Radical change must be rooted in the soil
If politicians know how to do one thing, it is to use words and language for their own purposes. It is not what they say that we should care about, but what they mean. It is in that spirit that I have been listening to the re-emergence of the phrase “radical economic transformation”.
On the occasion of the ANC January 8 statement, President Jacob Zuma reintroduced radicalism into our economic language. He went on to repeat it during his state of the nation address.
He sought to indicate, it seems, that we are on an elevated path to contending with the economic and social challenges we face.
Of course, it is not difficult to forgive the sceptics who reckon this is just more political rhetoric. It wasn’t until Finance Minister Pravin Gordhan, carrying the nation’s cheque book, reiterated the president’s language that it seemed there might be something to this new sense of radicalism. That faith lasted until I paid attention to the detail of his speech.
Politicians are known the world over for talking big and giving old words and phrases new meaning. So one always has to listen closely.
Gordhan made good on the language and made it clear that by transformation he meant inclusion.
Indeed, in our country the task of social and economic transformation should mean inclusion, since apartheid’s main crime and effect was the exclusion of black people from major and meaningful economic activity. That legacy is still with us if we look at the employment levels of black people and their participation in business, science and even culture.
In this sense the minister made the comment: “To achieve sustained higher growth, there are also more fundamental, more radical transformation measures that are needed.”
He went on to state that he agreed with Zuma that “a new perspective on economic transformation is required”.
But consider that the drought seen in the agricultural sector during the past two years did a great deal to disrupt sustained growth in the South African economy.
In 2015, the sector contracted nearly 6% and shaved 0.1% off the country’s GDP. Of course, this also came with marked job losses.
Against this background, government spending on agriculture, rural development and land reform will only increase 2% from just under R26bn in 2016-17 to R26.5bn in 2017-18 as presented in this budget.
Of this amount, the government’s budget allocated for land reform actually declined 3%, from R1.23bn in 2016-17 to R1.19bn in 2017-18.
The budget cuts outlined above seem to suggest that, despite the desire by the government to embark on a more radical economic transformation path, the limitations imposed by the budget might slow the process to a much more modest pace.
Having said that, there are two sources of radical economic transformation that the government will most likely (continue to) use in the future and these include legislative provisions and regulations — such as broad-based black economic empowerment — and support and development programmes for farmers.
In the latter, the budget allocation increased 10% to R3.79bn, from R3.43bn in the previous fiscal year.
Overall, there is a disconnect between government spending and the political expectation created in the agricultural sector. We can, therefore, expect more legislation-driven approaches, rather than resource-driven approaches, to achieving radical economic transformation over the short to medium term.
Apart from the decline in growth and employment, the drought led to a marked spike in inflation, which further contributed to the disturbance in economic and financial stability.
If the minister and the government are serious about stable and sustained growth, there is a definite need to show this in how they spend on infrastructure in the agricultural sector. There should be substantially more money spent to make a radical difference in storage and irrigation methods so we are better prepared for the arrival of the next drought, which is inevitable.
More should go to support small-scale farmers to be able to store their crops as they manage their produce through economic cycles in the sector.
We should be seeing a radical shift in instruments of support for both small and large farmers in which the government shares risks with the sector to stabilise the supply of food both for commercial purposes and for food security for the poor.
All these measures would give real meaning to the idea of radical economic transformation in a sector that shows substantial promise for inclusion. This is to say nothing of the land question.
THERE SHOULD BE SUBSTANTIALLY MORE MONEY SPENT TO MAKE A RADICAL DIFFERENCE IN STORAGE AND IRRIGATION METHODS