[DEBATE] : (Fwd) SA power relations (Patricia Agupusi)

[Patrick Bond]

The Trajectory of Power Relations in Post Apartheid South Africa

Paper prepared for the 6th Development Dialogue (June 5 – 6, 2008)

Patricia Agupusi, School of Development Studies, University of East Anglia,

Norwich UK

P.Agupusi at uea.ac.uk

Abstract

Since the official power shift in 1994 the interaction of power has 
become a keen discourse among academics and researchers. There are three 
major arguments on the power dynamic in South Africa. First, is the 
obvious; ‘power has shifted from white to black’. The paper will examine 
how ‘obvious’ is the shift from white to black in this argument. 
Secondly is that different interest groups in South Africa among the 
progressive anti-apartheid group were without a clear ideological view 
of how to sustain their influence in the policy-making process. This 
placed them at a cross-road at the end of apartheid in 1994. Thirdly due 
to lack of synergy in ideological view among the progressive, the 
corporate sector controlling economic power took over strategic 
influence in policy-making process from the progressive group. The last 
argument is that the policy-making process in post apartheid South 
Africa is influenced by a neo-liberal economic view championed mainly by 
the international financial institutions, corporate sector and the new 
black elite. The paper will critically assess these arguments and 
attempt to explain the complexity of the power dynamic in post apartheid 
South Africa. It will look at the different groups interests and their 
exertion of power and influence; interaction between the elites and the 
implications for the new South Africa. Key questions are- ‘is there a 
balance of power between white and black or is the elite still 
controlling power and who are the elite?

In adding to this debate, I applied triangulation method that draws from 
archive documents and in-depth interviews that were conducted during a 
six months research fieldwork carried in 2007.

Introduction

The foundation for the major trend in South Africa’s contemporary 
political economy environment was set during the pre-transitional and 
transitional periods of the mid-eighties and late nineties. The turning 
point of any transitional political economy is macro-level policy 
initiative which shapes the micro-level and consequently the social 
economic trends of the country after transition. Hence, power relations 
and how they influence decision-making determines the out-come of the 
transition process.

Power-play dynamics in contemporary South Africa started taking shape in 
the early 1980s through the rise of progressive anti-apartheid groups 
and individuals from academia, the private sector and civil society. 
These groups, particularly academic and non-academic researchers, allied 
with some of the key political and social movements such as the Congress 
of South African Trade Unions (COSATU) and the then-banned African 
National Congress (ANC), enabling them to influence strategically the 
political and economic bargaining process during the transitional period.

However, the lifting of ban on the ANC and the release of political 
prisoners by the apartheid government led to a paradigm shift in power 
relations. The ANC-alliance with other social political movements, such 
as the South African Communist Party (SACP) and COSATU helped, propel 
them to power. The relationship between anti-apartheid progressive 
groups and the ANC-alliance became that of a client relationship, with 
the ANC tripartite alliance seen as the big client. By the end of 1994 
the power and influence of the progressive anti-apartheid groups began 
to erode.

This paper adds to the debate of political economy of post-apartheid 
South Africa as it analyses these power interactions by looking at the 
different elements that influenced the trajectory of power relations. It 
examines the different groups and individuals that emerged as key power 
brokers in the macro-economic policy process at different stages of 
transition and post transition process. It also assesses how the power 
dynamic affected the social economic transformation process in 
post-apartheid South Africa by examining briefly the policy process 
behind the Small Business Development White Paper. In so doing, it will 
attempt to answer the following questions: who made decisions and who 
influenced the decision-making process and whose interests were affected?

This paper is structured as follows. It begins with a brief examination 
of power as it was utilised in South Africa’s transitional and 
post-transitional processes. The second section examines the dynamics of 
power during the transitional and post transitional period and how this 
shaped macro policies. The analysis will then extend to the debate on 
the micro level policy process by studying the White Paper for small 
business to explain the shift in power and identify who really 
controlled the process and how it shaped the political and economic 
development of the new South Africa. This is followed by a summary and 
conclusion with suggestions for possible future research direction.
Power relations in South Africa

Power is a complex concept which is explained using different 
dimensions. In the South African context, it is closely related to 
Polsby’s (1980:3) argument that power should be analysed by examining 
who participates, who gains and who loses from alternative outcomes and 
also who prevails in decision making. In an attempt to understand the 
complexity of power relations in transitional and post transitional 
South Africa, this paper will be examining this relationship through the 
interests and views of the different actors and how they affected the 
decision making process. In some cases during this process, power might 
have been excised before being introduced to the public. An Example of 
this can be seen in the manner of the process that led to the Growth, 
Employment and Redistribution (GEAR) programme, which was shrouded in 
secrecy until it was introduced to the public in June 1996 as a 
non-negotiable macroeconomic framework to replace the Reconstruction and 
Development Programme (RDP). This, in turn, highlights a dimension of 
power play in the new sphere of the political economy in post-apartheid 
South Africa.

