Analysis

Development: We need a Brazil process, not a Lula moment

Lyal White

Sustained reforms and strong leadership will enable South Africa to reap economic prosperity, says Lyal White.

The changes instituted by former Brazilian president Luiz Inacio 'Lula' da Silva and his predecessors set the country on the path to economic prosperity. (AFP)

Cosatu general secretary Zwelinzima Vavi strongly believes South Africa needs a Brazilian-style "Lula moment". Vavi's reference to best practice from around the world is commendable: Brazil, especially, has transformed itself into a progressively integrated and increasingly open economy. But calling it a single moment is somewhat misleading.

Former Brazilian president Luiz Inacio "Lula" da Silva did play a fundamental role in Brazil's transition to a modern economy, but I would urge Vavi to take a closer look at its evolution to better understand the key lessons for South Africa.

The so-called Lula moment – which was in the air once more last week when Lula visited South Africa – refers to a radical shift during his second term in office when pro-poor policies kicked in and there was a consolidation of leadership and power under the Workers' Party.

This coincided with earlier structural reforms gaining traction, allowing the country to ride the wave of the commodity boom. The rise of Brazilian multinationals drove productivity and lured investment. Brazil became the world's largest exporter of beef, coffee, orange juice, sugar and ethanol fuel and the second-largest producer of soya beans after the United States.

Innovations in agriculture, which began in the 1960s when Brazil was a net importer of food (as South Africa is today), are paying dividends now. The divide between rich and poor was also narrowed. For a long time Brazil had been regarded as the world's most unequal society – a position South Africa now holds.

The Lula administration is credited with pulling 32million people out of poverty and for the substantial growth of the middle class. Increases in individual wealth and upward social mobility have outpaced growth in gross domestic product. This was achieved through targeted social development programmes combining poverty alleviation, education and healthcare.

Vavi's comments imply a single moment, provided by an individual leader, that resulted in transformation. But Brazil has evolved beyond the messianic style of leadership that plagued Latin America and fuelled populism in the past. The country's deliverance from decades of underperformance shows that it requires more than just leadership. It is the process and strengthening of institutions that counts.

Structural adjustments

Brazil's success dates back to Lula's predecessor, Fernando Henrique Cardoso, and the reforms he started in the 1990s. Difficult structural adjustments and liberalisation policies allowed Brazil to benefit from the commodity boom and grow. Surges in demand for iron ore and soya beans from Asia, plus price increases, were central to Lula's success. But leadership and policy continuity were key. The seamless succession from Cardoso to Lula – from competing parties – instilled faith in the Brazilian economy. This political stability encouraged trade and foreign direct investment to flourish, providing the essential capital for economic growth, development and far-reaching social policies.

None of this should diminish Lula's achievements. He gave Brazilians the drive to be competitive and was a catalyst for business, unions, civil society and government to develop a coherent vision. Lula's real "moment" was a greater injection of practical realism into politics and a move away from ideological rhetoric: Brazil was no longer sidetracked by silver-bullet solutions.

The televised corruption trial of Lula's former chief of staff, José Dirceu, also showed political maturity.

Business, too, recognised its role as a development partner. This is particularly instructive for South Africa, where business has always had a role to play in politics, as seen during our transition to democracy.

Lula interacted constructively with the private sector, inviting it to ensure his goals were implemented effectively. Business became an instrument of many of his plans.

I don't fundamentally disagree with Vavi. But Brazil's "moment" was really a process of development over time, involving various stakeholders and administrations. Most of all, Brazil is proof that a challenging situation can be turned around with the right policies and decisive leadership underpinned by a healthy dose of pragmatism.

Dr Lyal White is director of the ­Centre for Dynamic Markets at the Gordon Institute of Business Sciencea

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