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Remarks on the Threats Posed by COVID-19 on the People’s Democracy as a Value Creator in General, by Ms. Nardos Bekele-Thomas at the Commonwealth Africa Day event

30 September 2020. – It is a great pleasure and honour to be here, today, addressing a topic that is of great value and significance both to this House and to the whole of South Africa: “The threats that COVID-19 can pose to People’s Democracy as a Value Creator.”

We all know that, as a result of COVID-19, we are living today a crisis of historic proportions whose ultimate consequences we are yet to fully grasp.
We also know that the national government, the provinces, districts, and local communities around this country have undertaken decisive action and mobilised significant human, technical and financial resources to address the immediate crisis and to start building a strategy for recovery. The United Nations family in South Africa has been part of these efforts. Yet, despite the emergency responses and recovery plans, what we are witnessing at present is a crisis of such depth and scale that it has exposed the deep fractures that characterise South African society. It has thus given a new urgency to addressing the triple challenges of unemployment, poverty and inequality that South Africa faces.

As we pursue today’s topic, it would be important to build a working construct for the idea of a “People’s Democracy”. In this regard I would like to draw a distinction between that form of democracy and one that is predisposed to serve the economic interests of the rich and minority. That latter form of democracy is always hemmed in by the narrow limits set by the elite form of accumulation where society is characterised by disparities in wealth and income distribution. Those who are economically excluded are systematically debarred from meaningful participation in public and political life. In such circumstances the democracy that emerges in both political and economic terms is what we can consider as an elite form of democracy.
This elite form of democracy can be counterposed with a democratic order that fosters the active participation of every citizen, fully empowered to do so, and a fundamentally altered economic structure of modern capitalist society, including but not limited to resolving important questions of how the social surplus is effectively ustilised to ensure a more just and equitable society. A society that would work in the interest of the majority ensuring that both economic and social outcomes engender a sense of social solidarity. In a broad sense these are the basic tenets of what would constitute a “people’s democracy”.

Global data on social and economic outcomes produced over the past century point in the direction of a well-entrenched elitist form of democracy. Examples include the estimated 821 million people globally who are undernourished; 770 million people facing severe food insecurity; 262 million children and youth aged 6 to 17 are out of school; one third of all primary schools lacking basic drinking water, sanitation and hygiene services, affecting the education of millions of schoolchildren, particularly girls managing menstruation; and one in four health-care facilities world-wide, mainly those servicing the poor, lack basic water services, affecting more than 2 billion people.

At the Annual Nelson Mandela lecture presented in July this year the United Nations Secretary General, Antonio Guterres, summed up the challenges of our elitist global system as a modern lie that promoted the idea that free markets would be able to deliver the necessary social services for all. Instead what we see is that inequality defines our time with more than 70 per cent of the world’s people living with rising income and wealth inequality. The 26 richest people in the world hold as much wealth as half the global population. Multiple inequalities intersect and reinforce each other across the generations. The lives and expectations of millions of people are largely determined by their circumstances at birth.
The SG’s summation points us to the concrete reality that we are indeed confronted by a global system that works for the elite, supported by elite democratic projects at a national level that have systematically excluded the majority of citizens from meaningful economic and political participation.

The result of this has been loss of faith in democratic institutions; due to the failure of these institutions to respond to the consequences of the rising global trends in poverty, inequality and unemployment. These have been long-term trends, that we can trace back to the late-1970s and early 1980s.

Until the 1970s, the macroeconomic framework that was dominant around the world leaned towards Keynesian policies that favored tools and measures that could maintain economic activity near full employment levels. Since the early 1980s, the macroeconomic policy framework has shifted away from emphasis on Keynesian policies and towards a more orthodox orientation which often took the form of tight monetary policy and fiscal austerity. This shift in policy orientation was a response that countries such as the US, the UK and France adopted to address macroeconomic challenges such as rising inflation, lower productivity growth and falling corporate profitability that surfaced in the late 1960s and early 1970s.

The shift in emphasis to orthodox macroeconomic policies to address these challenges, which were also adopted, to varying degrees, in other parts of the world, led to rising unemployment. At the same time, reforms aimed at more flexible labor markets led to lower labor protection. These macroeconomic policy changes and labor market reforms undermined labor union power and led to lower wages. In addition, growing emphasis on international competition and privatization led to job destruction in various sectors. A consequence of these policy changes was corporate power concentration and rent shifting from workers to owners of large corporations.

The result is that corporate profits have increased significantly in the past few decades. Indeed, according to McKinsey Global Institute (2015), post-tax net profits in the corporate world (both financial and non-financial) went up from 7.6 per cent of world GDP in 1980 to 9.8 per cent in 2013.