In the policy making process, the actors’ values, beliefs and culture 
shaped their perception and ideology that was then transferred into the 
bargaining and decision-making process. Where there was some similarity 
of goals and values among key actors, the degree of conflict was greatly 
reduced, as was seen in the making of the Broad-based Black Economic 
Empowerment policy process which will be discussed later in this paper. 
However in other cases some individual perspectives and interests may 
not have been considered in all stages of the policy process. It was 
those actors, whose input was sustained throughout the deliberation and 
bargaining process, who became the key power brokers. These actors whose 
views and interests shaped a policy outcome were usually in a position 
of influence among political leaders. However, the key issue is who were 
these actors and whose interests did they represent, as this will have 
an impact on the out-come of macro and micro policy.
Background

Prior to 1994, South Africa was isolated internationally as a 
consequence of apartheid policy. As a result of various sanctions, the 
country was excluded from many major international organisations 
including the UN and its agencies. Internally, the country was faced 
with racial inequality and poverty among its black majority population. 
By 1994 South Africa was eager to be re-integrated into a world system 
that was embracing globalisation and its values, while at the same time 
it sought to correct the legacy of apartheid. Prior to this, a great 
deal of wrangling over power had taken place during the transitional 
process and involving different individuals and groups. The complex 
power relations that shaped post-apartheid South Africa’s political 
environment will be examined here.

The period between the late 1980s and the early 1990s, witnessed the 
rise of progressive anti-apartheid groups and individuals from business, 
academia, civil society and externally-funded institutes. These groups 
played key roles in shaping the policy issues of transitional and 
post-transitional South Africa. However, within these groupings, the 
relationship between progressive social scientists on the one hand, and 
the wider social and political movements on the other became more 
complex and contradictory. (V. Padayachee and G. Sherbut 2007:16). 
Secret meetings were held between the banned ANC, SACP and SACTU in 
different international locations to debate new ideas and formulate 
alternative policies for social and economic reconstruction. Among these 
conferences were: ‘The South African economy after Apartheid’ held at 
York University in the UK in (1986); others took place in Boston (1987), 
Harare (1988) and Lausanne (1989).

In 1985, Congress of South African Trade Unions (COSATU), a non-racial 
labour union, was created and in 1986 it initiated the Economic Trends 
Research Group (ET) to examine the structure of the South African 
economy. This culminated in the publication of a book - ‘South Africa’s 
Crisis’. The ET began with eight researchers co-ordinated by Stephen 
Gelb1 and funded by British, Canadian and German foundations. Membership 
of the project2 was by invitation only, which was not received well by 
some progressive academics who felt unfairly excluded (Padayachee 2007: 
18). Following the lifting of the ban on the ANC in 1990, Stephen Gelb 
and ET contributed greatly to the drawing up of the discussion document 
on economic policy during the Harare conference. Alec Erwin, who played 
a key role in representing COSATU, and in mediating between the ET and 
COSATU, is still a major player in the macro-policy making of the 
present government, including the Black Economic Empowerment programme 
(BEE) and Small Business development programme, as Minister of Trade and 
Industry from 1996 to 2004, and Public Enterprises since 2004.

By 1989, there was growing tension between ET and COSATU. Padayachee 
(2007:21) argues that the key area of conflict between the two was over 
the main area of focus. COSATU wanted ET to pay more attention to 
innovative policies for socialist transformation but ET did not consider 
this feasible given global trends at the time: during this period, the 
Berlin Wall came down, the Soviet Union collapsed and the neo-liberal 
ideology was on the rise. However, COSATU leaders who worked within the 
ET structure accepted their approach of creating a social democratic 
system that recognised and protected workers’ rights and needs. Because 
of its alliance with the ANC, when the ban on the party was lifted, 
COSATU’s negotiating power increased, creating a more open environment 
for policy research. This led to the second phase of the ET project 
which focused on industrial strategy and was co-directed by Rafael 
Keplinsky of the University of Sussex. Bond (1996:24-25) agues that the 
involvement of Kaplinsky, who co-directed the Industrial Strategy 
Project (ISP), contributed to post-Fordist thinking in South Africa with 
the emphasis on: becoming internationally competitive; supply-side 
interventions; developing skills, etc. Although this second phase was 
said to be independent, the work was influenced by a section of South 
Africa’s corporate sector and the World Bank team.

