by Donna Katzin, Shared Interest
“Eliminating poverty is not a gesture of charity. It is an act of justice… Like slavery and apartheid, poverty is not natural. People have created and tolerated poverty. And it is people who will overcome it.”
– Nelson Rolihlhla Mandela
On July 18, Nelson Mandela’s 95th birthday, children with crayons in Kazakhstan draw his face on the sidewalk. At the United Nations, fifteen year-old Malala Yousafzai from Pakistan, who has been shot in the head by the Taliban, says Mandela has influenced her and she forgives her shooters. On December 5, the world mourns and harvests lessons from this monumental man who has taught us so much, and left so much more to do.
Nelson Mandela’s Legacy
On a personal level, Nelson Mandela exemplified the heights of human potential. Today we harvest his humility, courage, selfless dedication to justice, his understanding of what is historically necessary — and his capacity to reconcile without bitterness, learn from others and build community. These things challenge us and point us to what is possible.
At the same time, his life and the global groundswell he helped to catalyze and lead underscore larger lessons about changing history. In the investment community, they enlighten our work to build a more equitable, sustainable and peaceful world. Among many other things, Mandela and the anti-apartheid movement taught us the following:
1. In this global economy, transformation requires organizing beyond borders. South Africa’s struggle to end apartheid wove the work of activists, stakeholders, and “ordinary” people around the world to do extraordinary things. They ranged from the United Nations with its arms embargo and oil embargo campaigners in Norway, sports-boycotters in New Zealand, to communities, congregations, campuses, companies, cities and states that mobilized their resources to exclude South Africa from the family of nations.
2. Sustained catalytic campaigns require more than one lever for change. They are rooted in collaboration by stakeholders coordinating a spectrum of strategies. For socially responsible investors, effective tools have included dialogues, divestment, boycotts, sanctions, codes of conduct and, ultimately, reinvestment. Since apartheid’s demise, investors and activists alike have applied these strategies to campaigns ranging from climate change to financial inclusion to waging peace in the Middle East.
In South Africa’s case, these strategies were not hatched in a vacuum, but developed in concert and solidarity with activists on the ground – mineworkers and autoworkers, and protesters in Sharpeville, students in Soweto, and the wide web of social justice movements – throughout South Africa and in exile.
3. Historic change does not flow from one man. Mandela maintained to the end, whether prisoner or president, that he was a “humble servant” of the African National Congress. The wisdom and strength he gleaned from other ANC members – and from their many partners – informed his leadership and enhanced his effectiveness. Mandela was a great man, but knew better than to espouse the “great man” theory of change.
4. Transformation often takes more than one lifetime. In the U.S. we should appreciate this fact – as we confront entrenched racism more than 150 years after our country’s Emancipation Proclamation. South Africa, which celebrated the ANC’s 100th anniversary last year, and this year the 20th anniversary of democracy, still has a long way to go to translate its hard-won political rights into an equitable economy for all of its citizens. The country’s transfer of political power in 1994 did not transform an economic system that continues to concentrate wealth, maintain exploitative relationships and generate poverty.
The Unfinished Agenda
Mandela appreciated that his long and continuing walk to freedom began before and would extend well beyond his lifetime – not only because of the viciousness of colonial and apartheid rule, but also because of the deeply entrenched attitudes and economic system that required change. While the new order, rooted in economic and social human rights, is hardwired into the country’s 1996 constitution, it will take at least another generation for it to become a reality for the majority of South Africans.
There is no denying that South Africa has accomplished Herculean achievements since it abolished apartheid and established a political democracy in 1994. A recent study released by Goldman Sachs reports that between 1996 and 2011, functional illiteracy dropped from 34 percent to 19 percent; access to sanitation increased from 50.3 percent to 62 percent of the population, and access to electricity rose from 58 percent to 85 percent. Between 2002 and 2012, the portion of the population that experiences hunger dropped from one in four to one in 10; those with access to tap water and/or plumbing grew from 56 percent to 91 percent of the population, and the share of learners receiving free elementary school education mushroomed from 1 percent to 57 percent. The democratically elected government has provided more than 3 million units of low-cost housing.
Contributing to South Africa’s success have been the increase in its gross domestic product per capita, which rose from $4,300 in 1995 to $6,000 in 2012, and its tax base, which grew from 1.7 million payers contributing $114 billion to state revenues in 1994 to 13.7 million contributing $814 billion in 2012.