Clearly, in the context of lower economic dynamism, this trend has not translated into higher capital accumulation. Profits and corporate investments have diverged over time. Large corporations have used their additional profits to build cash reserves and increase payouts in the form of dividends and share buybacks, rather than raise investment levels. These practices were part of the business model of shareholder value. Since the 1980s, the growing dominance of shareholder value in corporate behavior, with greater emphasis on short-term financial targets against long-term strategic goals, has been an important factor explaining corporate behavior favoring financial returns to shareholders to the detriment of real fixed investment.

Thus, clearly, these rising trends – of growing unemployment, poverty and inequality, observed across different parts of the world, have not been inevitable outcomes of rapid technological progress, although the latter is a factor that has probably contributed to such trends. These trends have been the result of government policy choices, and the type of corporate business model that has become dominant. The important point to emphasize here is that, against these trends, our governments, our institutions, our social protection systems, have been unable to sufficiently shield the many losers that have emerged from these trends. That, in turn, we could argue, has led to growing dissatisfaction and frustration by large swathes of people who see jobs opportunities disappearing, their communities becoming impoverished, and prospects for a better future fading away.

This is the historical evolution of the global reality of elitist forms of democracy we are contending with, where the global political and economic system is not delivering on critical global public goods: public health, climate action, sustainable development, peace.
The COVID-19 pandemic has brought home the tragic disconnect between self-interest and the common interest; and the huge gaps in governance structures and ethical frameworks.

At the Nelson Mandela lecture the Secretary General proposed that one way of closing these gaps, and to make a New Social Contract possible, is through a New Global Deal to ensure that power, wealth and opportunities are shared more broadly and fairly among the people.

Within the context of our discussion today, I would suggest that the SG is in essence advocating for a shift from elite forms of democracy to a governance system we can broadly classify as people’s democracy as we have defined it above.

In the South African context, however, the concept of people’s democracy, I would suggest, has a specific meaning. Here, people’s democracy, is about a democratic system that is able to resolve long-held tensions around wealth concentration and land ownership, as well as to ensure (racial, gender) equality, and to protect the most vulnerable and allow people to fulfil their full potential.

The Freedom Charter, a document of monumental historical value drafted here on South African soil 65 years ago, captures well the long-held socio-economic demands and deep aspirations of all South Africans: that “[t]he people shall share in the country’s wealth”; and that “land shall be shared among those who work”. The Charter goes further to state that “Restrictions of land ownership on a racial basis shall be ended, and all the land re-divided amongst those who work it, to banish famine and land hunger”.

With the advent of a democratic government in 1994, there was great hope that these deep inequalities and injustices that characterize South African society would be addressed. However, what we have seen since then is that, together with the end of apartheid, political opening and the buildup of democratic institutions, the triple challenges South Africa faces have stayed with us.

Stats SA data shows that South Africa remains one of the most unequal countries in the world, reporting a per-capita expenditure Gini coefficient of 0,65. This inequality co-exists with extreme poverty.

The latest “Poverty Trends in South Africa” report showed that between 2011 and 2015 the poverty headcount increased from 53,2% to 55,5%. This translates into over 30,4 million South Africans living in poverty in 2015. Unfortunately, the Eastern Cape remained the poorest province with 12,7% of its households classified as multidimensionally poor.

To further complicate matters, the macroeconomic regime South Africa has adopted since 1995 has been broadly in line with the macroeconomic policies adopted internationally. This has not helped to tackle the challenges of poverty, unemployment and inequality as expected. The reformed political system has demonstrated very limited capacity to address with effectiveness these issues.

So how has Covid-19 affected these developmental trends?
The National Income Dynamics Study Coronavirus Rapid Mobile Survey shows that three million South Africans have lost their jobs as a result of the Covid-19 pandemic and subsequent lockdown. Of those who managed to keep their jobs, 1.5million did not have an income. Women bore the brunt of the job
losses with 2 million out of the 3 million job losses attributed to women. Inevitably this has had profound impacts on the levels of poverty in the country, compounding on an already dire situation of just over half of citizens living in poverty.

Our own UN Socio-economic Impact Study released in August suggests that 34% of South Africa’s middle class was likely to fall below the poverty line as a result of Covid-19. The effects extend well beyond income, jobs and poverty but will be felt across the full developmental spectrum, including the levels of inequality that we had referred to earlier.

So, what we are seeing, particularly in the South African context due to Covid-19 is a deepening of the already existing social and economic challenges, such as poverty, unemployment and inequality. In relation to our topic, “Threats Posed by COVID-19 on the People’s Democracy as a Value Creator in General” I think we can safely conclude that Covid-19 and its impacts have undermined global and national efforts of building a system of governance that will deliver on some of the ambition we have articulated in the Sustainable Development Goals, such as ending hunger and poverty, reducing inequalities, promoting gender inclusive development approaches and many more. In a way the impacts of Covid-19 have undermined global and national efforts of building a people’s democracy as we have defined it above.