Despite the contribution of the progressive left from within academic 
and non-academic sections of society in opposing the apartheid system, 
its relevance started declining from the early 1990s as a consequence of 
changes in the country’s political terrain and the global rise of 
neo-conservative economics. There was also a gap in technical 
macroeconomic modelling methods on fiscal expenditure restructuring 
(Padayachee 2007:18). The dearth of technical knowledge of macroeconomic 
frameworks among progressive research groups means that foreign 
economists especially from international financial institutions played 
key role in modelling the macro policies. These reasons along with the 
progressive left’s lack of a foundational ideology to support policy 
development, made it easier for them to be sidelined. Thus, the 
influence of the country’s corporate sector and international financial 
institutions’ on macro-economic policy defeated the mass populist 
movement. With South Africa’s changing political economic environment in 
the 1990s some on the progressive left quickly embraced the 
neo-conservative economic approach to promoting a free market.
Post 1994: A walk from left to right - The macroeconomic policy shift

In the run-up to the crucial 1994 election, the ANC-alliance and some 
progressive think tanks came up with a comprehensive macro policy – the 
Reconstruction and Development Programme (RDP), which was aimed at 
correcting the wrongs of the past.

The process of assembling the resources and capacity that would later 
contribute to the drafting of the RDP began in 1990 during a visit by 
the then-ANC leader, Nelson Mandela, to Canada. Mandela and his team 
requested the assistance of the Canadian government in understanding the 
economic policy issues in South Africa. This led to the creation of the 
Macro-Economic Research Group (MERG) headed by a team of Canadian and 
South African economists supported by the Canadian government. 
Co-ordinated by the Canadian development agency IDRC, MERG’s task was to 
make recommendations to the political leadership on capacity-building 
for the formulation of economic policy (Ameringen 1995:2). MERG’s first 
priority was to stimulate and co-ordinate training and policy research 
in areas such as the development of a macro-economic policy framework 
(Ameringen 1995:41). It worked with officials from the ANC’s Department 
of Economic Policy (DEP) and a research team comprising of progressive 
economists from several South African universities, along with a number 
of international economists, was also involved. As part of its work, 
approximately 200 young black South African economists were sent abroad 
for a variety of training.3

In 1990 after some consultation process with the ANC, COSATU and other 
democratic movements, MERG published the outcome of its project in a 
book entitled ‘Making Democracy Work: A framework for Macroeconomic 
Policy in South Africa.” Although MERG received good reviews for their 
macro-economic framework, their recommendations were not taken up by the 
ANC. Some argued that this was due to the poor relationship between MERG 
and the DEP officials representing the ANC. For example, the DEP 
officials claimed that they had ignored and that the ANC’s policy 
document was not used as a basis for the project. In addition, the local 
research team were of the view that they had been sidelined by the much 
more radical international team, who took a top-down approach to the 
writing up of the project. The local team leaders also argued that their 
contributions were misrepresented (Padayachee 2007:26)

Following the rejection of the MERG macro-economic framework, another 
project was initiated by the ANC-alliance. The outcome was the 
introduction of the Reconstruction and Development Programme (RDP) prior 
to the 1994 Election. Significantly, it was seen as a compromise between 
all the different ideologies within the tripartite alliance and created 
a consensus behind nation-building and a national healing process. The 
RDP is a comprehensive reconstruction programme, but, unlike the MERG 
project, it was not written-up by an organised group of academic 
economists. Instead it was drafted by intellectuals from NGOs and labour 
organisations, and various key progressive left-wing economists, mostly 
from South Africa’s English-speaking universities. Although the RDP was 
accepted by the ANC as an official macro-economic framework, it required 
the championing of Alec Erwin and Jay Naidoo to convince them of its 
necessity.

The RDP gives a clear and all-inclusive explanation of past social, 
economic and political injustice. It identified five major policy 
programmes whose implementation would rectify the past wrongs against 
the majority of the population. This included the development of human 
resources, affirmative action, programmes to meet the basic needs of the 
poorest members of society and programmes to restructure the economy and 
democratise the state and society. The ANC recognised that the South 
African economy was in a serious structural crisis and needed strong 
administrative restructuring in order to fulfil its promises in the RDP 
document.

By 1994 political power had officially shifted to the ANC-led Government 
of National Unity (GNU). However, economic power eroded their 
contribution due to lack of resources, state capacity and the 
restructuring necessary to implement the RDP programme. Two years later, 
the RDP had not been able to fulfil its goals. Terreblenche (1999) 
stated that “the track record of the new government in building a new 
and more equitable economic system is also failing in producing what was 
promised”4 In addition, there was rising economic uncertainty due in 
part to high inflation and a fall in the country’s currency. The 
government also faced enormous levels of expectation from the masses 
that had voted them into power to right the wrongs of the apartheid 
system. Not only was it under pressure to fulfil an election promise to 
deal with the apartheid legacy of a poor and distorted society through 
the RDP programme, but it also needed to reassure the corporate sector 
and international community of its ability to manage the macro-economic 
situation given the high inflation and volatility of the Rand and the 
Johannesburg Securities Exchange. These necessitated an urgent rethink 
and reframing of the new macroeconomic model.