But apartheid’s legacy will take many years more to reverse – particularly given setbacks in some of South Africa’s key markets (notably Europe and the U.S.) The country’s booming population has grown from 40 million in 1994 to nearly 52 million today. While the number of employed people has risen between 1996 and 2011 from 9 million to 13.2 million, the ranks of its unemployed have officially increased from 4.7 million to 5.6 million. When we count “discouraged” workers who have given up looking for jobs, the unemployment rate swells to an estimated 40 percent – higher still for low-income youth of color. As township dwellers move into new homes, rural residents in search of jobs and housing often take over the shacks they vacate – replenishing the list of people waiting for government housing and subsidies. In many parts of the country – like many other parts of the world, the income gap between haves and have-nots is actually widening. Today – 20 years after the abolition of apartheid, 87 percent of white South Africans may be classified as middle or upper class. Eighty-five percent of Africans remain poor.
Laying Foundations for the Next Generation
Nelson Mandela understood that an equitable economy was not a foregone conclusion, and that it would take many more years to achieve. Acknowledging this reality, a number of non-profits have sprung up to help continue the work. In 1994, one of them, Shared Interest, launched a New York-based socially responsible investment fund, which Mandela recognized. A decade ago he told us, “Your contribution toward making available credit, creating jobs, encouraging small business and providing affordable homes and viable communities for economically disenfranchised South Africans [is] as necessary now as it was in 1994…We look forward to continuing that work which is based on a shared interest.”
Since then, Shared Interest has provided a vehicle for individuals and institutions to turn from disinvestment to reinvestment in South Africa’s economically excluded communities of color. Some would call this community investing, others “impact” investing. With our South African partner organization, Thembani, we guarantee South African financial institutions’ loans to small business owners and farmers, cooperatives, microfinance and affordable housing organizations they would otherwise consider “unbankable.” The goal is for the new borrowers to “graduate” from guarantees, and for commercial lenders to discover this market – and make it a platform for their ordinary business.
Our results have been significant. Not one of our investors has lost a penny of interest or principal. With the capital they lend to us for three to five years, we have guaranteed South African financial institutions’ loans benefiting more than 2.2 million low-income black South Africans.
These are couples like the Mkhungus in KwaZulu-Natal, who purchased a run-down poultry farm from a retiring white family, and have increased their production from 28,000 to more than 900,000 eggs a month. They are young workers at small businesses like One Vision, which makes vegetable chips in the Western Cape in a community where 1,000 jobs were destroyed when another plant closed. They are young women like 28-year old Rofihwa Tsialatshitsa in northern Limpopo, who have more than doubled the hectares of tomatoes they produce for a local company, and are determined to demonstrate that women can succeed as commercial farmers.
But as we celebrate Shared Interest’s 20th anniversary – and that of post-apartheid South Africa – we recognize how far we have to go on the path Mandela and South Africa’s liberation movements created. We also appreciate the continuing relevance of many lessons from the first two decades of South African democracy. These are cornerstones for Shared Interest’s Next Generation Campaign to lay financial foundations for the future, and to educate investors that at least another generation of work will be needed to make a just economy a reality for all South Africans.
A South African street vendor said it best: “Political freedom without economic freedom is not freedom.” The model of peaceful transition, forgiveness and multiracial collaboration runs the risk of unraveling unless it is shrinks the gap between haves and have-nots. We call this the economics of reconciliation.
1. We must build broader alliances and coalitions to challenge financial institutions whose practices and systems keep people poor and powerless, and to encourage emerging initiatives for inclusive finance. This is difficult now, in the wake of the world financial crisis that pressed institutions in South Africa (and elsewhere) to focus more on building reserves and protecting depositors’ assets than on providing credit and services to people at the bottom of the pyramid.
2. Building effective local institutions, enterprises and a more just economy call for stronger international partnerships – and all of our support within and beyond South Africa. In South Africa, some of the new “born free” generation that grew up after apartheid are less versed than their parents in lessons and tools for transformation. Young people around the world may labor under the illusion that South Africa’s transformation is an issue of the past, not a challenge for the future.
3. Finally, we recognize that transformation is likely to take longer than our lifetimes. Mandela clearly told us: “It is time for the next generations to continue our struggle against social injustice and for the rights of humanity. It is in your hands.”
Article by Donna Katzin, PhD., the founding Executive Director of Shared Interest (www.sharedinterest.org ). From 1986 until July of 1994, she served as Director of South Africa and International Justice Programs for the Interfaith Center on Corporate Responsibility. In that capacity she worked with religious bodies, institutional investors and community organizations to exert economic pressure to end apartheid, promote responsible reinvestment after apartheid, and to advance social criteria for domestic and international lending. She holds a master’s degree in Community Organization and Planning, and a doctorate in Human Services Education and Development. She is a board member of the Thembani International Guarantee Fund, Housing for HIV, and the Jewish Funds for Justice.