Around the world, the concerns regarding COVID-19, besides the havoc it has created, have been about what has been perceived as a threat to democracy. Evidence to the latter include national governments assembling emergency powers, restricting human rights and enhancing State surveillance – and that democracy is thus portrayed as an ineffective form of political regime to deal with the trends and challenges we currently face.

However, this moment also offers us some opportunities to re-imagine a post Covid reconstruction that will affirm the shift away from elitism to a people centred developmental trajectory. What we call “Building Back Better” in the UN.

Launching the policy brief on the impact of covid-19 on Latin America and the Caribbean a couple of weeks ago, the Secretary General outlined some of the core elements of a “Building Back Better” strategy, arguing that:

Building back better demands strengthening democratic governance, human rights protection and the rule of law, in line with the 2030 Agenda for Sustainable Development. The root causes of inequality, political instability and displacement must be addressed premised on greater accountability and transparency. This requires that we tackle the broader structural challenges that perpetuate the development model that has placed profits before people and planet. It means developing comprehensive welfare systems that are accessible to all. It means creating a fair taxation system, promoting decent jobs, strengthening environmental sustainability, and reinforcing social protection mechanisms”.

I would like to spend some time reflecting on some of the policy considerations and actions we would need to effect as part of a building back better strategy.
1. On Social Protection: The COVID-19 crisis has shown that The devastating impact on the world’s labour markets, particularly on workers in informal employment, self-employed, and daily wage earners has demonstrated that the provision of effective social protection for all can no longer be viewed as an aspirational goal but has become an urgent necessity. All countries should commit to achieving universal nationally appropriate social protection floors (SDG 1.3) by 2030. An important objective would be to reduce inequality in society and improve the well-being of vulnerable groups like children and orphans, older people, people with disabilities, and women.

2. On the economy. Governments must — in the immediate term — put in concerted efforts to prevent a collapse of the economy by boosting fiscal expenditure and lay the foundation for building back better from the current crisis.

Our earlier acknowledgement that the impacts of COVID-19 are exacerbated for women and girls means that the proposals we put on the table must be designed to address this reality. Our policy responses would be incomplete if we are unable to do this. Some of these proposals include the following:
3. Greater fiscal expenditure in sectors where women are heavily represented such as tourism, teaching, retail, restaurants, hospitality to ensure security of income for groups affected by COVID-19 and especially where women are heavily represented.

These are some examples of policy considerations we can consider as we develop our recovery plan from Covid-19.

Indeed, in South Africa, a grievance that has come to the fore of the national public debate as the government response to COVID-19 started to advance, is the issue of accountability; and linked to the latter, the grave issue of corruption involving both the public and private sectors.

The UN Common Position on Corruption states that “[t]he worst consequences of corruption are borne by poor, marginalized and vulnerable people”, and that certain types of corruption “impose a heavy burden on women”. Moreover, it stresses that “[c]orruption can exacerbate inequitable wealth distribution” and that “[p]eople often have deep misgivings about the expansion of state institutions if the state is perceived as tainted by corruption or exclusionary politics”. Thus, corruption inhibits efforts of building a people centered democracy.

I would like to take this opportunity to say that the United Nations system in South Africa stands ready to provide support to the Government of South Africa to fight corruption at all levels. We have “a common and shared responsibility to effectively work together…through strengthening knowledge exchange and coordination, and promoting innovative approaches to addressing corruption”.

We, the United Nations, are, above all, ready to work with you to help further enhance the ability of South African democratic institutions to turn the aspirations of South African people into tangible, concrete outcomes. This implies a system that can address with effectiveness the triple challenges facing South African society and delivering, as a result, a country where opportunities in terms of good-quality jobs are created, access to land for those who work on it is democratized, the poor and marginalized are fully protected, the basic rights to food, education, health, security are all fully met, and Gender Based Violence is fully addressed. All these are critical conditions to strengthen the democratic process and turn people’s democracy as a value creator into a reality.

The UN also believes that the achievement of these objectives requires more participatory forms of governing, whereby people from districts and communities participate directly in decision making, so that political practices are more able to respond to their concrete demands and aspirations. the District Level Development Model can be a most effective way for us to forge this partnership. It allows us to operate closer to where the country’s most urgent needs are. To this end, we truly hope that we can form a partnership with you – a partnership between the UN and the Eastern Cape Provincial Government and legislature, as well as the private sector, in areas such as health, education, social protection, productive sectors (such as SMME development and agriculture), infrastructure development and so on. By undertaking joint initiatives in these various areas, we truly believe we can together achieve more rapidly and with greater effectiveness our shared goals of a fairer and more prosperous South Africa.

Thank you very much.
Ms Nardos Bekele-Thomas is the Resident Coordinator of the United Nations in South Africa.