Abstract

"Post-Apartheid Eldorado: Gold Hedging, Black Economic Empowerment and the Making of the Most Unequal Society on Earth "

Tim Karayiannides, University of Cambridge (ek468@cam.ac.uk)

Post-apartheid South Africa is widely lauded for its peaceful transition to democracy, its progressive constitution and the robustness of its democratic institutions. Yet, over thirty years after the advent of democracy it is the most unequal country on earth. Following global scholarly trends, South African social scientists have largely blamed state policy. According to a dominant narrative, the African National Congress-led alliance which has ruled South Africa since the end of apartheid has progressively forsaken its emancipatory and egalitarian roots and embraced a neoliberal agenda. This paper complicates this narrative, arguing for the influence of private finance in shaping post-Apartheid patterns of inequality and endemic corruption. It charts the story of how sophisticated financing structures pioneered by the Australian investment bank Macquarie during a gold rush in 1980s Australia travelled to post-Apartheid South Africa in the 1990s. They were initially marketed to South Africa’s mammoth mining houses as risk management tools which would allow gold mines to navigate the seeming terminal decline of gold’s global monetary role. However, they soon developed into the instruments of choice for financing so-called Black Economic Empowerment mining deals—business ventures involving majority Black ownership encouraged by the South African state as part of its efforts to affect post-Apartheid economic transformation. The deals made certain politically-connected businessmen fabulously wealthy, but the sophisticated financial techniques involved also became avenues for spectacular levels of fraud which would ultimately bring down one of South Africa’s oldest mining houses, Johannesburg Consolidated Investments. Drawing on original archival sources and interviews, this paper will show South Africa’s post-apartheid political economy was forged in the crucible of government attempts at redressing historical injustices, and new forms of financial engineering available to South African business for the first time after decades of economic isolation.