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Seeraj Mohamed, Director of Corporate Strategy and Industrial Development, School of Economic and Business Sciences, Wits University, talks about the increasing role of finance in the South African economy, tracing its roots to the apartheid era.
We've seen a process of policy continuation from the apartheid government to the ANC-led government in following a model of liberalizing the economy by emulating the policies of the US and the UK, contends Mohamed.
He elaborates - as South Africa emerged from apartheid, on top of an unequal society and an economic structure based on the minerals energy complex (MEC), the country went through a process of the financialisation of the economy. Large mining and financial companies embraced a process of global financialisation and the global corporate restructuring that came with it.
Consequently, a huge amount of money left the country as companies such as Anglo American and Old Mutual listed offshore.
They essentially took a huge amount of capital - wealth that had been created by exploiting resources and people - and used it to become major international players. Moreover, when these corporations went global, they became influenced by the shareholder value movement and institutional investors of the North, he argues.
As this capital moved offshore, the South African economy became much more dependent on mining. The huge growth in the financial sector weakened South Africa's already weak industrial structure.
The financialisation of the South African economy has exacerbated the problems of the MEC. The major players that had benefited from the growth of the MEC and the apartheid state's support of mining and finance have now become global players and they are not really interested in employment creation, industrial diversification or building the South African economy, argues Mohamed.