are implications because there is the fear of pressure building at the grassroots level that it's time for the government to grab white-owned enterprises or white farms. But that's a misunderstanding, in fact, of what happened in Zimbabwe. There was no great ground swell at the grassroots for the kind of land grab that the government did. That was a power play by Robert Mugabe, the president of Zimbabwe, who saw his own political position threatened and seized on the land issue. Obviously the land issue is a huge historical economic and social issue. There is a historical inequality in the distribution of land. The whites came colonized the country, grabbed the land from blacks, and have been farming it ever since. But what Mugabe did was give this land to his fat cat cronies and buddies in the government and the military. And did it in a way that made the land completely unproductive so that the average workers, who were black, are out of jobs, and now 60 percent of the country is starving.
Mishal Husain: But black South Africans might not see it in terms ofÉ
Susan Rice: Some blacks South Africans may not see it that way, and that's the risk. The risk is a misinterpretation of what happened in Zimbabwe and the expectations that that may generate in some quarters for equally radical and detrimental policies in South Africa.
Mishal Husain: Which must be pretty frightening for the South African government, the thought that that could...
Susan Rice: It is, and it, in part, explains -- although not necessarily sufficiently -- one of the reasons why the South African government has tried to manage the Zimbabwe crisis in a low key behind the scenes fashion rather than in a very public and aggressive fashion, as some of us might have wished they would have.
Mishal Husain: One of the things that is, of course, really terrifying for South Africa today in terms of domestic issues is HIV/AIDS. This is something that has really taken hold in a horrifying way on the country. Amongst the economic problems is the fact that 10 percent of the workforce roughly have HIV. How does the government deal with that -- the fact that the workforce is potentially going to dwindle in that way?
Susan Rice: Well, this is a huge problem which is why South Africa, in my opinion, has been deservedly criticized for its failure to respond to the HIV crisis in as aggressive and timely a fashion as it should have. HIV/AIDS in South Africa, just as it is here and globally, is not just a health issue. It's a social issue. It's an economic issue. It's a security threat. And nowhere on the planet are there more people infected with HIV than South Africa. If employers have to hire two and three people to perform the same job because their expectation is that one employee hired and trained may not live long enough, you have a serious drain on the economy. And that is the reality. So the area where I think the government of South Africa deserves the greatest criticism -- and it is real and profound -- has been its failure to step up to the plate and acknowledge as some neighboring countries have done, for instance Botswana, that this is a life and death issue. It is about the very survival of the country. And we have got to be far more aggressive in everything from prevention and education about HIV/AIDS to treatment and building health care infrastructure and even finding a vaccine or other form of cure for it.
Mishal Husain: So that undermines all these strategies including black empowerment.
Susan Rice: It does indeed. Now the good news, however belatedly, is that the government has just in recent weeks done virtually a 180-degree turnaround and begun to approach the problem -- at least the treatment aspect of the problem -- in a more responsible fashion. But a great deal of time has been lost.
Mishal Husain: One of the aspects to the way that the black empowerment strategy has been implemented by the South African government is that they've done it by suggestion, by encouragement, they haven't actually imposed the fact that this is what they want as a government priority. Do you think in a sense that they should be more radical or should make it clear that this is an imperative that has to happen?
Susan Rice: I don't think it'll work if they made it more of a mandate. What they've done, as I think the film very amply explained, is employee coercion, encouragement, incentives, penalties. You don't get government contracts, which is obviously substantial, if you're not a company that's pursing the appropriate black economic strategies. And that cascades throughout the economy and I think it will work. If they were to mandate it legislatively and impose certain limits or quotas -- in this instance because a great deal of what they need to do at the same time is increase foreign and domestic investment in the economy -- they will blow up the other side of the coin, which is growing the economy at the same time as they redistribute wealth within the economy. They can't grow the economy if domestic and foreign investors are freaked out by imposed and legislated forms of black economic empowerment. They'll take their capital and go elsewhere. So I think on balance the government has got it about right. But it means that there are not going to be dramatic radical overnight benefits. I don't think there will be dramatic overnight benefits if they imposed it either though.
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