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9 - How Mineral Discoveries Shaped the Fiscal System of South Africa

Published online by Cambridge University Press:  15 November 2019

By
Abel Gwaindepi  and
Krige Siebrits
Edited by
Ewout Frankema  and
Anne Booth
Ewout Frankema
Affiliation:
Wageningen Universiteit, The Netherlands
Anne Booth
Affiliation:
School of Oriental and African Studies, University of London
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Summary

South Africa made remarkable progress from 1850 to 1961 with the establishment of a ‘modern’ fiscal state. This chapter shows that the discovery of diamonds and gold in the second half of 19th century facilitated the modernization of the country's fiscal system by providing the impetus for modern economic growth and by generating vast resources for the financing of infrastructure and essential social services. It also identifies two consequences of apartheid that negated vital potential benefits of the fiscal modernization process: the state could not achieve the legitimacy needed for political stability and long-term economic development, and the economic diversification that is essential for sustained economic progress in economies built on the extraction of exhaustible resources was thwarted by the debilitating effects of apartheid on policy priorities and the country's skills base. The main conclusion of the chapter therefore is that apartheid prevented South Africa from capitalizing on the opportunities afforded by its mineral wealth and otherwise solid governance foundations.

Keywords

South Africafiscal modernizationmineral resourcesapartheid
Type
Chapter
Information
Fiscal Capacity and the Colonial State in Asia and Africa, c.1850–1960 , pp. 264 - 298
Publisher: Cambridge University Press
Print publication year: 2019

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