TRC Final Report

Volume 4

Chapter 2

Subsection 13

■ THE WAY FORWARD

149 Many submissions addressed the question of what business should do to contribute to reconciliation and development in ways that are more concrete. Most business submissions pointed to the important contribution of social responsibility investment programmes, support for NGOs, improved employment equity programmes and the like. These important initiatives deserve support.

150 Other submissions suggested measures that are more radical. For example, the Apartheid Debt Co-ordinating Committee argued for the cancellation of all apartheid debt. In 1994, the apartheid debt stood at some R250 billion. Interest on the debt amounted to some R30 billion a year. According to a submission by the Apartheid Debt Co-ordinating Committee²⁵:

The total government debt currently stands at R300 billion. R40 billion of government’s budget for this year is spent on paying interest on this debt. This makes interest payment on the debt the largest item after education. In comparison, vital social services such as health received just R20 billion, social security and welfare R18 billion, housing R4 billion and water R2 billion.

Who owns the debt? Forty per cent is owned by the Public Investment Commission – a semi-government body – that is the chief lender to the government for financing civil service pensions. Fifty per cent is owned by business, commercial banks, insurers and other wealthy entities and individuals. The remaining amount is owed to the Reserve Bank and about 5 per cent is foreign debt.

151 In its argument for the cancellation of the debt, the Apartheid Debt Co-ordinating Committee continues:

There exists the doctrine of “odious debt” in international law. The doctrine concerns the responsibilities of successor governments in relation to the debts incurred by the former regime. As an exception, the doctrine allows successor governments to disown the debt incurred by fallen dictatorships …

For apartheid’s creditors, agreeing to the cancellation of their part of the apartheid debt would give them the opportunity to enter the process of truth and reconciliation. The cancellation of their loans would represent a recognition of their complicity with apartheid and a willingness to contribute to the reparations needed to rebuild this country.

152 Leaving aside the debate as to the morality of payment or non-payment, it has been suggested that cancellation of the debt could have certain adverse consequences for economic growth. Advocates for continued payment confirm the point made by the Apartheid Debt Co-ordinating Committee that a significant part of government debt is owned by domestic financial and commercial institutions. Cancelling it, they say, would erode their asset base, harm shareholders, pensioners (in cases where debt is owned by pension funds) and possibly employees. To the extent that such debt cancellation would undermine the level of confidence in government stock, it would also result in higher borrowing costs on new debt issues – or even an inability to market any debt domestically or abroad. This would severely constrain any subsequent attempts at redistribution on the part of the state. A very careful analysis of the costs and benefits of this proposal is, therefore, required.

153 However, given the crippling effects of the South African debt, as well as the general indebtedness of the ‘third’ to the ‘first world’, there is a strong argument for discussion, consultation and co-operation with other countries facing similar debts that impact on their ability to deliver services to their citizens.

154 Professor Sampie Terreblanche has proposed a wealth tax as a means of redressing an important legacy of apartheid - South Africa’s highly unequal distribution of wealth. He gives seven reasons which, to his mind, support this proposal:

a Africans were deprived of large parts of land on which they had conducted successful traditional farming for centuries.

b For decades, millions of African people were paid exploitative wages in all sectors of the economy.

c A great variety of discriminatory legislation not only deprived Africans of the opportunity to acquire skills, but also compelled them to do dreary, unskilled and humiliating work at very low wages.

d The prevailing power structures deprived Africans of opportunities to ‘accumulate’ human capital.

e Heavy restrictions on the legal right of Africans to own property and conduct business deprived them of the opportunity to accumulate property and develop entrepreneurial and professional capabilities.

f While the prevailing power structures impoverished the greater majority of Africans during the first three-quarters of the century, the liberation struggle and the state response to it had a devastating effect on the poorer 60 per cent of the African population.

g African societies were impoverished and “destroyed”, while the system also prevented South Africans from building a united society.