Meanwhile there are different arguments as to why the ANC leadership 
abandoned the RDP programme. Aside from low state capacity, the ANC 
leadership did not have the political will to implement the RDP 
programme and seemed keen to find an alternative. Terrenblenche (1999) 
commented that the most important reason for the failure of the RDP was 
that the government was too soft, too hesitant and in the end avoided 
making critical choices about RDP priorities. John Luiz (1998:17) agued 
that the government’s sudden abandonment of the RDP in 1996, was because 
at that stage it had accepted its own limitations and also realised that 
it did not have the manpower or the state capacity to implement the RDP 
in order to bring about the much-needed fundamental reconstruction of 
the economy. In desperation the government then handed over the solution 
to its economic problems to the alleged automatic and efficient forces 
of a free market. Arguing in a similar vein, Patrick Bond5 is of the 
view that the ANC’s acceptance of the RDP as a basis for post-apartheid 
reconstruction was a political act for the election period. He goes on 
to suggest that the ANC leadership had already abandoned their 
progressive views and embraced neo-liberalism (Padayachee 2007:30). This 
is a possible explanation for the quick replacement of the RDP with a 
neo-liberal macroeconomic framework – the Growth, Employment And 
Redistribution Programme (GEAR). Bond (1996:54), comments that ‘in the 
end, the RDP reflected an uneasy compromise between the feasibility of 
combining a social welfare state in the developmental sphere with 
neo-liberalism in the economic sphere.’

The continued economic problems caused by high inflation and 
depreciation of the Rand against the Dollar fuelled the debate on 
macro-economic policy and led to increased pressure from the corporate 
sector to follow free market economic theory. In February 1996, the 
South African Foundation (SAF), an organisation of the fifty largest 
corporations6, published its ‘Growth for All’ document. This rejected 
the RDP programmes as unattainable and claimed that there was no 
credible and comprehensive policy framework. It went further, attacking 
the new government’s fiscal, investment, labour and trade policies and 
argued for a reduction in the deficit budget and government spending. 
The document proposed a two-tier labour market without a prescribed 
minimum wage and an accelerated privatisation programme to create more 
jobs.

The SAF document stands in stark contrast to the ideological stance of 
ANC-alliance. In response to the SAF document, COSATU published an 
alternative entitled ‘Social Equality and Job Creation in April 1996’. 
By clearly distinguishing their respective view-points on the subject, 
the battle-lines were drawn in an ideological power struggle which saw 
the SAF prioritising growth while COSATU prioritised social equity.

In contrast to the consultation process that followed the publication of 
the RDP, the GEAR programme was developed in secret giving the first 
sign of a sharp departure from the ANC’s consultative method. The GEAR 
was the work of 17 technical experts: six economists drawn from South 
African universities; three from the Development Bank of South Africa; 
two each from the World Bank and South African Reserve Bank; and a 
representative from the Departments of Finance, Labour, Industry and the 
Deputy-President’s Office. Although the GEAR model was never made 
public, it was clear that its content was not far from the SAF’s ‘Growth 
for All’ document which emphasised the neo-classical economic model of 
the free market. The GEAR programme was introduced to the public on June 
14th 1996 by the then Finance Minister Trevor Manuel, who declared it 
non-negotiable - a sharp shift in ideology by the ANC leadership. 
Tereblenchie (1999) called it ‘a quantum leap’.


Whether GEAR’s key objectives have been fulfilled has been a subject of 
wide debate that will not be detailed in this study. Although the GEAR 
programme helped to stabilise the macroeconomic environment, there has 
been a decline in strict adherence to the GEAR model as a consequence of 
criticism from various quarters. This includes the central claim that 
the government abandoned their promise of broad-based reconstruction and 
transformation in order to follow the top-down prescriptions of the 
corporate sector and to satisfy the demands of international financial 
institutions for budget deficit reduction. GEAR has also been blamed for 
exacerbating the problem of unemployment. (Michie and Padayachee, 1998; 
Week 1999; Bond, 2000; Bhorat H. and Ravi Knabur 2005.
Phases of Power Relations and Ideological Shift


The impact of an ideological power shift is usually reflected in policy 
processes and outcomes. When examining the trends in the influence of 
power relations on the policy process in transitional and 
post-transitional South Africa four major phases, can be identified.

The first phase – during the 1980s – saw the rise of a range of 
fragmented white, progressive, anti-apartheid groups forming a network 
that brought together individuals from business, academia and civil 
society. They worked mostly with the labour movement COSATU but also 
with some other social movements and were dominated by progressive 
economists from within the academic environment. Between 1989 and the 
1990s they developed policy research and training centres linked to 
international development agencies. This placed them in a strategic 
position to play a key role as a policy think-tank when the ban on the 
ANC was ended in 1990.

This event indicated a shift in the position of a number of social 
political movements, including COSATU. It also altered power relations 
in the negotiation process taking place between progressive groups and 
the ANC-led social-political movements. The certainty of the ANC-led 
alliance’s achievement of political power ushered in the second phase in 
the power-relations trend.

During the crucial stages of the transition and negotiation process in 
the early 1990s, the ANC leadership was forced to face the reality of 
handling the social and economic reconstruction of South Africa in a 
changing global economy whilst simultaneously trying to achieve a 
peaceful transition of power. This demanded a revision of their 
socialist/nationalist view to a more structured and pragmatic 
macroeconomic approach that would direct the reconstruction of 
post-apartheid South Africa. The negotiation process involved different 
interest groups, such as the then-apartheid government, the corporate 
sector, international mediators and civil society. Due to the seemingly 
fragile state of the transition process, many compromises were made 
during the negotiations to accommodate the interests of all stakeholders 
and ensure a peaceful transition. The period also exposed the lack of 
in-depth understanding within the ANC-alliance of their socialist and 
nationalist views. Burawoy (1997:1) argues that “without a critical 
stance towards socialism, having never partaken in the debates about the 
meaning of socialism… the liberation movement in power found itself 
without an understanding to navigate the enormous problems of national 
reconstruction. An exodus without a map as Adler and Webster call it, 
became vulnerable to neoliberal redemption, especially when the entire 
globe is spellbound by the magic of the market.” This led to a 
re-thinking of social economic ideology particularly on the part of the 
ANC leadership.

As the negotiations progressed, external influences on the policy 
process increased. Foreign economists with different historical 
backgrounds and ideological leanings became more involved in shaping the 
macroeconomic framework that would be pivotal to other macro policy. 
Padayachee (2007:32) comments that in this period, the economic analysis 
and policy advice offered by progressive economists changed from a 
socialist to a neo-liberal outlook, partly to join the effort to develop 
a programme for the reconstruction of post-apartheid South Africa, but 
also to ensure they could act as advisors as the ANC-alliance’s rise to 
power became imminent.

It could also be argued that there was no real change in the theoretical 
foundations of the local progressive economists since they never defined 
or indicated a clear, coherent theoretical leaning. Instead, various 
fragments of the groups, united by their opposition to the apartheid 
government, represented different theoretical views including Socialism, 
Regulation Theory, Keynesianism, post-Fordism and Neo-Liberalism 
(Padayachee 2007). As events unfolded, some tended to take a more 
defined line. Mike Neocosmos (1997) comments that opposition debates 
from 1985 to 1995 were largely located within a statist framework, 
regardless of ideological leaning (nationalist, liberal or socialist).

The third phase was the peak of the negotiation process in 1993. At this 
time it was clear that the key players were the ANC and its allies such 
as the SACP and COSATU. They worked with progressives within civil 
society and the academic environment who were directly involved in the 
research and drafting of policy documents. However, the major influences 
in the transition and policy process remained the corporate sector, 
international financial institutions and the apartheid government party. 
Consideration and protection of their interests had more influence on 
the macroeconomic negotiation process because of their position and 
stake in the economy. To a very large extent, the monopoly of economic 
power enjoyed by the corporate sector empowered them strategically, 
placing them in a position to wield greater influence on the direction 
of economic policy, and thereby further eroding the already declining 
power and influence of the progressives. This led some to join the ANC 
leadership in a move to the right – representing a paradigm shift in the 
trajectory of power relations in the policy-making process in 
post-apartheid South Africa. Today, some progressives remain actively 
involved through policy critique, while others work with the government 
as advisors, consultants or in think-tanks. Thus, although the 
ANC-alliance had some political power they lack economic power and 
different groups such as the corporate sector and representative from 
the international finance organisations wielded influence on the general 
policy process and outcome.

The fourth phase began in 1996 and highlights how further changes on 
different groups impacted on the policy process. While previously the 
consultation and drafting of policy documents had been carried out by 
white academics and professionals in different areas, this period marked 
the beginning of the active involvement of blacks in policy debates and 
the drafting of policy documents. One of the most significant trends in 
the landscape of South Africa’s post-apartheid political economy was the 
rise of a black elite and its influence on macro and micro policy levels.

The first few years of the ANC-led government saw the rise of black 
elites, but their activities and contribution to the transformation 
process, especially the Black Economic Empowerment (BEE) programme, were 
questioned. They were seen as merely enriching themselves through 
lucrative BEE contracts instead of contributing actively to the broader 
transformation process. It was not until 1997 that they started making 
themselves visible in the political and economic environment through 
their contribution to the policy process, particularly the BEE. Although 
most members of this new elite in this period emerged as a result of 
their direct association with the ANC-alliance, others were those 
educated by missions or those who had climbed the ladder as civil 
servants in the apartheid Bantustan central administration (Roger 
Southall; 2004). They went on to become part of the new black elite, 
some of whom, although outside mainstream politics, started to play key 
roles in the political and economic environment of the new South Africa. 
This led to the growth of a number of different black interest groups 
such as the Black Management Forum (BMF), and the Black Business 
Council, which later metamorphosed into BEECOM and championed a 
redefinition and enactment of BEE into a broad-based Statutory Policy Act.

Currently, outside mainstream politics there has been increasing 
participation by black professionals, researchers and entrepreneurs in 
the policy process as consultants and advisors. Some play key roles in 
the drafting of policy documents: for example, in the BEE policy, the 
amendment of the Small Business Act, strategy framework documents and 
subsequent transformation policies such as Accelerated and Shared Growth 
Strategies (ASGISA). Archives indicate that up until 2000, white 
researchers and professionals championed most policy documents, while 
international financial institutions and the corporate sector influenced 
(and continue to influence) the direction and outcome of the policy 
process.

Notwithstanding that parliamentary deliberation on the enactment of 
policy into law is conducted by a black majority led by the 
ANC-alliance, real decision-making remains largely in the hands of the 
ANC leadership who are heavily influenced by different national and 
international interest groups. This raises the central issue of who 
controls power in the policy process and how it impacts directly on 
policy outcomes. Focussing on the micro-level the Small Business policy 
process will be examined next to relation to this question.
Small Business Policy Interfaces and Networks (meso-level)

Policymaking in South Africa is an interactive procedure that involves a 
consultation process before a draft bill leads to a parliamentary debate 
that will finally pass the policy into law. During the different stages 
of the policy process the degree of influence needed to pass through an 
interface varies. As with policy-making the world over, the most 
significant players in the policy process are those who have the ear of 
political leaders and are able to convince mainstream politicians, 
thereby ensuring their ideas and contributions become part of the 
newly-enacted law. Since policy is made by the interaction of competing 
interests that conflict at different interfaces in the process, the 
ability to sustain influence during bargaining will determine whose 
interests shape a given policy. This is where the degree of influence 
differs in the case of the Small Business and BEE policies, 
demonstrating the changing activities and contributions of different 
individuals or groups in the policy process since the transitional 
period. The diagram below explains these stages.


Policy enactment

Consultation process

Discussion paper

Contribution

Idea initiative

Policy process design

Research review

Policy formulation

Policy document drafting

Parliamentary debate

Processing issues

Identification and evaluation of problem

Identifying key actors, agenda setting and preliminary objective setting

Policy research planning and Agreement on procedure

Knowledge sharing and

gaining

Policy implementation

Policy dialogue

Debate on discussion papers, exploring options, analysis and filtering

Considering rules of the game and making decisions on policy content

Meetings with ministers and key political actors for bargaining and review

Redrafting, preparation for parliamentary debate

Bargaining, Agreement and Decision making process

Legal drafting,

Guidelines and debriefing

Communication, Information dissemination and strategy for implementation

Programme planning, budgeting, prioritising of goals and translating to 
policy to impact

Policy evaluation

Objectives, criteria for measurement and evaluation

1

3

2Policy interface and network (meso-level)
The Small Business Act


The initial idea for the Small Business Act came as a consequence of a 
consultation process championed by a group of white progressives who 
were involved in the small business sector in a variety of ways and 
capacities. These included Sunnyside, which later became the Strategy 
Business Partnership (SBP), the Small Business Development Corporation 
(SBDC) now Business Partners, and other individuals. Discussion papers 
were submitted by: the Sunnyside Group, SBDC, and the Development Bank 
of South Africa (DBSA); the South African Chamber of Business (SACB); 
the World Bank; the Friedrich Ebert Foundation; and the ANC. Under the 
watchful eyes of the DTI minister (Trevor Manuel), Alistair Ruiters 
steered the drafting of the policy document on small business 
development. He later became the director general of the DTI, the 
governing body of both BEE and small business development in South Africa.

The dynamic of groups and individuals involved in the activities of 
small business, and who hence exercised some influence on the direction 
of small business development, shifted as time progressed. Information 
obtained from interviews, discussion papers and some archive documents 
indicate clearly that there has been a shift in the policy process. Some 
of those involved in the initial stages are no longer actively 
participating. Some have distanced themselves from the process while 
others act as watchdogs in the area.

Although those formulating a policy are not necessarily policy 
implementers, they tend to support the mechanism for implementation to 
achieve set objectives. In the case of the White Paper for Small 
Business, two out of the four initial direct contributors in the policy 
process who were interviewed have since distanced themselves from the 
policy, especially its implementation process. Others, such as 
academics, are more involved as researchers, critics, consultants and 
advisors while a third group shows a degree of apathy towards the whole 
process of small business development. The question, then, is what has 
led to these changes in interaction among the policy initiators and who 
are the new power brokers?

Based on the analysis, three major arguments can be seen as reasons for 
this shift:

* First – a conflict of interest and ideas: Information gathered from 
different policy document archives7 and interviews indicates that those 
who contributed to the first Small Business Development Policy process 
have a conflicting view on the model for Small Business in South Africa. 
In some instances, when their views and contributions were neglected 
during the policy deliberation and bargaining processes, these 
individuals seem to have stepped aside or become disconnected from the 
process. For example, the Sunnyside Groups8 and Small Business 
Development Council (SBDC) have similar views on the model for small 
business policy in South Africa, which was not incorporated in the White 
Paper. These two groups reinvented themselves and now work in a 
different capacity in the small business sector. Sunny Side Group now 
Strategic Business Partnerships for growth in Africa, while SBDC 
formerly a government agency for small business under past system is now 
a private company know as Business Partners with the present government 
owning twenty percent equity.



* Second: lack of decision making power on the part of policy 
initiators: Lack of power in decision-making or in influencing 
decision-making is regarded as another contributing factor to the 
attitudes of these past policy contributors. Most often their input was 
restricted to developing and drafting discussion and policy documents 
that would not see the light of the day. Even when a research and 
strategy paper advising on the implementation process was sponsored by 
the government, it was no guarantee that it would be implemented. When 
asked if the objective of the discussion paper ‘Towards a Framework for 
Rural Small Business Support’ (initiated and co-sponsored by Ntiska 
Enterprises) was achieved, Rogerson a co-outhor commented: “I don’t 
think anything ever happened to it – I think it just ended up on a 
shelf”. He further explains that his part in the policy process was 
‘only on the outside writing reports - not directly in terms of making 
any key decisions.”9 These comments resonate with the views of some 
actors who have since distanced themselves from the policy process. It 
also reflects the general trend of power dynamic where ideology and 
interest drive policy process.



* Third is an ideological shift by the ANC leadership: Since the ANC 
came to power, most of the progressive left who worked with the alliance 
have become less relevant in South Africa’s political economy 
environment. Some have resigned to become critics and serve as a voice 
for the masses and the labour movement. Given that the ANC leadership 
have shifted to the right ideologically, they attract individuals with 
similar ideological leanings who are better able to contribute to the 
policy processes and outcomes. For example strategic policy papers that 
lean to the left are easily ignored as in the case of the paper on 
developing rural small business mentioned above. Also strategic 
framework documents for some development policies such as BEE and Small 
Business still contain free market undertones, ignoring the obvious lack 
of incentive to promote these policies to the poor. In the broad-based 
BEE and Small Business policy documents, the four major government 
support agencies - the National Empowerment Fund, Youth Fund, Khula 
Finance, and the Industrial Development Corporation - focus on small and 
medium-sized enterprises and ownership and acquisition loans while the 
South African Micro Finance Apex Fund (SAMAF), a subsidiary of Khula 
Enterprises, is the only pro-poor government support agency. Thus 
policies such as the broad-based BEE and small business development that 
claimed to be developmental have had little or no impact on the poor 
they are theoretically aimed at. Clearly the ideological shift has 
shaped power interactions and the outcome and impact of policy.

The Dynamic of power interaction from 1998 to the present: Colour or 
Ideological Interests?


 From the above analysis, we can state that ideology plays the key role 
in shaping power interactions and policy outcomes. However debates still 
abound on the power shift in the political/economic environment of South 
Africa. On a superficial level, it can be easily argued that power has 
shifted to the black majority. However, on a deeper level, the question 
must be posed as to whether the issue of the power shift in South Africa 
is one of colour or ideology and what type of power? Moreover, who are 
today’s power-brokers, and who do they represent? Among the new power 
players in the policy process, there are differences of ideology and 
interest that can be broadly categorised into neo-liberal and 
progressive approaches to social development, and that cut across 
boundaries of colour. Those holding neo-liberal views are mostly the 
corporate sector and some black elites. Some argue that those new black 
elites with the power to influence policy through their strong strategic 
connection to the ANC leadership lean more towards neo-liberal ideology. 
It is also agued that the Broad-Based Black Economic Empowerment (BBBEE) 
is used by these black elites to legitimise their position, allowing 
them to sound and look progressive. In a discussion with Mr Ashley on 
the contribution of the top black elites to the BBBEE programme, he 
commented that:

“It is all political; the system still promotes black elites. For 
instance the five key members of BEECOM that initiated BBBEE are not 
interested in any broad-based empowerment. To be fair only a very few 
among them have a relatively progressive mind”.10

On the same issue Mr Jerry11 went further, citing Soweto, where most of 
these black elites came from, as an example:

“You see, most of these people who have been empowered came from Soweto. 
We say to them just come and teach us how to fish, don’t give us the 
fish. We just want to learn. But they are not interested. They are just 
interested in politics.”

He added that only a very few members of these elites, and generally 
women, have a really progressive mind and are sincere about broad-based 
empowerment, which also explains the high motivation levels among women. 
However, others are of the view that the contribution of the black 
elites in the policy process is a step in the right direction. Thus, 
contrary to what some believe, South African politics are not driven by 
issues of colour, but rather mostly by ideology and economic interests, 
which shape the outcome of policy.

Moving further along the ideological spectrum, we come to the 
progressive camp. This comprises black and white academics, research 
professionals within different sectors, and civil society. An 
interesting finding is that those holding progressive views tend not to 
be at the top of the power ladder. Unlike the black elites and 
individuals from the corporate sector which control economic power and 
have the ear of the political leadership, these groups are more involved 
in researching and drafting policy documents. They have less influence 
on the decision-making process that shapes the content and outcome of 
policy. The key power brokers are therefore the corporate sector, the 
new black elites and international financial institutions with their 
strong external influence on predominantly economic policies. It is 
necessary, however, to add that there are some within these two key 
groups who do hold progressive views.

Although these groups have different levels and methods of influence at 
the various interfaces in the policy process, the real decision-making 
power remains with the political leadership of ANC-led alliance. It is 
argued that the ANC leadership is influenced by neo-liberal ideology but 
it does not have the absolute power to make decisions. Its political 
allies, such as the South African Communist Party (SACP) and COSATU, 
lean strongly leftwards. In an attempt to carry along all these 
different interest groups and ideologies, policy content is inevitably a 
mixture of ideologies representing views from right, left and centre. 
Thus the political economic environment of contemporary South Africa is 
an ideological battle-ground that consumes the interest of the masses. .
Summary

The dynamic of the policy process in South Africa since the 1980s has 
witnessed changes in the manner and degree of influence the key players 
have been able to exert. Those who shaped the political economy of South 
Africa through the policy process ranged from groups and individuals 
from civil society and trades unions, academia and non-academic 
researchers, the corporate sector, the apartheid government, and 
international financial institutions. This study finds that the degree 
of influence enjoyed by these groups in the political and economic 
terrain of South Africa has changed as time has progressed.

 From the 1980s to 1990s, progressive voices within academia, civil 
society and individuals from the private sector were united in a common 
goal - opposition to the apartheid system. These fragmented groups 
worked with the unions and social political movements to lay the 
foundations for the policy issues of the transitional period. Although 
they later formed some groups that contributed to the ANC’s policy 
framework, such as MERG’s research work and the RDP, they were not 
unified ideologically. As a consequence of a lack of organisational 
capacity and ideology, the complexity of the transitional process and 
the global rise of neo-liberalism, most of the early progressives were 
sidelined, although some continued to follow the direction of change in 
the political economy of South Africa. During the early 1990s, 
neo-liberalism became the key influence on the policy processes as the 
ANC leadership abandoned its nationalist and socialist viewpoints. The 
mid-1990s ushered in the rise of new black elites in the political and 
economic spheres. Championing neo-liberalism were the corporate sector, 
the aforementioned new elites and the international financial 
institutions. Meanwhile, the SACP and COSATU were left to fly the 
progressive flag which was used as tool of populist political rhetoric 
during the election period. The implication has been an elite-led 
transition that lacks a strong progressive influence within the policy 
process. After all the buzz around a broad-based BEE and small business 
development that focused on the pro-poor social economic integration of 
HDI, the policy documents and record of implementation indicate a much 
greater emphasis on purely economic growth that has created further 
inequality and poverty due to limited job generation, rather than social 
economic development.
Conclusion

Economic power shapes political power and economic power continues to be 
concentrated in the hands of the corporate sector which has to a large 
extent “co-opted” the black elites. This group remains in thrall to 
neo-liberal economic ideology and will continue to shape policy outcomes 
to sustain its ideological interests accordingly. The ANC leadership 
seem to be dependent on the support of the corporate sector and the 
approval of international financial organisations. On the other hand, 
the corporate sector profits from their close relationship with the 
government and needs a stable and good business environment in which to 
operate. Hence, until the major players - the ANC leadership and the 
corporate sector - shift from their neo-liberal ideological views to 
accommodate some alternative viewpoints that protect the interest of 
larger population of South African, the power will remain in the hands 
of the elites.

Meanwhile power interaction in the new South Africa is in fast changing 
pace and needs continues monitoring in understanding the dynamic of 
interaction in political and economic environment of South Africa.
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Policy Discussion documents

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1 Stephen Gelb is a Canadian-trained Economic Historian

2 By 1990 membership had grown to 21 (Gelb, 1992). With only two 
exceptions, participants were white, and mostly academics from different 
universities. (Padaychee, 2007)

3 It was noted that there was a lack of interest in training black 
researchers. Instead they were used merely as administrative assistants 
to photocopy and print papers. (Padaychee 2007:27)

4 S.J Terreblenche (1999) a paper presented in a special ME99 workshop 
on ‘Globalisation, Poverty, Woment and the Church in South Africa.

5 Patrick Bond is one of the authors of the RDP policy framework

6 The number of the organisation has increased to seventy three as 2008

7 Comparing discussion papers presented by the then Sunny Side Groups, 
Small Business Development Corporation to that presented by the steering 
committee –‘ the Strategies for the Development of An integrated Policy 
and Support programme for Small, Medium and Micro- Enterprises in South 
Africa’ summarising the contribution from different groups’ discussion 
papers.

9 Author’s interview note 2007

10 Author’s interview note 2007

11 Jerry Moloi is the chairperson of the Soweto Small Business Counc